UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 21, 2005
Delaware 1-14180 87-0748324
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
600 Third Avenue 10016
New York, New York
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (212) 697-1105
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
On November 21, 2005 (the "Effective Date"), the Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as modified (the "Plan") of Loral Space & Communications Ltd., a Bermuda company ("Old Loral"), and certain of its subsidiaries (the "Debtor Subsidiaries" and, collectively with Old Loral, the "Debtors") became effective under chapter 11 ("Chapter 11") of the United States Bankruptcy Code (the "Bankruptcy Code"). Pursuant to the Plan, on the Effective Date, among other things, (1) Old Loral transferred its assets and liabilities not discharged in the Chapter 11 cases to Loral Space & Communications Inc., a Delaware corporation and successor registrant to Old Loral under the Securities Exchange Act of 1934, as amended ("New Loral"), and its subsidiaries, and (2) the Debtors underwent certain restructuring transactions contemplated by the Plan and thereupon emerged from Chapter 11 of the Bankruptcy Code. The dissolution of Old Loral and Loral Licensing Ltd., a Bermuda company, under Bermuda law will be effected pursuant to winding up orders issued by the Supreme Court of Bermuda as soon as practicable after the Effective Date.
Information regarding the Plan is contained in the Form 8-K filed by Old Loral on August 5, 2005, which is incorporated herein by reference. A copy of the press release issued on November 22, 2005 announcing the Effective Date and implementation of the Plan is attached hereto as Exhibit 99.1 and incorporated herein by reference.
As of the Effective Date, New Loral owns, through an intermediate holding company, all of the issued and outstanding common stock of two principal operating subsidiaries: Loral Skynet Corporation, a Delaware corporation ("Loral Skynet") (formerly known as Loral Orion, Inc. ("Orion")) and Space Systems/Loral, Inc., a Delaware corporation (an Old Loral subsidiary which shall continue in existence ("SS/L")). Loral Skynet will be the satellite services arm of New Loral and will continue to provide satellite services and, through Loral Skynet Network Services, Inc., its indirect wholly-owned subsidiary, network and professional services and support. SS/L will be the satellite manufacturing arm of New Loral and will continue to design and manufacture satellites.
SS/L is an operating company that continues to own substantially all of the assets it owned prior to and during the Chapter 11 cases. Certain of its assets have been transferred to Loral Skynet, including those described below. Loral Skynet directly or indirectly owns the satellite services assets and businesses of Old Loral and its subsidiaries, including: (1) Loral Skynet Network Services, Inc., a Delaware corporation; (2) all of the equity interests in XTAR, L.L.C. formerly owned by a subsidiary of Old Loral and SS/L; (3) all licenses or rights to orbital slots formerly owned by Old Loral; (4) all of the Telstar 18 satellite transponders that were not formerly owned by Orion; (5) the Telstar 14/Estrela do Sul satellite ("EdS"); (6) Loral Skynet do Brasil Ltda. (including all of its assets and the orbital slot license for EdS); (7) the capital leases in respect of the three transponders on the Satmex 5 satellite owned by Satelites Mexicanos, S.A. de C.V. ("Satmex"); (8) the joint venture rights and interests in Mabuhay Space Holdings Limited; (9) all interests in Globalstar, L.L.C.; (10) trademark rights relating to the satellite services business; (11) all equity in Satmex; and (12) other assets used to operate the satellites.
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
SKYNET NOTES
On the Effective Date, Loral Skynet issued pursuant to the Plan $126,000,000 aggregate principal amount of its 14% Senior Secured Cash/PIK Notes due 2015 (the "Skynet Notes"), which notes have been or will be distributed to certain creditors of the Debtors that participated in the rights offering effected in accordance with the Plan. In connection with the issuance of the Skynet Notes, Loral Skynet entered into the following agreements: (1) an Indenture (the "Indenture") governing the Notes, dated as of November 21, 2005, by and among Loral Skynet, The Bank of New York, as trustee (the "Trustee"), and the Subsidiary Guarantors (as defined therein), and attached hereto as Exhibit 4.1 and incorporated herein by reference; (2) a Security Agreement (the "U.S. Security Agreement"), dated as of November 21, 2005, by and among Loral Skynet, each Subsidiary Guarantor and each Additional Grantor, as defined therein,
and The Bank of New York, as collateral agent and trustee, and attached hereto as Exhibit 4.2 and incorporated herein by reference; and (3) a Share Mortgage Agreement (the "Hong Kong Security Agreement" and, together with the U.S. Security Agreement, the "Security Agreements"), dated as of November 21, 2005, by and among Loral Skynet and the Bank of New York, as collateral agent and trustee, and attached hereto as Exhibit 4.3 and incorporated herein by reference.
Material terms and conditions of the Skynet Notes and the Indenture are described in Item 2.03 of this Form 8-K and incorporated herein by reference.
REGISTRATION RIGHTS AGREEMENT
On the Effective Date, in connection with and as contemplated by the Plan, New Loral, Loral Skynet and seven affiliated funds of MHR Fund Management LLC entered into a Registration Rights Agreement (the "Registration Rights Agreement"), dated as of November 21, 2005, attached hereto as Exhibit 4.4 and incorporated herein by reference. Pursuant to the Plan, each holder ("Holder") of an Allowed Claim, as that term is used in the Plan, that receives a distribution pursuant to the Plan of ten percent (10%) or greater of any of (i) New Loral Common Stock, (ii) Loral Skynet Series A 12% Preferred Stock or (iii) Skynet Notes (collectively, the "Registrable Securities") will receive certain registration rights under the Registration Rights Agreement (each such Holder and any future holder of Registrable Securities who becomes a party to the Registration Rights Agreement, a "Registration Rights Holder"). The Plan also allows for certain additional Holders meeting specified criteria at the discretion of the Debtors and the committee of unsecured creditors (the "Creditors' Committee") to become a Registration Rights Holder. Pursuant to the Registration Rights Agreement, in addition to certain piggy-back registration rights granted to the Registration Rights Holders, certain Registration Rights Holders can also demand under certain circumstances that the Registrable Securities be registered under the Securities Act of 1933, as amended (the "Securities Act"), in each case subject to the terms and conditions of the Registration Rights Agreement.
The Registration Rights Holders (or any group of affiliated Registration Rights Holders) who hold a minimum of 25% of such class of Registrable Securities as of the Effective Date (each, a "Major Holder") may demand the following number of registrations under the Securities Act: (i) three registration statements with respect to New Loral Common Stock, (ii) three registration statements with respect to Loral Skynet Series A 12% Preferred Stock and (iii) three registration statements with respect to Skynet Notes, plus an aggregate of two additional registration statements with respect to any class of Registrable Securities. In no event will a Registration Rights Holder have the right to demand more than two registration statements be filed in any twelve-month period with respect to each class of Registrable Securities. Subject to certain exceptions, within thirty days following the issuance by New Loral's independent public accountants of their audit report covering New Loral's post-emergence "fresh-start" financial statements, New Loral is required to file a shelf registration statement with the Securities and Exchange Commission covering the New Loral Common Stock subject to the Registration Rights Agreement. Subject to certain exceptions, following the demand by any Major Holder, Loral Skynet is required to file a shelf registration statement with the Securities and Exchange Commission covering the Loral Skynet Series A 12% Preferred Stock or Skynet Notes subject to the Registration Rights Agreement; provided that Loral Skynet shall in no event be required to effect more than one shelf registration statement with respect to the Loral Skynet Series A 12% Preferred Stock and more than one shelf registration statement with respect to the Skynet Notes. All rights granted under the Registration Rights Agreement shall terminate with respect to any Registration Rights Holder at such time as such Registration Rights Holder ceases to own any Registrable Securities and the entire Registration Rights Agreement shall terminate when all Registration Rights Holders cease to own any Registrable Securities.
SS/L LETTER OF CREDIT FACILITY
As of the Effective Date, SS/L entered into the following agreements:
(i) an Amended and Restated Letter of Credit Reimbursement Agreement (the
"Letter of Credit Agreement"), dated as of November 21, 2005, by and between
SS/L and JPMorgan Chase Bank, and attached hereto as Exhibit
10.10 and incorporated herein by reference and (ii) an Amended and Restated Cash Collateral Agreement (the "Cash Collateral Agreement"), dated as of November 21, 2005, by and between SS/L and JPMorgan Chase Bank and attached hereto as Exhibit 10.11 and incorporated herein by reference.
Material terms and conditions of the Letter of Credit Agreement and the Cash Collateral Agreement are described in Item 2.03 of this Form 8-K and incorporated herein by reference.
EMPLOYMENT AGREEMENTS
As of the Effective Date, (i) New Loral entered into employment agreements with Bernard L. Schwartz and the following executive officers (the "Loral Executives"): Avi Katz, Richard J. Townsend and Eric J. Zahler; and (ii) SS/L entered into an employment agreement with its President, C. Patrick DeWitt. In addition, New Loral on the Effective Date entered into similar employment agreements with nine other members of management of the Company, and SS/L entered into a similar employment agreement with one other member of its management. The employment agreement of Bernard Schwartz is attached hereto as Exhibit 10.1 and incorporated by reference herein. The employment agreements for the Loral Executives are substantially identical. A form of the employment agreement for the Loral Executives is attached hereto as Exhibit 10.2 and incorporated by reference herein. The employment agreement for Mr. DeWitt is attached hereto as Exhibit 10.3 and incorporated by reference herein.
Bernard L. Schwartz
Pursuant to Mr. Schwartz's employment agreement he serves as the Chief Executive Officer and Chairman of the Board of Directors. The term of Mr. Schwartz's employment agreement will expire on November 21, 2006.
Mr. Schwartz receives an annual base salary of $1,887,875, which will be increased, effective April 22, 2006, by a percentage at least equal to the percentage change during 2005 in the Annual Average All Items Index of the U.S. City Average Consumer Price Index for All Urban Consumers, as published the U.S. Bureau of Labor Statistics. The employment agreement also provides that Mr. Schwartz is a participant in the Management Incentive Bonus Program of New Loral, with a target annual bonus of forty-two and one-half percent (42.5%) of his annual salary. Mr. Schwartz is entitled to participate in any benefit plans provided generally to similarly situated employees. In addition, New Loral is required to obtain life insurance coverage for Mr. Schwartz equal to the lesser of $11,000,000 or the maximum amount of death benefit that can be obtained for an annual premium of $300,000.
Mr. Schwartz is also entitled to a benefit under the Supplemental Executive Retirement Plan ("SERP"), as discussed below in "Amendment to Supplemental Executive Retirement Plan for Mr. Schwartz".
Upon Mr. Schwartz's death or permanent disability during the contract term, Mr. Schwartz is entitled to, among other payments, his accrued and unpaid bonus for the preceding year, a pro rated annual bonus for the year in which such death or permanent disability occurred, and in the case of his death, salary through the end of the month.
In the event, during the contract term, Mr. Schwartz's employment is terminated by New Loral without "cause" or Mr. Schwartz resigns for "good reason" (as such terms are defined in his employment agreement), Mr. Schwartz will be entitled to a severance payment, in a lump sum, of $2,000,000, plus the remaining base salary he would have earned had he remained employed through the end of the contract term. In addition, Mr. Schwartz will be entitled to any accrued and unpaid annual bonus for the preceding year and a prorated annual bonus for the year in which any such termination of employment occurs. Mr. Schwartz will also be entitled to coverage under New Loral's medical, dental and life insurance in effect immediately prior to such termination until the first anniversary of such termination or, if earlier, the date he
commences new employment and is eligible for comparable benefits. Mr. Schwartz's severance payments and benefits are contingent upon the execution of a release.
During the term of Mr. Schwartz's employment with New Loral and for a twelve-month period following a termination of employment during the term of the agreement, Mr. Schwartz is restricted from (i) engaging in competitive activities, (ii) directly or indirectly soliciting current and certain former employees of New Loral or any of its affiliates and (iii) knowingly soliciting, directly or indirectly, any customers or suppliers within the twelve-month period prior to such termination of employment to terminate or diminish their relationship with New Loral or any of its affiliates. In addition, Mr. Schwartz may not disclose confidential information of New Loral.
SS/L and Loral Skynet have agreed to guarantee the payment and performance of New Loral's obligations under the employment contract with Mr. Schwartz.
Other Executive Officers
Each of the employment agreements with the Loral Executives and the employment agreement with Mr. C. Patrick DeWitt (Mr. DeWitt, together with the Loral Executives, the "Executives" and each an "Executive") are substantially identical.
Each of the employment agreements with the Executives is for an initial term of two years and sets forth the Executive's position and duties, annual salary, target annual bonus opportunity, and entitlement to an initial stock option grant (as summarized in the table below). In addition, each Executive is entitled to participate in employee benefits generally provided to similarly situated employees.
Bonus Initial
Executive Position Annual (% of Salary) Option
Salary Grant
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Eric J. Zahler President and Chief Operating Officer $1,248,000 40.0 120,000
Richard J. Townsend Executive Vice President and Chief $881,920 41.0 85,000
Financial Officer
Avi Katz Vice President, General Counsel and $438,048 40.0 50,000
Secretary
C. Patrick DeWitt Vice President, and President of SS/L $485,000 50.0 75,000
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Upon any Executive's death or permanent disability during the contract term, such Executive is entitled to, among other payments, such Executive's accrued and unpaid bonus for the preceding year, a pro rated annual bonus for the year, and any unvested stock options that would have vested on the next vesting date shall vest, and in the case of such Executive's death, salary through the end of the month.
In the event, during the contract term, an Executive's employment is
terminated by New Loral without "cause" or the Executive resigns for "good
reason" (as such terms are defined in the employment contract), the Executive
will be entitled to a severance payment, in a lump sum, of the greater of (i) a
specified percentage of the Executive's 2003 salary, plus one week's pay for
each year of service with New Loral and Old Loral ("Base Severance Amount"), or
(ii) the salary the Executive would have earned from the date the Executive
terminates employment through November 21, 2007. The Base Severance Amount for
each of the Executives as of November 21, 2005, is as follows: Mr. Zahler
($1,750,000), Mr. Townsend ($1,400,000), Mr. Katz ($708,750) and Mr. DeWitt
($425,040). Each Executive will also be entitled to any accrued and unpaid
annual bonus for the preceding year and a prorated annual bonus for the year in
which any such termination of employment occurs, and to be fully vested in all
outstanding stock options and deferred compensation relating thereto. In
addition, the Executive will be entitled to
coverage under New Loral's medical, dental and life insurance plans in effect immediately prior to such termination until the earlier of (i) the expiration of a period determined by dividing the Executive's lump sum severance payment by the Executive's monthly salary rate and (ii) the date the Executive commences new employment and is eligible for comparable benefits. Severance payments and benefits are contingent upon the execution of a release.
During the term of an Executive's employment agreement and for a twelve-month period following a termination of employment during the term of the agreement, each Executive is restricted from (i) engaging in competitive activities, (ii) directly or indirectly soliciting current and certain former employees of New Loral or any of its affiliates and (iii) knowingly soliciting, directly or indirectly, any customers or suppliers within the twelve-month period prior to such termination of employment to terminate or diminish their relationship with New Loral or any of its affiliates. In addition, the Executives may not disclose confidential information of New Loral.
Loral Skynet and SS/L guarantee the payment and performance obligations of New Loral under the employment agreements for the Loral Executives.
INDEMNIFICATION AGREEMENTS
As of the Effective Date, New Loral entered into Officers' and Directors' Indemnification Agreements (each, an "Indemnification Agreement") with the officers of New Loral who entered into employment agreements with New Loral and each director of New Loral (each, an "Indemnitee"), a form of which is attached hereto as Exhibit 10.4 and incorporated by reference herein. The Indemnification Agreement requires New Loral to indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding (as that term is used in the Indemnification Agreement), except with regard to any Proceeding by or in the right of New Loral to procure a judgment in its favor, against all Expenses and Losses (as those terms are used in the Indemnification Agreement), including judgments, fines, penalties and amounts paid in settlement, subject to certain conditions, actually and reasonably incurred in connection with such Proceeding, if the Indemnitee acted in good faith for a purpose which he or she reasonably believed to be in or not opposed to the best interests of New Loral. With regard to Proceedings by or in the right of New Loral, the Indemnification Agreement provides similar terms of indemnification; however no indemnification will be made with respect to any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to New Loral, unless a court determines that the Indemnitee is entitled to indemnification for such portion of the Expenses as the court deems proper, all as detailed further in the Indemnification Agreement. The Indemnification Agreement also requires New Loral to indemnify an Indemnitee where the Indemnitee is successful, on the merits or otherwise, in the defense of any claim, issue or matter therein, as well as in other circumstances delineated in the Indemnification Agreement. The indemnification provided for by the Indemnification Agreement is subject to certain exclusions detailed therein. SS/L and Loral Skynet both guarantee the due and punctual payment of all of New Loral's obligations under the Indemnification Agreement. This brief description of the Indemnification Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the form of Indemnification Agreement.
As of the Effective Date, SS/L entered into an Officers' and Directors' Indemnification Agreement with Mr. DeWitt, its President, attached hereto as Exhibit 10.5 and incorporated by reference herein. The Indemnification Agreement for Mr. DeWitt is substantially identical to the Indemnification Agreement entered into with the Loral officers and directors.
AMENDMENT TO SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN FOR MR. SCHWARTZ
Bernard Schwartz is a participant in the Space Systems/Loral, Inc. Supplemental Executive Retirement Plan (the "SERP") and prior to March 1, 2004 (the "Suspension Date") he was receiving monthly annuity benefits thereunder. Effective as of the Suspension Date benefits payable to Mr.
Schwartz under the SERP were suspended. In connection with the Plan, Mr. Schwartz and New Loral have agreed to amend the SERP to provide for a reduction of Mr. Schwartz's benefit under the SERP to $250,000 annually (the "Reduced Rate"). This amendment will be effective as of the Suspension Date. Pursuant to this amendment, the monthly annuity benefit payable to Mr. Schwartz under the SERP shall resume at the Reduced Rate commencing on the first normal monthly benefit payment date under the SERP following the Effective Date (the "Resumption Date"). The first such monthly payment will include a lump sum payment equal to the benefit amounts owed to Mr. Schwartz under the SERP at the Reduced Rate from the Suspension Date through the Resumption Date. In addition, to the extent that at the time of his death Mr. Schwartz has received $1.5 million or more in benefits under the SERP after the Suspension Date (the "Minimum Amount"), neither his estate nor his beneficiaries will be entitled to any post-retirement death benefits or any other benefits under the SERP following Mr. Schwartz's death. To the extent that Mr. Schwartz has received less than the Minimum Amount from the Suspension Date through the date of his death, following his death his beneficiaries shall be entitled to the post-retirement death benefits provided for under the SERP in an aggregate amount not to exceed the excess of the Minimum Amount over the amount actually received by Mr. Schwartz from the Suspension Date through the date of his death. This amendment relates solely to the participation of and benefits payable to Mr. Schwartz under the SERP and has no effect on the participation of or benefits payable to any other participant under the SERP.
A copy of the amendment to the SERP is attached as Exhibit 10.6 and is incorporated herein by reference.
STOCK INCENTIVE PLAN
On the Effective Date, the Loral Space & Communications Inc. 2005 Stock Incentive Plan (the "Stock Incentive Plan") became effective pursuant to the Plan. The purpose of the Stock Incentive Plan is to attract, retain, motivate and reward employees, directors and other service providers who are providing substantial services to New Loral and to promote the creation of long-term value for stockholders of New Loral.
The Stock Incentive Plan allows for the grant of several forms of stock-based compensation awards including stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses and other stock-based awards (collectively, the "Awards"). The total number of shares of New Loral Common Stock reserved and available for delivery in connection with Awards under the Stock Incentive Plan is 1,390,452 shares; provided, however, that the number of shares available is subject to adjustment for recapitalization, merger, and other similar events. In addition, shares of New Loral Common Stock that expire, are forfeited or canceled, or withheld in payment of the exercise price or taxes relating to an Award, will again be available for Awards under the Stock Incentive Plan.
The Compensation Committee of New Loral (the "Compensation Committee"), will administer the Stock Incentive Plan. The Compensation Committee may select persons to receive Awards, determine the type and size of such Awards and determine the number of shares covered by the Awards; provided, however, that in no event may options or stock appreciation rights be granted to any one individual in any calendar year in excess of 500,000 shares. The Compensation Committee also has the authority to interpret and construe the Stock Incentive Plan and any Award agreements and will make all other decisions necessary or advisable for the administration of the Stock Incentive Plan
The Stock Incentive Plan provides for an automatic initial grant of options (the "Automatic Option Grant") to purchase 1,390,452 shares of New Loral Common Stock to certain designated individuals on the date that is thirty (30) days following the Effective Date (the "Grant Date"). Twenty-five percent (25%) of the Automatic Option Grant will vest on each of the first four anniversaries of the Effective Date, subject to earlier vesting upon certain corporate transactions, as discussed below, or upon a termination of employment without Cause or for Good Reason, each, as defined in the Award holder's employment agreement, if such Award holder is party to an employment agreement, and if not as defined in the Stock Incentive Plan. The Automatic Option Grant will have an exercise price per share equal to
the greater of $19 or the fair market value of a share of New Loral Common Stock on the Grant Date and will expire seven years following the Grant Date, subject to earlier expiration, in accordance with the Stock Incentive Plan, following the Award holder's termination of employment.
If New Loral undergoes a Change of Control (as defined in the Stock Incentive Plan), all outstanding Awards will become immediately vested and exercisable, any restrictions on such Awards will lapse and all such Awards will become immediately payable or subject to settlement. In the event of a Change in Control, the Compensation Committee may cancel any or all outstanding Awards in exchange for a cash payment to each Award holder having a value equal to the value of each such Award at the time of such Change in Control (or without any payment in the event that an outstanding Award has no value at the time of such Change in Control).
Following a sale of all or substantially all of the common stock or assets of Loral Skynet (a "Skynet Sale Event") or SS/L (a "SS/L Sale Event"), all outstanding Awards held by employees or service providers of Loral Skynet or SS/L, as applicable, will become immediately vested and exercisable, any restrictions on such Awards will lapse and all such Awards will become immediately payable or subject to settlement. In addition, options held by employees or service providers of Loral Skynet or SS/L, as applicable, will remain exercisable following the sale for the shorter of (i) one year following the sale or (ii) the remaining term of the stock option as set forth in the applicable Award Agreement. For employees of New Loral assigned to New Loral's corporate headquarters, if the Skynet Sale Event of SS/L Sale Event occurs on or prior to the first anniversary of the Effective Date, fifty percent (50%) of all outstanding unvested Awards held by such employees will become immediately vested and exercisable, any restrictions on such Awards will lapse and all such Awards will become immediately payable or subject to settlement. If such sale occurs after the first anniversary but on or prior to the second anniversary of the Effective Date, one-third (1/3) of all outstanding unvested Awards held by employees of New Loral assigned to New Loral's corporate headquarters will become immediately vested and exercisable, any restrictions on such Awards will lapse and all such Awards will become immediately payable or subject to settlement.
The New Loral Board of Directors may amend the Stock Incentive Plan at any time, provided, that any such amendment may not increase the maximum number of shares of New Loral Common Stock which may be issued (other than as a result of an adjustment for recapitalization, merger, and other similar events) without shareholder approval. Additionally, amendments may not impair the rights of any Award holder without such Award holder's written consent. The Stock Incentive Plan will terminate on the day before the tenth anniversary of the date the plan was adopted by the Board of Directors; however, the Stock Incentive Plan will continue to be administered with respect to outstanding Awards until all such Awards have been fully exercised, paid or otherwise expire by their terms.
If the fair market value of a share of New Loral Common Stock on the
Grant Date is greater than $19, an individual selected to receive an Automatic
Option Grant will receive an additional deferred compensation award in an amount
equal to (i) the difference between the fair market value of a share of New
Loral Common Stock on the Grant Date and $19, multiplied by (ii) the number of
shares of New Loral Common Stock underlying such individual's Automatic Option
Grant. The deferred compensation award will be credited to a deferred
compensation bookkeeping account by the Company on behalf of the Award holder.
The deferred compensation award will become vested in the same manner as the
Automatic Option Grant, including vesting on certain terminations of employment
and corporate transactions (as discussed above). The vested portion of the
deferred compensation award will not be payable and distributed to the Award
holder until the earlier of (i) the Award holder's termination of employment,
(ii) a Change of Control of New Loral (as defined in the Stock Incentive Plan),
(iii) a Skynet Sale Event or SS/L Sale Event, but only with respect to employees
or service providers of Loral Skynet or SS/L, as applicable or (iv) seven years
from the Grant Date; provided, however, that in the event that the Award holder
is determined to be a "specified person" (as defined in Section 409A of the
Internal Revenue Code) such distribution may be delayed in accordance with
Section 409A. The value of the deferred compensation account will not be
credited with interest or be subject to any rate of return until the exercise of
all or a portion of the Automatic Option Grant. At such time, the corresponding
portion of
the deferred compensation account will automatically be converted into an
interest-bearing account from the date of exercise of such Automatic Option
Grant through the date of distribution of the deferred compensation award.
Further, while all or a portion of the Automatic Option Grant remains
unexercised and outstanding, the corresponding portion of the deferred
compensation account will be linked to the value of New Loral Stock and be
subject to limited decreases and increases in value as provided in the Award
holder's option agreement. The Company and the Award holder agree to enter into
good faith negotiations to restructure the deferred compensation award if the
Award holder believes that the deferred compensation award fails to comply with
Section 409A.
Copies of the Stock Incentive Plan, a form of Option Agreement for senior management and a form of Option Agreement for non-senior management are attached hereto as Exhibits 10.7, 10.8 and 10.9, respectively, and are incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
SKYNET NOTES
The information set forth under Item 1.01 of this 8-K is incorporated herein by reference. On the Effective Date, Loral Skynet issued the Skynet Notes in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 1145 of the Bankruptcy Code or other exemptions from such registration requirements. The aggregate principal amount of the Skynet Notes issued on the Effective Date totaled $126,000,000. The Skynet Notes are governed by the Indenture between Loral Skynet and the Indenture Trustee. The Skynet Notes mature in 2015, subject, in certain instances, to earlier repayment in whole or in part. The Skynet Notes bear interest at a rate of 14% per annum payable in cash semi-annually, provided that, if the amount of any interest payment would exceed certain thresholds calculated as specified in the Indenture, or under other circumstances at the determination of the Board of Directors of the Company unless two-thirds of the holders of principal amount of the Notes duly object, interest will be paid in kind by the issuance of additional Skynet Notes. The Skynet Notes are guaranteed by certain subsidiaries of Loral Skynet. The obligations of Loral Skynet and the subsidiary guarantors are secured by a first priority lien on certain specified assets of Loral Skynet and the guarantors pursuant to the Security Agreement. The Indenture contains restrictive covenants that limit, subject to certain exceptions, Loral Skynet's and its subsidiaries' ability to take certain actions, including restricted payments, incurrence of debt, incurrence of liens, payment of certain dividends or distributions, issuance or sale of capital stock of subsidiaries, sale of assets, affiliate transactions and sale/leaseback and merger transactions. The Indenture contains events of default relating to (1) Loral Skynet's failure to make payments of principal of or interest on the Skynet Notes when due (subject to a 30-day grace period in the case of interest payments), (2) Loral Skynet's failure to purchase any Skynet Notes when required, (3) Loral Skynet's failure to comply with certain restrictions contained in the Indenture relating to certain merger and sale transactions, (4) Loral Skynet's or certain of its subsidiaries' failure to comply with the covenants or agreements of the Indenture or the Security Agreement (subject in most instances to a 30-day grace period), (5) a payment default by Loral Skynet or certain of its subsidiaries in respect of indebtedness that exceeds $50 million, (6) certain bankruptcy events in respect of Loral Skynet or certain of its subsidiaries, (7) the entry of a judgments against Loral Skynet or certain of its subsidiaries in excess of $50 million that remain outstanding for a period of 30 consecutive days, (8) any subsidiary guarantee ceasing to be in full force and effect or being disaffirmed by the subsidiary guarantor, and (9) the Security Agreement or any other collateral documents ceasing to be in full force and effect.
SS/L LETTER OF CREDIT FACILITY
The information set forth under Item 1.01 of this 8-K is incorporated herein by reference. On the Effective Date, SS/L entered into the $20,000,000 Letter of Credit Agreement with JPMorgan Chase Bank as lender (the "Bank"). The Letter of Credit Agreement provides, among other things, for the amendment and restatement of SS/L's existing Letter of Credit Facility (the "Existing Letter of Credit") such that any existing Letters of Credit issued and outstanding under the Existing Letter of Credit will
become Letters of Credit issued and outstanding under this new Letter of Credit Agreement, and providing that the letter of credit facility will continue to be available to SS/L for issuance of new Letters of Credit under the Letter of Credit Agreement. The letters of credit are available from the Effective Date until the earlier of the termination by SS/L of the $20,000,000 Commitment, or December 31, 2006. Outstanding letters of credit are fully cash collateralized in accordance with the Cash Collateral Agreement.
3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
NEW LORAL COMMON STOCK
The information set forth under Item 1.01 of this 8-K is incorporated herein by reference. Pursuant to the Plan, as of the Effective Date, all of the securities of Old Loral, including, among other securities, the common stock of Old Loral, were extinguished and deemed cancelled. In accordance with the Plan, New Loral issued 20 million shares of Common Stock, par value $0.01 per share (the "Common Stock") on the Effective Date, which shares will be distributed in accordance with the Plan. All of the above shares of Common Stock were issued pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 1145 of the United States Bankruptcy Code.
Pursuant to the Plan, the initial distribution date of the New Loral Common Stock will take place not earlier than fifteen (15) days and no more than thirty (30) days after the Effective Date.
LORAL SKYNET PREFERRED STOCK
The information set forth under Item 1.01 of this 8-K is incorporated herein by reference. On the Effective Date, Loral Skynet Corporation issued 1,000,000 shares of Series A 12% Non-Convertible Preferred Stock, $0.01 par value per share ("Preferred Stock"), which shares will be distributed in accordance with the Plan. The issued shares will have an aggregate liquidation preference of $200,000,000 plus accrued and unpaid dividends and will be distributed to holders of Allowed Claims in Orion Class 4, as such term is used in the Plan. Dividends on the Preferred Stock (if not paid or accrued as permitted under certain circumstances) will be payable in kind (in additional shares of Preferred Stock) if the amount of any dividend payment would exceed certain thresholds calculated as specified in Exhibit A to the Restated Certificate of Incorporation of Loral Skynet, attached hereto as Exhibit 3.3. All of the shares of Preferred Stock were issued pursuant to the exemption from the registration requirements of the Securities Act afforded by Section 1145 of the United States Bankruptcy Code.
The Corporation may (to the extent that there exist at the time assets or funds of the Corporation legally available therefor in accordance with applicable Delaware law) at any time and from time to time, at its option, redeem any or all issued and outstanding shares of the Series A Preferred Stock by paying, in cash, a redemption price for each share of Series A Preferred Stock equal to the sum of (i) the Liquidation Preference and (ii) an amount equal to the amount, if any, of all unpaid dividends accumulated thereon to the date of actual payment of the redemption price, whether or not such dividends have been declared, but only to the extent that any such accrued and unpaid dividends are not reflected in the Liquidation Preference.
5.01 CHANGES IN CONTROL OF REGISTRANT.
The information set forth under the Explanatory Note and Item 3.02 of this Form 8-K is incorporated herein by reference.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
DEPARTURE OF DIRECTORS OF OLD LORAL
As of the Effective Date, the following persons ceased being directors of Old Loral: Bernard L. Schwartz, Robert B. Hodes, Arthur Simon, Eric J. Zahler, Gershon Kekst, Charles Lazarus, Sally Minard, Malvin A. Ruderman, E. Donald Shapiro and Daniel Yankelovich.
DEPARTURE OF DIRECTORS OF NEW LORAL
As of the Effective Date, the following persons ceased being directors of New Loral: Eric J. Zahler and Avi Katz.
ELECTION OF DIRECTORS
As of the Effective Date, the following persons became members of the Board of Directors pursuant to and by operation of the Plan: John D. Harkey, Jr., Robert B. Hodes, Dean Olmstead, Arthur L. Simon, and Michael B. Targoff. In addition, pursuant to the Plan, Mark H. Rachesky, Hal Goldstein and Sai Devabhaktuni are expected to become members of the Board of Directors on November 23, 2005. Bernard L. Schwartz remained a director of New Loral.
The following is biographical information regarding the members of New Loral's Board of Directors as of the Effective Date:
John D. Harkey, Jr., 45, is Chairman and Chief Executive Officer of Consolidated Restaurant Companies, Inc. He currently serves on the Board of Total Entertainment Restaurant Corp., Leap Wireless International, Inc., and Pizza Inn. He has over twenty years of experience as a private investor concentrating in the acquisition, consolidation and management of both public and private companies, and has merged or acquired and/or operated companies in a variety of industries. Mr. Harkey holds B.B.A. and J.D. degrees from the University of Texas at Austin and an M.B.A. degree from Stanford University School of Business.
Robert B. Hodes, 79, is presently employed at Willkie Farr & Gallagher LLP where he has served as Counsel since 1995. He began working at the firm in 1949 and became partner in 1956. He was co-chairman at Willkie Farr from 1956-1995. He currently sits on the Board at LCH Investments N.V., Mueller Industries, Inc., RV1 Guaranty Co., Ltd., Active Cremer Foundation, Beaver Dam Sanctuary, Inc. and National Philanthropic Trust. Mr. Hodes holds an A.B. degree from Dartmouth College and an L.L.B. from Harvard University.
Dean Olmstead, 50, currently serves as President of Arrowhead Global Solutions based in Princeton, N.J., and as director of the Arrowhead Board of Advisors. Additionally, he has served as Chairman of Satellite Development LLC since October 2004. From 2001-2004 he worked for SES Global, S.A. as Chairman of SES Global Americas, President and CEO of SES Americom, Inc., Chairman of American Asia-Pacific, and a member of the SES Global Executive Committee. From 1998-2001 he was employed at SES Astra, S.A. where he served as a Member of the SES ASTRA Management Committee and was a director on the Asiasat Board. Mr. Olmstead holds a Ph.D. in Economics from American University, an M.A. degree in Engineering-Economic Systems from Stanford University, and a B.A. degree from Western Washington University.
Arthur L. Simon, 73, was a partner at Coopers & Lybrand L.L.P. from 1968 to 1994 and currently is an independent consultant. He has been a director at L-3 Communications Corporation since 2000 and was on the Board of Old Loral since 1996. Mr. Simon holds a B.S. from Bucknell University and is a Certified Public Accountant in New York State (membership currently inactive).
Bernard L. Schwartz, 79, is Chairman of the Board and Chief Executive Officer of New Loral. Prior to the creation of Old Loral in 1996, Mr. Schwartz served for 24 years as chairman of Loral Corporation, a Fortune 200 designer and manufacturer of advanced, state-of-the-art defense systems and hardware. Mr. Schwartz is a member of the board of directors of K&F Industries, Inc. and Satelites Mexicanos, S.A. Mr. Schwartz is extensively involved in educational initiatives, philanthropic activities
in the medical field and civic and cultural activities. He is a Trustee of NYU Medical Center and Health System, Thirteen/WNET Educational Broadcasting Corporation and Baruch College Fund. Mr. Schwartz graduated from City College of New York with a B.S. degree in finance and holds an honorary Doctorate of Science degree from the college.
Michael B. Targoff, 61, previously served as President and Chief Operating Officer of Old Loral during 1996-1998. He is a Chairman of the Board and Chairman of the Audit Committee of Communication Power Industries, a director and Chairman of the Audit Committee of Leap Wireless International, Inc., and a director of ViaSat, Inc. and Infocrossing, Inc. He is also Chairman of the Board of three small private telecom companies, and the Founder of Michael B. Targoff & Co., which seeks active or controlling investments in Telecommunications and related industry early stage companies. Prior to joining Old Loral, he was a partner in the law firm of Willkie Farr & Gallagher LLP. Mr. Targoff holds a B.A. degree from Brown University and a J.D. degree from Columbia University School of Law.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.
On the Effective Date, New Loral filed with the Secretary of State of the State of Delaware its Restated Certificate of Incorporation and adopted its Amended and Restated Bylaws, each of which are attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and incorporated herein by reference. The Restated Certificate of Incorporation provides that the total authorized capital stock of the Company is 50,000,000 shares consisting of (i) 40,000,000 shares of Common Stock, $0.01 par value per share, and (ii) 10,000,000 shares of Preferred Stock, $0.01 par value per share. Material terms and conditions of the New Loral Common Stock are described in Item 3.02 of this Form 8-K and incorporated herein by reference.
On the Effective Date, Loral Skynet filed with the Secretary of State of the State of Delaware its Restated Certificate of Incorporation and adopted its Amended and Restated Bylaws, each of which are attached hereto as Exhibit 3.3 and Exhibit 3.4, respectively, and incorporated herein by reference. The Restated Certificate of Incorporation provides that the total number of shares of stock that the Corporation shall have authority to issue is 2,001,000 shares, consisting of 1,000 shares of Common Stock, par value $0.01 per share, and 2,000,000 shares of Preferred Stock, par value $.01 per share, designated as Series A 12% Non-Convertible Preferred Stock with a liquidation preference of $200.00 per share unless otherwise stated in Exhibit A to this Restated Certificate of Incorporation. Material terms and conditions of the Loral Skynet Preferred Stock are described in Item 3.02 of this Form 8-K and incorporated herein by reference.
On the Effective Date, SS/L filed with the Secretary of State of the State of Delaware its Restated Certificate of Incorporation and adopted its Amended and Restated Bylaws, each of which are attached hereto as Exhibit 3.5 and Exhibit 3.6, respectively, and incorporated herein by reference. The Restated Certificate of Incorporation provides that the total number of shares of stock that the Corporation shall have authority to issue is 200,000 shares, consisting of 100,000 shares of Common Stock, par value $0.10 per share, and 100,000 shares of Preferred Stock, par value $0.10 per share.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description ----------- ----------- 3.1 New Loral's Restated Certificate of Incorporation 3.2 New Loral's Amended and Restated Bylaws 3.3 Loral Skynet's Restated Certificate of Incorporation 3.4 Loral Skynet's Amended and Restated Bylaws |
3.5 SS/L's Restated Certificate of Incorporation
3.6 SS/L's Amended and Restated Bylaws
4.1 Indenture in respect of Loral Skynet's 14% Senior
Secured Cash/PIK Notes due 2015
4.2 Security Agreement in respect of Loral Skynet's 14%
Senior Secured Cash/PIK Notes due 2015
4.3 Hong Kong Security Agreement in respect of Loral
Skynet's 14% Senior Secured Cash/PIK Notes due 2015
4.4 Registration Rights Agreement
10.1 Employment Agreement of Bernard L. Schwartz
10.2 Form of Employment Agreement for Loral Executives
10.3 Employment Agreement for C. Patrick DeWitt
10.4 Form of Officers' and Directors' Indemnification
Agreement
10.5 Officers' and Directors' Indemnification Agreement
for C. Patrick DeWitt
10.6 Amendment to Supplemental Executive Retirement Plan
10.7 2005 Stock Incentive Plan
10.8 Form of Option Agreement for Senior Management
10.9 Form of Option Agreement for Non-Senior Management
10.10 Letter of Credit Agreement
10.11 Cash Collateral Agreement
99.1 New Loral's Press Release announcing effectiveness
of the Debtors' Fourth Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy
Code, as modified.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Loral Space & Communications Inc.
November 23, 2005 By: /s/ Avi Katz
------------------------------------------
Name: Avi Katz
Title: Vice President, General Counsel and
Secretary
|
Exhibit Index
Exhibit No. Description
----------- -----------
3.1 New Loral's Restated Certificate of Incorporation
3.2 New Loral's Amended and Restated Bylaws
3.3 Loral Skynet's Restated Certificate of Incorporation
3.4 Loral Skynet's Amended and Restated Bylaws
3.5 SS/L's Restated Certificate of Incorporation
3.6 SS/L's Amended and Restated Bylaws
4.1 Indenture in respect of Loral Skynet's 14% Senior
Secured Cash/PIK Notes due 2015
4.2 Security Agreement in respect of Loral Skynet's 14%
Senior Secured Cash/PIK Notes due 2015
4.3 Hong Kong Security Agreement in respect of Loral
Skynet's 14% Senior Secured Cash/PIK Notes due 2015
4.4 Registration Rights Agreement
10.1 Employment Agreement of Bernard L. Schwartz
10.2 Form of Employment Agreement for Loral Executives
10.3 Employment Agreement for C. Patrick DeWitt
10.4 Form of Officers' and Directors' Indemnification
Agreement
10.5 Officers' and Directors' Indemnification Agreement
for C. Patrick DeWitt
10.6 Amendment to Supplemental Executive Retirement Plan
10.7 2005 Stock Incentive Plan
10.8 Form of Option Agreement for Senior Management
10.9 Form of Option Agreement for Non-Senior Management
10.10 Letter of Credit Agreement
10.11 Cash Collateral Agreement
99.1 New Loral's Press Release announcing effectiveness
of the Debtors' Fourth Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy
Code, as modified.
|
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
LORAL SPACE & COMMUNICATIONS INC.
Loral Space & Communications Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the laws of the State of Delaware, DOES HEREBY CERTIFY that:
1. The name of the Corporation is Loral Space & Communications Inc.
2. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware under the name of Loral Space & Communications Inc. on June 24, 2005.
3. The Corporation has not received any payment for any of its stock.
4. Pursuant to Section 241 and 245 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Certificate of Incorporation of the Corporation.
5. This Restated Certificate of Incorporation was duly authorized and adopted in accordance with the applicable provisions of Sections 241 and 245 of the General Corporation Law of the State of Delaware.
6. The text of the Restated Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
LORAL SPACE & COMMUNICATIONS INC.
* * * * * * * *
ARTICLE I.
The name of the corporation (the "Corporation") is Loral Space & Communications Inc.
ARTICLE II.
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.
ARTICLE III.
Except as provided in Paragraph (d) of Article V of this Restated Certificate of Incorporation, the nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL").
ARTICLE IV.
The total authorized capital stock of the Corporation shall be FIFTY MILLION (50,000,000) shares consisting of (i) FORTY MILLION (40,000,000) shares of Common Stock, $0.01 par value per share ("Common Stock"), and (ii) TEN MILLION (10,000,000) shares of Preferred Stock, $0.01 par value per share ("Preferred Stock").
(a) Common Stock.
(i) Dividends. Subject to the preferences and other rights of the Preferred Stock, if any, the holders of Common Stock shall be entitled to receive dividends when and as declared by the Board of Directors out of funds legally available therefor. Holders of shares of Common Stock shall be entitled to share equally, share for share, in such dividends.
(ii) Liquidation. Subject to the rights, powers and preferences of any outstanding Preferred Stock, in the event of any liquidation, dissolution or winding up of the affairs of the Corporation, voluntary or involuntary, the assets of the Corporation available to stockholders shall be distributed equally per share to the holders of Common Stock.
(iii) Voting. Except as otherwise provided herein or by law, each holder of Common Stock shall be entitled to one vote in respect of each share of Common Stock held of record on all matters submitted to a vote of stockholders.
(b) Preferred Stock. The Preferred Stock may be issued from time to time in one or more series, each of which series shall have such distinctive designation or title and such number of shares as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it. The Board of Directors is further authorized to increase or decrease (but not below the number of shares outstanding) the number of shares of any series of Preferred Stock subsequent to the issuance of shares of that series, except as otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance of such series. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. Except as provided in the resolution or resolutions of the Board of Directors or in any Certificate of Designation or similar certificate creating any series of Preferred Stock or as otherwise provided herein, the shares of Common Stock shall have the exclusive right to vote for the election and removal of directors and for all other purposes.
(c) The Corporation shall not issue non-voting equity securities within the meaning of section 1123 of chapter 11 of title 11 of the United States Code.
ARTICLE V.
(a) In furtherance and not in limitation of the powers conferred by statute, the Bylaws of the Corporation (the "Bylaws") may be made, altered, amended or repealed by the Board of Directors.
(b) In addition to any affirmative vote of the holders of any
particular class or series of the capital stock of the Corporation required by
law or by this Restated Certificate of Incorporation, the affirmative vote of
the holders of not less than eighty percent (80%) in voting power of the
outstanding shares of the Corporation then entitled to vote upon the election of
directors generally, voting together as a single class, shall be required for
(i) the alteration, amendment, or repeal of (x) Paragraphs (b) or (d) of Article
V of this Restated Certificate of Incorporation or (y) Article VII of this
Restated Certificate of Incorporation, or (ii) the alteration, amendment or
repeal of the By-laws of the Corporation by the stockholders of the Corporation.
(c) Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Voting at meetings of stockholders need not be
by written ballot. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws. Except as otherwise provided for or fixed pursuant to the provisions of Paragraph (b) of Article IV of this Restated Certificate of Incorporation relating to the rights of holders of any series of Preferred Stock, no action that is required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders may be effected by written consent of stockholders in lieu of a meeting of stockholders.
(d) For so long as the Corporation owns any shares of Space Systems/Loral, Inc., a Delaware corporation, directly or indirectly, the Corporation shall not cause such shares to be voted in favor of any amendment to or modification of Section 3 of the Restated Certificate of Incorporation of Space Systems/Loral, Inc.
ARTICLE VI.
(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Restated Certificate of Incorporation or the Bylaws, the Board of Directors is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. Subject to Paragraph (f) below, the number of directors of the Corporation shall be fixed from time to time by the Board of Directors, provided, however, that such number shall be no fewer than three (3) and no more than fifteen (15).
(b) The Corporation is to have perpetual existence.
(c) The Board of Directors (other than those directors elected solely by the holders of any series of Preferred Stock provided for or fixed pursuant to the provisions of Paragraph (b) of Article IV hereof, if any (the "Preferred Stock Directors")) shall be divided into three classes to be designated as Class I, Class II and Class III. The number of such directorships shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible. The Class I directors will initially consist of (a) Mr. Bernard L. Schwartz, (b) Mr. Arthur L. Simon and (c) Mr. John D. Harkey, Jr. The Class II directors will initially consist of (a) Mr. Michael B. Targoff, (b) Mr. Robert B. Hodes and (c) Mr. Dean Olmstead. The Class III directors will initially consist of (a) Mr. Mark H. Rachesky, (b) Mr. Hal Goldstein, and (c) Mr. Sai S. Devabhaktuni. These directors, other than any Preferred Stock Directors, will be deemed to have been elected by the shareholders of the Corporation on the date of the filing of this Restated Certificate of Incorporation. The terms of office of the directors initially comprising such classes of directors shall expire at the times of the annual meetings of the stockholders as follows: Class I on the first annual meeting of stockholders following the effectiveness of this Restated Certificate of Incorporation by filing this Restated Certificate of Incorporation with the Secretary of State of the State of Delaware (the "Effective Time"), Class II on the second annual meeting following the Effective Time and Class III on the third annual meeting following the Effective Time, or thereafter in each case when their respective successors are elected and qualified. At subsequent annual elections, other than with
respect to the Preferred Stock Directors, the directors chosen to succeed those whose terms are expiring shall be identified as being of the same class as the directors whom they succeed, and shall be elected for a term ending at the time of the third succeeding annual meeting of stockholders, or thereafter in each case when their respective successors are elected and qualified.
(d) If the number of directors that constitutes the whole Board of Directors is changed in accordance with this Article VI, the majority of the Board of Directors that adopts the change shall also fix and determine the number of directors comprising each class; provided, however, that any increase or decrease in the number of directors shall be apportioned among the classes as equally as possible. No decrease in the number of directors constituting the entire Board of Directors shall have the effect of shortening the term of any incumbent director.
(e) A director, other than a Preferred Stock Director, may be removed from office only for cause and only by the vote of at least two-thirds in voting power of the outstanding stock entitled to vote in an election of directors. Subject to the rights of the holders of shares of any series of Preferred Stock then outstanding, any vacancy on the Board of Directors, however resulting, and any newly created directorship resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class, shall be filled only by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected.
(f) During any period when the holders of any series of Preferred Stock have the right to elect additional directors as provided for or fixed pursuant to the provisions of Paragraph (b) of Article IV hereof, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional director or directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director's successor shall have been duly elected and qualified, or until such director's right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board of Directors in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall forthwith be reduced accordingly.
(g) Elections of directors need not be by written ballot.
(h) In the event that the votes of the directors on any matter voted upon by the Board of Directors are equally divided, the director who is at that time the Vice Chairman of the Board of Directors shall have a second or casting vote on such matter.
ARTICLE VII.
(a) The Corporation shall indemnify to the fullest extent authorized or permitted under and in accordance with the laws of the State of Delaware (as now or hereafter in effect) any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature (including any legislative or self-regulatory proceeding), by reason of the fact that he or she is or was, or had agreed to become or is alleged to have been, a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving, or had agreed to serve or is alleged to have served, at the request of or to further the interests of the Corporation as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or in any other capacity with another corporation or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of the Corporation or of any of its affiliates and any charitable or not-for-profit enterprise (any such person being sometimes referred to hereafter as an "Indemnitee"), or by reason of any action taken or omitted or alleged to have been taken or omitted by an Indemnitee in any such capacity, against expenses (including court costs and attorneys' fees), judgments, damages, fines, penalties, amounts paid in settlement and other liabilities actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom. In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify the Corporation of the commencement thereof, and the Corporation shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful. With respect to service by an Indemnitee on behalf of any employee benefit plan of the Corporation or any of its affiliates, action in good faith in what the Indemnitee reasonably believed to be the best interest of the beneficiaries of the plan shall be considered to be in or not opposed to the best interests of the Corporation. The Corporation shall indemnify an Indemnitee for expenses (including attorneys' fees) reasonably incurred by the Indemnitee in connection with a proceeding successfully establishing his or her right to indemnification, in whole or in part, pursuant to this Article. However, notwithstanding anything to the contrary in this Article, the Corporation shall not be required to indemnify an Indemnitee against expenses incurred in connection with a proceeding (or part thereof) initiated by the Indemnitee against the Corporation (other than as contemplated by the immediately preceding sentence) or any other person who is an Indemnitee unless the initiation of the proceeding was approved by the Board of Directors of the Corporation.
(b) Expenses (including any attorneys' fees) reasonably incurred in investigating, defending or responding to any civil or criminal action, suit, proceeding or investigation in which a current or former director or officer of the Corporation has been named as a defendant, respondent or target, and any appeal therefrom, shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the current or former director or officer of the Corporation to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article VII. Such undertaking shall be accepted by the Corporation without reference to the financial ability of the current or former director or officer of the Corporation to make such repayment.
(c) This indemnification and other rights set forth in this Article VII shall not be exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), contract, agreement, bylaws, vote of stockholders or action of the Board of Directors or otherwise, both as to action in his or her official capacity and as to action in any other capacity while holding office for the Corporation, and nothing contained in this Article VII shall be deemed to prohibit the Corporation from entering into agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article VII.
(d) The right to indemnification and advancement of expenses provided by this Article VII shall continue as to any person who formerly was an officer or director of the Corporation in respect of acts or omissions occurring or alleged to have occurred while he or she was an officer or director of the Corporation and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitees. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. The right of an Indemnitee to indemnification or advances as granted by this Article VII shall be a contractual obligation of the Corporation and, as such, shall be enforceable by the Indemnitee in any court of competent jurisdiction.
(e) In addition to indemnification by the Corporation of current and former officers and directors and advancement of expenses by the Corporation to current and former officers and directors as provided for by the foregoing provisions of this Article VII, the Corporation may, in a manner and to the fullest extent permitted by law, indemnify current and former employees, agents and other persons serving the Corporation and advance expenses to current and former employees, agents and other persons serving the Corporation, in each case as may be authorized by the Board of Directors, and any rights to indemnity or advancement of expenses granted to such persons may be equivalent to, or greater or less than, those provided to directors, officers and employees by this Article VII.
(f) The Corporation may purchase and maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or of another corporation or a limited liability company, partnership, joint venture, trust or other enterprise (including any employee benefit plan) in which the
Corporation has an interest against any expense, liability or loss incurred by the Corporation or such person in his or her capacity as such, or arising out of his or her status as such, whether or not the Corporation would have the power to or is obligated to indemnify such person against such expense, liability or loss. The indemnification and reimbursement of expenses so provided by this Article VII shall not be available to the extent that indemnification or reimbursement has been received by such director or officer under any applicable policy of insurance or otherwise.
(g) No amendment, termination or repeal of this Article VII or the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article VII, shall eliminate or reduce the effect of this Article VII, in respect of any actions, transactions, facts or matter occurring before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause of action, suit, claim, proceeding or investigation arising out of or relating to any actions, transactions, facts or matter which would have given rise to a right of indemnification or right to receive expenses pursuant to this Article VII, if such provision had not been so amended, terminated or repealed or if a provision inconsistent therewith had not been so adopted.
(h) A director shall have no personal liability to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for (i) any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law by the director, (iii) liability under Section 174 of the DGCL or (iv) any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the full extent permitted by the DGCL, as so amended. Any repeal or modification of this Article VII shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to an act or omission of such director occurring prior to such repeal or modification.
(i) Notwithstanding anything to the contrary set forth in this Article VII, and except as provided in clause (iv) below and as provided in the Stipulation and Agreement Among the Debtors and Their Directors and Officers in Respect of Certain Indemnification Claims in In re Loral Space & Communications Ltd. et al., Case Nos. 03-41710 (RDD), 03-41709 (RDD) through 03-41728 (RDD) in the United States Bankruptcy Court for the Southern District of New York, (i) for the purposes of this Article VII, the term "Corporation" shall not include Loral Space & Communications Ltd., a Bermuda company, or any direct or indirect subsidiary thereof that at the time was not or that is not a direct or indirect subsidiary of the Corporation (collectively, "Old Loral"), and the Corporation shall not have obligations pursuant to this Article VII solely by virtue of any assertion by any person, entity or governmental authority or any determination by a court of competent jurisdiction, that it is a successor to Old Loral or any other entity; (ii) the Corporation may, but shall not be required to, indemnify any director or officer of Old Loral, or any person who was serving, or had agreed to serve or is alleged to have served, at the request of or to further the interests of Old Loral as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or
in any other capacity with another corporation or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of Old Loral or of any of its affiliates and any charitable or not-for-profit enterprise, except as specifically set forth in that certain Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 of Loral Space & Communications, Ltd. and its subsidiaries that are a party thereto (as the same may be amended from time to time, the "Plan"); (iii) the Corporation may, but shall not be required to, indemnify any Indemnitee with respect to any events or circumstances occurring prior to the filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on July 11, 2003 by Loral Space & Communications, Ltd. and its subsidiaries that are a party thereto, except as specifically set forth in the Plan; and (iv) the Corporation shall indemnify and hold harmless each Indemnitee from and against and for any and all obligations incurred directly or indirectly by Old Loral with respect to any taxes owed by Old Loral or the Debtors (as defined in the Plan) for the period prior to the Effective Date (as defined in the Plan), including interest and penalties, to any governmental entity and as to which Old Loral or the Debtors are the primary obligor(s), to the full extent provided in Paragraphs (a) through (h) of this Article VII.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be signed and attested by its duly authorized officers on this 21st day of November, 2005.
/s/ Avi Katz
____________________________
Avi Katz
Vice President and Secretary
ATTEST:
/s/ Janet Yeung
_______________________________________
Janet Yeung
Vice President and Assistant Secretary
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EXHIBIT 3.2
LORAL SPACE & COMMUNICATIONS INC.
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. Registered Office and Agent. The registered office of Loral Space & Communications Inc. (the "Corporation") shall be located in the State of Delaware and shall be at such address as shall be set forth in the Restated Certificate of Incorporation. The resident agent of the Corporation at such address shall be as set forth in the Restated Certificate of Incorporation.
Section 2. Principal Office. The principal office for the transaction of the business of the Corporation shall be at such location, within or without the State of Delaware, as shall be designated by the board of directors of the Corporation (the "Board of Directors").
Section 3. Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may otherwise require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for the election of directors and the transaction of any other business properly brought before the meeting will be held on such day in such month, in such city and state and at such time and place as may be designated by the Board of Directors and set forth in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation.
Section 2. Special Meetings. Special meetings of the stockholders for any purpose may be called at any time by any three or more members of the Board of Directors or by its Chairman, or by the Chief Executive Officer and President, and will be called by the Chief Executive Officer and President at the request of the holders of a majority in voting power of the outstanding shares of capital stock generally entitled to vote. The officer or directors calling such a meeting shall direct the Secretary of the Corporation to notify the directors of the time, place and purpose of such meeting forthwith, but in any event not less than five (5) days before
such notice is sent to the stockholders. Special meetings shall be held at such place or places within or without the State of Delaware as shall from time to time be designated by the Board of Directors and stated in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation. At a special meeting, no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.
Section 3. Notice of Meetings. Not less than ten (10) days nor more than fifty (50) days before the date of every stockholder's meeting, the Secretary of the Corporation shall give to each stockholder entitled to vote at such meeting and each other stockholder entitled to notice of the meeting notice stating the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, by mail, by presenting it to him or her personally, by leaving it at his or her residence or usual place of business or by any other lawful means. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his or her post office address as it appears on the records of the Corporation, with postage thereon prepaid. Notice of any adjourned meeting need not be given except by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment or required by law.
Section 4. Waiver of Notice. Any stockholder may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. A stockholder's attendance, in person or by proxy, at a meeting: (i) waives objection to lack of notice or defective notice of the meeting, unless the stockholder or his proxy attends the meeting for the express purpose of objecting at the beginning of the meeting to holding the meeting or transacting business at the meeting because the meeting is not lawfully called or convened; and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder or his proxy objects to considering the matter before it is voted upon.
Section 5. Notice of Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the Corporation's notice of meeting (or any supplement thereto), (b) by or at the direction of the Board of Directors or any committee thereof or (c) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 5 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 5.
(2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 5, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business other than the nominations of persons for election to the Board
of Directors must constitute a proper matter for stockholder action. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the ninetieth (90th) day, nor earlier than the close of business on
the one hundred twentieth (120th) day, prior to the first anniversary of the
preceding year's annual meeting (provided, however, that in the event that the
date of the annual meeting is more than thirty (30) days before or more than
seventy (70) days after such anniversary date, notice by the stockholder must be
so delivered not earlier than the close of business on the one hundred twentieth
(120th) day prior to such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such annual meeting
or the tenth (10th) day following the day on which public announcement of the
date of such meeting is first made by the Corporation). For purposes of the
first annual meeting of stockholders of the Corporation, the first anniversary
of the preceding year's annual meeting shall be deemed to be one year from the
date of the filing of the Restated Certificate of Incorporation of the
Corporation, and the next annual meeting of the stockholders of the Corporation
shall take place not earlier than one (1) year from the date of filing of the
Restated Certificate of Incorporation of the Corporation. In no event shall the
public announcement of an adjournment or postponement of an annual meeting
commence a new time period (or extend any time period) for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth: (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case pursuant to and
in accordance with Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and (ii) such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected; (b) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the text of the proposal or business (including the text of
any resolutions proposed for consideration and in the event that such business
includes a proposal to amend the Bylaws of the Corporation, the language of the
proposed amendment), the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such stockholder,
as they appear on the Corporation's books, and of such beneficial owner, (ii)
the class and number of shares of capital stock of the Corporation which are
owned beneficially and of record by such stockholder and such beneficial owner,
(iii) a representation that the stockholder is a holder of record of stock of
the Corporation entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to propose such business or nomination, and (iv) a
representation whether the stockholder or the beneficial owner, if any, intends
or is part of a group which intends (a) to deliver a proxy statement and/or form
of proxy to holders of at least the percentage of the Corporation's outstanding
capital stock required to approve or adopt the proposal or elect the nominee
and/or (b) otherwise to solicit proxies from stockholders in support of such
proposal or nomination. The foregoing notice requirements of this Section 5
shall be deemed satisfied by a stockholder if the stockholder has notified the
Corporation of his or her intention to present a proposal or nomination at an
annual meeting in compliance with applicable rules and regulations promulgated
under the Exchange Act and such stockholder's
proposal or nomination has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 5 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 5 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (1) by or at the direction of the Board of
Directors or (2) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time the notice provided for
in this Section 5 is delivered to the Secretary of the Corporation, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 5. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder entitled to vote in such election of directors
may nominate a person or persons (as the case may be) for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by paragraph (A)(2) of this Section 5 shall be
delivered to the Secretary at the principal executive offices of the Corporation
not earlier than the close of business on the one hundred twentieth (120th) day
prior to such special meeting and not later than the close of business on the
later of the ninetieth (90th) day prior to such special meeting or the tenth
(10th) day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment or postponement of a special meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above.
(C) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 5 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 5. Except as otherwise provided by law,
the chairman of the meeting shall have the power and duty (a) to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 5 (including whether the stockholder or beneficial owner,
if any, on whose behalf the nomination or proposal is made solicited (or is part
of a group which solicited) or did not so solicit, as the case may be, proxies
in support of such stockholder's nominee or proposal in compliance with such
stockholder's representation as required by clause (A)(2)(c)(iv) of this Section
5) and (b) if any proposed nomination or business was not made or proposed in
compliance with this Section 5, to declare that such nomination shall be
disregarded or that such proposed business shall not be transacted.
Notwithstanding the foregoing provisions of this Section 5, unless otherwise
required by law, if the stockholder (or a qualified representative of the
stockholder) does not appear at the annual or special meeting of stockholders of
the Corporation to present a nomination or proposed business, such nomination
shall be disregarded and such proposed business shall not be transacted,
notwithstanding that proxies in respect of such vote may have been received by
the Corporation. For purposes of this Section 5, to be considered a qualified
representative of the stockholder, a person must be a duly authorized officer,
manager or partner of such stockholder or must be authorized by a writing
executed by such stockholder or an electronic transmission delivered by such
stockholder to act for such stockholder as proxy at the meeting of stockholders
and such person must produce such writing or electronic transmission, or a
reliable reproduction of the writing or electronic transmission, at the meeting
of stockholders.
(2) For purposes of this Section 5, "public announcement" shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 5, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 5. Nothing in this Section 5 shall be deemed to affect any rights (a) of stockholders to request inclusion of proposals or nominations in the Corporation's proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act or (b) of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Restated Certificate of Incorporation.
Section 6. Quorum. Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Corporation issued and outstanding and generally entitled to vote in the election of directors, present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the Restated Certificate of Incorporation or by these Bylaws.
Section 7. Adjournment of Meetings. If less than a quorum is in attendance at the time for which a meeting is called, the meeting may be adjourned by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting, without notice other than announcement at such
meeting, until a quorum is in attendance. Any meeting at which a quorum is present may also be adjourned in like manner and for the amount of time as may be determined by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 8. Voting List. The Secretary of the Corporation will prepare and make, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each stockholder. The list will be available for inspection by any stockholder of record as required by applicable law.
Section 9. Voting. Each stockholder entitled to vote at a meeting of stockholders may vote either in person or authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation.
Except as otherwise provided by the General Corporation Law of the State of Delaware as from time to time in effect, including any successor provisions of law (the "DGCL"), or by the Restated Certificate of Incorporation of the Corporation or any amendments thereto, every stockholder shall at every meeting of the stockholders be entitled to one vote (or such other number of votes as shall be provided in the Restated Certificate of Incorporation, including any certificate of designation, with respect to any class or series of stock) in person or by proxy for each share of common stock registered in his or her name on the record of stockholders. At all meetings of stockholders, all matters will be determined by the affirmative vote of the majority in voting power of shares present in person or by proxy and entitled to vote on the subject matter, except as otherwise provided by statute, applicable stock exchange rules, any rule or regulations applicable to the Corporation or its securities, the Restated Certificate of Incorporation, or these Bylaws and except that directors shall be elected by a plurality vote. Voting at meetings of stockholders need not be by written ballot.
Section 10. Conduct of Meetings. All regular or special meetings of the stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of
the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer, by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. To the maximum extent permitted by law, the presiding person will have the power to set procedural rules governing all aspects of the conduct of the meetings, including, but not limited to, rules respecting the time allotted to stockholders to speak. The Secretary of the Corporation will act as secretary of each meeting. In the absence of the Secretary, the chairman of the meeting will appoint any person to act as secretary of the meeting.
Section 11. Inspectors. The Board of Directors may, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may (and when inspectors are required under applicable law, shall), appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. The inspectors shall determine (i) the number of shares of capital stock of the Corporation outstanding and the voting power of each, (ii) the number of shares represented at the meeting, (iii) the existence of a quorum, and (iv) the validity and effect of proxies. The inspectors shall (a) receive votes, ballots, or consents, (b) hear and determine all challenges and questions arising in connection with the right to vote, (c) count and tabulate all votes, ballots, or consents, (d) determine the results, and (e) do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request, or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. Inspectors need not be stockholders.
Section 12. Certain Rules of Procedure Relating to Stockholder Meetings. The chairman of the meeting shall preside over and conduct the meeting in a fair and reasonable manner, and all questions of procedure or conduct of the meeting shall be decided solely by the chairman of the meeting. The chairman of the meeting shall have all power and authority vested in a presiding officer by law or practice to conduct an orderly meeting. Among other things, the chairman of the meeting shall have the power to (i) adjourn or recess the meeting, (ii) silence or expel persons to ensure the orderly conduct of the meeting, (iii) declare motions or persons out of order, (iv) prescribe rules of conduct and an agenda for the meeting, (v) impose reasonable time limits on questions and remarks by any stockholder, (vi) limit the number of questions a stockholder may ask, (vii) limit the nature of questions and comments to one subject matter at a time as dictated by any agenda for the meeting, (viii) limit the number of speakers or persons addressing the chairman of the meeting or the meeting, (ix) determine when the polls shall be closed, and (x) limit the attendance at the meeting to stockholders of record, and the proxies of such record holders. All stockholder meetings, annual or special, shall be governed in accordance with the rules contained in this Section 12.
ARTICLE III
DIRECTORS
Section 1. Qualifications. Directors of the Corporation need not be stockholders or a resident of the State of Delaware. Each director must have attained the age of majority.
Section 2. Change In Number. If the number of directors that constitutes the whole Board of Directors is changed in accordance with the Restated Certificate of Incorporation, the majority of the Board of Directors that adopts the change shall also fix and determine the number of directors comprising each class; provided, however, that any increase or decrease in the number of directors shall be apportioned among the classes as equally as possible. No decrease in the number of directors constituting the entire Board of Directors shall have the effect of shortening the term of any incumbent director.
Section 3. Resignation of Directors. Any director may resign at any time upon written notice or notice by electronic transmission to the Board of Directors or to the Chief Executive Officer, the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective.
Section 4. Regular Meetings. The Board of Directors will hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the stockholders, provided a quorum of directors is present. Other regular meetings may be held at any time as may be determined from time to time by resolution of the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors may be called by any three or more members of the Board of Directors, the Chairman of the Board of Directors or by the Chief Executive Officer or President.
Section 6. Notice and Place of Meetings. Meetings of the Board of
Directors may be held at the principal office of the Corporation, or at any
other place as is stated in the notice of such meeting. Notice of any special
meeting, and except as the Board of Directors may otherwise determine by
resolution, notice of any regular meeting, will be mailed to each director
addressed to him or her at his residence or usual place of business at least two
(2) days before the day on which the meeting is to be held, or if sent to him or
her at such place by telegraph, cable, electronic transmission or facsimile, or
delivered personally or by telephone, not later than the day before the day on
which the meeting is to be held. No notice of the annual meeting of the Board of
Directors will be required if it is held immediately after the annual meeting of
the stockholders and if a quorum is present.
Section 7. Waiver of Notice. Any director may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. If any director is present at any meeting his or her presence will constitute a waiver of notice, unless the director attends the meeting for the express purpose of objecting at the beginning of the meeting to holding the meeting because the meeting is not lawfully called or convened.
Section 8. Business Transacted at Meetings, etc. Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum is present, whether the business or proposed action is stated in the notice of that meeting or not, unless special notice of such business or proposed action is required by statute.
Section 9. Quorum. Two-thirds of the total number of directors authorized at the time will constitute a quorum. At any meeting at which a quorum is present, except as otherwise provided in the Corporation's Restated Certificate of Incorporation, each director shall have one vote and the vote of a majority of the members present will be the act of the Board of Directors unless the act of a greater number is specifically required by law or by the Restated Certificate of Incorporation or these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 10. Compensation. The directors will receive such compensation and reimbursement as may be determined by the Board of Directors from time to time. Members of special or standing committees of the Board of Directors may be allowed such compensation as may be determined by the Board of Directors for attending committee meetings. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity, as an officer, employee, agent or otherwise, and receiving compensation therefor.
Section 11. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent to the action in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 12. Meetings Through Use of Communications Equipment. Members of the Board of Directors, or any committee designated by the Board of Directors, will, except as otherwise provided by law, the Restated Certificate of Incorporation or these Bylaws, have the power to participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other, and this participation will constitute presence in person at the meeting.
Section 13. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer by the President or in the absence of the foregoing persons by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary, the chairman of the meeting may appoint any person to act as the secretary of the meeting.
Section 14. Boards of Directors of Related Entities. So long as the Corporation continues to own, directly or indirectly, a majority of the outstanding capital stock entitled to vote generally at meetings of Space Systems/Loral, Inc., a Delaware corporation ("SS/L"), and Loral Skynet Corporation, a Delaware corporation ("Skynet"), the Corporation shall cause the board of directors, chairman and vice chairman of the board of directors of each of SS/L and Skynet to be the same as the Board of Directors, Chairman and Vice Chairman of the Board of Directors of the Corporation at all times. Any amendment of this Section 14 by the Board of Directors shall require the affirmative vote of not less than seventy-five percent (75% ) of the Board of Directors of the Corporation.
ARTICLE IV
COMMITTEES
Section 1. Audit Committee. The Board of Directors shall designate the directors to constitute an Audit Committee. The composition, responsibilities and procedures of the Audit Committee shall be as set forth in the Audit Committee Charter, as in effect from time to time pursuant to the resolution of the Board of Directors. Any member of the Audit Committee may be removed at any time, with or without cause, by a resolution of the Board of Directors. Any person ceasing to be a director shall ipso facto cease to be a member of the Audit Committee. Any vacancy in the Audit Committee occurring from any cause whatsoever may be filled from among the directors by a resolution of the Board of Directors.
Section 2. Executive Committee. The Board of Directors shall designate the directors to constitute an Executive Committee of at least three (3) members. The Executive Committee shall include the Chairman and Vice Chairman of the Board of Directors and the Vice Chairman of the Board of Directors shall serve as the Chairman of the Executive Committee. The members of the Executive Committee shall hold office for a term and have such powers and perform such duties as may from time to time be determined or assigned to them, as applicable, by the Board of Directors. Any member of the Executive Committee may be removed at any time, with or without cause, by a resolution of the Board of Directors. Any person ceasing to be a director shall ipso facto cease to be a member of the Executive
Committee. Any vacancy in the Executive Committee occurring from any cause whatsoever may be filled from among the directors by a resolution of the Board of Directors.
Section 3. Other Committees. Other committees may be appointed by the Board of Directors, which committees shall hold office for an amount of time and have powers and perform duties as may from time to time be assigned to them by the Board of Directors. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
Section 4. Alternate Members of Committees. The Board of Directors may designate one or more directors as alternate members of any committee. Any such alternate member may replace any absent or disqualified member at any meeting of the committee. If no alternate committee members have been so appointed to a committee or each such alternate committee member is absent or disqualified, the member or members of such committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Section 5. Committee Rules. Each committee of the Board of Directors may adopt, amend and repeal rules for the conduct of its business and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee and subject to the rules and regulations of the principal stock exchange or securities market on which the Corporation's stock is listed or traded.
Section 6. Resignation and Removal. Any member of a committee may resign at any time. This resignation shall be made in writing or by electronic transmission and will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman of the Board of Directors, Chief Executive Officer, President or Secretary. The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.
Any member of a committee may be removed at any time, with or without cause, by the Board of Directors. Any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors.
Section 7. Quorum. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the members of a committee shall constitute a quorum. The act of a majority of the members of a committee present at any meeting at which a quorum is present will be the act of the committee.
Section 8. Record of Proceedings, etc. Each committee will keep a record of its acts and proceedings, and will report the same to the Board of Directors when and as required by the Board of Directors.
Section 9. Organization, Meetings, Notices, etc. Regular meetings of any committee may be held without notice at such time and place as may be designated from time to time by resolution by the committee and communicated to all members thereof. Special meetings of any committee may be held whenever called by any committee member. Unless otherwise ordered by the Board of Directors, any notice of a meeting of a committee may be given by the Secretary of the Corporation or by the chairman of the committee and will be sufficient if mailed to each member at his residence or usual place of business at least two (2) days before the day on which the meeting is to be held, or if sent to him or her at that place by telegraph, cable, electronic transmission or facsimile, or delivered personally or by telephone not later than twenty-four (24) hours before the time at which the meeting is to be held.
Section 10. Compensation. The members of any committee will be entitled to such compensation as may be allowed them by resolution of the Board of Directors.
ARTICLE V
OFFICERS; CHAIRMAN AND VICE CHAIRMAN
Section 1. Number. The officers of the Corporation shall be a Chief Executive Officer, a President, and may include a Chief Financial Officer, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V. The Board of Directors in its discretion may also elect a Chairman and a Vice Chairman of the Board of Directors, each of which, in the Board of Directors' discretion, may also be an officer of the Corporation. Notwithstanding anything to the contrary in these Bylaws, the Board of Directors shall not elect a Chairman of the Board of Directors unless it shall also have elected a Vice Chairman of the Board of Directors. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of President and Secretary shall be filled as expeditiously as possible. New offices may be created and filled at any meeting of the Board of Directors. The initial Chairman of the Board of Directors shall be Bernard L. Schwartz and the initial Vice Chairman of the Board of Directors shall be Michael B. Targoff, who shall not be an officer of the Corporation.
Section 2. Election, Term of Office and Qualifications. The officers, except as provided in Section 3 of this Article V, will be chosen annually by the Board of Directors. Each officer will, except as otherwise provided in the Bylaws, hold office until his successor is chosen and qualified or until his or her earlier death, incapacity, resignation or removal as hereinafter provided. Except as otherwise provided by law, any number of offices may be held by the same person.
Section 3. Other Officers. Other officers, including one or more additional Vice Presidents, Assistant Secretaries or Assistant Treasurers, may from time to time be appointed by the Board of Directors or an officer or committee of the Corporation vested with such authority, which other officers shall have powers and perform duties as may be assigned to them by the Board of Directors or the officer or committee appointing them.
Section 4. Removal of Officers. Any officer of the Corporation may be removed from office, with or without cause, by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed, but the election of an officer shall not of itself create contractual rights.
Section 5. Resignation. Any officer of the Corporation may resign at any time. This resignation shall be in writing or by electronic transmission and take effect at the time specified in the resignation, or if no time is specified, at the time of its receipt by the Chief Executive Officer, President or Secretary. The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified in the resignation.
Section 6. Filling of Vacancies. A vacancy in any office will be filled by the Board of Directors or by the authority appointing the predecessor in such office.
Section 7. Compensation. The compensation of the officers will be fixed by the Board of Directors, or by any committee upon whom power in that regard may be conferred by the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board of Directors, if any, will be a director of the Corporation, and should he or she cease to be a director, he or she shall ipso facto cease to be Chairman. The Chairman of the Board, if any, shall have power to call special meetings of the stockholders or of the Board of Directors at any time. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board of Directors or as may be provided by law. A director who is not otherwise an officer of the Corporation who is elected to be Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election.
Section 9. Vice Chairman of the Board. The Vice Chairman of the Board, if
any, shall preside at all meetings of the Board of Directors and of the
stockholders at which the Chairman of the Board is not present. The Vice
Chairman of the Board shall have and may exercise such powers as may, from time
to time, be assigned to him or her by the Board of Directors or as may be
provided by law. A director who is not otherwise an officer of the Corporation
who is elected to be Vice Chairman of the Board of Directors shall not be deemed
an officer of the Corporation by virtue of such election. Without limitation to
any other provision in these Bylaws, the Vice Chairman shall have (i) full
access to all information as the Vice Chairman shall request relating to the
Corporation's business and operations and, following notification to the Chief
Executive Officer, all employees of the Corporation and its subsidiaries; and
(ii) the right to bring any matter to the attention of the Board of Directors
for its consideration.
Section 10. Chief Executive Officer. The Chief Executive Officer shall have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she shall be the chief executive officer of the Corporation, and shall have the general direction of the business, affairs and property of the Corporation, and of its several officers, and shall have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Executive Officer.
Section 11. President. The President shall have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she shall assist the Chief Executive Officer (and, in the Chief Executive Officer's absence, act as Chief Executive Officer) in the general direction of the business, affairs and property of the Corporation, and of its several officers, and shall have and exercise all the powers and discharge the duties as usually pertain to the office of President, subject to the direction of the Chief Executive Officer.
Section 12. Vice Presidents. The Vice Presidents, or any of them, shall, subject to the direction of the Board of Directors, at the request of the Chief Executive Officer or in the absence of both the Chief Executive Officer and the President, or in case of their inability to perform their duties from any cause, perform the duties of the Chief Executive Officer and, when so acting, shall have all the powers of, and be subject to all restrictions upon, the Chief Executive Officer. There shall be no duties that are incident to the office of Vice President, other than those which are specifically assigned by the Board of Directors, the President or the Chief Executive Officer.
Section 13. Chief Financial Officer. Subject to the direction of the Board of Directors, the Chief Executive Officer and the President, the Chief Financial Officer shall be responsible for the financial affairs of the Corporation and shall have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Financial Officer.
Section 14. Secretary. The Secretary shall keep the minutes of all meetings of the stockholders and all meetings of the Board of Directors and any committee in books provided for that purpose. Under the supervision of the Chief Executive Officer and the President, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one (1), the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors, the President or the Chief Executive Officer may, from time to time, prescribe. The Secretary shall perform the duties and have all other powers that are incident to the office of Secretary, or as may from time to time be assigned to him or her by the Board of Directors, or as are prescribed by these Bylaws.
Section 15. Treasurer. The Treasurer shall have custody of all the funds and securities of the Corporation which may be delivered into his or her possession. He or she may endorse on behalf of the Corporation for collection, checks, notes and other obligations and shall deposit the same to the credit of the Corporation in a depository or depositories of the Corporation, and may sign all receipts and vouchers for payments made to the Corporation. He or she shall enter or cause to be entered regularly in the books of the Corporation kept for that purpose, full and accurate accounts of all monies received and paid on account of the Corporation and whenever required by the Board of Directors will render statements of the accounts. The Treasurer shall perform the duties and have all other powers that are incident to the office of Treasurer or that are assigned to him or her by the Board of Directors.
Section 16. Other Officers, Assistant Officers and Agents. Officers and assistant officers, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors which is not inconsistent with these Bylaws.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock. Certificates of capital stock shall be in the form approved by the Board of Directors. The certificates shall be numbered in the order of their issue and shall be signed by the Chairman of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, and the seal of the Corporation or a facsimile of the seal shall be impressed or affixed or reproduced on the certificates, provided, however, that (i) the signature of the Chairman of the Board, President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be facsimile and (ii) if such a certificate is manually signed by one officer or manually countersigned (a) by a transfer agent or an assistant transfer agent other than the Corporation or its employee or (b) by a registrar, other than the Corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any certificate or certificates ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before that certificate or certificates are delivered by the Corporation, that certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed that certificate or certificates, or whose facsimile signature or signatures is used thereon have not ceased to be an officer or officers of the Corporation.
Section 2. Registration and Transfer of Shares. The shares of capital stock of the Corporation shall be issued in registered form. The name of each person owning a share of the capital stock of the Corporation shall be entered on the books of the Corporation together with the number of shares held by him, the numbers of the certificates covering such shares and the dates of issue of such certificates. The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their attorneys or legal representatives duly authorized in writing, on surrender and cancellation of certificates for a like
number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require, and accompanied by any necessary stock transfer stamps. A record shall be made of each transfer.
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it and alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representatives, to give the Corporation a bond, in such sum and with such surety or sureties as it may require, to indemnify it against any claim that may be made against it by reason of the issue of the new certificate and against all other liability in the premises, or may remit the owner to any remedy or remedies he or she may have under the laws of the State of Delaware.
Section 4. Transfer Agent and Registrar; Regulations. The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board of Directors, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Registrar and/or Transfer Agent shall have been designated, shall be valid unless countersigned by such Transfer Agent and registered by such Registrar, if any. The Board of Directors shall also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.
Section 5. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and the Corporation may hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the calendar year unless another fiscal year is fixed by resolution of the Board of Directors.
Section 2. Corporate Seal. The corporate seal will be in the form approved by the Board of Directors and may be altered at its pleasure. The corporate seal may be used by causing it or a facsimile of the seal to be impressed or affixed or reproduced or otherwise.
Section 3. Notices. Subject to the requirements of applicable law, any notice required to be given by these Bylaws will be sufficient if given by (i) depositing the same in a post office or letter box in a sealed postpaid wrapper addressed to the person entitled to the notice at his or her address, as the same appears upon the books of the Corporation, (ii) telegraphing or cabling the same to that person at that address, (iii) electronically transmitting to an email address designated upon the books of the Corporation, if any, (iv) facsimile transmission to a number designated upon the books of the Corporation, if any, or (v) any other lawful means; and the notice will be deemed to be given at the time it is mailed, telegraphed, cabled, electronically transmitted, sent by facsimile or sent by such other lawful means.
Section 4. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by an officer or officers, or agent or agents of the Corporation, and in such manner, as shall from time to time be designated by resolution of the Board of Directors.
Section 5. Deposits. All funds of the Corporation will be deposited from time to time to the credit of the Corporation in a bank or banks, trust companies or other depositories as the Corporation may select, and, for the purpose of the deposit, checks, drafts, warrants and other orders for the payment of money which are payable to the order of the Corporation, may be endorsed for deposit, assigned and delivered by any officer of the Corporation, or by agents of the Corporation as the Board of Directors, the Chief Executive Officer or the President may authorize for that purpose.
Section 6. Voting Securities of Other Entities. Except as otherwise ordered by the Board of Directors, any of the Chief Executive Officer, the President and the Treasurer shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the holders of securities of any entity of which the Corporation is a securityholder, and to execute a proxy to any other person to represent the Corporation at any meeting, and at any meeting of the holders of securities of any entity of which the Corporation is a securityholder. The Chief Executive Officer, the President or the Treasurer or the holder of any proxy, as the case may be, shall possess and may exercise any and all rights and powers incident to ownership of the security which the Corporation might have possessed and exercised if present. The Board of Directors may from time to time confer like powers upon any other person or persons.
Section 7. Inconsistent Provisions. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Restated Certificate of Incorporation, the DGCL or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
Section 8. References. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate.
ARTICLE VIII
AMENDMENTS
Except as otherwise provided herein, these Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by the Board of Directors at any regular meeting of the Board of Directors or at any special meeting of the Board of Directors, whether the proposed alteration, amendment, repeal or addition is stated in the notice of that meeting or not, unless special notice of such alteration, amendment, repeal or addition is required by statute. In addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law or by the Restated Certificate of Incorporation, the affirmative vote of the holders of not less than eighty percent (80%) in voting power of the outstanding shares of the Corporation then entitled to vote upon the election of directors generally, voting together as a single class, shall be required for the alteration, amendment, or repeal of the Bylaws or adoption of new Bylaws by the stockholders of the Corporation.
Dated: November 21, 2005
EXHIBIT 3.3
RESTATED
CERTIFICATE OF INCORPORATION
OF
LORAL SKYNET CORPORATION
(formerly known as Loral Orion, Inc.)
Loral Skynet Corporation (the "Corporation"), a corporation organized and existing under and by virtue of the laws of the State of Delaware, DOES HEREBY CERTIFY that:
1. The name of the Corporation is Loral Skynet Corporation.
2. The date of filing of its original Certificate of Incorporation with the Secretary of State was January 22, 1988, and the name under which the corporation was originally incorporated is Orion Satellite Corporation.
3. On July 15, 2003, the Corporation and certain of its affiliates filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") (Lead Case No. 03-41710 (RDD)). This Amended and Restated Certificate of Incorporation amends and restates the original Certificate of Incorporation of the Corporation, as amended to date (the "Certificate of Incorporation"), and has been duly adopted in accordance with Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware (the "DGCL"), pursuant to the authority granted to the Corporation under Section 303 of the DGCL to put into effect and carry out the Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code of the Corporation, et al., as confirmed on July 13, 2005 by order (the "Order") of the Bankruptcy Court. Provision for amending the Certificate of Incorporation is
contained in the Order of the Bankruptcy Court having jurisdiction under the Bankruptcy Code for the reorganization of the Corporation.
4. The text of the Restated Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
RESTATED
CERTIFICATE OF INCORPORATION
OF
LORAL SKYNET CORPORATION
* * * * * * * *
1. The name of the corporation (the "Corporation") is:
Loral Skynet Corporation
2. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
4. The total number of shares of stock which the Corporation shall have authority to issue is 2,001,000 shares, consisting of 1,000 shares of Common Stock, par value $0.01 per share, and 2,000,000 shares of Preferred Stock, par value $.01 per share.
5. The Preferred Stock may be issued from time to time in one or more series, each of which series shall have such distinctive designation or title and such number of shares as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such series of Preferred Stock as may be adopted
from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it. The Board of Directors is further authorized to increase or decrease (but not below the number of shares outstanding) the number of shares of any series of Preferred Stock subsequent to the issuance of shares of that series, except as otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance of such series. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. Except as provided in the resolution or resolutions of the Board of Directors or in any Certificate of Designation or similar certificate creating any series of Preferred Stock or as otherwise provided herein, the shares of Common Stock shall have the exclusive right to vote for the election and removal of directors and for all other purposes.
The Corporation's Series A 12% Non-Convertible Preferred Stock, the designations and authorized number of shares of which are, and the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions of which are set forth in Exhibit A hereto, is hereby expressly authorized and approved and the terms of such Exhibit A are hereby incorporated herein by reference.
6. Ownership of shares of any class or series of capital stock of the Corporation shall not entitle the holders thereof to any preemptive right to subscribe for or purchase or to have offered to them for subscription or purchase any additional shares of capital stock of any class or series of the Corporation or any securities convertible into any class or series of capital stock of the Corporation, whether now or hereafter authorized, however acquired, issued or sold by the Corporation, it being the purpose and intent hereof that the Board
of Directors shall have full right, power and authority to offer for subscription or sell or to make any disposal of any or all unissued shares of the capital stock of the Corporation or any securities convertible into stock or any or all shares of stock or convertible securities issued and thereafter acquired by the Corporation, for such consideration as the Board of Directors in its sole discretion shall determine.
7. The Corporation shall not issue non-voting equity securities within the meaning of section 1123 of chapter 11 of title 11 of the United States Code.
8. In furtherance and not in limitation of the powers conferred by statute, the Bylaws of the Corporation (the "Bylaws") may be made, altered, amended or repealed by the Board of Directors.
9. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Voting at meetings of stockholders need not be by written ballot. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.
10. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Restated Certificate of Incorporation or the Bylaws, the Board of Directors is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. The number of directors of the Corporation shall be fixed from time to time by the stockholders, provided, however, that such number shall be no fewer than three (3) and no more than fifteen (15).
11. In the event that the votes of the directors on any matter voted upon by the Board of Directors are equally divided, the director who is at that time the Vice Chairman of the Board of Directors shall have a second or casting vote on such matter.
12. During any period when the holders of any series of Preferred
Stock have the right to elect additional directors as provided for or fixed
pursuant to the provisions of Section 5 hereof, then upon commencement and for
the duration of the period during which such right continues: (i) the then
otherwise total authorized number of directors of the Corporation shall
automatically be increased by such specified number of directors, and the
holders of such Preferred Stock shall be entitled to elect the additional
director or directors so provided for or fixed pursuant to said provisions, and
(ii) each such additional director shall serve until such director's successor
shall have been duly elected and qualified, or until such director's right to
hold such office terminates pursuant to said provisions, whichever occurs
earlier, subject to his or her earlier death, disqualification, resignation or
removal. Except as otherwise provided by the Board of Directors in the
resolution or resolutions establishing such series, whenever the holders of any
series of Preferred Stock having such right to elect additional directors are
divested of such right pursuant to the provisions of such stock, the terms of
office of all such additional directors elected by the holders of such stock, or
elected to fill any vacancies resulting from the death, resignation,
disqualification or removal of such additional directors, shall forthwith
terminate and the total authorized number of directors of the Corporation shall
forthwith be reduced accordingly.
13. The Corporation is to have perpetual existence.
14. Elections of directors need not be by written ballot.
15. Subject to applicable law, any director (other than that director, if any, elected solely by the holders of any series of Preferred Stock pursuant to the provisions of Section B of Article VI of Exhibit A to this Restated Certificate of Incorporation) may be removed from the Board of Directors, with or without cause, by the holders of two-thirds of the shares of capital stock entitled to vote, either by written consent or consents or at any special meeting of the stockholders called for that purpose, and the office of such director shall forthwith become vacant.
16. a. The Corporation shall indemnify to the fullest extent authorized or permitted under and in accordance with the laws of the State of Delaware (as now or hereafter in effect) any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature (including any legislative or self-regulatory proceeding), by reason of the fact that he or she is or was, or had agreed to become or is alleged to have been, a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving, or had agreed to serve or is alleged to have served, at the request of or to further the interests of the Corporation as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or in any other capacity with another corporation or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of the Corporation or of any of its affiliates and any charitable or not-for-profit enterprise (any such person being sometimes referred to hereafter as an "Indemnitee"), or by reason of any action taken or omitted or alleged to have been taken or omitted by an Indemnitee in any such capacity, against expenses (including court costs and attorneys' fees), judgments, damages, fines, penalties, amounts paid in settlement and other liabilities actually and reasonably incurred by
him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom. In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify the Corporation of the commencement thereof, and the Corporation shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful. With respect to service by an Indemnitee on behalf of any employee benefit plan of the Corporation or any of its affiliates, action in good faith in what the Indemnitee reasonably believed to be the best interest of the beneficiaries of the plan shall be considered to be in or not opposed to the best interests of the Corporation. The Corporation shall indemnify an Indemnitee for expenses (including attorneys' fees) reasonably incurred by the Indemnitee in connection with a proceeding successfully establishing his or her right to indemnification, in whole or in part, pursuant to this Article. However, notwithstanding anything to the contrary in this Article, the Corporation shall not be required to indemnify an Indemnitee against expenses incurred in connection with a proceeding (or part thereof) initiated by the Indemnitee against the Corporation (other than as contemplated by the immediately preceding sentence) or any other person who is an Indemnitee unless the initiation of the proceeding was approved by the Board of Directors of the Corporation.
b. Expenses (including any attorneys' fees) reasonably incurred in investigating, defending or responding to any civil or criminal action, suit, proceeding or investigation in
which a current or former director or officer of the Corporation has been named as a defendant, respondent or target, and any appeal therefrom, shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the current or former director or officer of the Corporation to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Section 16. Such undertaking shall be accepted by the Corporation without reference to the financial ability of the current or former director or officer of the Corporation to make such repayment.
c. This indemnification and other rights set forth in this Section 16 shall not be exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), contract, agreement, bylaws, vote of stockholders or action of the Board of Directors or otherwise, both as to action in his or her official capacity and as to action in any other capacity while holding office for the Corporation, and nothing contained in this Section 16 shall be deemed to prohibit the Corporation from entering into agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Section 16.
d. The right to indemnification and advancement of expenses provided by this Section 16 shall continue as to any person who formerly was an officer or director of the Corporation in respect of acts or omissions occurring or alleged to have occurred while he or she was an officer or director of the Corporation and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitees. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. The right of an Indemnitee to indemnification or
advances as granted by this Section 16 shall be a contractual obligation of the Corporation and, as such, shall be enforceable by the Indemnitee in any court of competent jurisdiction.
e. In addition to indemnification by the Corporation of current and
former officers and directors and advancement of expenses by the Corporation to
current and former officers and directors as provided for by the foregoing
provisions of this Section 16, the Corporation may, in a manner and to the
fullest extent permitted by law, indemnify current and former employees, agents
and other persons serving the Corporation and advance expenses to current and
former employees, agents and other persons serving the Corporation, in each case
as may be authorized by the Board of Directors, and any rights to indemnity or
advancement of expenses granted to such persons may be equivalent to, or greater
or less than, those provided to directors, officers and employees by this
Section 16.
f. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or of another corporation or a limited liability company, partnership, joint venture, trust or other enterprise (including any employee benefit plan) in which the Corporation has an interest against any expense, liability or loss incurred by the Corporation or such person in his or her capacity as such, or arising out of his or her status as such, whether or not the Corporation would have the power to or is obligated to indemnify such person against such expense, liability or loss. The indemnification and reimbursement of expenses so provided by this Section 16 shall not be available to the extent that indemnification or reimbursement has been received by such director or officer under any applicable policy of insurance or otherwise.
g. No amendment, termination or repeal of this Section 16 or the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Section 16, shall
eliminate or reduce the effect of this Section 16, in respect of any actions, transactions, facts or matter occurring before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause of action, suit, claim, proceeding or investigation arising out of or relating to any actions, transactions, facts or matter which would have given rise to a right of indemnification or right to receive expenses pursuant to this Section 16, if such provision had not been so amended, terminated or repealed or if a provision inconsistent therewith had not been so adopted.
h. A director shall have no personal liability to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for (i) any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law by the director, (iii) liability under Section 174 of the DGCL or (iv) any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the full extent permitted by the DGCL, as so amended. Any repeal or modification of this Section 16 shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to an act or omission of such director occurring prior to such repeal or modification.
i. Notwithstanding anything to the contrary set forth in this
Section 16, and except as provided in clause (iv) below and as provided in the
Stipulation and Agreement Among the Debtors and Their Directors and Officers in
Respect of Certain Indemnification Claims in In re Loral Space & Communications
Ltd. et al., Case Nos. 03-41710 (RDD), 03-41709 (RDD) through 03-41728 (RDD) in
the United States Bankruptcy Court for the Southern District of New
York, (i) for the purposes of this Section 16, the term "Corporation" shall not
include Loral Space & Communications Ltd., a Bermuda company, or any direct or
indirect subsidiary thereof that at the time was not or that is not a direct or
indirect subsidiary of the Corporation (collectively, "Old Loral"), and the
Corporation shall not have obligations pursuant to this Section 16 solely by
virtue of any assertion by any person, entity or governmental authority or any
determination by a court of competent jurisdiction, that it is a successor to
Old Loral or any other entity; (ii) the Corporation may, but shall not be
required to, indemnify any director or officer of Old Loral, or any person who
was serving, or had agreed to serve or is alleged to have served, at the request
of or to further the interests of Old Loral as a director, officer, trustee,
appointee, designee, employee, manager, partner, or agent of or in any other
capacity with another corporation or any limited liability company, partnership,
joint venture, trust or other enterprise, including any employee benefit plan of
Old Loral or of any of its affiliates and any charitable or not-for-profit
enterprise, except as specifically set forth in that certain Fourth Amended
Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as
of June 3, 2005 of Loral Space & Communications, Ltd. and its subsidiaries that
are a party thereto (as the same may be amended from time to time, the "Plan");
(iii) the Corporation may, but shall not be required to, indemnify any
Indemnitee with respect to any events or circumstances occurring prior to the
filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code on July 11, 2003 by Loral Space & Communications, Ltd. and its subsidiaries
that are a party thereto, except as specifically set forth in the Plan; and (iv)
the Corporation shall indemnify and hold harmless each Indemnitee from and
against and for any and all obligations incurred directly or indirectly by Old
Loral with respect to any taxes owed by Old Loral or the Debtors (as defined in
the Plan) for the period prior to the Effective Date (as defined in the Plan),
including
interest and penalties, to any governmental entity and as to which Old Loral or the Debtors are the primary obligor(s), to the full extent provided in Paragraphs (a) through (h) of this Section 16.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be signed and attested by its duly authorized officers on this 21st day of November, 2005.
/s/ Avi Katz
____________________________
Avi Katz
Vice President and Secretary
ATTEST:
/s/ Janet Yeung
_______________________________________
Janet T. Yeung
Vice President and Assistant Secretary
|
Exhibit A
Series A 12% Preferred Non-Convertible Preferred Stock
EXHIBIT A
SERIES A 12% NON-CONVERTIBLE PREFERRED STOCK
OF
LORAL SKYNET CORPORATION
There shall be a series of preferred stock, par value $0.01 per share (the "Preferred Stock"), of which the designation and number, the voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions shall be as follows:
Series A 12% Non-Convertible Preferred Stock:
I. Designation and Amount
The designation of this series of shares shall be "Series A 12% Non-Convertible Preferred Stock" (the "Series A Preferred Stock"), par value $0.01 per share; the liquidation preference per share shall be two hundred dollars ($200.00), as adjusted pursuant to Article III, Section B hereof (the "Liquidation Preference"); and the authorized number of shares constituting such series shall be 2,000,000. Shares of Series A Preferred Stock may be issued by the Corporation from time to time by a resolution or resolutions of the Board of Directors.
II. Rank
A. Dividend Rights. With respect to dividend rights, the Series A Preferred Stock shall rank (i) junior to each other class or series of capital stock of the Corporation which by its terms ranks senior to the Series A Preferred Stock as to payment of dividends, (ii) on a parity with each other class or series of capital stock of the Corporation which by its terms ranks on a parity with the Series A Preferred Stock as to payment of dividends, and (iii) prior to all common stock of the Corporation (the "Common Stock"), and, except as specified above, all other classes and series of capital stock of the Corporation now authorized or hereafter issued by the Corporation. With respect to dividend rights, all equity securities of the Corporation to which the Series A Preferred Stock ranks senior, including the Common Stock, are collectively referred to herein as the "Junior Dividend Securities"; all equity securities of the Corporation with which the Series A Preferred Stock ranks on a parity are collectively referred to herein as the "Parity Dividend Securities"; and all equity securities of the Corporation to which the Series A Preferred Stock ranks junior are collectively referred to herein as the "Senior Dividend Securities."
B. Distribution of Assets. With respect to the distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the Series A Preferred Stock shall rank (i) junior to each other class or series of capital stock of the Corporation which by its terms ranks senior to the Series A Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up, (ii) on a parity with each other class or series of capital stock of the Corporation which by its terms ranks on a parity with the Series A Preferred Stock as to distribution of assets upon liquidation, dissolution or winding up of the
Corporation, and (iii) prior to the Common Stock, and, except as specified above, all other classes and series of capital stock of the Corporation now authorized or hereinafter issued by the Corporation. With respect to the distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, all equity securities of the Corporation to which the Series A Preferred Stock ranks senior, including the Common Stock, are collectively referred to herein as "Junior Liquidation Securities" (and, as context requires, together with the Junior Dividend Securities are sometimes referred to herein as the "Junior Securities"); all equity securities of the Corporation to which the Series A Preferred Stock ranks on parity are collectively referred to herein as "Parity Liquidation Securities" (and, as context requires, together with the Parity Dividend Securities are sometimes referred to herein as the "Parity Securities"); and all equity securities of the Corporation to which the Series A Preferred Stock ranks junior are collectively referred to herein as "Senior Liquidation Securities" (and, as context requires, together with the Senior Dividend Securities are sometimes referred to herein as the "Senior Securities").
III. Dividends
A. Mandatory Dividends. Subject to the provisions of this Article III, to the full extent of the assets and funds of the Corporation lawfully available therefor, the Board of Directors shall declare, and the Corporation shall pay to the holders of shares of Series A Preferred Stock dividends at a rate of 12% per annum of the Liquidation Preference, payment of which shall be made in cash except as otherwise provided in this Article III. Dividends shall be paid in semi-annual installments, in arrears, on the fifteenth day of January and July of each year, commencing July 15, 2006, or if any such date is not a Business Day, on the Business Day next preceding such day (each such date, a "Dividend Payment Date"), to holders of record of shares of Series A Preferred Stock as they appear on the stock record books of the Corporation (the "Registered Holders") on the tenth (10th) day prior to the relevant Dividend Payment Date. Dividends shall begin to accumulate on outstanding shares of Series A Preferred Stock from the date of issuance and shall accumulate from day to day whether or not earned or declared until paid. Dividends shall accumulate on the basis of a 360-day year consisting of twelve 30-day months (four 90-day quarters) and the actual number of days elapsed in the period for which dividends are payable.
B. Accumulation. Dividends on the Series A Preferred Stock shall be
cumulative, and from and after any Dividend Payment Date on which any dividend
that has accumulated through such date has not been paid in full, additional
dividends shall accumulate in respect of the amount of such unpaid dividends
(such amount, the "Arrearage") at the annual rate then in effect as provided in
Section A of this Article III as if the unpaid dividends were payable in cash
(but may be paid in cash or PIK Shares pursuant to the terms of this Article
III) and the Liquidation Preference shall be increased by the amount of such
Arrearage until paid. Such additional dividends in respect of any Arrearage
shall accumulate from day to day whether or not earned or declared until the
Arrearage is paid, shall be calculated as of each such successive Dividend
Payment Date and shall constitute an additional Arrearage from and after any
Dividend Payment Date to the extent not paid on such Dividend Payment Date.
References in any Article herein to dividends that have accumulated with respect
to the Series A Preferred Stock shall include the amount, if any, of any
Arrearage together with any dividends accumulated on such Arrearage pursuant to
the immediately preceding two sentences. Additional dividends in respect
of any Arrearage may be declared and paid at any time, in whole or in part, without reference to any regular Dividend Payment Date, to Registered Holders on such record date as may be fixed by the Board of Directors (which record date shall be no less than ten (10) days prior to the corresponding payment date).
C. Limitation on Cash Dividends. Notwithstanding the provisions of
Section A of this Article III, dividends shall not be paid in cash, but rather
shall be paid in additional shares of Series A Preferred Stock (the "PIK
Shares") (except as provided in Section D of this Article III with respect to
the Accrual Determination), if and to the full extent that the amount of such
dividend cash payment to be paid on any Dividend Payment Date would exceed the
amount that equals (x) 50% of the Corporation's 12-month Adjusted EBITDA (as
certified by the Corporation's Chief Financial Officer) for the 12-month period
ending as of the completed fiscal quarter which ended at least 50 days prior to
the date of the Dividend Determination of any such dividend, minus (y) the
amount of interest paid in cash on the Senior Secured Notes on the applicable
Interest Payment Date. For the purpose of this Article III, the value of each
PIK Share shall equal the Liquidation Preference of any such share.
D. Dividend and/or Accrual Determination. Notwithstanding the
provisions of Sections A or B of this Article III, not later than thirty (30)
days prior to any Dividend Payment Date, the Board of Directors shall make the
following determinations: (i) whether any portion or all of the dividend, which
would otherwise be payable in cash in accordance with Sections A, B and C of
this Article III, should be paid in cash or, instead, in PIK Shares (the
"Dividend Determination") and (ii) if the Dividend Determination is to pay any
portion or all of such dividend in PIK Shares, or any or all of the Dividend is
to be paid in PIK Shares pursuant to Section C of this Article III, whether (x)
only the portion of such dividend to be paid in PIK Shares or (y) the whole
dividend if all of such dividend is to be paid in PIK Shares (pursuant to
Section C or Section D of this Article III), if otherwise payable, should be
paid or, instead, not be paid but rather accrue (the "Accrual Determination").
If the Dividend Determination is that any portion or the whole dividend be paid
in cash, then such portion or the whole dividend, as the case may be, shall be
payable only in cash. If the Board makes (x) the Dividend Determination that any
portion or the whole dividend be paid in PIK Shares and/or (y) the Accrual
Determination to accrue and not to pay the portion of such dividend to be paid
in PIK Shares or the whole dividend if all of such dividend is to be paid in PIK
Shares, a notice of such Dividend Determination and/or Accrual Determination, as
the case may be (each a "Determination Notice"), shall be sent to the Registered
Holders not more than thirty (30) nor fewer than fifteen (15) days prior to the
Dividend Payment Date. The Determination Notice shall describe in reasonable
detail, among other things: (i) the Dividend Determination and/or Accrual
Determination, (ii) the methods by which the holders of Series A Preferred Stock
may respond to such Determination Notice in accordance with Section E of this
Article III (including a contact at the Corporation and/or transfer agent, if
any, and the address and facsimile number of each such contact), (iii) the
Dividend Payment Date to which such Determination Notice relates, and (iv) the
Expiration Date.
E. Change of Dividend and/or Accrual Determination. If, within ten
(10) Business Days following the date that a Determination Notice is delivered
to the Registered Holders pursuant to Section A of Article IX, written notice is
received by the Corporation from the Registered Holders of at least two-thirds
(2/3) of the number of then outstanding shares of
Series A Preferred Stock directing that (i) the dividend be paid and not be
accrued and/or (ii) the dividend being paid be paid in cash and not in PIK
Shares, as applicable (each a "Stockholders' Notice"), then, in case of clause
(i), the whole dividend shall be paid and not accrue and, in the case of clause
(ii), the whole dividend shall be paid in cash (which payments shall be in
addition to the delivery of any PIK Shares that are required to be issued
pursuant to Section C of this Article III). If the Stockholders' Notice is not
received by the Corporation by the expiration of such ten (10) Business
Day-period (the "Expiration Date"), and the dividend, or the relevant portion
thereof, as the case may be, shall accrue and/or be paid in PIK Shares, as set
forth in the Determination Notice. If any stockholder's response to a
Determination Notice does not clearly provide the information required in such
response, then such stockholder shall be conclusively deemed to have not
delivered a Stockholders' Notice.
F. Legal Limit on Dividends. The Board of Directors shall declare and the Corporation shall pay all dividends, in the form prescribed by this Article III, to the full extent, but only to such extent, that there exist at the time assets or funds of the Corporation legally available for the payment of dividends in accordance with the DGCL.
G. Method of Payment. Dividends paid on the shares of Series A Preferred Stock in an amount less than the full amount of such dividends at the time accumulated and payable on all outstanding shares of Series A Preferred Stock (and on any Arrearage) shall be allocated pro rata on a share-by-share basis among all such shares then outstanding. Dividends paid in an amount less than the full amount of dividends at the time accumulated and payable on the Series A Preferred Stock (and on any Arrearage) shall be applied first to the earliest dividend which has not theretofore been paid. All cash payments of dividends on the shares of Series A Preferred Stock shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. If a dividend is paid in PIK Shares, no fractional PIK Shares shall be issued, so that the number of PIK Shares issued to each Registered Holder shall be rounded down to the nearest whole number of shares of Series A Preferred Stock and, in lieu of the issuance of any such fractional share, the Corporation shall pay cash in an amount equal to the Liquidation Preference multiplied by such fraction of a share. All dividends paid in PIK Shares shall be deemed issued on the applicable Dividend Payment Date and shall thereupon be duly authorized, validly issued, fully paid and non-assessable and free and clear of all liens, charges, security interests or other encumbrances.
All dividends declared on the Series A Preferred Stock and any Parity Dividend Securities shall be declared and paid pro rata so that the amount of dividends so declared and paid on Series A Preferred Stock and such Parity Dividend Securities shall in all cases bear to each other the same ratio that accumulated dividends (including additional dividends accumulated in respect of such accumulated dividends) on the shares of Series A Preferred Stock and such Parity Dividend Securities bear to each other.
IV. Liquidation Preference
In the event of a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of then-outstanding shares of Series A Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to the stockholders of the Corporation, whether such assets are capital or surplus of any nature,
after and subject to the payment in full of all amounts required to be distributed to the holders of any Senior Liquidation Securities, but before any payment or other distribution shall be made to the holders of any Junior Liquidation Securities, an amount per share equal to the sum of (i) the Liquidation Preference thereof and (ii) an amount equal to the dividends, if any, accumulated thereon to the date of final distribution to such holders, whether or not such dividends are declared, but only to the extent that any such accrued and unpaid dividends are not reflected in the Liquidation Preference. After any such payment in full, the holders of Series A Preferred Stock shall not, as such, be entitled to any further participation in any distribution of assets of the Corporation. All the assets of the Corporation available for distribution to stockholders after payment in full of the liquidation preferences of any Senior Liquidation Securities shall be distributed ratably (in proportion to the full distributable amounts to which holders of Series A Preferred Stock and Parity Liquidation Securities, if any, are respectively entitled upon such dissolution, liquidation or winding up) among the holders of the then-outstanding shares of Series A Preferred Stock and Parity Liquidation Securities, if any, when such assets are not sufficient to pay in full the aggregate amounts payable thereon.
Neither a consolidation or merger of the Corporation with or into any other Person or Persons, nor a sale, conveyance, lease, exchange or transfer of all or part of the Corporation's assets for cash, securities or other property to a Person or Persons shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Article IV. Notice of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable to each holder of shares of Series A Preferred Stock in such circumstances shall be payable, shall be sent to the Registered Holders not less than thirty (30) days prior to any payment date stated therein.
V. Redemption
A. Optional Redemption. The Corporation may (to the extent that there exist at the time assets or funds of the Corporation legally available therefor in accordance with the DGCL) at any time and from time to time, at its option, redeem any or all issued and outstanding shares of the Series A Preferred Stock by paying, in cash, a redemption price for each share of Series A Preferred Stock equal to the sum of (i) the Liquidation Preference and (ii) an amount equal to the amount, if any, of all unpaid dividends accumulated thereon to the date of actual payment of the redemption price, whether or not such dividends have been declared, but only to the extent that any such accrued and unpaid dividends are not reflected in the Liquidation Preference (such sum, the "Redemption Price").
B. Partial Redemptions. In the event that fewer than all the issued and outstanding shares of Series A Preferred Stock are to be redeemed, the number of issued and outstanding shares to be redeemed shall be determined by the Board of Directors and such shares shall be redeemed pro rata (with any fractional shares being rounded to the nearest whole share).
C. Notice and Redemption Procedures. In the event that the Corporation shall redeem shares of Series A Preferred Stock, a notice of such redemption (a "Notice of Redemption") shall be sent to the Registered Holders of the shares of Series A Preferred Stock to be redeemed not more than fifty (50) nor fewer than thirty (30) days prior to the date fixed for
redemption (the "Redemption Date"); provided, however, that failure to give such Notice of Redemption to any holder, or any defect in such Notice of Redemption to any holder shall not affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock held by any other holder. In order to facilitate the redemption of shares of Series A Preferred Stock, the Board of Directors may fix a record date for the determination of the holders of shares of Series A Preferred Stock to be redeemed, in each case, not more than ten (10) days prior to the date the Notice of Redemption is mailed. On or after the Redemption Date, each holder of the shares called for redemption shall surrender the certificate evidencing such shares to the Corporation or to its designated representative as provided and at the place designated in such notice and shall thereupon be entitled to receive payment of the Redemption Price. From and after the Redemption Date, all dividends on shares of Series A Preferred Stock that have been redeemed shall cease to accumulate and all rights of the holders thereof as holders of Series A Preferred Stock shall cease and terminate, except the right to receive the Redemption Price and except that if the Corporation shall default in payment of the Redemption Price on the Redemption Date, all such rights shall continue unless and until such shares are redeemed and such price is paid in accordance with the terms hereof. Each such Redemption Notice shall state: (i) the Redemption Date, (ii) the number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder, (iii) the Redemption Price, (iv) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price, and (iv) that dividends on the shares to be redeemed shall cease to accrue on such Redemption Date.
D. Deposit of Funds. The Corporation shall, no later than 11:00
a.m., New York City time, on any Redemption Date pursuant to this Article V,
deposit with its transfer agent or other redemption agent in the Borough of
Manhattan, The City of New York having a capital and surplus of at least five
hundred million dollars ($500,000,000.00), as a trust fund for the benefit of
the holders of the shares of Series A Preferred Stock to be redeemed, cash that
is sufficient in amount to redeem all of the shares to be redeemed in accordance
with the Notice of Redemption, with irrevocable instructions and authority to
such transfer agent or other redemption agent to pay to the respective holders
of such shares, as evidenced by a list of such holders certified by an officer
of the Corporation, the Redemption Price upon surrender of their respective
share certificates for the shares to be redeemed. Such deposit shall be deemed
to constitute full payment of such shares to the holders, and from and after the
date of such deposit, if the Notice of Redemption has been given, all rights of
the holders of the shares of Series A Preferred Stock that are to be redeemed as
stockholders of the Corporation with respect to such shares, except the right to
receive the Redemption Price upon the surrender of their respective certificates
and all rights under Article IX hereof, shall cease and terminate. In case
holders of any shares of Series A Preferred Stock called for redemption shall
not, within two (2) years after such deposit, claim the cash deposited for
redemption thereof, such transfer agent or other redemption agent shall, upon
demand, pay over to the Corporation the balance so deposited. Thereupon, such
transfer agent or other redemption agent shall be relieved of all responsibility
to the holders thereof and the sole right of such holders, with respect to
shares to be redeemed, shall be to receive the Redemption Price as general
creditors of the Corporation. Any interest accrued on any funds so deposited
shall belong to the Corporation, and shall be paid to it from time to time on
demand.
VI. Voting Rights
A. General. The holders of shares of Series A Preferred Stock shall have no voting rights except as set forth below or as otherwise from time to time required by the DGCL or other applicable law.
B. Additional Director in Certain Circumstances. If on any date the Corporation shall have failed, on two (2) consecutive semi-annual Dividend Payment Dates, to pay in full on such Dividend Payment Dates, dividends due and payable on the Series A Preferred Stock in accordance with Article III hereof (a "Default"), then the number of directors being voted upon for election at the next annual meeting of the stockholders of the Corporation shall, without further action, be increased by one (1), subject to the following provisions of this Section B and of Section C of this Article VI. Upon such increase, the holders of shares of Series A Preferred Stock may, and shall have the exclusive right (the "Additional Director Right"), in addition to the other voting rights set forth herein to, elect one (1) director of the Corporation (the "Additional Director") to the Board of Directors, by a vote of holders of the shares of Series A Preferred Stock voting as a separate class under Section 216(4) of the DGCL. Notwithstanding the foregoing, no vacancy shall be created by increase in the size of the Board of Directors pursuant to this Section B nor shall the holders of Series A Preferred Stock be entitled to exercise the Additional Director Right unless and until, after the Default but prior to the next scheduled annual meeting of stockholders of the Corporation, the Registered Holders of a majority of the outstanding shares of Series A Preferred Stock send written notice to the Corporation indicating their intent to exercise such Additional Director Right (the "Default Notice") and the Corporation fails to cure such Default within forty five (45) days after the Corporation receives the Default Notice. The Additional Director shall continue as a director and such Additional Director Right shall continue until such time as all dividends accumulated on the Series A Preferred Stock, whether or not such dividends are declared, shall have been paid in full as required pursuant to the terms hereof at which time such Additional Director shall cease to be a director, such Additional Director Right of the holders of shares of Series A Preferred Stock shall terminate subject to revesting in the event of each and every subsequent Default and the authorized number of directors, if increased in connection with the Additional Director Right, shall automatically be reduced by one.
C. Election, Term, Vacancy and Removal of Additional Director.
(a) The foregoing rights of holders of shares of Series A Preferred Stock to initially elect an Additional Director as provided in Section B of this Article VI may only be exercised at any annual meeting of stockholders or at any adjournment thereof, and not by written consent in lieu of a meeting.
(b) Each director elected pursuant to Section B of this Article VI shall serve until the next annual meeting at which directors are being voted upon for election or until his or her successor shall be elected and shall qualify, unless and until the Additional Director Right is terminated or the director's term of office shall have otherwise terminated pursuant to the provisions of Section B of this Article VI. In case any vacancy shall occur for the director elected pursuant to Section B of this Article VI before his or her term shall expire, the holders of the shares of Series A Preferred Stock then outstanding and entitled to vote for such director
pursuant to the provisions of Section B hereof, may elect a successor to hold office for the unexpired terms of such vacant directorship. The holders of a majority of the outstanding shares of Series A Preferred Stock, voting as a separate class, shall have the right to remove a director that such holders have elected pursuant to such section without cause at any time and replace such director by electing a replacement director by written consent, or at a special meeting of such holders.
D. Voting by Class on Certain Matters. So long as at least two-thirds (2/3) of the number of shares of Series A Preferred Stock initially issued pursuant the Plan remain outstanding, in addition to any other vote of the holders of Series A Preferred Stock required by this Exhibit A or by applicable law, unless prior to or simultaneously with the consummation of such action the Series A Preferred Stock is redeemed in its entirety in accordance with Section A of Article V hereof, the consent or affirmative vote of the holders of the shares of Series A Preferred Stock, voting as a separate class under Section 216(4) of the DGCL, shall be required before the Corporation may take any action that results in any of the following:
(a) any action that reclassifies any outstanding shares of capital stock of the Corporation into Senior Securities or Parity Securities (or any warrants, rights or options exercisable for or convertible into any Senior Securities or Parity Securities), whether by merger, consolidation or otherwise;
(b) any amendment, alteration or repeal of any provision of the Certificate of Incorporation, whether by merger, consolidation or otherwise, if the amendment, alteration or repeal alters or changes in any materially adverse manner the powers, preferences, rights, privileges or restrictions of the Series A Preferred Stock;
(c) any amendment, waiver or repeal of the powers, preferences, rights, privileges or restrictions of the Series A Preferred Stock, whether by merger, consolidation or otherwise;
(d) any merger or consolidation of the Corporation with or into any Person or any sale by the Corporation of all or substantially all of its assets unless (i) the Corporation is the surviving entity in such transaction, or (ii) the Corporation is not the surviving entity in such transaction but the Series A Preferred Stock is converted into or exchanged for (on a share-for-share basis) shares of preferred stock of the surviving entity (or its direct or indirect parent corporation) having substantially identical (and no less favorable) powers, preferences and rights as the Series A Preferred Stock; and
(e) the declaration by the Board of Directors, and the payment or setting apart for payment by the Corporation of any dividend on any Junior Securities or any payment on account of, or setting apart for payment money or other assets for a sinking or other similar fund for, the repurchase, redemption or other retirement of, any Junior Securities or any warrants, rights or options exercisable for or convertible into any Junior Securities (other than the repurchase, redemption or other retirement of debentures or other debt instruments that are convertible or exchangeable into any Junior Securities), or any distribution in respect of the Junior Securities, either directly or indirectly, and whether in cash, obligations or shares of the Corporation or other property (other than distributions or dividends in Junior Securities to the
holders of Junior Securities), and the purchase or redemption by any direct or
indirect Subsidiary of the Corporation of any Junior Securities or any warrants,
rights, calls or options exercisable for or convertible into any Junior
Securities (other than the repurchase, redemption or other retirement of
debentures or other debt instruments that are convertible or exchangeable into
any Junior Securities) unless prior to or concurrently with such declaration,
payment, setting apart for payment, repurchase, redemption or other retirement
or distribution, as the case may be, all accumulated and unpaid dividends on
shares of the Series A Preferred Stock not paid on the dates provided for in
Section A of Article III hereof (including Arrearages and accumulated dividends
thereon and regardless of whether the Corporation shall have had the right to
elect to defer such payments as provided for in Article III hereof) shall have
been paid. Notwithstanding the foregoing, this paragraph shall not prohibit, and
shall not require the approval of the holders of the Series A Preferred Stock
under this paragraph, for the acquisition, repurchase, exchange, conversion,
redemption or other retirement for value of shares of Series A Preferred Stock
or any Parity Dividend Security by the Corporation in accordance with the terms
of such securities.
VII. Transfer Restrictions.
A. Restrictions. Shares of Series A Preferred Stock may be freely transferred subject to the requirements of applicable law and the express restriction in the following sentence. Unless and until the Corporation is otherwise subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board of Directors may prohibit and refuse to permit the Corporation or its agents to register or otherwise give effect to any purported transfer of shares of Series A Preferred Stock if, (a) in the good faith judgment of the Board of Directors, permitting registration of or otherwise giving effect to such transfer would present the Corporation with an undue risk of becoming subject to the reporting requirements under the Exchange Act, including, without limitation, Section 12(g) of the Exchange Act or otherwise, and (b) the number of holders of such shares is already at least 80% of the number that would subject the Corporation to such reporting requirements.
B. Transfer Restriction Legend. Each certificate representing shares of Series A Preferred Stock shall bear a legend substantially similar to the following:
PURSUANT TO THE RESTATED CERTIFICATE OF INCORPORATION OF LORAL SKYNET CORPORATION (THE "CORPORATION"), UNLESS AND UNTIL THE CORPORATION IS OTHERWISE SUBJECT TO THE REPORTING REQUIREMENTS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THE BOARD OF DIRECTORS OF THE CORPORATION MAY PROHIBIT AND REFUSE TO PERMIT THE CORPORATION OR ITS AGENTS TO REGISTER OR OTHERWISE GIVE EFFECT TO ANY PURPORTED TRANSFER OF THIS SECURITY IF, (A) IN THE GOOD FAITH JUDGMENT OF THE BOARD OF DIRECTORS OF THE CORPORATION, PERMITTING REGISTRATION OF OR OTHERWISE GIVING EFFECT TO SUCH TRANSFER WOULD PRESENT THE CORPORATION WITH AN UNDUE
RISK OF BECOMING SUBJECT TO THE REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT, INCLUDING, WITHOUT LIMITATION, SECTION 12(G) OF THE EXCHANGE ACT OR OTHERWISE, AND (B) THE NUMBER OF HOLDERS OF SUCH SHARES IS ALREADY AT LEAST 80% OF THE NUMBER THAT WOULD SUBJECT THE CORPORATION TO SUCH REPORTING REQUIREMENTS.
The Corporation agrees that the legend set forth above shall be removed and the Corporation shall issue a certificate without such legend to the holder of any shares of Series A Preferred Stock upon which it is stamped if at any time the Corporation registers any security under the Securities Act or is required to file periodic reports under Section 13 of the Exchange Act, for any reason other than by virtue of a transfer of any such shares.
VIII. Definitions
A. Certain Terms Defined in the Indenture. All terms defined herein by reference to the Indenture shall have the respective meanings given to such terms in the Indenture, provided, however, that (a) if after the effectiveness of the Restated Certificate of Incorporation of the Corporation to which this Exhibit A is attached, the Indenture shall be amended to delete the definition of any term defined herein by reference to the Indenture, such term, when used herein, shall have the meaning ascribed thereto in the Indenture immediately prior to such amendment, and (b) if the Indenture shall be terminated or shall otherwise cease to be in full force and effect, any term defined herein by reference to the Indenture shall have the meaning ascribed thereto in the Indenture immediately prior to its termination or the cessation of its effectiveness.
B. Definitions. For the purposes of this Exhibit A, the following terms shall have the meanings indicated:
"Accrual Determination" has the meaning assigned to such term in Section D of Article III hereof.
"Additional Director" has the meaning assigned to such term in
Section B of Article VI hereof.
"Additional Director Right" has the meaning assigned to such term in Section B of Article VI hereof.
"Adjusted EBITDA" shall have the meaning ascribed thereto in the Indenture, and shall be calculated and applied in accordance with the provisions thereof, including, without limitation, any annualizing or proration thereof pursuant to Section 4.01(b)(ii) of the Indenture.
"Affiliate" of a Person means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such other Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of
the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
"Arrearage" has the meaning assigned to such term in Section B of Article III hereof.
"Board of Directors" means the Corporation's Board of Directors, as constituted from time to time.
"Business Day" means any day, other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended from time to time.
"Certificate of Incorporation" means the Certificate of Incorporation of the Corporation, as amended from time to time.
"Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.
"Common Stock" has the meaning assigned to such term in
Section A of Article II hereof.
"Corporation" means Loral Skynet Corporation (f/k/a Loral Orion, Inc.), a Delaware corporation.
"Default" has the meaning assigned to such term in Section B of Article VI hereof.
"Default Notice" has the meaning assigned to such term in
Section B of Article VI hereof.
"Determination Notice" has the meaning assigned to such term in Section D of Article III hereof.
"DGCL" means the General Corporation Law of the State of Delaware.
"Dividend Determination" has the meaning assigned to such term in Section D of Article III hereof.
"Dividend Payment Date" has the meaning assigned to such term in Section A of Article III hereof.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, from time to time, or any replacement act thereof.
"Expiration Date" has the meaning assigned to such term in
Section E of Article III hereof.
"GAAP" means generally accepted accounting principles in the United States of America in effect from time to time as applied by nationally recognized accounting firms.
"Indenture" means that certain Indenture dated as of November 21, 2005 by and between the Company and The Bank of New York, as Trustee, pursuant to which the Company issued the Senior Secured Notes, as such Indenture may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms.
"Interest Payment Date" shall have the meaning ascribed thereto in the Indenture.
"Junior Dividend Securities" has the meaning assigned to such term in Section A of Article II hereof.
"Junior Liquidation Securities" has the meaning assigned to such term in Section B of Article II hereof.
"Junior Securities" has the meaning assigned to such term in
Section B of Article II hereof.
"Liquidation Preference" has the meaning assigned to such term in Article I hereof.
"Notice of Redemption" has the meaning assigned to such term in Section C of Article V hereof.
"Parity Dividend Securities" has the meaning assigned to such term in Section A of Article II hereof.
"Parity Liquidation Securities" has the meaning assigned to such term in Section B of Article II hereof.
"Parity Securities" has the meaning assigned to such term in
Section B of Article II hereof.
"Person" means any individual, corporation, company, association, partnership, limited liability company, joint venture, trust or unincorporated organization, or a government or any agency or political subdivision thereof.
"PIK Shares" has the meaning assigned to such term in Section C of Article III hereof.
"Plan" means that certain Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 of Loral Space & Communications Ltd. and its Subsidiaries that are a party thereto.
"Preferred Stock" has the meaning assigned to such term in the Preamble hereof.
"Redemption Date" has the meaning assigned to such term in
Section C of Article V hereof.
"Redemption Price" has the meaning assigned to such term in
Section A of Article V hereof.
"Registered Holders" has the meaning assigned to such term in
Section A of Article III hereof.
"Securities Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, from time to time, or any replacement act thereof.
"Senior Dividend Securities" has the meaning assigned to such term in Section A of Article II hereof.
"Senior Liquidation Securities" has the meaning assigned to such term in Section B of Article II hereof.
"Senior Secured Notes" means the Company's 14% Senior Secured PIK Notes due 2015 issued pursuant to the Indenture, as such Senior Secured Notes may be amended, restated, supplemented or otherwise modified from time to time in accordance with their terms and the terms of the Indenture.
"Senior Securities" has the meaning assigned to such term in
Section B of Article II hereof.
"Series A Preferred Stock" has the meaning assigned to such term in Article I hereof.
"Stockholder's Notice" has the meaning assigned to such term in Section E of Article III hereof.
"Subsidiary" means as to any Person, any other Person of which more than 50% of the shares of the voting stock or other voting interests are owned or controlled, or the ability to select or elect more than 50% of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries.
"Transfer" means the direct or indirect offer, sale, donation, assignment (as collateral or otherwise), pledge, hypothecation, encumbrance, transfer or disposition, whether by merger or otherwise by operation of law or otherwise, of any security or an agreement to do any of the foregoing.
IX. Miscellaneous
A. Notices. Any notice referred to herein shall be in writing and shall be sent by first class mail, postage prepaid and shall be deemed duly delivered five (5) days after it is sent to the intended recipient. Any notice referred to herein may be given by personal delivery, telecopy or electronic transmission, but no such notice or other communication shall be deemed to have been duly given unless and until it actually is received by the party for whom it is intended. Notices shall be addressed as follows:
(i) if to the Corporation, to its office at 600 Third Avenue, New York, New York 10016 (Attention: General Counsel) or to the transfer agent for the Series A Preferred Stock;
(ii) if to a holder of the Series A Preferred Stock, to such holder at the address of such holder as listed in the stock record books of the Corporation (which may include the records of any transfer agent for the Series A Preferred Stock); or
(iii) to such other address as the Corporation or such holder, as the case may be, shall have designated by notice similarly given.
B. Term. The term of the shares of Series A Preferred Stock shall be perpetual.
C. Reacquired Shares. Any shares of Series A Preferred Stock redeemed, purchased or otherwise acquired by the Corporation, directly or indirectly, in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof (and shall not be deemed to be outstanding for any purpose). All such shares of Series A Preferred Stock shall upon their retirement and upon the filing of an appropriate certificate with the Secretary of State of the State of Delaware, become authorized but unissued shares of Preferred Stock, par value $0.01 per share, of the Corporation and may be reissued as part of another series of Preferred Stock, par value $0.01 per share, of the Corporation subject to the conditions or restrictions on issuance set forth herein.
D. Enforcement. Any registered holder of shares of Series A Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision in this Exhibit A or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
So long as at least two-thirds (2/3) of the number of shares of Series A Preferred Stock initially issued pursuant to the Plan remain outstanding, the Corporation shall not enter into any agreement or instrument, amend or modify any existing agreement, instrument or obligation, or issue any security that expressly prohibits, conflicts or is inconsistent with, or would be breached by, the Corporation's performance of its obligations hereunder, including, without limitation, the payment of any dividend.
E. Transfer Taxes. Except as otherwise agreed upon pursuant to the terms of this Exhibit A and except with respect to the initial issuance of the Series A Preferred Stock
pursuant to the Plan, the Corporation shall pay any and all documentary, stamp or similar issue or transfer taxes and other governmental charges that may be imposed under the laws of the United States of America or any political subdivision or taxing authority thereof or therein in respect of any issue or delivery of PIK Shares or other securities or property issued on account of, shares of Series A Preferred Stock pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be required to pay any such tax or other charge that may be imposed in connection with any transfer involved in the issue or transfer and delivery of any certificate for PIK Shares or other securities or property in a name other than that in which the shares of Series A Preferred Stock are registered and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Corporation the amount of any such tax or has established to the satisfaction of the Corporation that such tax has been paid or is not payable.
F. Transfer Agent. The Corporation may appoint, and from time to time discharge and change, a transfer agent for the Series A Preferred Stock. Upon any such appointment or discharge of a transfer agent, the Corporation shall send notice thereof to each Registered Holder.
G. Record Dates. The Corporation shall establish appropriate record dates with respect to payments and other actions to be made with respect to the Series A Preferred Stock.
H. Amendment. Except as expressly provided herein, any amendment, waiver or repeal of the powers, preferences, rights, privileges or restrictions of the Series A Preferred Stock shall require such consent or affirmative vote of the holders of shares of Series A Preferred Stock as required by the DGCL. Notwithstanding anything to the contrary contained herein, so long as at least two-thirds (2/3) of the number of shares of Series A Preferred Stock initially issued pursuant the Plan remain outstanding, the consent or affirmative vote of the holders of at least a two-thirds (2/3) of the outstanding shares of Series A Preferred Stock, voting as a separate class, shall be required for any amendment of the Certificate of Incorporation or this Exhibit A affecting, directly or indirectly, the payment of dividends on the Series A Preferred Stock.
I. Copy of Indenture. If not otherwise publicly available, upon the written request of any holder of record of shares of Series A Preferred Stock, the Corporation shall furnish to such requesting record holder, at the Corporation's expense, a copy of the Indenture then in effect.
EXHIBIT 3.4
LORAL SKYNET CORPORATION
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. Registered Office and Agent. The registered office of Loral Skynet Corporation, Inc. (the "Corporation") shall be located in the State of Delaware and shall be at such address as shall be set forth in the Restated Certificate of Incorporation. The resident agent of the Corporation at such address shall be as set forth in the Restated Certificate of Incorporation. The Corporation may also have such other offices at such other places, within or without the State of Delaware, as the board of directors of the Corporation (the "Board of Directors") may from time to time designate or the business of the Corporation may require.
Section 2. Principal Office. The principal office for the transaction of the business of the Corporation shall be at such location, within or without the State of Delaware, as shall be designated by the Board of Directors.
Section 3. Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may otherwise require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for the election of directors and the transaction of any other business properly brought before the meeting will be held on such day in such month, in such city and state and at such time and place as may be designated by the Board of Directors and set forth in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation.
Section 2. Special Meetings. Special meetings of the stockholders for any purpose may be called at any time by the Board of Directors or by its Chairman, or by the Chief Executive Officer and President, and will be called by the Chief Executive Officer and President at the request of the holders of a majority in voting power of the outstanding shares of capital stock generally entitled to vote. The officer or directors calling such a meeting shall direct the
Secretary of the Corporation to notify the directors of the time, place and purpose of such meeting forthwith, but in any event not less than five (5) days before such notice is sent to the stockholders. Special meetings shall be held at such place or places within or without the State of Delaware as shall from time to time be designated by the Board of Directors and stated in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation. At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.
Section 3. Notice of Meetings. Not less than ten (10) days nor more than fifty (50) days before the date of every stockholder's meeting, the Secretary of the Corporation shall give to each stockholder entitled to vote at such meeting and each other stockholder entitled to notice of the meeting notice stating the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, by mail, by presenting it to him or her personally, by leaving it at his or her residence or usual place of business or by any other lawful means. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his or her post office address as it appears on the records of the Corporation, with postage thereon prepaid. Notice of any adjourned meeting need not be given except by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment or required by law.
Section 4. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand, or by certified or registered mail, return receipt requested.
Section 5. Waiver of Notice. Any stockholder may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. A stockholder's attendance, in person or by proxy, at a meeting: (i) waives objection to lack of notice or defective notice of the meeting, unless the stockholder or his proxy attends the meeting for the express purpose of objecting at the beginning of the meeting to holding the meeting or transacting business at the meeting because the meeting is not lawfully called or convened; and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder or his proxy objects to considering the matter before it is voted upon.
Section 6. Quorum. Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Corporation issued and outstanding and generally entitled to vote in the election of directors, present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the Restated Certificate of Incorporation or by these Bylaws.
Section 7. Adjournment of Meetings. If less than a quorum is in attendance at the time for which a meeting is called, the meeting may be adjourned by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting, without notice other than announcement at such meeting, until a quorum is in attendance. Any meeting at which a quorum is present may also be adjourned in like manner and for the amount of time as may be determined by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 8. Voting List. The Secretary of the Corporation will prepare and make, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each stockholder. The list will be available for inspection by any stockholder of record as required by applicable law.
Section 9. Voting. Each stockholder entitled to vote at a meeting of stockholders may vote either in person or authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation.
Except as otherwise provided by the General Corporation Law of the State of Delaware as from time to time in effect, including any successor provisions of law (the "DGCL"), or by the Restated Certificate of Incorporation of the Corporation or any amendments thereto, every stockholder shall at every meeting of the stockholders be entitled to one vote (or such other number of votes as shall be provided in the Restated Certificate of Incorporation, including any certificate of designation, with respect to any class or series of stock) in person or by proxy for each share of common stock registered in his or her name on the record of stockholders. At all meetings of stockholders, all matters will be determined by the affirmative vote of the majority in voting power of shares present in person or by proxy and entitled to vote on the subject matter, except as otherwise provided by statute, applicable stock exchange rules,
any rule or regulations applicable to the Corporation or its securities, the Restated Certificate of Incorporation, or these Bylaws and except that directors shall be elected by a plurality vote. Voting at meetings of stockholders need not be by written ballot.
Section 10. Conduct of Meetings. All regular or special meetings of the stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer, by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. To the maximum extent permitted by law, the presiding person will have the power to set procedural rules governing all aspects of the conduct of the meetings, including, but not limited to, rules respecting the time allotted to stockholders to speak. The Secretary of the Corporation will act as secretary of each meeting. In the absence of the Secretary, the chairman of the meeting will appoint any person to act as secretary of the meeting.
Section 11. Certain Rules of Procedure Relating to Stockholder Meetings. The chairman of the meeting shall preside over and conduct the meeting in a fair and reasonable manner, and all questions of procedure or conduct of the meeting shall be decided solely by the chairman of the meeting. The chairman of the meeting shall have all power and authority vested in a presiding officer by law or practice to conduct an orderly meeting.
ARTICLE III
DIRECTORS
Section 1. Qualifications. Directors of the Corporation need not be stockholders or a resident of the State of Delaware. Each director must have attained the age of majority. For so long as Loral Space & Communications Inc., a Delaware corporation ("Loral"), is the owner, directly or indirectly, of one hundred percent (100%) of the outstanding shares of capital stock of the Corporation entitled to vote at meetings of directors, each director of the Corporation (other than that director, if any, elected solely by the holders of any series of Preferred Stock pursuant to the provisions of Section B of Article VI of Exhibit A to the Corporation's Restated Certificate of Incorporation (the "Preferred Stock Director")) must be a director of Loral in order to be qualified to serve as a director of the Corporation. Each director of the Corporation (other than the Preferred Stock Director, if any) shall hold office until the next annual meeting of shareholders or until such earlier date when he or she is no longer a director of Loral or until his or her earlier resignation or removal.
Section 2. Resignation of Directors. Any director may resign at any time upon written notice or notice by electronic transmission to the Board of Directors or to the Chief Executive Officer, the President or the Secretary of the Corporation. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective.
Section 3. Filling of Vacancies. Except as otherwise provided in the Restated Certificate of Incorporation: (i) any vacancy among the directors, occurring from any cause whatsoever, may be filled by a majority of the remaining directors, though less than a quorum, provided, however, that the stockholders removing any director may at the same meeting fill the vacancy caused by such removal, and provided, further, that if the directors fail to fill any such vacancy, the stockholders may at any special meeting called for that purpose fill such vacancy; (ii) in case of any increase in the number of directors, the additional directors may be elected by the directors in office before such increase; and (iii) any person elected to fill a vacancy shall hold office, subject to the right of removal as hereinbefore provided, until the next annual election and until his successor is elected and qualifies.
Section 4. Regular Meetings. The Board of Directors will hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the stockholders, provided a quorum of directors is present. Other regular meetings may be held at any time as may be determined from time to time by resolution of the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors may be called by any three or more members of the Board of Directors, the Chairman of the Board of Directors or by the Chief Executive Officer or President.
Section 6. Notice and Place of Meetings. Meetings of the Board of
Directors may be held at the principal office of the Corporation, or at any
other place as is stated in the notice of such meeting. Notice of any special
meeting, and except as the Board of Directors may otherwise determine by
resolution, notice of any regular meeting, will be mailed to each director
addressed to him or her at his residence or usual place of business at least two
(2) days before the day on which the meeting is to be held, or if sent to him or
her at such place by telegraph, cable, electronic transmission or facsimile, or
delivered personally or by telephone, not later than the day before the day on
which the meeting is to be held. No notice of the annual meeting of the Board of
Directors will be required if it is held immediately after the annual meeting of
the stockholders and if a quorum is present.
Section 7. Business Transacted at Meetings, etc. Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum is present, whether the business or proposed action is stated in the notice of that meeting or not, unless special notice of such business or proposed action is required by statute.
Section 8. Quorum. Two-thirds of the total number of directors authorized at the time will constitute a quorum. At any meeting at which a quorum is present, except as otherwise provided in the Corporation's Restated Certificate of Incorporation, each director shall have one
vote and the vote of a majority of the members present will be the act of the Board of Directors unless the act of a greater number is specifically required by law or by the Restated Certificate of Incorporation or these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Compensation. The directors will receive such compensation and reimbursement as may be determined by the Board of Directors from time to time. Members of special or standing committees of the Board of Directors may be allowed such compensation as may be determined by the Board of Directors for attending committee meetings. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity, as an officer, employee, agent or otherwise, and receiving compensation therefor.
Section 10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent to the action in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 11. Meetings Through Use of Communications Equipment. Members of the Board of Directors, or any committee designated by the Board of Directors, will, except as otherwise provided by law, the Restated Certificate of Incorporation or these Bylaws, have the power to participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and this participation will constitute presence in person at the meeting.
Section 12. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer by the President or in the absence of the foregoing persons by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary, the chairman of the meeting may appoint any person to act as the secretary of the meeting.
ARTICLE IV
COMMITTEES
Section 1. Committees. The Board of Directors may appoint any committee, which committee or committees shall hold office for an amount of time and have powers and perform
duties as may from time to time be assigned to them by the Board of Directors. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
Section 2. Alternate Members of Committees. The Board of Directors may designate one or more directors as alternate members of any committee. Any such alternate member may replace any absent or disqualified member at any meeting of the committee. If no alternate committee members have been so appointed to a committee or each such alternate committee member is absent or disqualified, the member or members of such committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Section 3. Committee Rules. Each committee of the Board of Directors may adopt, amend and repeal rules for the conduct of its business and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee.
Section 4. Resignation and Removal. Any member of a committee may resign at any time. This resignation will be made in writing or by electronic transmission and will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman of the Board of Directors, Chief Executive Officer, President or Secretary. The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.
Any member of these committees may be removed at any time, with or without cause, by the Board of Directors. Any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors.
Section 5. Quorum. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the members of a committee shall constitute a quorum. The act of a majority of the members of a committee present at any meeting at which a quorum is present will be the act of the committee.
Section 6. Record of Proceedings, etc. Each committee will keep a record of its acts and proceedings, and will report the same to the Board of Directors when and as required by the Board of Directors.
Section 7. Organization, Meetings, Notices, etc. Regular meetings of any committee may be held without notice at such time and place as may be designated from time to time by resolution by the committee and communicated to all members thereof. Special meetings of any committee may be held whenever called by any committee member. Unless otherwise ordered by the Board of Directors, any notice of a meeting of a committee may be given by the Secretary of the Corporation or by the chairman of the committee and will be sufficient if mailed to each
member at his residence or usual place of business at least two (2) days before the day on which the meeting is to be held, or if sent to him or her at that place by telegraph, cable, electronic transmission or facsimile, or delivered personally or by telephone not later than twenty-four (24) hours before the time at which the meeting is to be held.
ARTICLE V
OFFICERS AND CHAIRMAN
Section 1. Number. The officers of the Corporation shall be a Chief Executive Officer, a President, and may include a Chief Financial Officer, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V. The Board of Directors in its discretion may also elect a Chairman and a Vice Chairman of the Board of Directors, each of which, in the Board of Directors' discretion, may also be an officer of the Corporation. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of President and Secretary shall be filled as expeditiously as possible. New offices may be created and filled at any meeting of the Board of Directors.
Section 2. Election, Term of Office and Qualifications. The officers, except as provided in Section 3 of this Article V, will be chosen annually by the Board of Directors. Each officer will, except as otherwise provided in the Bylaws, hold office until his successor is chosen and qualified or until his or her earlier death, incapacity, resignation or removal as hereinafter provided. Except as otherwise provided by law, any number of offices may be held by the same person.
Section 3. Other Officers. Other officers, including one or more additional Vice Presidents, Assistant Secretaries or Assistant Treasurers, may from time to time be appointed by the Board of Directors or an officer or committee of the Corporation vested with such authority, which other officers shall have powers and perform duties as may be assigned to them by the Board of Directors or the officer or committee appointing them.
Section 4. Removal of Officers. Any officer of the Corporation may be removed from office, with or without cause, by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed, but the election of an officer shall not of itself create contractual rights.
Section 5. Resignation. Any officer of the Corporation may resign at any time. This resignation shall be in writing or by electronic transmission and take effect at the time specified in the resignation, or if no time is specified, at the time of its receipt by the Chief Executive Officer, President or Secretary. The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified in the resignation.
Section 6. Filling of Vacancies. A vacancy in any office will be filled by the Board of Directors or by the authority appointing the predecessor in such office.
Section 7. Compensation. The compensation of the officers will be fixed by the Board of Directors, or by any committee upon whom power in that regard may be conferred by the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board of Directors, if any, will be a director of the Corporation, and should he or she cease to be a director, he or she shall ipso facto cease to be Chairman. The Chairman of the Board, if any, will have power to call special meetings of the stockholders or of the Board of Directors at any time. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board of Directors or as may be provided by law. A director that is not otherwise an officer of the Corporation that is elected to be Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election.
Section 9. Vice Chairman of the Board. The Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman of the Board is not present. The Vice Chairman of the Board shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board of Directors or as may be provided by law. A director that is not otherwise an officer of the Corporation that is elected to be Vice Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election. Without limitation to any other provision in these Bylaws, the Vice Chairman, if any, shall have (i) full access to all information as the Vice Chairman shall request relating to the Corporation's business and operations and, following notification to the Chief Executive Officer, all employees of the Corporation and its subsidiaries; and (ii) the right to bring any matter to the attention of the Board of Directors for its consideration.
Section 10. Chief Executive Officer. The Chief Executive Officer will have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she will be the chief executive officer of the Corporation, and will have the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Executive Officer.
Section 11. President. The President will have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she will assist the Chief Executive Officer (and, in the Chief Executive Officer's absence, act as Chief Executive Officer) in the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of President, subject to the direction of the Chief Executive Officer.
Section 12. Vice Presidents. The Vice Presidents, or any of them, will, subject to the direction of the Board of Directors, at the request of the Chief Executive Officer or in the absence of both the Chief Executive Officer and the President, or in case of their inability to perform their duties from any cause, perform the duties of the Chief Executive Officer and, when so acting, will have all the powers of, and be subject to all restrictions upon, the Chief Executive Officer. There shall be no duties that are incident to the office of Vice President, other than those which are specifically assigned by the Board of Directors, the President or the Chief Executive Officer.
Section 13. Chief Financial Officer. Subject to the direction of the Board of Directors, the Chief Executive Officer and the President, the Chief Financial Officer shall be responsible for the financial affairs of the Corporation and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Financial Officer.
Section 14. Secretary. The Secretary will keep the minutes of all meetings of the stockholders and all meetings of the Board of Directors and any committee in books provided for that purpose. Under the supervision of the Chief Executive Officer and the President, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one (1), the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors, the President or the Chief Executive Officer may, from time to time, prescribe. The Secretary will perform the duties and have all other powers that are incident to the office of Secretary, or as may from time to time be assigned to him or her by the Board of Directors, or as are prescribed by these Bylaws.
Section 15. Treasurer. The Treasurer will have custody of all the funds and securities of the Corporation which may be delivered into his or her possession. He or she may endorse on behalf of the Corporation for collection, checks, notes and other obligations and will deposit the same to the credit of the Corporation in a depository or depositories of the Corporation, and may sign all receipts and vouchers for payments made to the Corporation. He or she will enter or cause to be entered regularly in the books of the Corporation kept for that purpose, full and accurate accounts of all monies received and paid on account of the Corporation and whenever required by the Board of Directors will render statements of the accounts. The Treasurer will perform the duties and have all other powers that are incident to the office of Treasurer or that are assigned to him or her by the Board of Directors.
Section 16. Other Officers, Assistant Officers and Agents. Officers and assistant officers, other than those whose duties are provided for in these Bylaws, shall have such
authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors which is not inconsistent with these Bylaws.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock. Certificates of capital stock will be in the form approved by the Board of Directors. The certificates will be numbered in the order of their issue and will be signed by the Chairman of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, and the seal of the Corporation or a facsimile of the seal will be impressed or affixed or reproduced on the certificates, provided, however, that (i) the signature of the Chairman of the Board, President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be facsimile and (ii) if such a certificate is manually signed by one officer or manually countersigned (a) by a transfer agent or an assistant transfer agent other than the Corporation or its employee or (b) by a registrar, other than the Corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any certificate or certificates ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before that certificate or certificates are delivered by the Corporation, that certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed that certificate or certificates, or whose facsimile signature or signatures is used thereon have not ceased to be an officer or officers of the Corporation.
Section 2. Registration and Transfer of Shares. The shares of capital stock of the Corporation shall be issued in registered form. The name of each person owning a share of the capital stock of the Corporation shall be entered on the books of the Corporation together with the number of shares held by him, the numbers of the certificates covering such shares and the dates of issue of such certificates. The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their attorneys or legal representatives duly authorized in writing, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require, and accompanied by any necessary stock transfer stamps. A record shall be made of each transfer.
Unless and until the Corporation is otherwise subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Board of Directors may prohibit and refuse to permit the Corporation or its agents to register or otherwise give effect to any purported transfer of shares of the Corporation's Series A 12% Non-Convertible Preferred Stock if, (a) in the good faith judgment of the Board of Directors, permitting registration of or otherwise giving effect to such transfer would present the Corporation with an undue risk of becoming subject to the reporting requirements under the Exchange Act, including, without limitation, Section 12(g) of the Exchange Act, or otherwise and (b) the number of
holders of such shares is already at least 80% of the number that would trigger such reporting requirements.
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock of the Corporation will immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it and alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representatives, to give the Corporation a bond, in such sum and with such surety or sureties as they may require, to indemnify it against any claim that may be made against it by reason of the issue of the new certificate and against all other liability in the premises, or may remit the owner to any remedy or remedies he or she may have under the laws of the State of Delaware.
Section 4. Transfer Agent and Registrar; Regulations. The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board of Directors, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Registrar and/or Transfer Agent shall have been designated, shall be valid unless countersigned by such Transfer Agent and registered by such Registrar, if any. The Board of Directors shall also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.
Section 5. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and the Corporation may hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the calendar year unless another fiscal year is fixed by resolution of the Board of Directors.
Section 2. Corporate Seal. The corporate seal will be in the form approved by the Board of Directors and may be altered at its pleasure. The corporate seal may be used by causing it or a facsimile of the seal to be impressed or affixed or reproduced or otherwise.
Section 3. Notices. Subject to the requirements of applicable law, any notice required to be given by these Bylaws will be sufficient if given by (i) depositing the same in a post office or letter box in a sealed postpaid wrapper addressed to the person entitled to the notice at his or her address, as the same appears upon the books of the Corporation, (ii) telegraphing or cabling the same to that person at that address, (iii) electronically transmitting to an email address designated upon the books of the Corporation, if any, (iv) facsimile transmission to a number designated upon the books of the Corporation, if any, or (v) any other lawful means; and the notice will be deemed to be given at the time it is mailed, telegraphed, cabled, electronically transmitted, sent by facsimile or sent by such other lawful means.
Section 4. Waiver of Notice. Any director may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. If any director is present at any meeting his or her presence will constitute a waiver of notice, unless the director attends the meeting for the express purpose of objecting at the beginning of the meeting to holding the meeting because the meeting is not lawfully called or convened.
Section 5. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation will be signed by an officer or officers, or agent or agents of the Corporation, and in such manner, as will from time to time be designated by resolution of the Board of Directors.
Section 6. Deposits. All funds of the Corporation will be deposited from time to time to the credit of the Corporation in a bank or banks, trust companies or other depositories as the Corporation may select, and, for the purpose of the deposit, checks, drafts, warrants and other orders for the payment of money which are payable to the order of the Corporation, may be endorsed for deposit, assigned and delivered by any officer of the Corporation, or by agents of the Corporation as the Board of Directors, the Chief Executive Officer or the President may authorize for that purpose.
Section 7. Voting Securities of Other Entities. Except as otherwise ordered by the Board of Directors, any of the Chief Executive Officer, the President and the Treasurer shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the holders of securities of any entity of which the Corporation is a securityholder, and to execute a proxy to any other person to represent the Corporation at any meeting, and at any meeting of the holders of securities of any entity of which the Corporation is a securityholder. The Chief Executive Officer, the President or the Treasurer or the holder of any proxy, as the case may be, will possess and may exercise any and all rights and powers incident to ownership of the security which the Corporation might have possessed and exercised if present. The Board of Directors may from time to time confer like powers upon any other person or persons.
Section 8. Inconsistent Provisions. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Restated
Certificate of Incorporation, the
DGCL or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
Section 9. References. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate.
ARTICLE VIII
AMENDMENTS
Except as otherwise provided herein, these Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by the Board of Directors at any regular meeting of the Board of Directors or at any special meeting of the Board of Directors, whether the proposed alteration, amendment, repeal or addition is stated in the notice of that meeting or not, unless special notice of such alteration, amendment, repeal or addition is required by statute.
Dated: November 21, 2005
Exhibit 3.5
RESTATED
CERTIFICATE OF INCORPORATION
OF
SPACE SYSTEMS/LORAL, INC.
Space Systems/Loral, Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the laws of the State of Delaware, DOES HEREBY CERTIFY that:
1. The name of the Corporation is Space Systems/Loral, Inc.
2. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware under the name of Philco Corporation on November 30, 1961.
3. On July 15, 2003, the Corporation and certain of its affiliates filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") (Lead Case No. 03-41710 (RDD)). This Amended and Restated Certificate of Incorporation amends and restates the original Certificate of Incorporation of the Corporation, as amended to date (the "Certificate of Incorporation"), and has been duly adopted in accordance with Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware (the "DGCL"), pursuant to the authority granted to the Corporation under Section 303 of the DGCL to put into effect and carry out the Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code of the Corporation, et al., as confirmed on July 13, 2005 by order (the "Order") of the Bankruptcy Court. Provision for amending the Certificate of Incorporation is
contained in the Order of the Bankruptcy Court having jurisdiction under the Bankruptcy Code for the reorganization of the Corporation.
4. The text of the Restated Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:
RESTATED
CERTIFICATE OF INCORPORATION
OF
SPACE SYSTEMS/LORAL, INC.
********
1. The name of the corporation (the "Corporation") is:
Space Systems/Loral, Inc.
2. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware; provided, however, until the second anniversary of the date of the filing of this Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, the Corporation shall not declare or pay dividends or make or agree to make any other distributions of cash or property in respect of its capital stock, other than to finance its allocable share of ordinary course operating expenses of Loral Space & Communications Inc., a Delaware corporation ("Loral"), and shall not purchase, repay, guarantee, redeem, secure or otherwise provide credit support for the Series A 12% Non-Convertible Preferred Stock or 14% Senior Secured Notes Due 2015 of Loral Skynet Corporation, a Delaware corporation; provided, however, that the foregoing shall not apply to any of the following transactions, which the Corporation shall be permitted to effect solely pursuant to authorization of the Board of Directors which shall have the sole authority to approve
or disapprove in accordance with the Bylaws of the Corporation and applicable law: (i) the Management Agreement by and among Loral, Loral Skynet Corporation, a Delaware corporation ("Loral Skynet"), and the Corporation, dated as of November 21, 2005, as the same may be amended from time to time, (ii) the Shared Services Agreement by and among Loral, Loral Skynet and the Corporation, dated as of November 21, 2005, as the same may be amended from time to time, (iii) any tax sharing agreement with Loral or any of its subsidiaries, (iv) the Officers' and Directors' Indemnification Agreements by and among Loral, Loral Skynet, the Corporation and certain officers and directors of Loral, dated as of November 21, 2005, (v) the Employment Agreements by and among Loral, Loral Skynet, the Corporation and certain officers of Loral, dated as of November 21, 2005; (vi) the assignment by the Corporation to Loral Skynet Network Services, Inc. ("LSNS") or Loral Skynet Corporation ("Loral Skynet") of its right, title and interest in, to and under that certain Transponder Lease Agreement effective as of July 1, 2003 by and between the Corporation and Mabuhay Philippines Satellite Corporation ("Mabuhay"), as well as the Corporation's right to collect and receive certain monies from Mabuhay under that certain Memorandum of Agreement effective as of June 30, 2003 by and among the Corporation, Philippine Long Distance Telephone Company and Mabuhay; (vii) the discharge by the Corporation of LSNS' obligations to make Lease Charges (as defined in that certain Transponder Lease Agreement dated as of January 1, 2001 between Mabuhay and Loral Cyberstar, Inc. (the predecessor in interest to LSNS)) to the Corporation as set forth in that certain Memorandum of Agreement effective as of January 1, 2001 by and among Mabuhay, Loral Cyberstar, Inc. (the predecessor in interest to LSNS) and the Corporation (the "2001 MOA"), and (viii) the assignment by the Corporation to LSNS or Loral Skynet of its right to collect and receive certain monies from Mabuhay under the 2001 MOA (collectively, the
"Permitted Actions"). Until such second anniversary, the Corporation shall not enter into transactions with, or purchase, repay, guarantee, redeem, secure or otherwise provide credit support for any obligation of Loral or any legal entity controlled, directly or indirectly, by Loral (other than the Corporation and the Corporation's subsidiaries), or agree to do any of the foregoing, unless the Corporation's Board of Directors determines that (i) any such transaction is fair to the Corporation from a financial point of view, (ii) the Corporation is receiving no less than substantially equivalent value in connection therewith and (iii) the terms and conditions of any such transaction are no less favorable than those that would have applied to a transaction with an unrelated third party; provided, however, that the foregoing shall not apply to any Permitted Actions, which the Board of Directors shall have the authority to approve or disapprove in accordance with the Bylaws of the Corporation and applicable law.
4. The total number of shares of stock which the Corporation shall have authority to issue is 200,000 shares, consisting of 100,000 shares of Common Stock, par value $.10 per share, and 100,000 shares of Preferred Stock, par value $.10 per share.
5. The Preferred Stock may be issued from time to time in one or more series, each of which series shall have such distinctive designation or title and such number of shares as shall be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it. The Board of Directors is further authorized to
increase or decrease (but not below the number of shares outstanding) the number of shares of any series of Preferred Stock subsequent to the issuance of shares of that series, except as otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance of such series. In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. Except as provided in the resolution or resolutions of the Board of Directors or in any Certificate of Designation or similar certificate creating any series of Preferred Stock or as otherwise provided herein, the shares of Common Stock shall have the exclusive right to vote for the election and removal of directors and for all other purposes.
6. Ownership of shares of any class or series of capital stock of the Corporation shall not entitle the holders thereof to any preemptive right to subscribe for or purchase or to have offered to them for subscription or purchase any additional shares of capital stock of any class or series of the Corporation or any securities convertible into any class or series of capital stock of the Corporation, whether now or hereafter authorized, however acquired, issued or sold by the Corporation, it being the purpose and intent hereof that the Board of Directors shall have full right, power and authority to offer for subscription or sell or to make any disposal of any or all unissued shares of the capital stock of the Corporation or any securities convertible into stock or any or all shares of stock or convertible securities issued and thereafter acquired by the Corporation, for such consideration as the Board of Directors in its sole discretion shall determine.
7. The Corporation shall not issue non-voting equity securities within the meaning of section 1123 of chapter 11 of title 11 of the United States Code.
8. In furtherance and not in limitation of the powers conferred by statute, the Bylaws of the Corporation (the "Bylaws") may be made, altered, amended or repealed by the Board of Directors.
9. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. Voting at meetings of stockholders need not be by written ballot. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.
10. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Restated Certificate of Incorporation or the Bylaws, the Board of Directors is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. The number of directors of the Corporation shall be fixed from time to time by the stockholders, provided, however, that such number shall be no fewer than three (3) and no more than fifteen (15).
11. In the event that the votes of the directors on any matter voted upon by the Board of Directors are equally divided, the director who is at that time the Vice Chairman of the Board of Directors shall have a second or casting vote on such matter.
12. The Corporation is to have perpetual existence.
13. Elections of directors need not be by written ballot.
14. Any director may be removed from the Board of Directors, with or without cause, by the holders of two-thirds of the shares of capital stock entitled to vote, either
by written consent or consents or at any special meeting of the stockholders called for that purpose, and the office of such director shall forthwith become vacant.
15. a. The Corporation shall indemnify to the fullest extent authorized or permitted under and in accordance with the laws of the State of Delaware (as now or hereafter in effect) any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature (including any legislative or self-regulatory proceeding), by reason of the fact that he or she is or was, or had agreed to become or is alleged to have been, a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving, or had agreed to serve or is alleged to have served, at the request of or to further the interests of the Corporation as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or in any other capacity with another corporation or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of the Corporation or of any of its affiliates and any charitable or not-for-profit enterprise (any such person being sometimes referred to hereafter as an "Indemnitee"), or by reason of any action taken or omitted or alleged to have been taken or omitted by an Indemnitee in any such capacity, against expenses (including court costs and attorneys' fees), judgments, damages, fines, penalties, amounts paid in settlement and other liabilities actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom. In case any action, suit or proceeding shall be brought against any Indemnitee, such Indemnitee shall notify the Corporation of the commencement thereof, and the Corporation shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof. The termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that such person had reasonable cause to believe that his or her conduct was unlawful. With respect to service by an Indemnitee on behalf of any employee benefit plan of the Corporation or any of its affiliates, action in good faith in what the Indemnitee reasonably believed to be the best interest of the beneficiaries of the plan shall be considered to be in or not opposed to the best interests of the Corporation. The Corporation shall indemnify an Indemnitee for expenses (including attorneys' fees) reasonably incurred by the Indemnitee in connection with a proceeding successfully establishing his or her right to indemnification, in whole or in part, pursuant to this Article. However, notwithstanding anything to the contrary in this Article, the Corporation shall not be required to indemnify an Indemnitee against expenses incurred in connection with a proceeding (or part thereof) initiated by the Indemnitee against the Corporation (other than as contemplated by the immediately preceding sentence) or any other person who is an Indemnitee unless the initiation of the proceeding was approved by the Board of Directors of the Corporation.
b. Expenses (including any attorneys' fees) reasonably incurred in investigating, defending or responding to any civil or criminal action, suit, proceeding or investigation in which a current or former director or officer of the Corporation has been named as a defendant, respondent or target, and any appeal therefrom, shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the current or former director or officer of the Corporation to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation
as authorized in this Section 15. Such undertaking shall be accepted by the Corporation without reference to the financial ability of the current or former director or officer of the Corporation to make such repayment.
c. This indemnification and other rights set forth in this Section 15 shall not be exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), contract, agreement, bylaws, vote of stockholders or action of the Board of Directors or otherwise, both as to action in his or her official capacity and as to action in any other capacity while holding office for the Corporation, and nothing contained in this Section 15 shall be deemed to prohibit the Corporation from entering into agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Section 15.
d. The right to indemnification and advancement of expenses provided by this Section 15 shall continue as to any person who formerly was an officer or director of the Corporation in respect of acts or omissions occurring or alleged to have occurred while he or she was an officer or director of the Corporation and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitees. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. The right of an Indemnitee to indemnification or advances as granted by this Section 15 shall be a contractual obligation of the Corporation and, as such, shall be enforceable by the Indemnitee in any court of competent jurisdiction.
e. In addition to indemnification by the Corporation of current and former officers and directors and advancement of expenses by the Corporation to current and former officers and directors as provided for by the foregoing provisions of this Section 15, the Corporation may, in
a manner and to the fullest extent permitted by law, indemnify current and former employees, agents and other persons serving the Corporation and advance expenses to current and former employees, agents and other persons serving the Corporation, in each case as may be authorized by the Board of Directors, and any rights to indemnity or advancement of expenses granted to such persons may be equivalent to, or greater or less than, those provided to directors, officers and employees by this Section 15.
f. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or of another corporation or a limited liability company, partnership, joint venture, trust or other enterprise (including any employee benefit plan) in which the Corporation has an interest against any expense, liability or loss incurred by the Corporation or such person in his or her capacity as such, or arising out of his or her status as such, whether or not the Corporation would have the power to or is obligated to indemnify such person against such expense, liability or loss. The indemnification and reimbursement of expenses so provided by this Section 15 shall not be available to the extent that indemnification or reimbursement has been received by such director or officer under any applicable policy of insurance or otherwise.
g. No amendment, termination or repeal of this Section 15 or the adoption
of any provision of this Restated Certificate of Incorporation inconsistent with
this Section 15, shall eliminate or reduce the effect of this Section 15, in
respect of any actions, transactions, facts or matter occurring before such
amendment, repeal or adoption of an inconsistent provision or in respect of any
cause of action, suit, claim, proceeding or investigation arising out of or
relating to any actions, transactions, facts or matter which would have given
rise to a right of indemnification or right to receive expenses pursuant to this
Section 15, if such provision had not
been so amended, terminated or repealed or if a provision inconsistent therewith had not been so adopted.
h. A director shall have no personal liability to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for (i) any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law by the director, (iii) liability under Section 174 of the DGCL or (iv) any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the full extent permitted by the DGCL, as so amended. Any repeal or modification of this Section 15 shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to an act or omission of such director occurring prior to such repeal or modification.
i. Notwithstanding anything to the contrary set forth in this Section 15, and except as provided in clause (iv) below and as provided in the Stipulation and Agreement Among the Debtors and Their Directors and Officers in Respect of Certain Indemnification Claims in In re Loral Space & Communications Ltd. et al., Case Nos. 03-41710 (RDD), 03-41709 (RDD) through 03-41728 (RDD) in the United States Bankruptcy Court for the Southern District of New York, (i) for the purposes of this Section 15, the term "Corporation" shall not include Loral Space & Communications Ltd., a Bermuda company, or any direct or indirect subsidiary thereof that at the time was not or that is not a direct or indirect subsidiary of the Corporation (collectively, "Old Loral"), and the Corporation shall not have obligations pursuant to this Section 15 solely by virtue of any assertion by any person, entity or governmental authority or
any determination by a court of competent jurisdiction, that it is a successor
to Old Loral or any other entity; (ii) the Corporation may, but shall not be
required to, indemnify any director or officer of Old Loral, or any person who
was serving, or had agreed to serve or is alleged to have served, at the request
of or to further the interests of Old Loral as a director, officer, trustee,
appointee, designee, employee, manager, partner, or agent of or in any other
capacity with another corporation or any limited liability company, partnership,
joint venture, trust or other enterprise, including any employee benefit plan of
Old Loral or of any of its affiliates and any charitable or not-for-profit
enterprise, except as specifically set forth in that certain Fourth Amended
Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as
of June 3, 2005 of Loral Space & Communications, Ltd. and its subsidiaries that
are a party thereto (as the same may be amended from time to time, the "Plan");
(iii) the Corporation may, but shall not be required to, indemnify any
Indemnitee with respect to any events or circumstances occurring prior to the
filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code on July 11, 2003 by Loral Space & Communications, Ltd. and its subsidiaries
that are a party thereto, except as specifically set forth in the Plan; and (iv)
the Corporation shall indemnify and hold harmless each Indemnitee from and
against and for any and all obligations incurred directly or indirectly by Old
Loral with respect to any taxes owed by Old Loral or the Debtors (as defined in
the Plan) for the period prior to the Effective Date (as defined in the Plan),
including interest and penalties, to any governmental entity and as to which Old
Loral or the Debtors are the primary obligor(s), to the full extent provided in
Paragraphs (a) through (h) of this Section 15.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation to be signed and attested by its duly authorized officers on this 21st day of November, 2005.
/s/ Avi Katz
----------------------------------------
Avi Katz
Vice President and Secretary
ATTEST:
/s/ Janet Yeung
-------------------------------------
Janet T. Yeung
Vice President and Assistant
Secretary
|
EXHIBIT 3.6
SPACE SYSTEMS/ LORAL, INC.
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
FOURTH AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES
Section 1. Registered Office and Agent. The registered office of Space Systems/ Loral, Inc. (the "Corporation") shall be located in the State of Delaware and shall be at such address as shall be set forth in the Restated Certificate of Incorporation. The resident agent of the Corporation at such address shall be as set forth in the Restated Certificate of Incorporation. The Corporation may also have such other offices at such other places, within or without the State of Delaware, as the board of directors of the Corporation (the "Board of Directors") may from time to time designate or the business of the Corporation may require.
Section 2. Principal Office. The principal office for the transaction of the business of the Corporation shall be at such location, within or without the State of Delaware, as shall be designated by the Board of Directors.
Section 3. Other Offices. The Corporation may also have an office or offices at such other place or places, either within or without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may otherwise require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of stockholders for the election of directors and the transaction of any other business properly brought before the meeting will be held on such day in such month, in such city and state and at such time and place as may be designated by the Board of Directors and set forth in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation.
Section 2. Special Meetings. Special meetings of the stockholders for any purpose may be called at any time by the Board of Directors or by its Chairman, or by the Chief Executive Officer and President, and will be called by the Chief Executive Officer and President at the request of the holders of a majority in voting power of the outstanding shares of capital stock generally entitled to vote. The officer or directors calling such a meeting shall direct
the Secretary of the Corporation to notify the directors of the time, place and purpose of such meeting forthwith, but in any event not less than five (5) days before such notice is sent to the stockholders. Special meetings shall be held at such place or places within or without the State of Delaware as shall from time to time be designated by the Board of Directors and stated in the notice of such meeting. If no designation is made, the place of meeting shall be the principal executive office of the Corporation. At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.
Section 3. Notice of Meetings. Not less than ten (10) days nor more than fifty (50) days before the date of every stockholder's meeting, the Secretary of the Corporation shall give to each stockholder entitled to vote at such meeting and each other stockholder entitled to notice of the meeting notice stating the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, by mail, by presenting it to him or her personally, by leaving it at his or her residence or usual place of business or by any other lawful means. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his or her post office address as it appears on the records of the Corporation, with postage thereon prepaid. Notice of any adjourned meeting need not be given except by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment or required by law.
Section 4. Action Without Meeting. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand, or by certified or registered mail, return receipt requested.
Section 5. Waiver of Notice. Any stockholder may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. A stockholder's attendance, in person or by proxy, at a meeting: (i) waives objection to lack of notice or defective notice of the meeting, unless the stockholder or his proxy attends the meeting for the express purpose of objecting at the beginning of the meeting to holding the meeting or transacting business at the meeting because the meeting is not lawfully called or convened; and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder or his proxy objects to considering the matter before it is voted upon.
Section 6. Quorum. Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Corporation issued and outstanding and generally entitled to vote in the election of directors, present in person or represented by proxy at any
meeting duly called, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the Restated Certificate of Incorporation or by these Bylaws.
Section 7. Adjournment of Meetings. If less than a quorum is in attendance at the time for which a meeting is called, the meeting may be adjourned by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting, without notice other than announcement at such meeting, until a quorum is in attendance. Any meeting at which a quorum is present may also be adjourned in like manner and for the amount of time as may be determined by the chairman of the meeting or by the affirmative vote of a majority of the voting power of shares present in person or by proxy and entitled to vote at such meeting. At any adjourned meeting at which a quorum is present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 8. Voting List. The Secretary of the Corporation will prepare and make, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each stockholder. The list will be available for inspection by any stockholder of record as required by applicable law.
Section 9. Voting. Each stockholder entitled to vote at a meeting of stockholders may vote either in person or authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation.
Except as otherwise provided by the General Corporation Law of the State of Delaware as from time to time in effect, including any successor provisions of law (the "DGCL"), or by the Restated Certificate of Incorporation of the Corporation or any amendments thereto, every stockholder shall at every meeting of the stockholders be entitled to one vote (or such other number of votes as shall be provided in the Restated Certificate of Incorporation, including any certificate of designation, with respect to any class or series of stock) in person or by proxy for each share of common stock registered in his or her name on the record of stockholders. At all meetings of stockholders, all matters will be determined by the affirmative vote of the majority in voting power of shares present in person or by proxy and entitled to vote on the subject matter, except as otherwise provided by statute, applicable stock exchange rules,
any rule or regulations applicable to the Corporation or its securities, the Restated Certificate of Incorporation, or these Bylaws and except that directors shall be elected by a plurality vote. Voting at meetings of stockholders need not be by written ballot.
Section 10. Conduct of Meetings. All regular or special meetings of the stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer, by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. To the maximum extent permitted by law, the presiding person will have the power to set procedural rules governing all aspects of the conduct of the meetings, including, but not limited to, rules respecting the time allotted to stockholders to speak. The Secretary of the Corporation will act as secretary of each meeting. In the absence of the Secretary, the chairman of the meeting will appoint any person to act as secretary of the meeting.
Section 11. Certain Rules of Procedure Relating to Stockholder Meetings. The chairman of the meeting shall preside over and conduct the meeting in a fair and reasonable manner, and all questions of procedure or conduct of the meeting shall be decided solely by the chairman of the meeting. The chairman of the meeting shall have all power and authority vested in a presiding officer by law or practice to conduct an orderly meeting.
ARTICLE III
DIRECTORS
Section 1. Qualifications. Directors of the Corporation need not be stockholders or a resident of the State of Delaware. Each director must have attained the age of majority. For so long as Loral Space & Communications Inc., a Delaware corporation ("Loral"), is the owner, directly or indirectly, of one hundred percent (100%) of the outstanding shares of capital stock of the Corporation entitled to vote at meetings of directors, each director of the Corporation must be a director of Loral in order to be qualified to serve as a director of the Corporation. Each director of the Corporation shall hold office until the next annual meeting of shareholders or until such earlier date when he or she is no longer a director of Loral or until his or her earlier resignation or removal.
Section 2. Resignation of Directors. Any director may resign at any time upon written notice or notice by electronic transmission to the Board of Directors or to the Chief Executive Officer, the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective.
Section 3. Filling of Vacancies. Any vacancy among the directors, occurring from any cause whatsoever, may be filled by a majority of the remaining directors, though less than a quorum, provided, however, that the stockholders removing any director may at the same meeting fill the vacancy caused by such removal, and provided, further, that if the directors fail to fill any such vacancy, the stockholders may at any special meeting called for that purpose fill such vacancy. In case of any increase in the number of directors, the additional directors may be elected by the directors in office before such increase. Any person elected to fill a vacancy shall hold office, subject to the right of removal as hereinbefore provided, until the next annual election and until his successor is elected and qualifies.
Section 4. Regular Meetings. The Board of Directors will hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the stockholders, provided a quorum of directors is present. Other regular meetings may be held at any time as may be determined from time to time by resolution of the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors may be called by any three or more members of the Board of Directors, the Chairman of the Board of Directors or by the Chief Executive Officer or President.
Section 6. Notice and Place of Meetings. Meetings of the Board of
Directors may be held at the principal office of the Corporation, or at any
other place as is stated in the notice of such meeting. Notice of any special
meeting, and except as the Board of Directors may otherwise determine by
resolution, notice of any regular meeting, will be mailed to each director
addressed to him or her at his residence or usual place of business at least two
(2) days before the day on which the meeting is to be held, or if sent to him or
her at such place by telegraph, cable, electronic transmission or facsimile, or
delivered personally or by telephone, not later than the day before the day on
which the meeting is to be held. No notice of the annual meeting of the Board of
Directors will be required if it is held immediately after the annual meeting of
the stockholders and if a quorum is present.
Section 7. Business Transacted at Meetings, etc. Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum is present, whether the business or proposed action is stated in the notice of that meeting or not, unless special notice of such business or proposed action is required by statute.
Section 8. Quorum. Two-thirds of the total number of directors authorized at the time will constitute a quorum. At any meeting at which a quorum is present, except as otherwise provided in the Corporation's Restated Certificate of Incorporation, each director shall have one vote and the vote of a majority of the members present will be the act of the Board of Directors unless the act of a greater number is specifically required by law or by the Restated Certificate of Incorporation or these Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Compensation. The directors will receive such compensation and reimbursement as may be determined by the Board of Directors from time to time. Members of special or standing committees of the Board of Directors may be allowed such compensation as may be determined by the Board of Directors for attending committee meetings. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity, as an officer, employee, agent or otherwise, and receiving compensation therefor.
Section 10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent to the action in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 11. Meetings Through Use of Communications Equipment. Members of the Board of Directors, or any committee designated by the Board of Directors, will, except as otherwise provided by law, the Restated Certificate of Incorporation or these Bylaws, have the power to participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and this participation will constitute presence in person at the meeting.
Section 12. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the Chief Executive Officer, or in the absence of the Chief Executive Officer by the President or in the absence of the foregoing persons by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary, an Assistant Secretary shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary, the chairman of the meeting may appoint any person to act as the secretary of the meeting.
ARTICLE IV
COMMITTEES
Section 1. Committees. The Board of Directors may appoint any committee, which committee or committees shall hold office for an amount of time and have powers and perform duties as may from time to time be assigned to them by the Board of Directors. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.
Section 2. Alternate Members of Committees. The Board of Directors may designate one or more directors as alternate members of any committee. Any such alternate member may replace any absent or disqualified member at any meeting of the committee. If no alternate committee members have been so appointed to a committee or each such alternate committee member is absent or disqualified, the member or members of such committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Section 3. Committee Rules. Each committee of the Board of Directors may adopt, amend and repeal rules for the conduct of its business and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee.
Section 4. Resignation and Removal. Any member of a committee may resign at any time. This resignation will be made in writing or by electronic transmission and will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman of the Board of Directors, Chief Executive Officer, President or Secretary. The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.
Any member of these committees may be removed at any time, with or without cause, by the Board of Directors. Any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors.
Section 5. Quorum. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the members of a committee shall constitute a quorum. The act of a majority of the members of a committee present at any meeting at which a quorum is present will be the act of the committee.
Section 6. Record of Proceedings, etc. Each committee will keep a record of its acts and proceedings, and will report the same to the Board of Directors when and as required by the Board of Directors.
Section 7. Organization, Meetings, Notices, etc. Regular meetings of any committee may be held without notice at such time and place as may be designated from time to time by resolution by the committee and communicated to all members thereof. Special meetings of any committee may be held whenever called by any committee member. Unless otherwise ordered by the Board of Directors, any notice of a meeting of a committee may be given by the Secretary of the Corporation or by the chairman of the committee and will be sufficient if mailed to each member at his residence or usual place of business at least two (2) days before the day on which the meeting is to be held, or if sent to him or her at that place by telegraph, cable, electronic transmission or facsimile, or delivered personally or by telephone not later than twenty-four (24)
hours before the time at which the meeting is to be held.
ARTICLE V
OFFICERS AND CHAIRMAN
Section 1. Number. The officers of the Corporation shall be a Chief Executive Officer, a President, and may include a Chief Financial Officer, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V. The Board of Directors in its discretion may also elect a Chairman and a Vice Chairman of the Board of Directors, each of which, in the Board of Directors' discretion, may also be an officer of the Corporation. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of President and Secretary shall be filled as expeditiously as possible. New offices may be created and filled at any meeting of the Board of Directors.
Section 2. Election, Term of Office and Qualifications. The officers, except as provided in Section 3 of this Article V, will be chosen annually by the Board of Directors. Each officer will, except as otherwise provided in the Bylaws, hold office until his successor is chosen and qualified or until his or her earlier death, incapacity, resignation or removal as hereinafter provided. Except as otherwise provided by law, any number of offices may be held by the same person.
Section 3. Other Officers. Other officers, including one or more additional Vice Presidents, Assistant Secretaries or Assistant Treasurers, may from time to time be appointed by the Board of Directors or an officer or committee of the Corporation vested with such authority, which other officers shall have powers and perform duties as may be assigned to them by the Board of Directors or the officer or committee appointing them.
Section 4. Removal of Officers. Any officer of the Corporation may be removed from office, with or without cause, by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed, but the election of an officer shall not of itself create contractual rights.
Section 5. Resignation. Any officer of the Corporation may resign at any time. This resignation shall be in writing or by electronic transmission and take effect at the time specified in the resignation, or if no time is specified, at the time of its receipt by the Chief Executive Officer, President or Secretary. The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified in the resignation.
Section 6. Filling of Vacancies. A vacancy in any office will be filled by the Board of Directors or by the authority appointing the predecessor in such office.
Section 7. Compensation. The compensation of the officers will be fixed by the Board of Directors, or by any committee upon whom power in that regard may be conferred by the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board of Directors, if any, will be a director of the Corporation, and should he or she cease to be a director, he or she shall ipso facto cease to be Chairman. The Chairman of the Board, if any, will have power to call special meetings of the stockholders or of the Board of Directors at any time. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board of Directors or as may be provided by law. A director that is not otherwise an officer of the Corporation that is elected to be Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election.
Section 9. Vice Chairman of the Board. The Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman of the Board is not present. The Vice Chairman of the Board shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board of Directors or as may be provided by law. A director that is not otherwise an officer of the Corporation that is elected to be Vice Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election. Without limitation to any other provision in these Bylaws, the Vice Chairman, if any, shall have (i) full access to all information as the Vice Chairman shall request relating to the Corporation's business and operations and, following notification to the Chief Executive Officer, all employees of the Corporation and its subsidiaries; and (ii) the right to bring any matter to the attention of the Board of Directors for its consideration.
Section 10. Chief Executive Officer. The Chief Executive Officer will have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she will be the chief executive officer of the Corporation, and will have the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Executive Officer.
Section 11. President. The President will have power to call special meetings of the stockholders or of the Board of Directors at any time. He or she will assist the Chief Executive Officer (and, in the Chief Executive Officer's absence, act as Chief Executive Officer) in the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of President, subject to the direction of the Chief Executive Officer.
Section 12. Vice Presidents. The Vice Presidents, or any of them, will, subject to the direction of the Board of Directors, at the request of the Chief Executive Officer or in the absence of both the Chief Executive Officer and the President, or in case of their inability to
perform their duties from any cause, perform the duties of the Chief Executive Officer and, when so acting, will have all the powers of, and be subject to all restrictions upon, the Chief Executive Officer. There shall be no duties that are incident to the office of Vice President, other than those which are specifically assigned by the Board of Directors, the President or the Chief Executive Officer.
Section 13. Chief Financial Officer. Subject to the direction of the Board of Directors, the Chief Executive Officer and the President, the Chief Financial Officer shall be responsible for the financial affairs of the Corporation and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Financial Officer.
Section 14. Secretary. The Secretary will keep the minutes of all meetings of the stockholders and all meetings of the Board of Directors and any committee in books provided for that purpose. Under the supervision of the Chief Executive Officer and the President, the Secretary shall give, or cause to be given, all notices required to be given by these Bylaws. The Secretary, or an Assistant Secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The Assistant Secretary, or if there be more than one (1), the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors, the President or the Chief Executive Officer may, from time to time, prescribe. The Secretary will perform the duties and have all other powers that are incident to the office of Secretary, or as may from time to time be assigned to him or her by the Board of Directors, or as are prescribed by these Bylaws.
Section 15. Treasurer. The Treasurer will have custody of all the funds and securities of the Corporation which may be delivered into his or her possession. He or she may endorse on behalf of the Corporation for collection, checks, notes and other obligations and will deposit the same to the credit of the Corporation in a depository or depositories of the Corporation, and may sign all receipts and vouchers for payments made to the Corporation. He or she will enter or cause to be entered regularly in the books of the Corporation kept for that purpose, full and accurate accounts of all monies received and paid on account of the Corporation and whenever required by the Board of Directors will render statements of the accounts. The Treasurer will perform the duties and have all other powers that are incident to the office of Treasurer or that are assigned to him or her by the Board of Directors.
Section 16. Other Officers, Assistant Officers and Agents. Officers and assistant officers, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors which is not inconsistent with these Bylaws.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock. Certificates of capital stock will be in the form approved by the Board of Directors. The certificates will be numbered in the order of their issue and will be signed by the Chairman of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, and the seal of the Corporation or a facsimile of the seal will be impressed or affixed or reproduced on the certificates, provided, however, that (i) the signature of the Chairman of the Board, President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be facsimile and (ii) if such a certificate is manually signed by one officer or manually countersigned (a) by a transfer agent or an assistant transfer agent other than the Corporation or its employee or (b) by a registrar, other than the Corporation or its employee, any other signatures on the certificate may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any certificate or certificates ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before that certificate or certificates are delivered by the Corporation, that certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed that certificate or certificates, or whose facsimile signature or signatures is used thereon have not ceased to be an officer or officers of the Corporation.
Section 2. Registration and Transfer of Shares. The shares of capital stock of the Corporation shall be issued in registered form. The name of each person owning a share of the capital stock of the Corporation shall be entered on the books of the Corporation together with the number of shares held by him, the numbers of the certificates covering such shares and the dates of issue of such certificates. The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their attorneys or legal representatives duly authorized in writing, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require, and accompanied by any necessary stock transfer stamps. A record shall be made of each transfer.
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock of the Corporation will immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it and alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his legal representatives, to give the Corporation a bond, in such sum and with such surety or sureties as they may require, to indemnify it against any claim that may be made against it by reason of the issue of the new certificate and against all other liability in the premises, or may remit the owner to any remedy or remedies he or she may have under the laws of the State of Delaware.
Section 4. Transfer Agent and Registrar; Regulations. The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board of Directors, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Registrar and/or Transfer Agent shall have been designated, shall be valid unless countersigned by such Transfer Agent and registered by such Registrar, if any. The Board of Directors shall also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.
Section 5. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, and the Corporation may hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the calendar year unless another fiscal year is fixed by resolution of the Board of Directors.
Section 2. Corporate Seal. The corporate seal will be in the form approved by the Board of Directors and may be altered at its pleasure. The corporate seal may be used by causing it or a facsimile of the seal to be impressed or affixed or reproduced or otherwise.
Section 3. Notices. Subject to the requirements of applicable law, any notice required to be given by these Bylaws will be sufficient if given by (i) depositing the same in a post office or letter box in a sealed postpaid wrapper addressed to the person entitled to the notice at his or her address, as the same appears upon the books of the Corporation, (ii) telegraphing or cabling the same to that person at that address, (iii) electronically transmitting to an email address designated upon the books of the Corporation, if any, (iv) facsimile transmission to a number designated upon the books of the Corporation, if any, or (v) any other lawful means; and the notice will be deemed to be given at the time it is mailed, telegraphed, cabled, electronically transmitted, sent by facsimile or sent by such other lawful means.
Section 4. Waiver of Notice. Any director may at any time, by writing or by telegraph, cable, electronic transmission, or facsimile transmission, waive any notice required to be given under these Bylaws. If any director is present at any meeting his or her presence will constitute a waiver of notice, unless the director attends the meeting for the express purpose of
objecting at the beginning of the meeting to holding the meeting because the meeting is not lawfully called or convened.
Section 5. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation will be signed by an officer or officers, or agent or agents of the Corporation, and in such manner, as will from time to time be designated by resolution of the Board of Directors.
Section 6. Deposits. All funds of the Corporation will be deposited from time to time to the credit of the Corporation in a bank or banks, trust companies or other depositories as the Corporation may select, and, for the purpose of the deposit, checks, drafts, warrants and other orders for the payment of money which are payable to the order of the Corporation, may be endorsed for deposit, assigned and delivered by any officer of the Corporation, or by agents of the Corporation as the Board of Directors, the Chief Executive Officer or the President may authorize for that purpose.
Section 7. Voting Securities of Other Entities. Except as otherwise ordered by the Board of Directors, any of the Chief Executive Officer, the President and the Treasurer shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the holders of securities of any entity of which the Corporation is a securityholder, and to execute a proxy to any other person to represent the Corporation at any meeting, and at any meeting of the holders of securities of any entity of which the Corporation is a securityholder. The Chief Executive Officer, the President or the Treasurer or the holder of any proxy, as the case may be, will possess and may exercise any and all rights and powers incident to ownership of the security which the Corporation might have possessed and exercised if present. The Board of Directors may from time to time confer like powers upon any other person or persons.
Section 8. Inconsistent Provisions. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Restated Certificate of Incorporation, the DGCL or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
Section 9. References. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender should include each other gender where appropriate.
ARTICLE VIII
AMENDMENTS
Except as otherwise provided herein, these Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by the Board of Directors at any regular meeting of the Board of Directors or at any special meeting of the Board of Directors, whether the proposed
alteration, amendment, repeal or addition is stated in the notice of that meeting or not, unless special notice of such alteration, amendment, repeal or addition is required by statute.
Dated: November 21, 2005
Exhibit 4.1
LORAL SKYNET CORPORATION
Issuer
14% SENIOR SECURED CASH/PIK NOTES DUE 2015
INDENTURE
Dated as of November 21, 2005
THE BANK OF NEW YORK
Trustee
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------------
310(a)(1) ........................................ 7.10
(a)(2) ........................................ 7.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(a)(5) ........................................ 7.10
(b) ........................................ 7.08; 7.10
(c) ........................................ N.A.
311(a) ........................................ 7.11
(b) ........................................ 7.11
(c) ........................................ N.A.
312(a) ........................................ 2.05, 12.03
(b) ........................................ 12.03
(c) ........................................ 12.03
313(a) ........................................ 7.06
(b)(1) ........................................ N.A.
(b)(2) ........................................ 7.06
(c) ........................................ 12.02
(d) ........................................ 7.06
314(a) ........................................ 4.02; 4.03
(b) ........................................ N.A.
(c)(1) ........................................ 12.04
(c)(2) ........................................ 12.04
(c)(3) ........................................ N.A.
(d) ........................................ 11.03
(e) ........................................ 12.05
(f) ........................................ N.A.
315(a) ........................................ 7.01
(b) ........................................ 7.05; 12.02
(c) ........................................ 7.01
(d) ........................................ 7.01
(e) ........................................ 6.11
316(a)(last sentence) ........................................ 12.06
(a)(1)(A) ........................................ 6.05
(a)(1)(B) ........................................ 6.04
(a)(2) ........................................ Section 1 of
the Note; 12.06
(b) ........................................ Section 1 of
the Note; 6.07
(c) ........................................ 9.04
317(a)(1) ........................................ 6.08
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(a)(2) ........................................ 6.09 (b) ........................................ 2.04 318(a) ........................................ 12.01 |
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.
TABLE OF CONTENTS
ARTICLE 1 Definitions and Incorporation by Reference....................... 1
SECTION 1.01. Certain Definitions.................................... 1
SECTION 1.02. Other Definitions...................................... 28
SECTION 1.03. Incorporation by Reference of Trust Indenture Act...... 29
SECTION 1.04. Rules of Construction.................................. 30
ARTICLE 2 The Notes........................................................ 31
SECTION 2.01. Form and Dating........................................ 31
SECTION 2.02. Execution and Authentication........................... 31
SECTION 2.03. Registrar and Paying Agent............................. 32
SECTION 2.04. Paying Agent To Hold Money in Trust.................... 32
SECTION 2.05. Noteholder Lists....................................... 32
SECTION 2.06. Transfer and Exchange.................................. 33
SECTION 2.07. Replacement Notes...................................... 33
SECTION 2.08. Outstanding Notes...................................... 33
SECTION 2.09. Temporary Notes........................................ 34
SECTION 2.10. Cancellation........................................... 34
SECTION 2.11. Defaulted Interest..................................... 34
SECTION 2.12. CUSIP Numbers.......................................... 34
SECTION 2.13. Trustee's Disclaimer................................... 34
ARTICLE 3 Redemption....................................................... 35
SECTION 3.01. Notices to Trustee..................................... 35
SECTION 3.02. Selection of Notes To Be Redeemed...................... 35
SECTION 3.03. Notice of Redemption................................... 36
SECTION 3.04. Effect of Notice of Redemption......................... 37
SECTION 3.05. Deposit of Redemption Price............................ 37
SECTION 3.06. Notes Redeemed in Part................................. 38
ARTICLE 4 Covenants........................................................ 38
SECTION 4.01. Payment of Notes....................................... 38
SECTION 4.02. [Intentionally Left Blank]............................. 40
SECTION 4.03. Compliance Certificate................................. 40
SECTION 4.04. Change of Control...................................... 40
SECTION 4.05. Limitation on Restricted Payments...................... 42
SECTION 4.06. Limitation on Indebtedness............................. 44
SECTION 4.07. Limitation on Liens.................................... 47
SECTION 4.08. Limitation on Restrictions on Distributions from
Restricted Subsidiaries................................ 47
SECTION 4.09. Limitation on Sales of Assets and Subsidiary Stock..... 49
SECTION 4.10. Limitation on Affiliate Transactions................... 51
SECTION 4.11. Guarantors............................................. 53
SECTION 4.12. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries................................ 53
SECTION 4.13. Limitation on Sale/Leaseback Transactions.............. 54
SECTION 4.14. Existence.............................................. 54
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SECTION 4.15. Payment of Taxes and Other Claims...................... 54 SECTION 4.16. Insurance; Maintenance of Properties................... 55 SECTION 4.17. Notice of Defaults..................................... 55 SECTION 4.18. Business Activities.................................... 55 SECTION 4.19. Use of Proceeds........................................ 55 SECTION 4.20. Further Instruments and Acts........................... 55 ARTICLE 5 Merger........................................................... 56 SECTION 5.01. Merger and Consolidation............................... 56 ARTICLE 6 Defaults and Remedies............................................ 57 SECTION 6.01. Events of Default...................................... 57 SECTION 6.02. Acceleration........................................... 59 SECTION 6.03. Other Remedies......................................... 60 SECTION 6.04. Waiver of Past Defaults................................ 60 SECTION 6.05. Control by Majority.................................... 60 SECTION 6.06. Limitation on Suits.................................... 60 SECTION 6.07. Rights of Holders to Receive Payment................... 61 SECTION 6.08. Collection Suit by Trustee............................. 61 SECTION 6.09. Trustee May File Proofs of Claim....................... 61 SECTION 6.10. Priorities............................................. 62 SECTION 6.11. Undertaking for Costs.................................. 62 SECTION 6.12. Waiver of Stay or Extension Laws....................... 62 SECTION 6.13. Payment of Premium..................................... 62 ARTICLE 7 Trustee.......................................................... 63 SECTION 7.01. Duties of Trustee...................................... 63 SECTION 7.02. Rights of Trustee...................................... 64 SECTION 7.03. Individual Rights of Trustee........................... 65 SECTION 7.04. Trustee's Disclaimer................................... 65 SECTION 7.05. Notice of Defaults..................................... 65 SECTION 7.06. Reports by Trustee to Holders.......................... 65 SECTION 7.07. Compensation and Indemnity............................. 65 SECTION 7.08. Replacement of Trustee................................. 67 SECTION 7.09. Successor Trustee by Merger............................ 68 SECTION 7.10. Eligibility; Disqualification.......................... 68 SECTION 7.11. Preferential Collection of Claims Against Company...... 68 SECTION 7.12. Co-trustees and Separate Trustees...................... 68 ARTICLE 8 Discharge of Indenture; Defeasance............................... 69 SECTION 8.01. Discharge of Liability on Notes; Defeasance............ 69 SECTION 8.02. Conditions to Defeasance............................... 70 SECTION 8.03. Application of Trust Money............................. 71 SECTION 8.04. Repayment to Company................................... 71 SECTION 8.05. Indemnity for Government Obligations................... 72 SECTION 8.06. Reinstatement.......................................... 72 ARTICLE 9 Amendments....................................................... 72 SECTION 9.01. Without Consent of Holders............................. 72 |
SECTION 9.02. With Consent of Holders................................ 73
SECTION 9.03. Compliance with Trust Indenture Act.................... 74
SECTION 9.04. Revocation and Effect of Consents and Waivers.......... 74
SECTION 9.05. Notation on or Exchange of Notes....................... 75
SECTION 9.06. Trustee To Sign Amendments............................. 75
ARTICLE 10 Guaranties...................................................... 75
SECTION 10.01. Guaranties............................................. 75
SECTION 10.02. Limitation on Liability................................ 77
SECTION 10.03. Successors and Assigns................................. 77
SECTION 10.04. No Waiver.............................................. 77
SECTION 10.05. Modification........................................... 78
SECTION 10.06. Release of Guarantor................................... 78
ARTICLE 11 Collateral...................................................... 78
SECTION 11.01. Collateral Documents; Additional Collateral............ 78
SECTION 11.02. Recording, Registration and Opinions................... 80
SECTION 11.03. Release of Collateral.................................. 82
SECTION 11.04. Possession and Use of Collateral....................... 82
SECTION 11.05. Specified Releases of Collateral....................... 83
SECTION 11.06. Disposition of Collateral Without Release.............. 84
SECTION 11.07. Form and Sufficiency of Release........................ 85
SECTION 11.08. Purchaser Protected.................................... 85
SECTION 11.09. Authorization of Actions To Be Taken by the Collateral
Agent Under the Collateral Documents................... 85
SECTION 11.10. Authorization of Receipt of Funds by the Collateral
Agent Under the Collateral Documents................... 86
SECTION 11.11. Third Party Consents to Pledge of Collateral........... 86
SECTION 11.12. Collateral Agent....................................... 86
SECTION 11.13. Authorization of Actions to Be Taken................... 86
ARTICLE 12 Miscellaneous................................................... 89
SECTION 12.01. Trust Indenture Act Controls........................... 89
SECTION 12.02. Notices................................................ 89
SECTION 12.03. Communication by Holders with Other Holders............ 90
SECTION 12.04. Certificate and Opinion as to Conditions Precedent..... 90
SECTION 12.05. Statements Required in Certificate or Opinion.......... 90
SECTION 12.06. When Notes Disregarded................................. 91
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar........... 91
SECTION 12.08. Legal Holidays......................................... 91
SECTION 12.09. Governing Law; Waiver of Jury Trial.................... 91
SECTION 12.10. No Recourse Against Others............................. 92
SECTION 12.11. Successors............................................. 92
SECTION 12.12. Multiple Originals..................................... 92
SECTION 12.13. Table of Contents; Headings............................ 92
|
Schedule 4.10 - Certain Affiliate Transactions
Schedule 11.01 - Certain Perfection Deadlines
Appendix A - Provisions Relating to the Notes
Appendix B - Form of Notes
Appendix C - Form of Security Agreement
INDENTURE dated as of November 21, 2005, by and among Loral Skynet Corporation, a Delaware corporation (the "COMPANY"), the Guarantors from time to time parties hereto, and The Bank of New York, as trustee and as collateral agent.
Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Certain Definitions.
"ADDITIONAL ASSETS" means:
(1) any property, plant or equipment (including transponder capacity) used in a Related Business and regulatory rights acquired or regulatory rights settled relating to a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2) or (3) above is primarily engaged in a Related Business.
"ADDITIONAL NOTES" means Notes issued from time to time after the Issue Date pursuant to Section 4.01(b) of this Indenture.
"ADJUSTED EBITDA" of the Company for any period means EBITDA of the Company for such period less the following:
(1) all ongoing cash restructuring expenses that are incurred as part of the ongoing emergence process, including any non-recurring fees, charges or other expenses directly related to the Transactions and the Restructuring Transactions that are paid in cash subsequent to the Issue Date;
(2) income being recognized against items whose cash receipt occurred prior to the Issue Date;
(3) all other non-cash income of the Company and its consolidated Restricted Subsidiaries except to the extent such non-cash income represents cash income received in a prior period;
(4) all income tax benefits of the Company and its consolidated Restricted Subsidiaries; and
(5) dividends in respect of all Preferred Stock held by Persons other than the Company or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company).
Adjusted EBITDA shall be annualized and prorated as provided in Section 4.01(b)(ii).
"AFFILIATE" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "CONTROL" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing; provided, however, that notwithstanding anything else herein to the contrary, any Permitted Holder shall be deemed not to be an Affiliate of the Company, the Parent, any Intermediate Holding Company or any Subsidiary of any of such entities.
"ASSET DISPOSITION" means any sale, lease, issuance, transfer or other disposition (or series of related sales, leases, issuances, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a "DISPOSITION"), of, and any Event of Loss with respect to:
(1) any shares of Capital Stock of a Restricted Subsidiary;
(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary outside the ordinary course of business (it being understood that (i) the lease (including prepaid leases) of transponders or any similar arrangement whereby the Company retains title to the transponder, or (ii) the disposition of any transponder, in each case with a fair market value of less than $25.0 million, shall be deemed to be in the ordinary course of business) of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, the following shall be deemed not to be Asset Dispositions:
(A) a disposition to the Company or a Subsidiary Guarantor;
(B) for purposes of Section 4.10 only, (i) a disposition that constitutes a Restricted Payment permitted by Section 4.05 or a Permitted Investment and (ii) a transaction governed by, and consummated in compliance with, Section 5.01;
(C) the granting of a Permitted Lien;
(D) dispositions of obsolete, damaged or worn out equipment no longer used or useful to the business of the Company and its Restricted Subsidiaries;
(E) a disposition in any single transaction or a group of related transactions of assets, including transponders, with a fair market value of less than $100.0 million;
(F) any disposition effected as part of any Restructuring Transactions;
(G) any disposition of assets pursuant to any contract (i) assumed with the approval of the Bankruptcy Court under the Plan or (ii) entered into prior to the Issue Date and approved by the Bankruptcy Court;
(H) any disposition of title of the Estrela do Sul satellite to the providers of insurance for such satellite;
(I) a sale and leaseback transaction as described in Section 9.10 of that certain Lease Agreement dated August 18, 1999 by and between LAPS(HK) and APT Satellite Company Limited;
(J) the exchange of transponder capacity as set forth in the December 10, 2002 and November 16, 2003 letter agreements entered into between the Company and APT Satellite Company Limited;
(K) any transfer of equity interests in Earth Station Ecuador CIA Ltda.; and
(L) any disposition effected pursuant to that certain letter agreement dated August 26, 2003, as amended on November 16, 2003 by and between the Company and APT Satellite Company Limited.
"ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capital Lease Obligation."
"AVERAGE LIFE" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment, by
(2) the sum of all such payments.
"BANKRUPTCY INTEREST" means, with respect to any Indebtedness, all interest accruing thereon after the filing of a petition by or against the Company or any of its Subsidiaries under any Bankruptcy Law, in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in the documents evidencing or governing such Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such Bankruptcy Law.
"BOARD OF DIRECTORS" with respect to a Person means the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, and unless specified to the contrary or inappropriate in the context, refers to the Board of Directors of the Company.
"BUSINESS DAY" means each day which is not a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, partnership interests and limited liability company interests but excluding any debt securities convertible into such equity.
"CHANGE OF CONTROL" means the occurrence of any of the following events:
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, the Parent or
any intermediate holding company between the Company and the Parent, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person (the
"SPECIFIED PERSON") shall be deemed to have "beneficial ownership" of all
shares that such specified person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the
Voting Stock of the Company (including any successor to the Company
pursuant to Article 5 of this Indenture) (for the purposes of this clause
(1), such specified person shall be deemed to beneficially own any Voting
Stock of the Company or any other Person held by any entity (a "PARENT
ENTITY") if such specified person is the beneficial owner (as defined in
this clause (1)), directly or indirectly, of more than 50% of the voting
power of the Voting Stock of such parent entity;
(2) individuals who on the Issue Date constituted the Parent Board or the Company Board (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Parent or the Company, as the case may be, was approved by (A) a vote of a majority of the directors
of the Parent or the Company, as the case may be, then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved or (B) the Permitted Holders) cease for any reason to constitute a majority of such Board of Directors then in office; or
(3) the adoption of a plan under Bankruptcy Law relating to the liquidation or dissolution of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means any assets of the Company or any Guarantor defined as "Collateral" in any Collateral Document or otherwise subject to a security interest or lien in favor of the Collateral Agent to secure the payment of obligations under this Indenture, the Collateral Documents or the Notes; provided, however, that in no case shall the Collateral include Excluded Collateral.
"COLLATERAL AGENT" means The Bank of New York in its capacity as collateral agent under any Collateral Document until a successor replaces it, and thereafter means the successor.
"COLLATERAL DOCUMENTS" means, collectively, the Security Agreement and all other security agreements, pledge agreements, mortgages, deeds of trust, collateral agreements, control agreements, assignments, instruments, financing statements, filings and other documents that grant, evidence, set forth, provide notice of, govern or limit any security interest or lien in favor of the Collateral Agent in the Collateral, and all amendments thereto from time to time.
"COMMERCIALLY REASONABLE EFFORTS" means efforts that are reasonable under the circumstances as determined in good faith by the Board of Directors of the Company. Such efforts do not, in any event, include the payment of money or the making of concessions by the Company or any Subsidiary (or any Affiliate or Permitted Holder) in order to obtain such concessions or making efforts to obtain consent or approval if in good faith the Board of Directors determines that such efforts are unlikely to be successful.
"COMPANY" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.
"COMPANY BOARD" means the Board of Directors of the Company.
"CONSOLIDATED CASH INTEREST EXPENSE" for the Company, for any period, means Consolidated Interest Expense for the Company for such period, less the following, without duplication:
(1) any non-cash interest expense of the Company and its consolidated Restricted Subsidiaries;
(2) any interest payments on the Notes that are paid in-kind; and
(3) any amount included pursuant to clause (7) of the definition of the term "Consolidated Interest Expense".
"CONSOLIDATED COVERAGE RATIO" as of any date of determination means the ratio of (x) the aggregate amount of EBITDA of the Company for the period of the most recent four consecutive fiscal quarters ending at least 50 days prior to the date of such determination to (y) Consolidated Cash Interest Expense of the Company for such four fiscal quarters; provided, however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, then EBITDA and Consolidated Cash Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness and the use of proceeds thereof as if such Indebtedness had been Incurred on the first day of such period and such proceeds had been applied as of such date;
(2) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, then EBITDA and Consolidated Cash Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary had not earned the interest income actually earned, if any, during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if, since the beginning of such period, the Company or any Restricted Subsidiary shall have made any Asset Disposition, then EBITDA for such period shall be reduced by an amount equal to EBITDA (if positive) directly attributable to the assets which were the subject of such Asset Disposition for such period, or increased by an amount equal to EBITDA (if negative) directly attributable thereto for such period, and Consolidated Cash Interest Expense for such period shall be reduced by an amount equal to the Consolidated Cash Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Cash Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);
(4) if, since the beginning of such period, the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted
Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of assets having a fair market value in excess of $10.0 million, then EBITDA and Consolidated Cash Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period; and
(5) if, since the beginning of such period, any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Subsidiary during such period, then EBITDA and Consolidated Cash Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition had occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness, but if the remaining term of such Interest Rate Agreement is less than twelve months, then such Interest Rate Agreement shall only be taken into account for that portion of the period equal to the remaining term thereof).
The Consolidated Interest Expense attributable to interest on any Indebtedness under a revolving credit facility the outstanding principal balance of which is required to be computed on a pro forma basis in accordance with the foregoing shall be computed based on the average daily balance of such Indebtedness during the applicable period, provided, that such average daily balance shall take into account the amount of any repayment of Indebtedness under such revolving credit facility during the applicable period, to the extent such repayment permanently reduced the commitments or amounts available to be borrowed under such facility.
If the calculation of the Consolidated Coverage Ratio as of any date of determination would include any period prior to the Issue Date, Consolidated Interest Expense and EBITDA for such four fiscal quarter period shall be determined (i) by annualizing the Consolidated Interest Expense and EBITDA for all completed fiscal quarters starting after the Issue Date and ending prior to such date of determination for which financial statements are available or (ii) if no fiscal quarters have started after the Issue Date and ended prior to such date of determination for which financial statements are available, in the case of Consolidated Interest Expense, by using the Indebtedness and Capital Lease Obligations balances and expense amounts as of such date of determination and for the period from the Issue Date to such date of determination and in the case of EBITDA, by using estimated EBITDA for the period from the
Issue Date to such date of determination as reasonably determined by the Board of Directors of the Company in good faith.
"CONSOLIDATED INTEREST EXPENSE" of the Company means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent incurred by the Company or its Restricted Subsidiaries, without duplication:
(1) interest expense attributable to Capital Lease Obligations and the interest expense attributable to leases constituting part of a Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Interest Rate Agreements;
(7) dividends in respect of all Preferred Stock held by Persons other than the Company or a Wholly Owned Subsidiary (other than dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company); provided, however, that such dividends will be multiplied by a fraction the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the issuer of such Preferred Stock (expressed as a decimal) for such period (as estimated by the chief financial officer of the Company in good faith);
(8) interest incurred in connection with Investments in discontinued operations;
(9) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust.
"CONSOLIDATED NET INCOME" of the Company means, for any period, the net income of the Company and its consolidated Subsidiaries (computed before giving effect to the payment of dividends on Capital Stock); provided, however, that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (3) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income in an amount equal to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (2) below); and
(B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income;
(2) any net income of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:
(A) subject to the exclusion contained in clause (3) below, the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income in an amount equal to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause (2));
(B) the net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; and
(C) the net income of any such Restricted Subsidiary for such period shall not be excluded solely as a result of the restrictions on the payment of dividends and the making of distributions set forth in any Credit Facility Incurred pursuant to Section 4.06(b)(1) or Indebtedness under Section 4.06(b)(11) or (12), or any Credit Linked Hedge related to any such Credit Facility;
(3) any gain or loss (other than any cash loss) realized upon the sale or other disposition of any assets of the Company, its consolidated Subsidiaries or any other Person (including pursuant to any sale-and-leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any gain (but not loss) realized upon the sale or other disposition of any Capital Stock of any Person;
(4) extraordinary gains or losses;
(5) the cumulative effect of a change in accounting principles and its effect as shown on the Company's consolidated statement of income for such period;
(6) any non-recurring fees, charges or other expenses directly related to the Transactions; and
(7) any charges recorded as a result of implementing SFAS 123R (expensing of stock options) and any related interpretations or amendments thereto.
Notwithstanding the foregoing, for the purposes of Section 4.05 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under Section 4.05(a)(3)(D).
"CORPORATE TRUST OFFICE" means the corporate trust office of the Trustee located at 101 Barclay Street, 8 West, New York, New York 10286, Attention: Corporate Trust Division - Corporate Finance Unit, or such other office, designated by the Trustee by written notice to the Company, at which at any particular time its corporate trust business shall be administered.
"CREDIT FACILITIES" means one or more debt facilities, capital markets transactions or commercial paper facilities or any other agreement or instrument providing for or evidencing the extension of credit with banks, finance companies, funds, insurance companies, vendors or institutional lenders providing revolving credit loans, term loans, notes, bonds, debentures, receivables financing (including through the sale of receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.
"CREDIT LINKED HEDGE" means, with respect to a Credit Facility, all
Hedging Obligations that (1) constitute or are directly related to Indebtedness
Incurred under such Credit Facility or are entered into with counterparties who
are lenders or Affiliates of lenders under such Credit Facility, (2) are secured
by all collateral securing such Credit Facility on an equal and ratable basis
and guaranteed by all guarantors of such Credit Facility on a pari passu basis,
in each case pursuant to common documentation, (3) contains covenants not less
favorable to the Noteholders than those set forth in such Credit Facility, and
(4) are permitted under this Indenture.
"CURRENCY AGREEMENT" means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement designed to protect such Person against fluctuations in currency values.
"DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:
(1) matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise, in whole or in part;
in each case on or prior to the date that is 367 days after the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the first anniversary of the Stated Maturity of the Notes shall not constitute Disqualified Stock if:
(A) the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the terms applicable to the Notes and described in Sections 4.04 and 4.10; and
(B) any such requirement only becomes operative after compliance with such terms applicable to the Notes, including the purchase of any Notes tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture; provided, however, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.
"DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that is not a Foreign Subsidiary.
"EBITDA" of the Company for any period means the sum of Consolidated Net Income of the Company, plus the following to the extent deducted in calculating such Consolidated Net Income:
(1) all income tax expense of the Company and its consolidated Restricted Subsidiaries;
(2) Consolidated Interest Expense (but computed without any increase for the amount set forth in clause (7) of the definition of Consolidated Interest Expense);
(3) depreciation and amortization expense of the Company and its consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid operating activity item that was paid in cash in a prior period);
(4) all other non-cash charges of the Company and its consolidated Restricted Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period);
(5) all ongoing cash restructuring expenses that are incurred as part of the ongoing emergence process;
(6) equity losses recognized in Consolidated Net Income; and
(7) gains/losses recognized on foreign exchange,
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders.
"ESOP" means any employee stock ownership plan or a trust established by the Company or any of its Subsidiaries for the benefit of their employees.
"EVENT OF LOSS" means, with respect to any property or asset (tangible or intangible, real or personal), any loss, destruction or damage of the property or asset or any actual condemnation, seizure or taking by the power of eminent domain or otherwise of the property or asset, or confiscation of the property or asset or the requisition of the use of the property or asset, in any such case only to the extent such loss, destruction or damage is valued in good faith by the Board of Directors of the Company to be in excess of $100.0 million.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as amended.
"EXCLUDED COLLATERAL" means:
(1) any contract, agreement, instrument or other asset that by its terms would be violated, breached or terminated by an assignment as Collateral under any Collateral Document (other than to the extent that such terms prohibiting such assignment in any contract, agreement, instrument or other asset would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the applicable Uniform Commercial Code or any successor provision or provisions and other than to the extent that the Company has obtained a consent from the relevant counterparty to such assignment);
(2) any property subject to a Lien permitted by clauses (iii), (iv),
(vi), (ix), (xiii), (xvii), (xviii), (xix), (xx) and (xxi) of the definition of
Permitted Liens in this Indenture, to the extent that the contractual
arrangements governing such Lien prohibit the granting of a security interest
hereunder in such property;
(3) assets sold to a Person which is not the Company or a Restricted Subsidiary in compliance with this Indenture;
(4) assets owned by a Restricted Subsidiary after the sale of such Person or the release of the Guarantee of such Person pursuant to Section 10.06 or the release of the Liens pursuant to Section 11.05;
(5) any domestic deposit account (i) for which the Trustee is the depositary, and (ii) of which all or a substantial portion of the funds on deposit are used for funding (w) payroll, (x) 401(k) and other retirement plans and employee benefits, including rabbi trusts for deferred compensation, (y) health care benefits and (z) escrow arrangements (e.g., environmental indemnity accounts) or (iii) (not already subject to the other clauses of this clause (5)) with an aggregate average ten consecutive Business Day daily balance of all funds in all such other domestic deposit accounts for all Obligors not in excess of $2.0 million;
(6) any individual parcel of owned real estate with a fair market value, as reasonably determined in good faith by the Company, not in excess of $1,000,000;
(7) any real estate leasehold interest;
(8) any outstanding stock of a direct or indirect Foreign Subsidiary of the Company that is not a Guarantor in excess of 65% of the total combined voting stock (as determined for United States federal income tax purposes) of such Foreign Subsidiary;
(9) any property of any Obligor which requires governmental regulatory approval for such Guarantor to grant the lien on such Collateral so long as the Guarantor is using or has used Commercially Reasonable Efforts to obtain such consent;
(10) any letter of credit rights for a specified purpose to the extent the beneficiary is required by applicable law to apply the proceeds of such letter of credit rights for a specified purpose;
(11) any assets securing Indebtedness permitted under Section 4.06(b)(4) to the extent the documents securing such Indebtedness prohibit such assets from securing other Indebtedness;
(12) cash deposits, not exceeding $5,000,000 at any time, securing Hedging Obligations permitted under this Indenture;
(13) assets subject to the Amended and Restated Satellite Agreement dated August 26, 2003, as amended, by and between the Company and APT Satellite Company Limited, until such time as the requirements set forth in Section 13 thereof have been satisfied;
(14) any collateral provided pursuant to that certain Security Agreement dated October 8, 2004 entered into among the Company, APT Satellite Company Limited and Bank of China (Hong Kong) Limited;
(15) equity interests in Earth Station Ecuador CIA Ltda.;
(16) other assets designated from time to time by the Company with a fair market value as determined in good faith by the Company in the aggregate for all assets designated not to exceed $5.0 million;
(17) transponders on Telstar 18 that are subject to the leasehold or ownership interest of APT Satellite Company Limited and the common elements on the satellite associated therewith;
(18) any contract, agreement, instrument or other asset that by its terms would be violated, breached or terminated by an assignment as Collateral under any Collateral Document if such asset is not material to the business of the Obligors taken as a whole; and
(19) FCC Licenses to the extent (and only to the extent) that the creation of a security interest in any such FCC License would be prohibited by FCC Laws, but excluding (i) the right to receive any payment of money (including, without limitation, payment intangibles) and (ii) any proceeds, products, accessions, rents, profits, income, benefits, substitutions or replacements of any FCC License (unless and to the extent that such proceeds, products, accessions, rents, profits, income, benefits, substitutions or replacements would constitute an FCC License and FCC Laws applicable thereto prohibit the creation of a security interest in such FCC License).
"EXCLUDED CONTRIBUTIONS" means the Net Cash Proceeds received by the Company after the Issue Date from (a) contributions to its common equity capital and (b) the sale (other than to an ESOP) of Capital Stock (other than Disqualified Stock) of the Company, in each case designated within 60 days of the receipt of such Net Cash Proceeds as Excluded Contributions pursuant to an Officers' Certificate, the cash proceeds of which are excluded from the calculation set forth in clause(a) 3(B) of the first paragraph of Section 4.05.
"FCC" means the U.S. Federal Communications Commission (or any successor entity).
"FCC LAWS" means the Communications Act of 1934, as amended, and the rules, regulations and policies promulgated thereunder and all other similar laws, rules and regulations administered by the FCC.
"FCC LICENSES" means all rights that the Company or any Subsidiary may have at any time in any license, authorization, permit, certificate, right, consent, or approval issued by the FCC that directly relate to the business of the Company and its Subsidiaries, including any rights to payment upon any transfer or assignment of any FCC License, or any other transfer or transaction intended to result in a transfer or assignment of an FCC License.
"FOREIGN REQUIRED MINORITY SHARES" means Capital Stock of a Foreign Subsidiary that is required by the applicable laws and regulations of such foreign jurisdiction to be owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction in order for such Foreign Subsidiary to transact business in such foreign jurisdiction.
"FOREIGN SUBSIDIARY" means any Restricted Subsidiary that is not organized under the laws of the United States, any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards Board;
(3) such other statements by such other entity as approved by a significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.
All ratios and computations based on GAAP in this Indenture will be computed in conformity with GAAP. Computations shall not be adjusted as a result of any recharacterization of the Notes for accounting purposes.
"GROUP MEMBER" means the Parent and any Subsidiary of the Parent.
"GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTOR" means any Person that Guarantees any of the Notes pursuant to the terms of this Indenture, in each case unless and until such Person is released from its obligations under its Guaranty pursuant to the terms of this Indenture.
"GUARANTY" means a Guarantee by a Guarantor of the Company's Obligations with respect to the Notes.
"HEDGING OBLIGATIONS" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is registered on the Registrar's books.
"INCUR" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "INCURRENCE" when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 4.06, (1) amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security, (2) the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms, and (3) unrealized losses or charges in respect of Hedging Obligations (including those resulting from the application of FAS 133), in each case will be deemed not to be Incurrences of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person on any date of determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable, progress payments and milestone payments arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Subsidiary of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture;
(6) all obligations of the types referred to in clauses (1) through
(5) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the types referred to in clauses (1) through
(6) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the fair market
value of such property or assets at such date of determination and the
amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.
Indebtedness shall not include:
(a) any obligation of the Company or any Restricted Subsidiary as of the Issue Date under the sale and leaseback transaction as described in Section 9.10 of that certain Lease Agreement dated August 18, 1999 by and between Loral Asia Pacific Satellite (HK) Limited and APT Satellite Company Limited;
(b) $36,264,800 in payments to be made by the Company to APT under that Amended and Restated Agreement dated as of August 26, 2003, as further amended on November 16, 2003, by and between the Company and APT Satellite Company Limited (as it may be amended pursuant to the Letter Agreement dated August 26, 2003);
(c) orbital or like payments pursuant to contracts with satellite manufacturers; and
(d) payment obligations to third parties for rights to an orbital slot.
"INDENTURE" means this Indenture as amended or supplemented from time to time.
"INDEPENDENT QUALIFIED PARTY" means an investment banking firm, accounting firm or appraisal firm of reputable standing as determined by the Board of Directors of the Company; provided, however, that such firm is not an Affiliate of the Company.
"INTEREST PAYMENT DATE" means each interest payment date as specified in the form of Note attached hereto as Appendix B.
"INTEREST RATE AGREEMENT" means, in respect of a Person, any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to reduce such Person's interest expense or protect such Person against fluctuations in interest rates.
"INVESTMENT" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. Except as otherwise provided for herein, the amount of an Investment shall be its fair value at the time the Investment is made and without giving effect to subsequent changes in value. The term "Investment" shall not include any arrangements with any service provider for the joint sale of services or other teaming arrangement pursuant to which the Company or any Restricted Subsidiary contributes transponder capacity and/or related assets.
For purposes of the definition of "Unrestricted Subsidiary," the definition of "Restricted Payment" and Section 4.05:
(1) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors.
Any action taken by an Unrestricted Subsidiary shall not be deemed to have been taken directly or indirectly by the Company or any Restricted Subsidiary.
"ISSUE DATE" means November 21, 2005.
"LAPS(HK)" means Loral Asia Pacific Satellite (HK) Limited, a corporation with limited liability organized under the laws of Hong Kong, and its successors.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).
"MHR" means MHR Fund Management LLC and any successor thereto.
"MOODY'S" means Moody's Investors Service, Inc.
"NET AVAILABLE CASH" from an Asset Disposition means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form), in each case net of:
(1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law, be repaid out of the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition; and
(4) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition.
"NET CASH PROCEEDS" means, with respect to any issuance or sale of Capital Stock, the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
"NOTES" means the notes issued under this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements and other amounts payable.
"OBLIGOR" means each of the Company and each Guarantor.
"OFFICER" means the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.
"PARENT" means Loral Space & Communications Inc., a Delaware corporation, and its successors.
"PARENT BOARD" means the Board of Directors of the Parent.
"PAYMENT DEFAULT" means a Default arising pursuant to Section 6.01(1) or 6.01(2).
"PERMITTED HOLDERS" means MHR and any Related Party of MHR.
"PERMITTED INVESTMENT" means an Investment by the Company or any Restricted Subsidiary in:
(1) the Company, a Subsidiary Guarantor or a Person that will, upon the making of such Investment, become a Subsidiary Guarantor; provided, however, that the primary business of such Subsidiary Guarantor is a Related Business;
(2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Subsidiary Guarantor; provided, however, that such Person's primary business is a Related Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary reasonably deems necessary under the circumstances and may include prudent vendor financing terms as determined in good faith by the Company;
(5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business of the Company or such Restricted Subsidiary not exceeding in the aggregate at any time $1.0 million;
(7) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition as permitted pursuant to Section 4.10;
(9) any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;
(10) any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection, and lease, workers' compensation, performance and similar deposits made in the ordinary course of business by the Company or any Restricted Subsidiary;
(11) any Person to the extent such Investments consist of Hedging Obligations otherwise not prohibited under Section 4.06;
(12) any Person, not otherwise permitted to be made pursuant to the preceding clauses of this definition, in an aggregate amount which, when taken together with all other Investments made pursuant to this clause (12) at any one time outstanding, does not exceed $50.0 million; and
(13) the exchange of transponder capacity as contemplated in agreements with APT Satellite Company Limited in effect as of the Issue Date.
"PERMITTED LIENS" means (i) Liens for taxes, assessments, governmental charges or claims with respect to amounts not yet delinquent or amounts being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (ii) contractual, statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens on cash or cash equivalents incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens on cash or cash equivalents incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers' acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary
course of business (exclusive of obligations for the payment of borrowed money);
(v) easements, rights-of-way, municipal and zoning ordinances and similar
charges, encumbrances, title defects or other irregularities affecting real
property that do not, individually or in the aggregate, materially interfere
with the ordinary course of business of the Company or any of its Restricted
Subsidiaries; (vi) Liens (including extensions and renewals thereof) upon real
or personal property acquired after the Issue Date; provided that (a) such Lien
is created solely for the purpose of securing Indebtedness Incurred, in
accordance with Section 4.06 of this Indenture, to finance (or refinance) the
cost (including the cost of improvement, transportation, development and design,
installation, integration or construction) of the item of property or assets
subject thereto and such Lien is created prior to, at the time of or within 6
months after the later of the acquisition, the completion of construction or the
commencement of full operation of such property, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost (plus, in
the case of any refinancing Indebtedness referred to above, premiums, accrued
interest, fees and expenses), and (c) any Lien permitted by this clause shall
not extend to or cover any property or assets other than such item of property
or assets, any improvements on such item, and proceeds thereof; (vii) leases or
subleases of real property granted to others that do not materially interfere
with the ordinary course of business of the Company and its Restricted
Subsidiaries; (viii) any interest or title of a lessor in the property subject
to any capitalized lease or operating lease; (ix) Liens on property of, or on
shares of Capital Stock or Indebtedness of, any Person existing at the time such
Person becomes, or such property becomes a part of, any Restricted Subsidiary;
provided that such Liens (a) do not extend to or cover any property or assets of
the Company or any Restricted Subsidiary other than the property or assets so
acquired and (b) were not incurred in contemplation of the acquisition thereof;
(x) Liens in favor of the Company or any Restricted Subsidiary; (xi) Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary that does not give rise to a Default or an Event of
Default provided that any reserve or other appropriate provision that shall be
required in conformity with GAAP shall have been made therefor; (xii) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods with
respect to amounts not yet delinquent or amounts being contested in good faith
by appropriate legal proceedings promptly instituted and diligently conducted
and for which a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made; (xiii) Liens upon a
satellite and components thereof during the period in which such satellite is
being constructed, provided that (a) such Liens (1) are for the benefit of only
the manufacturer of such satellite or components and (2) secure only the
obligation of the Company or any Restricted Subsidiary to pay the purchase price
for such satellite or components and (b) such Liens are actually released upon,
or prior to, the completion of construction of such satellite and prior to the
launch or commencement of full operations of such satellite; (xiv) Liens
securing the Notes; (xv) Liens arising under this Indenture in favor of the
Trustee for its own benefit and similar Liens in favor of other trustees, agents
and representatives arising under instruments governing Indebtedness permitted
to be incurred under this Indenture, provided, that such Liens are solely for
the benefit of the trustees, agents, or representatives, in their capacities as
such and not for the benefit of the holders of such Indebtedness; (xvi) set-off,
chargeback and other rights of depositary and collection banks and other
regulated financial institutions with respect to money or instruments of the
Company or its Restricted Subsidiaries on deposit with or in the possession of
such institutions; (xvii) Liens arising from the deposit of funds or securities
in trust
for the purpose of decreasing or defeasing Indebtedness so long as such deposit of funds or securities and such decreasing or defeasing of Indebtedness are permitted under Section 4.05 hereof; (xviii) Liens securing Indebtedness Incurred pursuant to and in compliance with Section 4.06(b)(1) hereof; (xix) Liens on transponders leased by the Company or a Restricted Subsidiary to customers to secure obligations to such customers under such leases; (xx) Liens, in addition to those provided for in the foregoing clauses (i) through (xix) securing obligations valued in good faith by the Board of Directors of the Company to be in an aggregate amount not to exceed $40.0 million; and (xxi) Liens on existence on the Issue Date.
"PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"PLAN" means the Debtors' Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of Loral Space & Communications Ltd., et al., as confirmed by the United States Bankruptcy Court, Southern District of New York, including all exhibits and other attachments thereto.
"PREFERRED STOCK", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
"PRINCIPAL" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
"RECORD DATE" means each record date as specified in the form of Note attached hereto as Appendix B.
"REFINANCE" means, in respect of any Indebtedness, to refinance, extend, renew or refund, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. "REFINANCED" and "REFINANCING" shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Subsidiary existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced; and
(2) such Refinancing Indebtedness has an aggregate principal amount
(or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"RELATED BUSINESS" means any business in which the Company and its Restricted Subsidiaries were engaged on the Issue Date and any business related, ancillary or complementary to any business in which the Company and its Restricted Subsidiaries were engaged on the Issue Date, after giving effect to the Restructuring Transactions.
"RELATED PARTY" means (1) any controlling stockholder, controlling member, general partner, majority owned Subsidiary, or spouse or immediate family member (in the case of an individual) of any Permitted Holder, (2) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons holding a controlling interest of which consist solely of one or more Permitted Holders and/or such other Persons referred to in the immediately preceding clause (1), (3) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding clause (2) acting solely in such capacity, (4) any investment fund or other entity controlled by, or under common control with, MHR or the principals that control MHR, or (5) upon the liquidation of any entity of the type described in the immediately preceding clause (4), the former partners or beneficial owners thereof to the extent of the Voting Stock formerly held by such entity.
"RESTRICTED PAYMENT" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than (A) dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock), (B) dividends or
distributions payable solely to the Company or a Restricted Subsidiary, and
(C) dividends or other distributions made by a Subsidiary that is not a
Wholly Owned Subsidiary to the holders of any class of its Capital Stock on
a pro rata basis);
(2) the purchase, redemption or other acquisition or retirement for value of any Capital Stock of the Company or the Parent held by any Person (other than the Company or a Restricted Subsidiary) or of any Capital Stock (other than Disqualified Stock) of a Restricted Subsidiary held by any Affiliate of the Company (other than a Restricted Subsidiary), including the exercise of any option to exchange any Capital Stock (other than Disqualified Stock) into any other securities of any Person (other than into Capital Stock of the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of such Person (other than (A) payments made solely to the Company or a Subsidiary Guarantor and (B) the refinancing of Subordinated Obligations through the Incurrence of Refinancing Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such Incurrence); or
(4) the making of any Investment (other than a Permitted Investment) in any Person.
For clarity, payments under tax sharing agreements, shared services agreements and management agreements are not Restricted Payments.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that is not an Unrestricted Subsidiary.
"RESTRUCTURING TRANSACTIONS" has the meaning given to it in the Plan and shall, in any event, include the transactions set forth on Schedule 6(f) to the Security Agreement.
"S&P" means Standard & Poor's Ratings Group.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement made by the Company and the Subsidiary Guarantors in favor of the Collateral Agent, substantially in the form of Appendix C attached hereto, as such may be amended, supplemented or otherwise modified from time to time.
"SERIES A PREFERRED STOCK" means the 12% Series A Non-Convertible Preferred Stock of the Company
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"STATED MATURITY" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
"SUBORDINATED OBLIGATION" means, with respect to a Person, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinated in right of payment to the Notes or a Guaranty of such Person, as the case may be, pursuant to a written agreement to that effect.
"SUBSIDIARY" means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
Unless otherwise specified or inappropriate in the context, "Subsidiary" means a Subsidiary of the Company.
"SUBSIDIARY GUARANTOR" means any Guarantor that is a Subsidiary of the Company.
"SUPPLEMENTAL GUARANTY AGREEMENT" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Guarantor guarantees the Company's obligations with respect to the Notes on the terms provided for in this Indenture.
"TEMPORARY CASH INVESTMENTS" means any of the following:
(1) U.S. dollars, or, in the case of any Foreign Subsidiary, such local currencies held by it from time to time in the ordinary course of business;
(2) any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America, any member nation of the European Union or any agency thereof having maturities of not more than one year from the date of acquisition;
(3) investments in demand accounts, time deposit accounts, certificates of deposit and money market deposits maturing within 360 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $500 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;
(4) repurchase obligations with a term of not more than 90 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;
(5) investments in commercial paper, maturing not more than 360 days after the date of acquisition, issued by an entity (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S & P;
(6) investments in securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's; and
(7) instruments equivalent to those referred to in clauses (1) to (6) above denominated in Euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Restricted Subsidiary organized in such jurisdiction, all as determined in good faith by the Company.
"TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the Issue Date.
"TRANSACTIONS" means the issuance of the Notes on the Issue Date, the Rights Offering (as defined in the Plan), and the other transactions contemplated by the Plan.
"TRUST OFFICER" - means, when used with respect to the Trustee, any officer within the Corporate Trust Division - Corporate Finance Unit of the Trustee (or any successor unit of the Trustee) located at the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and for the purposes of Sections 7.01(c)(2) and 7.05 also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"TRUSTEE" means The Bank of New York in its capacity as trustee until a successor replaces it, and thereafter means the successor. Where appropriate in the context, for purposes of Articles 6 and 7 of this Indenture, the term "Trustee" shall include the Collateral Agent.
"UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code as in effect from time to time.
"UNPERFECTED COLLATERAL" means,
(1) any vehicle covered by a certificate of title having a fair market value of less than $250,000; and
(2) any assets of any Obligor located outside the United States; provided, however, that this clause (2) shall not include: (a) any contract between LAPS (HK) and APT, (b) satellites and transponders, and (c) any Capital Stock of any Person that owns any satellites or transponders.
"UNRESTRICTED SUBSIDIARY" means (a) XTAR, LLC, a Delaware limited liability company and its successors (other than the Company or a Restricted Subsidiary), (b) XTAR Services LLC, a Delaware limited liability company and its successors (other than the Company or a Restricted Subsidiary) and (c):
(1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary;
in each case unless and until such Subsidiary is designated a Restricted Subsidiary for purposes of this Indenture.
The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) that is not a Significant Subsidiary to be an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (A) the Company could Incur $1.00 of additional Indebtedness under Section 4.06(a) and (B) no Default or Event of Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option.
"VOTING STOCK" of a Person means all classes of Capital Stock or other interests of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
"WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all the Capital Stock of which is owned by the Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- --------------
"Affiliate Transaction"........................................ 4.10(a)
"After-Acquired Property"...................................... 11.01(b)
"Asset Disposition Offer"...................................... 4.09(a)(3)
"Bankruptcy Law" .............................................. 6.01
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Defined in
Term Section
---- --------------
"Cash/PIK Interest"............................................ 4.01(b)(iii)
"Change of Control Offer" ..................................... 4.04(b)
"Consideration"................................................ 11.05(b)(i)
"covenant defeasance option" .................................. 8.01(b)
"Custodian" ................................................... 6.01
"Default Rate"................................................. 4.01(c)
"Determination Notice"......................................... 4.01(b)(iii)
"Event of Default" ............................................ 6.01
"Expiration Date".............................................. 4.01(b)(iv)
"Guaranteed Obligations" ...................................... 10.01
"Interest Determination"....................................... 4.01(b)(iii)
"legal defeasance option" ..................................... 8.01(b)
"Legal Holiday" ............................................... 12.08
"Mandatory PIK Date"........................................... 4.01(b)(ii)
"Paying Agent" ................................................ 2.03
"PIK Notes".................................................... 4.01(b)(ii)
"Redemption Date" ............................................. 5 of the Notes
"Relevant Interest Payment Date"............................... 4.01(b)(iii)
"Registrar" ................................................... 2.03
"Released Collateral".......................................... 11.05(b)
"Requisite Objection Notice"................................... 4.01(b)(iv)
"Successor Company" ........................................... 5.01(a)
"Valuation Date"............................................... 11.05(b)(i)
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In addition, terms defined in Appendix A shall have the meanings set forth therein.
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes and the Guaranties;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate in right of payment to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(7) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the maximum liquidation preference plus accrued and unpaid dividends of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater;
(9) all references to the date the Notes were originally issued shall refer to the Issue Date;
(10) in the event of a conflict between the definitions set forth in
Section 1.01 and the definitions set forth in the first paragraph of this
Indenture, the definitions set forth in Section 1.01 shall govern;
(11) for purposes of determining compliance with any U.S. dollar-denominated restriction contained in this Indenture, the U.S. dollar-equivalent amount denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness, or made, in the case of Investments or other amounts; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced; and
(12) notwithstanding any other provision under this Indenture, the maximum amount of Indebtedness, Investments and other amounts that the Company and its Restricted Subsidiaries may incur pursuant to this Indenture shall not be deemed to be exceeded, with regard to any outstanding Indebtedness, Investments or other amounts, solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such refinancing Indebtedness is denominated that is in effect on the date of such refinancing.
ARTICLE 2
The Notes
SECTION 2.01. Form and Dating.
Provisions relating to the Notes are set forth in Appendix A and Appendix B attached hereto which are hereby incorporated in and expressly made part of this Indenture. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Appendix B. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any (provided, that any such notation, legend or endorsement is in a form reasonably acceptable to the Company and the Trustee). Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Appendix B are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal, if any, may be impressed, affixed, imprinted or reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate Notes in the amounts and at the times specified in Section 2.2 of Appendix A attached hereto.
The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "REGISTRAR") and an office or agency where Notes may be presented for payment (the "PAYING AGENT"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term "REGISTRAR" includes any appointed co-registrar and the term "PAYING AGENT" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Wholly Owned Subsidiary incorporated or organized within The United States of America may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Notes.
SECTION 2.04. Paying Agent To Hold Money in Trust.
Not less than one Business Day prior to each due date of the principal, premium and interest on any Note, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal, premium and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders and the Trustee all money held by the Paying Agent for the payment of principal of, premium or interest on the Notes and shall promptly notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon payment in full to or a receipt by the Trustee of all the principal, premium and interest due under this Indenture, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing, at least five Business Days before each payment date, including each Interest Payment Date, and at
such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders.
SECTION 2.06. Transfer and Exchange.
The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer, and only to the extent permitted by, and consummated in compliance with, Section 2.3 of Appendix A. When a Note is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of this Indenture and Section 8-401(a) of the Uniform Commercial Code are met. When Notes are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. The Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection with the transfer or exchange of the Notes (other than any such transfer taxes or other similar governmental charges payable upon exchange pursuant to Section 2.07, 2.09, 3.06 or 9.05).
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue, and the Trustee shall authenticate, a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the reasonable judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Note is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Note.
Every replacement Note shall be an additional Obligation of the Company.
SECTION 2.08. Outstanding Notes.
(a) Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. Subject to Section 12.06, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
(b) If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser.
(c) If the Paying Agent (other than the Company or an Affiliate thereof) segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Noteholders on that date pursuant to the
terms of this Indenture or otherwise, then on and after that date interest on such Notes (or portions thereof) ceases to accrue.
SECTION 2.09. Temporary Notes.
The Company may prepare, and the Trustee shall authenticate, temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company reasonably considers appropriate for temporary Notes. If the Company so reasonably elects, the Company shall prepare and the Trustee shall authenticate permanent Definitive Notes and deliver them in exchange for such temporary Notes.
SECTION 2.10. Cancellation.
The Company immediately upon the redemption of any Notes shall deliver such Notes and at any other time may deliver Notes, to the Trustee for cancellation, which Notes the Trustee shall cancel promptly upon such delivery. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act and the Trustee's policies) all Notes surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner and in compliance with the provisions of Section 4.01(b) as to whether such interest shall be paid in cash, in-kind through the issuance of Additional Notes or some combination thereof. The Company may pay the defaulted interest to the Persons who are Noteholders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Noteholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers and corresponding "ISINs" (if then generally in use) and, if so, the Trustee may use "CUSIP" numbers and corresponding "ISINs" in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.
SECTION 2.13. Trustee's Disclaimer.
None of the Company, the Trustee, the Registrar, any Paying Agent or any agent of any of them shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Notes, for maintaining, supervising or reviewing any records relating to such beneficial ownership interests, or for any acts or omissions of a Depository or for any transactions between a Depository and any beneficial owner or between or among beneficial owners. No owner of a beneficial interest in the Notes shall have any rights under this Indenture, and the Depository or its nominee, if any, shall be deemed and treated by the Company, the Trustee, the Registrar, any Paying Agent or any agent of any of them as the absolute owner and holder of such Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, the Registrar, any Paying Agent or any agent of any of them from giving effect to any written certification, proxy or other authorization furnished by a Depository, or any of its members, as a Holder, with respect to such Notes or impair, as between such Depository and owners of beneficial interests in such Notes, the operation of customary practices governing the exercise of the rights of such Depository (or its nominee) as Holder of such Notes.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Section 5 of the Notes, it shall notify the Trustee in writing of the Redemption Date and the principal amount of Notes to be redeemed (such principal amount, the "PROPOSED REDEMPTION AMOUNT" and, any such notice, the "COMPANY REDEMPTION NOTICE").
The Company shall give each Company Redemption Notice to the Trustee at least 90 days before the applicable Redemption Date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein.
SECTION 3.02. Selection of Notes To Be Redeemed.
(a) Within ten (10) days after receipt by the Trustee of the Company Redemption Notice, the Trustee, in the Company's name and at the Company's expense, shall notify each then record holder of Notes (each, a "RECORD HOLDER") of the Company's proposal to redeem up to the Proposed Redemption Amount and shall instruct, in reasonable detail, each such Record Holder to cause the Trustee to be notified within the twenty (20) days after such Record Holder's receipt of the Trustee Notification (such 20-day period, the "ACCEPTANCE PERIOD"), in accordance with the applicable procedures of the Depository (which may necessitate the establishment by the Company of a Record Date), as to (A) whether each beneficial owner of Notes in respect of whom such Record Holder holds Notes in street name or otherwise (each, a "Beneficial Holder" and, collectively, the "Beneficial Holders") objects to such redemption, and (B) if such Beneficial Holder does not so object, the maximum aggregate principal amount of Notes held of record by such Beneficial Holder that such Beneficial Holder would voluntarily have redeemed by the Company in connection with such Company Redemption Notice (the "VOLUNTARY
REDEMPTION AMOUNT"(such notice from the Trustee to the Record Holders, the
"TRUSTEE NOTIFICATION").
(b) If the Proposed Redemption Amount is less than the aggregate principal amount of Notes then outstanding, the Trustee shall select the Notes to be redeemed from outstanding Notes not previously called for redemption as follows:
(i) if the sum of all Voluntary Redemption Amounts (such sum, the "TOTAL VOLUNTARY REDEMPTION AMOUNT") in respect of the applicable redemption exceeds the Proposed Redemption Amount, then, in respect of each Beneficial Holder, such amount of such Beneficial Holder's then outstanding Notes as is equal to the product of (x) the Proposed Redemption Amount multiplied by (y) a fraction, the numerator of which is such Beneficial Holder's Voluntary Redemption Amount and the denominator of which is the Total Voluntary Redemption Amount; and
(ii) if the Total Voluntary Redemption Amount is less than the Proposed Redemption Amount, then, in respect of each Beneficial Holder, (A) first, such Beneficial Holder's Voluntary Redemption Amount, if any, and (B) then, such amount of such Beneficial Holder's then remaining outstanding Notes (the "REMAINING NOTES AMOUNT"), if any, as is equal to the product of (x) the Proposed Redemption Amount less the Total Voluntary Redemption Amount multiplied by (y) a fraction, the numerator of which is such Beneficial Holder's Remaining Notes Amount, if any, and the denominator or which is the sum of all Remaining Notes Amounts in respect of all Beneficial Holders). Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed.
(c) For purposes of Section 3.02(a), the Trustee Notification shall be deemed to have been received on the fifth Business Day after deposit in the mails, pursuant to the requirements of Section 12.02, and each Beneficial Holder not responding within the Acceptance Period or whose response shall not clearly provide the information required in such response shall be conclusively deemed to have objected to the applicable redemption.
(d) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the redemption of Notes pursuant to this Article 3. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Article 3, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Article 3 by virtue of its compliance with such securities laws or regulations.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, and after expiration of the Acceptance Period and then only if the Requisite Objection to Redemption Notice has not been delivered, the Trustee, in the Company's name and at the Company's expense, shall mail a
further notice of redemption by first-class mail to each Record Holder to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Notes are to be redeemed, the identification and principal amounts of the particular Notes to be redeemed in compliance with Section 3.02 in respect of each Beneficial Holder identified to the Trustee by such Record Holder;
(6) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on the Notes (or portion thereof) called for redemption shall cease to accrue on and after payment in full of the redemption price;
(7) that no representation is made as to the correctness or accuracy of the CUSIP number or corresponding ISIN, if any, listed in such notice or printed on the Notes; and
(8) if applicable, that the Holders have the right to object to and prevent such redemption, and in such event, such redemption notice shall further comply with the applicable requirements of Section 5 of the Notes.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for redemption shall become due and payable on the Redemption Date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the related Interest Payment Date). Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price.
One Business Day prior to the Redemption Date, the Company shall deposit with the Paying Agent (other than the Company or an Affiliate thereof) money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date other than Notes or
portions of Notes called for redemption which have been delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Notes.
(a) General. The Company shall promptly pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Subject to Section 2.08(c), principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or an Affiliate thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available U.S. funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. All payments shall be made in New York, New York unless the Trustee otherwise specifies. Notwithstanding any provision of this Indenture or the Notes to the contrary, the Company shall be entitled to withhold from any payment required in respect of the Notes any amount determined by the Company to be required by law to be withheld.
(b) Payment of Interest.
(i) The Company shall pay interest on the Notes at the rate of 14.0% per annum payable semi-annually in arrears in cash, subject only to certain conditions specified below. In certain circumstances more particularly described in this Section 4.01(b), a portion of the interest (including, without limitation, any defaulted interest plus interest on such defaulted interest) from time to time due and payable on the Notes may be paid in-kind through the issuance of Additional Notes in lieu of cash.
(ii) Notwithstanding the provisions of Section 4.01(b)(i), interest on the Notes shall not be payable in cash, but rather shall be payable in-kind through the issuance of Additional Notes in lieu of cash (the "PIK NOTES") if and to the full extent that the amount of such interest (including, without limitation, any defaulted interest plus interest on such defaulted interest) to be paid on any Interest Payment Date (the "MANDATORY PIK DATE"), would exceed the amount that equals the product of (A) 50% of the Company's 12-month Adjusted EBITDA for the period ending as of the end of the most recently completed fiscal quarter which ended at least 50 days prior to the date of Interest Determination (as defined below) immediately preceding such Mandatory PIK Date, which Adjusted EBITDA shall be annualized if necessary consistently with the annualization provisions set forth in the definition of Consolidated Coverage Ratio (as certified by the Company's Chief Financial Officer), multiplied by (B) a fraction the
numerator of which is the number of days from and including the last Mandatory PIK Date (or in the case of the first Interest Payment Date, from and including the Issue Date) to but not including the current Mandatory PIK Date, and the denominator of which is 365 or 366 days, as applicable.
(iii) Notwithstanding the provisions of Section 4.01(b)(i), not
later than thirty (30) days prior to any Interest Payment Date, the Board
of Directors shall make the following determination: whether any portion or
all of the interest to be paid on such Interest Payment Date (the "RELEVANT
INTEREST PAYMENT DATE") if otherwise payable in cash in accordance with
Section 4.01(b)(i) as modified by Section 4.01(b)(ii) (the entire amount of
such interest so payable in cash but for the provisions of this clause
(iii), the "CASH/PIK INTEREST") should be paid in cash or, instead, in PIK
Notes (such determination, the "INTEREST DETERMINATION"). If the Board of
Directors makes the Interest Determination that the entire amount of the
Cash/PIK Interest be paid in cash, then the Cash/PIK Interest shall be
payable only in cash. If the Board makes the Interest Determination that
any portion or the entire amount of the Cash/PIK Interest be paid in PIK
Notes, a notice of such Interest Determination (a "DETERMINATION NOTICE"),
shall be sent to the Holders not more than thirty (30) nor fewer than
fifteen (15) days prior to the Relevant Interest Payment Date. The
Determination Notice shall describe in reasonable detail, among other
things: (A) the Interest Determination, (B) the methods by which the
Holders may respond to such Determination Notice in accordance with Section
4.01(b)(iv) (including a contact at the Company and the address and
facsimile number of such contact), (C) the Interest Payment Date to which
such Determination Notice relates, and (D) the Expiration Date (as defined
below). The Determination Notice shall be deemed delivered on the fifth
Business Day after deposit in the mails pursuant to the requirements of
Section 12.02.
(iv) If within ten (10) Business Days following the date that a
Determination Notice is deemed delivered to the Holders in accordance with
Section 4.01(b)(iii), written notice is received by the Company from the
Holders of at least two-thirds (2/3) in principal amount of the then
outstanding Notes directing that the Cash//PIK Interest being paid be paid
in cash and not in PIK Notes (such notices from the Holders of such
two-thirds or greater amount, collectively, the "REQUISITE OBJECTION
NOTICE"), then the entire amount of the Cash/PIK Interest shall be paid in
cash. If the Requisite Objection Notice is not received by the Company by
the expiration of such ten (10) Business Day-period (the "EXPIRATION
DATE"), then the Cash/PIK Interest or the relevant portion thereof shall be
paid in PIK Notes to the extent set forth in the Determination Notice and
the balance, if any, of such Cash/PIK Interest shall be paid in cash.
(v) If the Company is required to pay interest in-kind through
the issuance of Additional Notes in lieu of cash pursuant to paragraphs
(ii) and (iv) above, then the Company shall promptly deliver to the Trustee
an Officers' Certificate notifying the Trustee of the aggregate amount of
such Additional Notes to be issued, and specifying the amount of Additional
Notes to be issued through the issuance of Additional Definitive Notes and
the amounts to be issued through increases in the Global Notes. On or after
the date of such Officers' Certificate but not less than 2 Business Days
prior to the
Relevant Interest Payment Date, the Company shall deliver to the Trustee any Additional Definitive Notes to be issued, which Additional Definitive Notes shall have been duly executed by the Company in the manner provided in Section 2.02. On the Relevant Interest Payment Date the Trustee shall record increases in the Global Notes and authenticate Additional Definitive Notes, as appropriate, in the aggregate principal amounts required to pay such portion of the interest.
(vi) Each Additional Note is an additional obligation of the Company and the Guarantors and shall be governed by, and entitled to the benefits of, this Indenture and shall be subject to the terms of this Indenture (including the Guaranty provisions), shall rank pari passu with and be subject to the same terms (including the rate of interest from time to time payable thereon) as all other Notes (except, as the case may be, with respect to the issuance date and aggregate principal amount), and shall have the benefit of all Liens securing Notes.
(c) Default Rate Interest. Notwithstanding any other provision of this Indenture or the Notes, the Company shall pay interest (including Bankruptcy Interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand in compliance with the provisions of Section 4.01(b) as to whether such interest shall be paid in cash, in-kind through the issuance of Additional Notes or some combination thereof at a rate that is 2.0% per annum in excess of the then applicable interest rate on the Notes to the extent lawful (the "DEFAULT RATE"). In addition, the Company shall pay interest (including Bankruptcy Interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand in compliance with the provisions of Section 4.01(b) as to whether such interest shall be paid in cash, in-kind through the issuance of Additional Notes or some combination thereof at the Default Rate to the extent lawful.
SECTION 4.02. [Intentionally Left Blank].
SECTION 4.03. Compliance Certificate.
The Company shall deliver to the Trustee within 90 days after the end of each fiscal year of the Company an Officers' Certificate stating whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.04. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company repurchase such Holder's Notes at a purchase price in accordance with the schedule set forth in Section 7 of the Notes, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), in accordance with the terms of Section 4.04(b). In the event that at the time of such Change of Control, the terms of
any Credit Facility prohibit the Company from making a Change of Control Offer or from purchasing the Notes pursuant to this Section 4.04, the Company shall, prior to the mailing of the notice to Holders provided for in Section 4.04(b) below but, in any event within 30 days following any Change of Control: (1) repay in full all Indebtedness outstanding under the relevant Credit Facility; or (2) obtain the requisite consent under the relevant Credit Facility to permit the purchase of the Notes as provided for in Section 4.04(b).
(b) Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the "CHANGE OF CONTROL OFFER") stating:
(1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Notes at a purchase price in accordance with the schedule set forth in Section 7 of the Notes, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest on the relevant Interest Payment Date);
(2) the circumstances and relevant facts regarding such Change of Control (including information with respect to pro forma historical income, cash flow and capitalization, in each case after giving effect to such Change of Control);
(3) the purchase date (which shall not be earlier than 30 days nor later than 60 days from the date such notice is mailed);
(4) the instructions, reasonably determined by the Company, consistent with this Section 4.04, that a Holder must follow in order to have its Notes purchased; and
(5) if applicable, that the Company has the option to redeem any Notes not purchased in the Change of Control Offer, and setting forth the applicable redemption price or the formula used to determine the applicable redemption price.
(c) Holders electing to have a Note purchased will be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing its election to have such Note purchased.
(d) On the purchase date, all Notes purchased by the Company under this Section 4.04 shall be delivered by the Company to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.04, the Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change
of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.04. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.04, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.04 by virtue of its
compliance with such securities laws or regulations.
(g) If, as of the date of any supplemental indenture, pursuant to which the parties seek to waive or modify the provisions of Section 4.04 or any relevant definition, no Change of Control has occurred and the Company is not aware of any pending, proposed or threatened Change of Control, the provisions of this Indenture and the Notes relative to the Company's obligation to make an offer to purchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes.
SECTION 4.05. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default or Event of Default shall have occurred and be continuing (or would result therefrom);
(2) the Company could not Incur an additional $1.00 of Indebtedness under Section 4.06(a); or
(3) the aggregate amount of such Restricted Payment and all other Restricted Payments since the Issue Date made pursuant to this Section 4.05(a)(3) and all Restricted Payments since the Issue Date made pursuant to Section 4.05 (b)(3) and (b)(7) would exceed the sum of (without duplication):
(A) 50% of the Consolidated Net Income of the Company accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter ended at least 45 days prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock and other than Excluded Contributions) subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of the Company or to an ESOP) and 100%
of any cash capital contribution received by the Company from its stockholders subsequent to the Issue Date; plus
(C) the amount by which Indebtedness of the Company is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); plus
(D) an amount equal to the sum of (x) the net reduction in the
Investments (other than Permitted Investments) made by the Company or
any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment and proceeds representing the
return of capital (excluding amounts that contribute to Consolidated
Net Income), in each case received by the Company or any Guarantor and
(y) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; provided, however, that the
foregoing sum shall not exceed, in the case of any such Person or
Unrestricted Subsidiary, the amount of Investments (excluding
Permitted Investments) previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary;
but in no event shall the sum under this subparagraph (a)(3) of Section 4.05 increase as the result of any action or occurrence under Section 4.05(b).
(b) The provisions of Section 4.05(a) shall not prohibit (but in the
case of subparagraphs (b)(3), (b)(4), (b)(5), (b)(6) ,(b)(7) and (b)(8) of this
Section 4.05, only if no Event of Default or Payment Default has occurred and is
continuing or would result therefrom):
(1) any Restricted Payment made out of (A) the Net Cash Proceeds of the substantially concurrent issuance or sale of, or made by conversion into or exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an ESOP) and (B) any Excluded Contributions;
(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or a Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent issuance or sale of, Indebtedness which is permitted to be Incurred pursuant to Section 4.06;
(3) payment of any dividends within 60 days after the date of declaration thereof if at such date of declaration such dividend complied with this Section 4.05;
(4) dividends payable on the Series A Preferred Stock or any Preferred Stock issued to redeem, purchase, retire or otherwise acquire any Preferred Stock;
(5) dividends by the Company on and repurchases by the Company of Disqualified Stock;
(6) purchase by the Company or a Restricted Subsidiary of Equity Interests in a Restricted Subsidiary from another Person;
(7) Restricted Payments in an aggregate amount which, when taken
together with all other Restricted Payments made pursuant to this clause
(7) and any amounts applied under Sections 4.09(a)(1) and 4.09(a)(2), at
any one time outstanding do not exceed $200.0 million;
(8) any purchase, repurchase, redemption or other acquisition by the Company of the Series A Preferred Stock;
(9) dividends or distributions to, or Investments in, the Parent or any of its Subsidiaries pursuant to any tax sharing agreement contemplated by Section 4.10(b)(10); and
(10) any Restricted Payment made upon consummation of the Restructuring Transactions.
(c) The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the assets proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, in accordance with the Restricted Payment. The fair market value of any non-cash Restricted Payment shall be determined in good faith by an executive officer of the Company (if such fair market value is less than $1.0 million), or by the Board of Directors (in all other cases), in each case pursuant to an Officers' Certificate delivered to the Trustee.
SECTION 4.06. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company and any Restricted Subsidiary shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro forma basis, no Default has occurred and is continuing and the Consolidated Coverage Ratio exceeds 1.25 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries shall be entitled to Incur any or all of the following Indebtedness:
(1) Indebtedness of the Company and any Restricted Subsidiary Incurred pursuant to Credit Facilities of any Group Member; provided, however, that after giving effect to any such Incurrence, the aggregate principal amount of all Indebtedness of the Company and the Restricted Subsidiaries Incurred under this clause (1) and then outstanding does not exceed $200.0 million;
(2) Indebtedness of the Company owing to and held by a Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or a Wholly Owned Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company or a Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes or such Subsidiary Guarantor's Guaranty;
(3) the Notes (including Additional Notes issued pursuant to Section 4.01(b)) and any Guaranties;
(4) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Subsidiary was acquired by the Company (other than Indebtedness Incurred in anticipation of or in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company); provided, however, that on the date of such acquisition and after giving pro forma effect thereto, the Consolidated Coverage Ratio of the Company is equal to or greater than the Consolidated Coverage Ratio of the Company prior to the consummation of the transaction or series of related transactions;
(5) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.06(a) or pursuant to clause (3), (4) or (13) of this
Section 4.06(b) or this clause (5); provided, however, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Subsidiary Incurred pursuant to clause (4), such
Refinancing Indebtedness shall be Incurred only by such Subsidiary;
(6) Hedging Obligations consisting of (A) Interest Rate Agreements entered into for nonspeculative purposes, and (B) Currency Agreements entered into for nonspeculative purposes;
(7) obligations in respect of performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;
(8) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within two Business Days of its Incurrence;
(9) Indebtedness consisting of any Guarantee by the Company or any Restricted Subsidiary of Indebtedness of the Company or any Restricted Subsidiary Incurred after the Issue Date to the extent such Indebtedness was permitted by this
Indenture to be Incurred at the time of its Incurrence (other than Indebtedness Incurred pursuant to Section 4.06(b)(5) (to the extent of the limitation therein));
(10) Indebtedness consisting of indemnification, adjustment of purchase price, earn-out or similar obligations (other than Guarantees of Indebtedness), in each case incurred in connection with the acquisition or disposition of assets otherwise permitted by this Indenture;
(11) (a)(i) Indebtedness Incurred to finance the purchase, construction, launch, insurance for and other costs with respect to two additional satellites at any given time after the Issue Date and (ii) other Indebtedness Incurred to finance the purchase, construction, launch, insurance for and other costs with respect to additional satellites after the Issue Date, in an aggregate principal amount which, when taken together with all other Indebtedness under this clause (11)(a) at any one time outstanding does not exceed the greatest amount at any one time previously outstanding under clause (11)(a)(i), and (b) Indebtedness Incurred to finance the cost (including the cost of design, development, construction, installation, improvement, transportation or integration) of equipment (other than satellites but including transponder capacity) or inventory (other than satellites but including transponder capacity) acquired by the Company or a Restricted Subsidiary after the Issue Date;
(12) Indebtedness of the Company and any Restricted Subsidiary (other than Indebtedness described in clauses (1)-(11) and clause (13)) in an aggregate principal amount which, when taken together with all other Indebtedness outstanding under this clause (12) at any one time does not exceed $125.0 million; and
(13) Indebtedness constituting Disqualified Stock issued in connection with the refinancing of the Series A Preferred Stock.
(c) Notwithstanding the foregoing, the Company shall not, and shall
not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to
Section 4.06(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations of the Company or any Subsidiary
Guarantor unless such new Indebtedness shall be subordinated to the Notes or the
applicable Guaranty to at least the same extent as such Subordinated
Obligations.
(d) For purposes of determining compliance with this Section 4.06, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Indebtedness described in Section 4.06(a) or 4.06(b), (1) the
Company, in its sole discretion, is entitled to classify such item of
Indebtedness at the time of Incurrence, in any manner in compliance with this
Section 4.06, (2) the Company will only be required to include the amount and
type of such Indebtedness in one of the above categories and (3) the Company
will be entitled to divide and classify and reclassify from time to time an item
of Indebtedness in more than one of the categories of Indebtedness described
above.
(e) Notwithstanding Section 4.06(a) or 4.06(b), the Company shall not, and shall not permit any of its Restricted Subsidiaries to, Incur any Indebtedness, unless such
Indebtedness is Incurred in compliance with the other provisions of this Indenture, including Sections 4.07, and 4.11.
SECTION 4.07. Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist or become effective any Lien to secure Indebtedness on or with respect to any of its assets, whether owned at the Issue Date or thereafter acquired, other than Permitted Liens. Notwithstanding anything else herein or elsewhere to the contrary, any Permitted Lien under clauses (vi), (xviii) and (xxi) of the definition thereof securing Indebtedness Incurred ("PERMITTED SENIOR FINANCINGS") pursuant to and in compliance with Sections 4.06(b)(1), 4.06(b)(11) and 4.06(b)(12) and any Permitted Lien under clause (xv) of the definition thereof may be superior in priority to any Lien securing the Notes pursuant to this Agreement or any of the Collateral Documents. The Collateral Agent shall upon the request and at the expense of the Company execute and deliver any Lien subordination and related intercreditor agreement requested by the Persons providing the Permitted Senior Financings, which agreement may contain provisions, among others, relating to subordination of the Lien for the benefit of the Holders (including the Lien for the benefit of the Trustee and the Collateral Agent but shall preserve the priority of such Lien to secure up to $1,500,000 of claims) under the Collateral Documents on the collateral subject to such Permitted Secured Financings, sale of such collateral, waivers of rights relating to certain actions relating to the collateral in bankruptcy and similar proceedings and other related matters requested by the Persons providing the Permitted Senior Financing, and which agreement shall include all customary rights, benefits, privileges and immunities in favor of the Trustee and the Collateral Agent.
SECTION 4.08. Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to the Company or a Restricted Subsidiary, (b) make any loans or advances to the Company or a Restricted Subsidiary or (c) transfer any of its property or assets to the Company or a Restricted Subsidiary, except:
(1) with respect to clauses (a), (b) and (c),
(A) any encumbrance or restriction contained in the terms of any Credit Facility entered into pursuant to Section 4.06(b)(1), 4.06(b)(11) or 4.06(b)(12) if (i) the Company determines at the time any such Indebtedness is Incurred (or in the case of revolving Indebtedness, at the time such commitment is established) and at the time of any modification of the terms of any documentation governing such Indebtedness that any such encumbrance or restriction will not materially affect the Company's ability to make principal and interest payments on the Notes and (ii) the encumbrance or restriction is not materially more disadvantageous to the
Holders than is customary in comparable Indebtedness for companies similarly situated (as determined by the Board of Directors in good faith);
(B) any encumbrance or restriction contained in any indenture if such indenture is substantially identical to this Indenture;
(C) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred in anticipation of or in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company) and outstanding on such date;
(D) any encumbrance or restriction pursuant to an agreement effecting an amendment, modification, restatement, renewal, replacement or Refinancing of Indebtedness Incurred pursuant to an agreement referred to in Section 4.08(1)(B) or (C) or this clause (D) or contained in any amendment to an agreement referred to in Section 4.08(1)(B) or (C) or this clause (D); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment, taken as a whole, either satisfy the requirements of clause (A) above or are no less favorable to the Noteholders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such predecessor agreements;
(E) any encumbrance or restriction arising under any applicable law, rule, regulation or order; and
(F) any encumbrance or restriction if (i) such encumbrance or restriction is set forth in the documentation governing a Credit Linked Hedge, (ii) such encumbrance or restriction is not less favorable to the Noteholders than the corresponding encumbrance or restriction set forth in the Credit Facility related to such Credit Linked Hedge, and (iii) the corresponding encumbrance or restriction set forth in such Credit Facility is permitted under this covenant;
(G) any encumbrance or restriction in effect on the Issue Date; and
(H) any encumbrance or restriction entered into in good faith contained in any shareholders or similar agreement relating to any Subsidiary that is not a Wholly-Owned Subsidiary; and
(2) with respect to clause (c) only,
(A) any encumbrance or restriction consisting of a customary nonassignment provision in a lease, license or similar ordinary course of business agreement;
(B) any restriction contained in a security agreement or mortgage securing Indebtedness of a Restricted Subsidiary to the extent such restriction restricts the transfer of the property subject to such security agreement or mortgage; and
(C) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition.
SECTION 4.09. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Disposition unless:
(1) except in the case of an Event of Loss, the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors, of the shares and assets subject to such Asset Disposition; provided, however, that the Company may count as consideration received for such Asset Disposition any amount available under Section 4.05(a)(3) and 4.05(b)(7);
(2) except in the case of an Event of Loss, at least 50% of the consideration thereof received (exclusive of earnouts or orbital payments) by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents or Additional Assets; provided, however, that the Company may count as cash received for such Asset Disposition any amount available under Section 4.05(a)(3) and 4.05(b)(7) ; and
(3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be):
(A) to the extent the Company is required to do so by the terms of any such Indebtedness, to prepay, repay, purchase, repurchase, redeem, defease or otherwise acquire or retire for value Indebtedness of the Company or any Wholly Owned Subsidiary that was secured by a Lien on the asset that was the subject of such Asset Disposition (in each case other than (i) Indebtedness constituting Subordinated Obligations and (ii) Indebtedness owed to the Company or an Affiliate of the Company) from time to time within 540 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash (such later date being herein called, the "MEASUREMENT DATE");
(B) to the extent the Company elects, to enter into contractual agreements to acquire Additional Assets from time to time within 540 days from the Measurement Date and consummates such acquisitions within two years after the execution of such contracts; and
(C) to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an offer to the holders of the Notes to purchase Notes pursuant to and subject to the conditions contained in this Indenture (an "ASSET DISPOSITION OFFER").
Notwithstanding the foregoing provisions of this Section 4.09, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section 4.09 except to the extent that the aggregate Net Available Cash from all Asset Dispositions which is not applied in accordance with this Section 4.09 exceeds $150.0 million. Pending application of Net Available Cash pursuant to this Section 4.09, such Net Available Cash may be invested in Temporary Cash Investments, applied to temporarily reduce revolving credit indebtedness or used in any manner otherwise permitted by this Indenture.
For the purposes of clause (a)(2) of this Section 4.09, the following are deemed to be cash or cash equivalents: (1) the assumption of Indebtedness of the Company or any Wholly Owned Subsidiary (in each case other than (i) Indebtedness constituting Subordinated Obligations and (ii) Indebtedness owed to the Company or an Affiliate of the Company) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; and (2) securities received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to Section 4.09(a)(3)(C), the Company shall make such Asset Disposition Offer to purchase Notes on or before the fifth Business Day following the 540th day after the Measurement Date, and shall purchase Notes tendered pursuant to an offer by the Company for the Notes at a purchase price of 100% of the principal amount thereof on the date of purchase without premium, plus accrued but unpaid interest in accordance with the procedures set forth in this Indenture and customary practice. If the aggregate purchase price of the Notes tendered exceeds the Net Available Cash allotted to their purchase, the Company shall select the Notes to be purchased on a pro rata basis but in denominations of $1,000 principal amount or multiples thereof. The Company shall not be required to make such an offer to purchase Notes pursuant to this Section 4.09 if the Net Available Cash available therefor is less than $150.0 million (which lesser amount shall be carried forward for purposes of determining whether such an offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). Upon completion of any application of Net Available Cash in accordance with the foregoing provisions of clause (a) (3) of this Section 4.09, the amount of Net Available Cash shall be reset at zero.
(c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.09, the
Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.09 by virtue of its compliance with such securities laws or regulations.
(d) If, as of the date of any supplemental indenture, pursuant to which the parties seek to waive or modify the provisions of this Section 4.09 or any relevant definition, no Asset Disposition has occurred that would, with the passage of time and the absence of any contrary application of the Net Available Cash therefrom, give rise to the requirement to make an Asset Disposition Offer, the Company does not have a present intent to make any Asset Disposition that would give rise to such requirement, and the Company is not aware of any pending, proposed or threatened Asset Disposition that would give rise to such requirement, the provisions under this Indenture relative to the Company's obligation to make an offer to purchase the Notes as a result of an Asset Disposition may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes.
SECTION 4.10. Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an "AFFILIATE TRANSACTION") unless:
(1) the terms of the Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary than those that could be obtained at the time of the Affiliate Transaction in arm's-length dealings with a Person who is not an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of
$50.0 million, the terms of the Affiliate Transaction are set forth in
writing and a majority of the non-employee directors of the Company
disinterested with respect to such Affiliate Transaction shall have
determined in good faith that the criteria set forth in clause (1) of this
Section 4.10 are satisfied and shall have approved the relevant Affiliate
Transaction as evidenced by a resolution of the Board of Directors; and
(3) if such Affiliate Transaction involves an amount in excess of $100.0 million, the Board of Directors shall also have received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm's-length transaction with a Person who was not an Affiliate.
(b) The provisions of Section 4.10(a) shall not prohibit:
(1) any Investment (other than a Permitted Investment but including
Permitted Investments made under clause (12) of the definition thereof) or
other Restricted Payment, in each case permitted to be made pursuant to
Section 4.05;
(2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors;
(3) loans or advances to employees in the ordinary course of business, but in any event not to exceed $1.0 million in the aggregate outstanding at any one time;
(4) the payment of reasonable fees and compensation (including health benefits, vacation, severance, compensation and similar benefits) to, and provision of customary indemnification on behalf of, directors, employees, consultants and agents of the Company or any Restricted Subsidiary as determined in good faith by the Board of Directors or the Company's senior management;
(5) any transaction (i) between or among the Company and/or its Restricted Subsidiaries or (ii) between or among the Company, a Restricted Subsidiary or any other Person that would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns an equity interest in or otherwise controls such Person;
(6) the issuance or sale of Capital Stock (other than Disqualified Stock) of the Company;
(7) the payment of all fees and expenses related to the Transactions; and
(8) any transaction between (i) the Company or any Restricted Subsidiary and (ii) any other Group Member entered into in good faith;
(9) any transaction involving the construction, design, development, purchase or acquisition of a satellite and related assets of any Group Member;
(10) any management agreement, tax sharing agreement and shared services agreement with any Group Member;
(11) any transaction set forth on Schedule 4.10;
(12) any transaction in which the Board of Directors has received a written opinion from an Independent Qualified Party to the effect that such Affiliate Transaction is fair from a financial standpoint, to the Company and its Restricted Subsidiaries or is not less favorable to the Company and its Restricted Subsidiaries than could reasonably be expected to be obtained at the time in an arm's length transaction with a Person who was not an Affiliate; or
(13) any affiliate transaction in which deficiency, if any, of the
fair market value of the consideration which would have been received by
the Company or any Restricted Subsidiary in a transaction complying with
Section 4.10(a)(1) over the consideration actually received by the Company
and its Restricted Subsidiaries, as determined in good faith by the Board
of Directors of the Company, is treated as a Restricted Payment or
Permitted Investment and otherwise permitted under this Indenture.
For purposes of this Indenture, a director is not deemed to be interested in a transaction between or among Persons solely because such director is an officer or director of both Persons or their Affiliates.
SECTION 4.11. Guarantors.
(a) The Company will cause (1) each Domestic Subsidiary that is a
Wholly Owned Subsidiary, (2) subject to receipt of all necessary consents
contemplated by paragraph (b) of this Section, each Domestic Subsidiary that is
not a Wholly Owned Subsidiary, and (3) each Domestic Subsidiary (notwithstanding
(2) above) that Guarantees any Indebtedness of the Company or a Domestic
Subsidiary, in each case, whether existing on the Issue Date or thereafter
acquired or formed, to at all times be a Guarantor, and if such Subsidiary is
not a party to the Indenture or a Supplemental Guaranty Agreement, to execute
and deliver to the Trustee a Supplemental Guaranty Agreement pursuant to which
such Subsidiary will Guarantee payment of the Notes on the same terms and
conditions as those set forth in this Indenture. Notwithstanding any provision
of this Indenture, the Notes or any Collateral Document to the contrary, no
Unrestricted Subsidiary shall be required to become a Guarantor or grant a Lien
on any of its assets or otherwise be bound by the provisions of this Indenture,
the Notes or any Collateral Document.
(b) In the case of a Domestic Subsidiary that is not a Wholly Owned Subsidiary, if such Subsidiary is not permitted to Guarantee the Notes, the Company shall, and shall cause its Subsidiaries (including such Subsidiary) to, use Commercially Reasonable Efforts to obtain any and all consents necessary in order to authorize and allow such Subsidiary to make such Guarantee.
(c) The Guaranty of a Guarantor shall be released as provided in
Section 10.06.
SECTION 4.12. Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries.
The Company will not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of Capital Stock of a Restricted Subsidiary except:
(1) to the Company or a Wholly Owned Subsidiary;
(2) issuances of Foreign Required Minority Shares but only to the extent required by applicable law and only if the Company, by contract or otherwise, controls the management and business of such Foreign Subsidiary and derives the economic benefits of ownership of such Foreign Subsidiary to substantially the same extent as if such Foreign Subsidiary were a Wholly Owned Subsidiary;
(3) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary, provided that any Investment in such Person remaining after giving effect to such issuance or sale shall
constitute an "Investment" made at the time of such issuance or sale, and such issuance or sale shall only be permitted if such Investment is permitted to be made under Section 4.05;
(4) issuances of Capital Stock (other than Preferred Stock) of any Restricted Subsidiary, the Net Cash Proceeds of which are promptly applied pursuant to Section 4.09(a)(3); provided that at no time may a Restricted Subsidiary the Capital Stock of which has been issued pursuant to this clause (4) be the owner of a satellite; and
(5) issuances and sales made upon consummation of the Restructuring Transactions.
SECTION 4.13. Limitation on Sale/Leaseback Transactions.
The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into any Sale/Leaseback Transaction unless such transaction is otherwise permitted under this Indenture, including Sections 4.06, 4.07 and 4.09.
SECTION 4.14. Existence.
Subject to Articles 4 and 5 of this Indenture, the Company will do or cause to be done all things necessary to preserve and maintain in full force and effect its existence and the existence of each Restricted Subsidiary in accordance with the respective organizational documents of the Company and each such Restricted Subsidiary and the rights (whether pursuant to charter, partnership certificate, agreement, statute or otherwise), licenses and franchises of the Company and each such Restricted Subsidiary, provided that the Company shall not be required to preserve any such right, license or franchise, or maintain the existence of any entity (other than of the Company) if the preservation or maintenance thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and the failure to preserve or maintain such right, license, franchise or entity is not reasonably likely to have a material adverse effect on the ability of the Company to repay the principal of, premium, if any, and interest on the Notes.
SECTION 4.15. Payment of Taxes and Other Claims.
The Company will pay or discharge and shall cause each Restricted Subsidiary to
pay or discharge, or cause to be paid or discharged, before the same shall
become delinquent (i) all material taxes, assessments and governmental charges
levied or imposed upon (a) the Company or any such Restricted Subsidiary, (b)
the income or profits of any such Restricted Subsidiary which is a corporation
or (c) the property of the Company or any such Restricted Subsidiary and (ii)
all material lawful claims for labor, materials and supplies that, if unpaid,
might by law become a Lien upon the property of the Company or any such
Restricted Subsidiary, provided that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such tax, assessment, charge
or claim if either (i) the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings by the Company and its
Restricted Subsidiaries where the failure to effect such payment is not adverse
in any material respect to the Holders and for which adequate reserves (to the
extent required in accordance with GAAP) have been established and maintained or
(ii) the failure to pay or discharge the same is
not reasonably likely to have a material adverse effect on the ability of the Company to repay the principal of, premium, if any, and interest on the Notes.
SECTION 4.16. Insurance; Maintenance of Properties.
(a) The Company and each of its Subsidiaries shall provide or cause to be provided, for itself and each of their respective Subsidiaries, insurance (including appropriate self-insurance) that is adequate and appropriate, in the good faith judgment of the Board of Directors of the Company, for the conduct of the business of the Company and such Subsidiaries in a prudent manner.
(b) The Company shall cause all properties owned by the Company or any Subsidiary or used or held for use in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Board of Directors of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 4.16 shall prevent the Company from discontinuing the maintenance of any such properties if the Board of Directors of the Company reasonably determines in good faith that such discontinuance is not reasonably likely to have a material adverse effect on the ability of the Company to repay the principal of, premium, if any, and interest on the Notes.
SECTION 4.17. Notice of Defaults.
In the event that the Company or any Subsidiary Guarantor becomes aware of any Event of Default, the Company shall promptly thereafter deliver to the Trustee an Officers' Certificate specifying such Event of Default and what actions the Company is taking or proposes to take with respect thereto.
SECTION 4.18. Business Activities.
The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any material business operations in businesses other than Related Businesses.
SECTION 4.19. Use of Proceeds.
The Company will use the proceeds of the issuance of the Notes only as permitted under the Plan.
SECTION 4.20. Further Instruments and Acts.
Upon request of the Trustee or the Collateral Agent, the Company will, and will cause its Subsidiaries to, execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
ARTICLE 5
Merger
SECTION 5.01. Merger and Consolidation.
(a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "SUCCESSOR COMPANY") shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes, this Indenture and the Collateral Documents;
(2) immediately after giving pro forma effect to such transaction (and treating any Indebtedness of the Successor Company and its Subsidiaries as having been Incurred by the Successor Company or each such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.06(a);
(4) each Person that is required pursuant to the terms of this Indenture to be a Guarantor (i) shall have become a Guarantor pursuant to a Supplemental Guaranty Agreement or (ii) shall have confirmed its Guaranty pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee;
(5) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and
(6) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such transaction and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred;
provided, however, that clause (3) will not be applicable (A) to a Restricted Subsidiary consolidating with, merging into, conveying, transferring or leasing all or part of its assets to the Company, (B) to the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction within the United States of America, or (C) to the conveying, transferring or leasing all or part of the assets by the Company to a Guarantor. For the avoidance of doubt, for purposes of this Section 5.01, (a) the determination of whether the sale involves all or substantially all of the assets of a Person shall
be based on the book value of such assets, and (b) conveying, transferring or leasing after the Issue Date of satellites and transponders in the ordinary course of business shall be deemed not to constitute the sale of all or substantially all assets of the Company.
(b) The Successor Company (if not the Company) shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes.
(c) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to any Person (except in the case of a Subsidiary Guarantor that has been disposed of in its entirety to another Person (other than to the Company or an Affiliate of the Company), whether through a merger, consolidation or sale of Capital Stock or assets, if in connection therewith the Company provides an Officers' Certificate to the Trustee to the effect that the Company will comply with, and the Company does comply with, its obligations under Section 4.09 in respect of such disposition) unless:
(1) the resulting, surviving or transferee Person (if not such Subsidiary) shall be a Person organized and existing under the laws of the jurisdiction under which such Subsidiary was organized or under the laws of the United States of America, or any State thereof or the District of Columbia, and such Person shall expressly assume, by a Supplemental Guaranty Agreement, in a form satisfactory to the Trustee, all the obligations of such Subsidiary, if any, under its Guaranty; and
(2) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such Supplemental Guaranty Agreement, if any, complies with this Indenture.
(d) Notwithstanding clauses (a), (b) and (c) of this Section 5.01, if no Default has occurred and is continuing, any Subsidiary Guarantor may consolidate with or merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Company or any Subsidiary Guarantor, and the Company and its Subsidiaries may consummate the Restructuring Transactions.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default.
Each of the following is an "EVENT OF DEFAULT":
(1) the Company defaults in any payment of interest on any Note when the same becomes due and payable, continued for 30 days;
(2) the Company (A) defaults in the payment of the principal of any Note when the same becomes due and payable at its Stated Maturity, upon optional
redemption, upon declaration of acceleration or otherwise, or (B) fails to purchase any Note when required pursuant to this Indenture or the Notes;
(3) the Company fails to comply with Section 5.01;
(4) the Company or any Guarantor that is a Significant Subsidiary defaults in the performance of or breaches any covenants or otherwise fails to comply with any of its agreements in the Notes, this Indenture or any Collateral Document (other than those referred to in clause (1), (2) or (3) above) and such default, breach or other failure continues for 30 days after the notice specified below;
(5) Indebtedness of the Company or any Significant Subsidiary (whether or not a Guarantor) is not paid within any applicable grace period after the due date thereof or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $50.0 million, or its foreign currency equivalent at the time;
(6) the Company or any Significant Subsidiary (whether or not a Guarantor) pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary case;
(C) consents to the appointment of a Custodian of it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency;
(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary (whether or not a Guarantor) in an involuntary case;
(B) appoints a Custodian of the Company or any Significant Subsidiary (whether or not a Guarantor)or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary (whether or not a Guarantor); or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 30 days;
(8) any judgment or decree for the payment of money in excess of $50.0 million (or its foreign currency equivalent at the time) is entered against the Company, or any Significant Subsidiary (whether or not a Guarantor), remains outstanding for a period
of 30 consecutive days following the entry of such judgment or decree and is not discharged, waived or the execution thereof stayed;
(9) a Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Guaranty) or any Guarantor denies or disaffirms its obligations under its Guaranty except pursuant to a merger, consolidation or dissolution permitted under this Indenture; or
(10) any Collateral Document ceases to be in full force and effect (other than in accordance with its terms), any obligor under any Collateral Document denies or disaffirms its obligations thereunder, or any Lien purported to be created under any Collateral Document shall cease to be enforceable or shall cease to be of the same effect and priority as purported to be created by such Collateral Document (other than in accordance with the terms thereof or of this Indenture) and the same shall continue for a period of 10 days after the notice referred to below.
The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
The term "BANKRUPTCY LAW" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
A Default under clause (4) or (10) of this Section 6.01 is not an Event of Default until the Trustee or the Holders of at least 33.33% in principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default specified
in Section 6.01(6) or (7)) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of at least 40.0% in principal amount of the
outstanding Notes by notice to the Company and the Trustee, may declare the
principal of and accrued but unpaid interest, if any, on all the Notes to be due
and payable. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified in Section 6.01(6) or
(7) occurs and is continuing, the principal of and interest, if any, on all the
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Noteholders. The
Holders of a majority in principal amount of the Notes, by notice to the
Trustee, may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (5) of Section 6.01 has occurred and is continuing, the declaration of
acceleration of the Notes shall be automatically annulled if (A) the event of
default or payment default triggering such Event of Default pursuant to clause
(5) of Section 6.01 shall be remedied or cured by the Company or a Restricted
Subsidiary or waived by the holders of the relevant Indebtedness within 20 days
after the declaration of acceleration with respect thereto, (B) the annulment of
the acceleration of the Notes would not conflict with any judgment or decree of
a court of competent jurisdiction and (C) all existing Events of Default, except
nonpayment of principal, premium or interest on the Notes that became due solely
because of the acceleration of the Notes, have been cured or waived.
(b) The Company agrees to pay, in addition to the amount stated above, any and all expenses (including reasonable counsel fees and expenses) incurred by the Trustee acting on behalf of the Noteholders in enforcing any rights under the Notes.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the Notes by notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal or interest on a Note, (ii) a Default arising from the failure to redeem or purchase any Note when required pursuant to this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Noteholder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits.
Except to enforce the right to receive payment of principal or interest when due, no Noteholder may pursue any remedy with respect to this Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing;
(2) notwithstanding the requirements of Section 316(a)(1) of the TIA (which are hereby excluded as permitted therein), the Holders of at least 40% in outstanding principal amount of the Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal and interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any Guarantor for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Noteholders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
Nothing herein shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceedings.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article 6, and, after an Event of Default, any other money or property distributable in respect of the Company's or any Guarantor's obligations under this Indenture, it shall be applied in the following order:
FIRST, to the Trustee, including any predecessor Trustee, for amounts due under Section 7.07;
SECOND, to Noteholders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and
THIRD, to the Company or any other Person legally entitled thereto.
The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section 6.10. At least 15 days before such record date, the Company shall mail to each Noteholder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Notes.
SECTION 6.12. Waiver of Stay or Extension Laws.
The Company and any Guarantor (to the extent it may lawfully do so) covenants that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture. The Company and any Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.
SECTION 6.13. Payment of Premium.
In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Company, any Guarantor or any Restricted Subsidiary with the intention of avoiding payment of the premium that would be due upon an optional redemption of the Notes, upon acceleration of the Notes following such Event of Default, to the fullest extent permitted by law, a premium shall immediately become due and payable by the Company in an amount equal to the premium that would have been due and payable had the Company elected to optionally redeem the Notes.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of the mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(1) this Section 7.01(c) does not limit the effect of paragraphs (b) and (g) of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture, the Notes and the Collateral Documents that in any way relates to the Trustee is subject to Sections 7.01 and 7.02.
(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely on, and shall be protected in acting or refraining from acting upon, any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
(d) The respective rights, privileges, protections, immunities and benefits given to the Trustee and the Collateral Agent, including, without limitation, its right to be indemnified and its right to appoint co-trustees and separate trustees, are extended to, and shall be enforceable by, the Trustee and the Collateral Agent in each of their respective capacities hereunder and under the Collateral Documents, and each agent, custodian and other Person employed to act hereunder.
(e) The Trustee may consult with counsel, and the advice or opinion of counsel shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Noteholder notice of the Default or Event of Default within 90 days after it occurs or as soon as is practicable after it becomes known to the Trustee. Except in the case of a Default or Event of Default in payment of principal or interest on any Note (including payments pursuant to the mandatory redemption provisions of such Note, if any), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is not opposed to the interests of Noteholders.
SECTION 7.06. Reports by Trustee to Holders.
As promptly as practicable after each May 15 beginning with the May 15 following the date of this Indenture, and in any event prior to July 15 in each year, the Trustee shall mail to each Noteholder a brief report dated as of May 15 that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be mailed). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall be filed with the SEC (if appropriate) and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee such compensation (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as shall be agreed upon in writing for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, except as set forth in the last sentence of this paragraph. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder unless and to the extent the Company is prejudiced by such negligent failure. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own willful misconduct, negligence or bad faith.
The Company shall defend, indemnify, and hold harmless the Trustee from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs, or expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to, (w) the presence, disposal, release, or threatened release of any Hazardous Materials which are on, from, or affecting the soil, water, vegetation, buildings, personal property, persons, animals, or otherwise; (x) any personal injury (including wrongful death) or property damage (real or personal) arising out of or related to such Hazardous Materials; (y) any lawsuit brought or threatened, settlement reached, or government order relating to such Hazardous Materials, and/or (z) any violation of laws, orders, regulations, requirements or demands of government authorities, or any policies or requirements of the Environmental Protection Agency, which are based upon or in any way related to such Hazardous Materials including, without limitation, attorney and consultant fees and expenses, investigation and laboratory fees, court costs, and litigation expenses. For purposes of this paragraph, "Hazardous Material" includes, without limit, any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et. seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 5108, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.), and in the regulations adopted and publications promulgated pursuant thereto, or any other Federal, state or local environmental law, ordinance, rule, or regulation. The provisions of this paragraph shall be in addition to any and all other obligations and liabilities the Company may have to the Trustee at common law.
To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal and interest on particular Notes.
The Company's payment obligations pursuant to this Section 7.07 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(6) or (7) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
For the purposes of this Section 7.07, the "Trustee" shall include any predecessor Trustee; provided, however, that the negligence or willful misconduct of any Trustee hereunder shall not affect the rights of any other Trustee hereunder.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company and the Company does not reasonably promptly appoint a successor Trustee or if the Trustee is removed by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any other reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Noteholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition, at the Company's expense, any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section 310(a). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 7.12. Co-trustees and Separate Trustees
At any time or times, for the purpose of meeting the legal requirements of any jurisdiction in which any of the Collateral may at the time be located, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least a majority in principal amount of the Notes then outstanding, the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee and, if no Event of Default shall have occurred and be continuing, by the Company either to act as co-trustee, jointly with the Trustee, of all or any part of the Collateral, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Company does not join in such appointment within fifteen (15) days after the receipt by it of a request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment.
Should any written instrument or instruments from the Company be required by any co-trustee or separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions:
(a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee;
(c) the Company and the Trustee, at any time by an instrument in writing, executed by them jointly, may accept the resignation of or remove any such separate trustee or co-trustee, and in that case, by an instrument in writing executed with the Trustee jointly, may appoint a successor to such separate trustee or co-trustee, as the case may be, anything herein contained to the contrary notwithstanding. In the event that the Company shall not have joined in the execution of any instrument within 10 days after the receipt of a written request from the Trustee so to do, or in case an Event of Default shall have occurred and be continuing, the Trustee shall have the power to accept the resignation of or remove any such separate trustee or co-trustee and to appoint a successor without the concurrence of the Company, the Company hereby irrevocably appointing the Trustee its agent and attorney to act for it in such connection in either of such contingencies;
(d) subject to Section 7.01, neither the Trustee nor any co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and
(e) any act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Notes; Defeasance.
(a) When (1) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation, or (2)
all outstanding Notes have become due and payable, whether at maturity or on a
redemption date as a result of the mailing of a notice of redemption pursuant to
Article 3 hereof, or (3) all outstanding Notes will become due and payable
within one year or are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee and, in the case of clauses
(a)(2) and (a)(3) of
this Section 8.01, the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Notes, including interest thereon to maturity or such redemption date (other than Notes replaced pursuant to Section 2.07), and if in any case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), be satisfied and discharged and cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company (accompanied by an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with and at the cost and expense of the Company).
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (1) all its and any Guarantors' Obligations under the Notes, the Collateral Documents and this Indenture ("LEGAL DEFEASANCE OPTION") or (2) its and any Guarantors' Obligations under Sections 4.04 through 4.13, 4.16, 4.17 and 4.18 and the operation of Sections 6.01(5), 6.01(8), 6.01(9) and 6.01(10) and the limitations contained in Sections 5.01(a)(3) and (a)(4) ("COVENANT DEFEASANCE OPTION"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its legal defeasance option or its covenant defeasance option, any Guarantor shall be released from all of its obligations with respect to its Guaranty, and all Collateral shall be released.
Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those Obligations that the Company terminates at the cost and expense of the Company.
(c) Notwithstanding clauses (a) and (b) of this Section 8.01, the Company's Obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8 shall survive until the Notes have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money in U.S. dollars or U.S. Government Obligations for the payment of principal and interest on the Notes to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Notes to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day period no Default or Event of Default specified in Sections 6.01(6) or (7) with respect to the Company or any Guarantor occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other agreement binding on the Company or any of its Subsidiaries;
(5) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Noteholders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Noteholders will not recognize income, gain or loss for Federal income tax purposes as a result of such covenant defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes as contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article 3.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.
SECTION 8.04. Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time less any amounts owing under Section 7.07.
Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money shall look solely to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes, and the obligations of the Guarantors under the Guaranties together with all grants, pledges and obligations of the Company and the Guarantors under the Collateral Documents, including the security interests granted therein, shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend this Indenture, any Collateral Document or the Notes without notice to or consent of any Noteholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to provide for the assumption by a Successor Company of the Obligations of the Company or any Guarantor under this Indenture, the Notes or the Collateral Documents pursuant to Article 5 of this Indenture;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Notes, including any Guaranties, or to add Collateral to further secure the Notes;
(5) to add to the covenants of the Company or any Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Guarantor;
(6) to make any change that does not adversely affect the rights of any Noteholder;
(7) to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or
(8) to evidence the release of a Guarantor pursuant to and in accordance with the terms of this Indenture.
Without limiting the foregoing, no consent of any Noteholder shall be required for the Trustee to enter into the intercreditor agreement contemplated by Section 4.07 hereof.
After an amendment under this Section 9.01 becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders.
(a) Except as provided in Section 9.02(b), the Company, the Guarantors and the Trustee may amend this Indenture, any Collateral Documents or the Notes without notice to any Noteholder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), including, without limitation, to reflect any amendment to the terms, conditions and other provisions of clauses (ii)-(v) of Section 4.01(b) of this Indenture and the defined terms used therein.
(b) Without the consent of each Noteholder affected thereby, an amendment may not:
(1) reduce the amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the amount payable upon the redemption of any Note or change the time at which any Note may be redeemed in accordance with Article 3;
(5) make any Note payable in money other than that stated in the Note;
(6) impair the right of any Noteholder to receive payment of principal and interest on such Noteholder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Noteholder's Notes;
(7) impair the Company's obligation to make an offer to purchase Notes pursuant to Section 4.04 or 4.09 except as permitted under Section 4.04(g) or 4.09(d), respectively;
(8) make any change in Section 4.04(g), Section 4.09(d), Section 6.04, 6.07 or the second sentence of this Section;
(9) make any change in the ranking or priority of any Note that would adversely affect the Noteholders; or
(10) make any change in any Guaranty or any Collateral Document that would adversely affect the Noteholders.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
Pursuant to Section 12.06, in certain circumstances a Note may be disregarded and deemed not to be outstanding for purposes of this Section.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Noteholder. An amendment or waiver becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described
above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments.
The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture.
ARTICLE 10
Guaranties
SECTION 10.01. Guaranties.
(a) Subject to the limitations set forth in this Article 10, each
Guarantor hereby unconditionally and irrevocably guarantees, jointly and
severally, to each Holder and to the Trustee and its successors and assigns (i)
the full and punctual payment of principal of and interest on the Notes when
due, whether at maturity, by acceleration, by redemption or otherwise, and all
other monetary obligations of the Company under this Indenture and the Notes and
(ii) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture, the Notes and the
Collateral Documents (all the foregoing being hereinafter collectively called
the "GUARANTEED OBLIGATIONS").
(b) As of the Issue Date, the Guarantors of the Notes are: (1) Loral
Skynet International, L.L.C., (2) LAPS (HK), (3) Loral SpaceCom Corporation, (4)
Loral Skynet Network Services, Inc., (5) Loral Communications Services, Inc.,
(6) Loral Ground Services, L.L.C., (7) Loral CyberStar International, Inc., (8)
Loral CyberStar Services, Inc., (9) Loral CyberStar Holdings, L.L.C., (10) Loral
Skynet Network Services Holdings L.L.C., (11) Loral Cyberstar, L.L.C., (12)
Cyberstar, L.L.C., and (13) Loral Satellite, Inc.
(c) Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation.
(d) Each Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of acceleration, notice of intent to accelerate and notice of protest for nonpayment. Subject to Section 6.01, each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by: (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Notes or any other agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (v) the failure of any Holder or the Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) except as set forth in Section 10.06, any change in the ownership of any such Guarantor.
(e) Each Guarantor further agrees that its Guaranty herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations.
(f) Except as expressly set forth in Sections 8.01, 10.02 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any such Guarantor or would otherwise operate as a discharge of any such Guarantor as a matter of law or equity.
(g) Each Guarantor further agrees that its Guaranty herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.
(h) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof,
subject to the limitations set forth in this Article 10, upon the failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (1) the unpaid amount of such Guaranteed Obligations, (2) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by law) and (3) all other monetary Guaranteed Obligations of the Company to the Holders and the Trustee.
(i) Each Guarantor agrees that it shall not be entitled to any right
of subrogation in respect of any Guaranteed Obligations guaranteed under this
Indenture until payment in full of all Guaranteed Obligations. Each Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (1) the maturity of the Guaranteed Obligations
guaranteed under this Indenture may be accelerated as provided in Article 6 for
the purposes of such Guarantor's Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Guaranteed Obligations guaranteed under this Indenture, and (2) in the event of
any declaration of acceleration of such Guaranteed Obligations as provided in
Article 6, such Guaranteed Obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor for the purposes of this
Section 10.01.
(j) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
SECTION 10.02. Limitation on Liability.
Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
SECTION 10.03. Successors and Assigns.
This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.04. No Waiver.
Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are
cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10, at law, in equity, by statute or otherwise.
SECTION 10.05. Modification.
No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.
SECTION 10.06. Release of Guarantor.
The Guaranty of a Guarantor will be automatically released:
(1) upon the sale or other disposition (including by way of consolidation or merger or dissolution) of that Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or an Affiliate of the Company, if such sale or other disposition complies with Section 4.09 and Article 11;
(2) upon the sale or other disposition of all or substantially all the assets of that Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or an Affiliate of the Company, if such sale or other disposition complies with Section 4.09 and Article 11;
(3) if the Company designates that Guarantor as an Unrestricted Subsidiary in compliance with the applicable provisions of this Indenture; or
(4) upon legal defeasance or covenant defeasance or satisfaction and discharge of this Indenture as provided in Article 8.
ARTICLE 11
Collateral
SECTION 11.01. Collateral Documents; Additional Collateral.
(a) In order to secure the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall be due and payable, whether on an Interest Payment Date, at maturity, pursuant to an Asset Disposition Offer or Change of Control Offer, or by acceleration, redemption or otherwise, and interest on the overdue principal of and (to the extent permitted by law) interest, if any, on the Notes and the performance of all other obligations of the Company and the Guarantors to the Holders, the Trustee and the Collateral Agent under this Indenture, the Notes, the Collateral Documents and any other documents contemplated hereby, the Company, the Guarantors and the Collateral Agent have simultaneously with the execution of this Indenture entered into the Security Agreement, and may in the future enter into additional Collateral Documents. The Collateral
Agent, the Trustee, the Company and the Guarantors each hereby agree that the Collateral Agent holds its interest in the Collateral in trust for its benefit, the benefit of the Trustee and the benefit of the Holders pursuant to the terms of the Collateral Documents. Each of the Company and the Guarantors covenants and agrees that it will execute, acknowledge and deliver to the Collateral Agent such further assignments, transfers, assurances or other instruments and will do or cause to be done all such acts and things as may be necessary or proper to assure and confirm to the Collateral Agent its interest in the Collateral (other than such acts and things that relate solely to the perfection of the Collateral Agent's security interest in Unperfected Collateral), or any part thereof, as from time to time constituted, and the right, title and interest in and to the Collateral Documents so as to render the same available for the security and benefit of this Indenture and of the Notes.
(b) Promptly upon the acquisition or receipt by the Company or any of
the Guarantors of property and assets, whether real, personal or mixed, tangible
or intangible, and including, without limitation, property and assets acquired
or received pursuant to a merger or consolidation of any Person or Persons with
or into the Company or a Guarantor, pursuant to an Asset Disposition, pursuant
to a transaction as a result of which a Guarantor is released as provided in
Section 10.06, or pursuant to a transaction as a result of which a Person
becomes a Guarantor as provided in Section 4.11 (each such item of property and
each such asset so acquired or received, but excluding any of the foregoing
which would constitute Excluded Collateral, being referred to herein as
"AFTER-ACQUIRED PROPERTY"):
(i) except for Unperfected Collateral, the Company or the applicable Guarantor, as the case may be, and the Collateral Agent will enter into all supplemental indentures, if any, required pursuant to the terms of this Indenture (including, without limitation, Section 4.11 hereof) and all such amendments or supplements to the Collateral Documents or such additional Collateral Documents as shall be necessary in order to grant and create a valid first priority Lien on and security interest in such After-Acquired Property in favor of the Collateral Agent (subject to no prior Liens except as permitted by this Indenture), and the Company shall cause appropriate financing statements, mortgages and other papers to be filed in such governmental offices as shall be necessary in order to perfect any Lien in such After-Acquired Property as to which a Lien may, under the Uniform Commercial Code or any other law of the applicable jurisdiction, be perfected by filing, and, if any such After-Acquired Property consists of stock certificates, promissory notes or other property as to which, under the relevant Uniform Commercial Code or other law, a Lien may be perfected by possession or control, deliver such certificates, promissory notes and other property, together with stock powers or assignments duly endorsed in blank, to the Collateral Agent or take such other steps as may from time to time be necessary or desirable to grant the Collateral Agent control over such After-Acquired Property;
(ii) for any such After-Acquired Property that constitutes Unperfected Collateral, (A) the Company or the applicable Guarantor, as the case may be, and the Collateral Agent will enter into all supplemental indentures, if any, required pursuant to the terms of this Indenture (including, without limitation, Section 4.11 hereof) and all such amendments or supplements to the Collateral Documents or such additional
Collateral Documents as shall be necessary in order to grant and create a valid Lien on and security interest in such After-Acquired Property in favor of the Collateral Agent;
(iii) the Company or the applicable Guarantor, as the case may be, shall also deliver to the Trustee the following:
(A) to the extent such After-Acquired Property consists of real property or a leasehold interest in real property, a customary title insurance policy;
(B) any Opinions of Counsel required pursuant to Section 11.02(b)
below; and
(C) evidence of payment of all filing fees, recording and registration charges, transfer taxes and other costs and expenses, including reasonable legal fees and disbursements of counsel for the Collateral Agent (and any local counsel), that may be incurred to validly and effectively subject the After-Acquired Property to the Lien of any applicable Collateral Document and, if required under this Indenture, perfect such Lien; and
(iv) The Company shall deliver to the Collateral Agent an Opinion of Counsel and an Officers' Certificate to the effect that the documents that have been or are therewith delivered to the Collateral Agent pursuant to this Section 11.01(b) (including any amendments, supplements or other Collateral Documents referred to in paragraph (i) above) conform to the requirements of this Indenture.
(c) Each Holder, by accepting a Note, agrees to and shall be bound by all the terms and provisions of the Collateral Documents, as the same may be amended or supplemented from time to time, and hereby grants the Collateral Agent full power and authority to execute, deliver, perform and enforce all such Collateral Documents without any consent or other action by the Holders.
Notwithstanding any provision of this Indenture or any Collateral Document to the contrary, the Obligors shall not be obligated to take any action under any foreign law to create or perfect a security interest in any Collateral (other than satellites, transponders, and Capital Stock of any Person that owns any satellites or transponders) located outside the United States, and the Obligors shall have until the number of days described in Schedule 11.01 after the consummation date to perfect the security interest in Collateral set forth on Schedule 11.01. To the extent the creation of a Lien requires the consent of a third party, the Company shall be deemed to have satisfied its obligation to provide a Lien under this Indenture and the Collateral Documents if it shall, with consent or by virtue of the provisions of applicable law (including the applicable UCC), have provided a Lien even though the Collateral Agent may not be able to transfer the Collateral to third parties, render performance to the Person party to the Collateral or be able to compel performance from such Person to the Collateral Agent.
SECTION 11.02. Recording, Registration and Opinions.
(a) The Company and the Guarantors shall take or cause to be taken all action required, and neither the Collateral Agent nor the Trustee shall have any obligation, to perfect,
maintain, preserve and protect the Lien on and security interest in the Collateral granted by the Collateral Documents (subject only to Liens expressly permitted by this Indenture), including without limitation, the filing of financing statements, continuation statements and any instruments of further assurance, in such manner and in such places as may be required by law fully to preserve and protect the rights of the Holders, the Collateral Agent and the Trustee under this Indenture and the Collateral Documents to all property comprising the Collateral. The Company and the Guarantors shall from time to time promptly pay all financing and continuation statement recording, registration and/or filing fees, charges and taxes relating to this Indenture and the Collateral Documents, any amendments thereto and any other instruments of further assurance required hereunder or pursuant to the Collateral Documents.
(b) (i) The Company and the Guarantors shall furnish to the Trustee and the Collateral Agent on the Issue Date a customary Opinion of Counsel stating that this Indenture, the Notes and the Collateral Documents have been duly authorized, executed and delivered by, and constitute the valid, binding and enforceable obligations of, the Company and the Guarantors. Such Opinion of Counsel shall address perfection of the Liens contemplated by this Indenture and the Collateral Documents and such other issues as the Trustee and the Collateral Agent shall reasonably request, and such Opinion of Counsel may be subject to customary exceptions.
(ii) The Company shall furnish to the Trustee and the Collateral Agent, promptly after the execution and delivery of this Indenture, an Opinion of Counsel in compliance with TIA Section 314(b)(1) either (A) substantially to the effect that, in the opinion of such counsel, this Indenture and the grant of the Liens on and security interests in the Collateral intended to be made by the Collateral Documents and all other instruments of further assurance, including, without limitation, financing statements, have been properly recorded and filed to the extent necessary to record or register (as the case may be), and if applicable, to perfect the Liens on and security interests in the Collateral created by the Collateral Documents, to the extent that a Lien or security interest may be perfected by filing, and stating that as to the Liens and security interests created pursuant to the Collateral Documents, such recordings, registrations and filings are the only recordings, registrations and filings necessary to give notice thereof and that no re-recordings, re-registrations or refilings are necessary to maintain such notice (other than as stated in such opinion), or (B) to the effect that, in the opinion of such counsel, no such action is necessary to record or register such Liens or to perfect such security interests.
(iii) The Company or the applicable Guarantor shall furnish to the Trustee and the Collateral Agent, at the time of execution and delivery of any additional Collateral Documents or any amendments or supplements to existing Collateral Documents, an Opinion of Counsel either substantially to the effect set forth in clause (b)(ii)(A) above (but relating only to such additional Collateral Documents or any amendments or supplements to existing Collateral Documents and the related After-Acquired Property) or to the effect set forth in clause (b)(ii)(B) above, and to the further effect that such additional Collateral Documents or amendments or supplements to existing Collateral Documents, as the case may be, and, if applicable, such Collateral Documents as amended and supplemented thereby, have been duly authorized, executed and delivered by, and constitute the valid, binding and enforceable obligations of the Company or the relevant Guarantor, as the case may be, subject to customary exceptions.
(c) The Company shall furnish to the Trustee on the anniversary of the Issue Date in each year, beginning with 2006, an Opinion of Counsel, dated as of such date, which complies with TIA Section 314(b)(2), either (i)(A) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registration, filing, re-recording, re-registration and refiling of this Indenture and all supplemental indentures, financing statements, continuation statements and other documents as is necessary to maintain the Lien of the Collateral Documents and reciting with respect to the Liens on and security interests in the Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, and (B) stating that, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements, continuation statements and other documents have been executed and filed that are necessary as of such date and during the succeeding 24 months fully to maintain the Liens and security interests of the Holders, the Collateral Agent and the Trustee hereunder and under the Collateral Documents with respect to the Collateral; provided that if there is a required filing of a continuation statement within such 24 month period and such continuation statement is not effective if filed at the time of the opinion, such opinion may so state and in that case the Company shall cause a continuation statement to be timely filed so as to maintain such Liens and security interests and shall provide a further Opinion of Counsel to the effect of this clause (i) upon the filing of the relevant continuation statement; or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Liens or security interests.
SECTION 11.03. Release of Collateral.
(a) The Collateral Agent shall not at any time release Collateral from the Liens created by this Indenture and the Collateral Documents unless such release is in accordance with the provisions of this Indenture and the Collateral Documents.
(b) The Collateral Agent shall release Collateral from the Liens contemplated by this Indenture and the Collateral Documents if, when and to the extent required by Section 11.05 or 11.07 hereof.
(c) The release of any Collateral from the Lien of the Collateral Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral is released pursuant to this Indenture and the Collateral Documents. To the extent applicable, the Company shall cause TIA Section 314(d) relating to the release of property from the Lien of the Collateral Documents and relating to the substitution therefor of any property to be subjected to the Lien of the Collateral Documents to be complied with. Any certificate or opinion required by TIA Section 314(d) may be made by an Officer of the Company, except in cases where TIA Section 314(d) requires that such certificate or opinion be made by an independent person, which person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee in the exercise of reasonable care.
SECTION 11.04. Possession and Use of Collateral.
Subject to and in accordance with the provisions of this Indenture and the Collateral Documents, so long as the Collateral Agent has not exercised rights or remedies with respect to the Collateral in connection with an Event of Default that has occurred and is
continuing, the Company and the Guarantors shall have the right to remain in possession and retain exclusive control of and to exercise all rights with respect to the Collateral (other than monies or U.S. Government Obligations deposited pursuant to Article 8), to operate, manage, develop, lease, use, consume and enjoy the Collateral, to alter or repair any Collateral so long as such alterations and repairs do not impair the Lien of the Collateral Documents thereon, and to collect, receive, use, invest and dispose of the reversions, remainders, interest, rents, lease payments, issues, profits, revenues, proceeds and other income thereof.
SECTION 11.05. Specified Releases of Collateral.
(a) Satisfaction and Discharge; Defeasance. The Company and the Guarantors shall be entitled to obtain a full release of all of the Collateral from the Liens of this Indenture and of the Collateral Documents upon compliance with the conditions precedent set forth in Article 8 for legal defeasance, covenant defeasance or satisfaction and discharge. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel, each to the effect that such conditions precedent have been complied with (and which may be the same Officers' Certificate and Opinion of Counsel required by Article 8), together with such documentation, if any, as may be required by the TIA (including, without limitation, TIA Section 314(d)) prior to the release of such Collateral, the Trustee shall forthwith take all necessary action (at the request of and the expense of the Company) to release and reconvey to the Company and the applicable Guarantors without recourse all of the Collateral, and shall deliver such Collateral in its possession to the Company and the applicable Guarantors including, without limitation, the execution and delivery of releases and satisfactions wherever required.
(b) Dispositions of Collateral Permitted by Section 4.09. The Company and the Guarantors, as the case may be, shall be entitled to obtain a release of, and the Collateral Agent shall release, items of Collateral (the "RELEASED COLLATERAL") subject to an Asset Disposition or any other disposition that is permitted under the terms of this Indenture upon compliance with the conditions precedent that the Company shall have delivered to the Collateral Agent the following to the extent applicable:
(i) An Officers' Certificate of the Company requesting release of such Released Collateral (A) specifically describing the proposed Released Collateral, (B) certifying that such sale complies with the terms and conditions of this Indenture, including, without limitation, Section 4.09 hereof (but may assume that the proceeds from such sale will be applied in compliance with Section 4.09), (C) certifying the extent to which the consideration from such sale (the "CONSIDERATION") will constitute After-Acquired Collateral and Excluded Collateral, and that all Net Available Cash from the sale of any of the Released Collateral will be applied pursuant to Section 4.09, (D) certifying there is not and will not be a Default or Event of Default in effect or continuing on the date thereof, or the date of such sale, (E) certifying that the release of the Collateral will not result in a Default or Event of Default hereunder and (F) certifying that all conditions precedent to such release have been complied with;
(ii) All documentation required by the TIA (including, without
limitation, the certificates of fair value required pursuant to TIA Section
314(d), which include, without limitation, a statement that the proposed
release will not impair the
security granted under this Indenture in contravention of the provisions
hereof), if any, prior to the release of Collateral by the Collateral
Agent, and all documentation required to subject the Consideration to the
Lien of the relevant Collateral Documents, and all documents required by
Section 11.01 hereof; and
(iii) An Opinion of Counsel stating that the documents that have been or are therewith delivered to the Trustee in connection with such release conform to the requirements of this Indenture and that all conditions precedent herein provided for relating to such release have been complied with.
Upon compliance by the Company with the conditions precedent set forth above, the Collateral Agent shall cause to be released and reconveyed to the Company or the applicable Guarantor the Released Collateral without recourse by executing a release in the form provided by the Company or the applicable Guarantor and reasonably acceptable to the Collateral Agent.
SECTION 11.06. Disposition of Collateral Without Release.
Notwithstanding the provisions of Section 11.05 and subject to Section 11.07 below, so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, the Company and the Guarantors may, without any prior release or consent by the Collateral Agent, conduct ordinary course activities in respect of the Collateral not constituting Asset Dispositions which do not individually or in the aggregate adversely affect the value of the Collateral taken as a whole, including (A) selling or otherwise disposing of, in any single transaction or series of related transactions, any property subject to the Lien of this Indenture or the Collateral Documents which has become worn out or obsolete and which either has an aggregate fair market value of $1.0 million or less or which is replaced by property of substantially equivalent or greater value which becomes subject to the Lien of the Collateral Documents as After-Acquired Property; (B) abandoning, terminating, canceling, releasing or making alterations in or substitutions of any leases or contracts subject to the Lien of this Indenture or any of the Collateral Documents; (C) surrendering or modifying any franchise, license or permit subject to the Lien of this Indenture or any of the Collateral Documents which it may own or under which it may be operating; (D) altering, repairing, replacing, changing the location or position of and adding to its structures, machinery, systems, equipment, fixtures, and appurtenances, provided, however, that no change in the location of any such Collateral subject to the Lien of any of the Collateral Documents shall be made which results in such Lien becoming unperfected or otherwise impairs the Lien of the Collateral Documents; (E) demolishing, dismantling, tearing down or scrapping any Collateral or abandoning any thereof if, in the good faith opinion of the Board of Directors of the Company (as evidenced by a resolution of the Board of Directors delivered to the Collateral Agent if it involves Collateral having a fair market value in excess of $1.0 million) such demolition, dismantling, tearing down, scrapping or abandonment is in the best interests of the Company, will not interfere with or impede the Collateral Agent's ability to realize the value of the remaining Collateral and will not impair the maintenance and operation of the remaining Collateral, and the fair market value and utility of the Collateral as an entirety, and the security for the Notes, will not thereby be otherwise impaired; (F) granting a nonexclusive license of any intellectual property; and (G) abandoning intellectual property which has become obsolete and not used in the business of the Company or its Subsidiaries.
SECTION 11.07. Form and Sufficiency of Release.
In the event that the Company or any Guarantor has sold, exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise dispose of any portion of the Collateral that under the provisions of Section 11.05 or 11.06 may be sold, exchanged or otherwise disposed of by the Company or any Guarantor, and the Company or such Guarantor requests the Collateral Agent to furnish a written disclaimer, release or quitclaim of any interest in such property under this Indenture and the Collateral Documents, upon being satisfied that the Company or such Guarantor is selling, exchanging or otherwise disposing of the Collateral in accordance with the provisions of Section 11.05 or 11.06 (which may include receipt of an Officers' Certificate and Opinion of Counsel upon the request of the Collateral Agent), the Collateral Agent shall execute, acknowledge and deliver to the Company or such Guarantor such an instrument in the form provided by the Company and reasonably acceptable to the Collateral Agent providing for release without recourse, promptly after satisfaction of the conditions set forth herein for delivery of any such release and shall take such other action as the Company or such Guarantor may reasonably request and is necessary to effect such release. Notwithstanding the preceding sentence, all purchasers and grantees of any property or rights purporting to be released shall be entitled to rely upon any release executed by the Collateral Agent hereunder as sufficient for the purpose of this Indenture and as constituting a good and valid release of the property therein described from the Lien of this Indenture and of the Collateral Documents.
SECTION 11.08. Purchaser Protected.
No purchaser or grantee of any property or rights purporting to be released shall be bound to ascertain the authority of the Collateral Agent to execute the release or to inquire as to the existence of any conditions herein prescribed for the exercise of such authority.
SECTION 11.09. Authorization of Actions To Be Taken by the Collateral Agent Under the Collateral Documents.
Subject to the provisions of the Collateral Documents:
(a) the Collateral Agent may, in its sole discretion and without the consent of the Holders, take all actions it deems necessary or appropriate in order to (i) comply with, enforce and perform, from time to time, any of the terms of the Collateral Documents and (ii) collect and receive any and all amounts payable in respect of the Obligations of the Company and the Guarantors hereunder and under the Collateral Documents; and
(b) the Collateral Agent shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any act that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest thereunder or be prejudicial to the interests of the Holders or of the Collateral Agent).
SECTION 11.10. Authorization of Receipt of Funds by the Collateral Agent Under the Collateral Documents.
The Collateral Agent is authorized to receive any funds for the benefit of Holders distributed under the Collateral Documents, to apply such funds as provided in this Indenture and the Collateral Documents, and to make further distributions of such funds to the Holders in accordance with the provisions of Article 11 and the other provisions of this Indenture.
SECTION 11.11. Third Party Consents to Pledge of Collateral.
If the Company or any Guarantor is required to obtain the consent of any third party to permit the Company and/or such Guarantor(s) to grant and create a valid first priority Lien on and security interest in any item of Collateral material to the business of the Company and its Subsidiaries taken as a whole pursuant to the terms of this Agreement or any Collateral Documents, the Company or the applicable Guarantor shall use its Commercially Reasonable Efforts to obtain such consent but shall not be required to seek such consent to the extent that the provisions of Sections 9-406 through 9-409 of the applicable Uniform Commercial Code permit the granting of the Lien on and security interest in such item of Collateral without the consent of such third party (even if enforcement of the Lien and rights and obligations of the parties to such item of Collateral remain unaffected).
SECTION 11.12. Collateral Agent.
(a) The Collateral Agent will be subject to such directions as may be given it by the Trustee from time to time as required or permitted by this Indenture.
(b) The Company will deliver to the Trustee copies of all Collateral Documents delivered to the Collateral Agent.
(c) The Collateral Agent will be accountable only for amounts that it actually receives as a result of the enforcement of the Liens granted pursuant to the Collateral Documents.
(d) In acting as Collateral Agent, the Collateral Agent may rely upon and enforce each and all of the rights, powers, protections, immunities, indemnities and benefits of the Trustee under Sections 7.01, 7.02, 7.03, 7.04, 7.07, 7.08, 7.09, 7.12 and 9.06, mutatis mutandis, and, in connection therewith, references to the Trustee shall be deemed to include the Collateral Agent and references to the Indenture shall be deemed to include the Collateral Documents.
(e) Each successor Trustee will become the successor Collateral Agent as and when the successor Trustee becomes the Trustee unless, at the time such successor Trustee becomes Trustee, the immediately preceding Trustee was not the Collateral Agent.
SECTION 11.13. Authorization of Actions to Be Taken.
(a) Each Holder, by its acceptance of its Note, consents and agrees to the terms of each Collateral Document, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms or the terms of this Indenture, authorizes and directs the Trustee and the Collateral Agent to enter into the Collateral Documents, and authorizes and empowers each of the Trustee and the Collateral Agent to bind the Holders as set forth in the Collateral Documents and to perform its obligations and exercise its rights and powers thereunder.
(b) The Collateral Agent and the Trustee are authorized and empowered to receive for the benefit of the Holders any funds collected or distributed under the Collateral Documents and to make further distributions of such funds to the Holders according to the provisions of this Indenture and the Collateral Documents.
(c) The Trustee may, in its sole discretion and without the consent of the Holders, direct, on behalf of the Holders, the Collateral Agent to take all actions it deems necessary or appropriate in order to:
(i) foreclose upon or otherwise enforce any or all of the Liens granted by the Collateral Documents;
(ii) enforce any of the terms of the Collateral Documents; or
(iii) collect and receive payment of any and all amounts owing under this Indenture, the Notes and the Collateral Documents.
(d) The Trustee is authorized and empowered to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the Liens granted by the Collateral Documents or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee or the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders, the Trustee or the Collateral Agent.
(e) The Collateral Agent shall have no duty as to any Collateral in its possession or control, other than those duties specifically set forth herein, or the possession or control of any agent or bailee or any income thereon or as to the preservation or rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.
(f) All moneys received by the Collateral Agent under or pursuant to any provision of this Indenture or any Collateral Document shall be paid over or delivered to the Trustee in the form received (with any necessary endorsements) for application by the Trustee pursuant to the provisions of this Indenture.
(g) The Collateral Agent may execute any power and perform any duty under this Indenture or any Collateral Document either directly or by or through agents, nominees or attorneys-in-fact. The Collateral Agent may act and conclusively rely, and shall be protected in acting and conclusively relying on, the opinion or advice of, or information obtained from, any counsel (which shall include counsel to the Company), accountant, appraiser or other expert or adviser, whether retained or employed by the Collateral Agent or the Trustee in relation to any matter in connection with this Indenture, the Collateral Documents or any other document, instrument or writing. The Collateral Agent shall be entitled to rely on the advice of counsel selected by it concerning all matters pertaining to such powers and duties. The Collateral Agent shall not be responsible for any acts or omissions, including any negligence or misconduct, of any agents, nominees or attorneys-in-fact selected by it with due care.
(h) If the Collateral Agent has been requested or is otherwise required to take action pursuant to this Indenture or any Collateral Document, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in the Collateral Agent by this Indenture or any Collateral Document unless the Collateral Agent shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Collateral Agent. Under no circumstances shall the Collateral Agent be required to expend or risk its own funds or incur or risk any liability.
(i) The Collateral Agent shall not be responsible for (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under the Collateral Documents, (ii) the filing, re-filing, recording, re-recording or continuing of any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any property subject to any of the Collateral Documents.
(j) In no event shall the Collateral Agent be liable for incidental, indirect, special or consequential damages, regardless of the form of action and even if the same were foreseeable. Notwithstanding anything set forth herein to the contrary, the Collateral Agent shall have a duty of reasonable care with respect to any Collateral which is delivered to the Collateral Agent and is in the Collateral Agent's possession and control.
(k) Except during the existence of an Event of Default, the Collateral Agent shall have no duty as to any Collateral in its possession or control, other than those duties specifically set forth herein, or the possession or control of any agent or bailee or any income thereon or as to the preservation or rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.
(l) All moneys received by the Collateral Agent under or pursuant to any provision of this Indenture or any Collateral Document shall be paid over or delivered to the Trustee in the form received (with any necessary endorsements) for application by the Trustee pursuant to the provisions of this Indenture.
(m) Subject to Section 7.01, in the absence of its negligence or willful misconduct, the Collateral Agent may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Indenture or any Collateral Document.
ARTICLE 12
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. Each Guarantor in addition to performing its obligations under its Guaranty shall perform such other obligations as may be imposed upon it with respect to this Indenture by the TIA.
SECTION 12.02. Notices.
Any notice, request or communication shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows:
if to the Company or any Guarantor:
Loral Skynet Corporation
600 Third Avenue
New York, NY 10016
Attention: Treasurer
if to the Trustee:
The Bank of New York
101 Barclay Street, 8 West
New York, NY 10286
Attention: Corporate Trust Division-Corporate Finance Unit
if to the Collateral Agent:
The Bank of New York
101 Barclay Street, 8 West
New York, NY 10286
Attention: Corporate Trust Division-Corporate Finance Unit
The Company, any Guarantor, the Trustee or the Collateral Agent by notice to the other may designate additional or different addresses for subsequent notices or communications.
Such notices or communications to the Trustee or the Collateral Agent shall be effective when received.
Any notice or communication mailed to a Noteholder shall be mailed to the Noteholder at the Noteholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Copies of any such communication or notice to a Holder shall also be mailed to the Trustee, the Registrar, co-registrar, Paying Agent and transfer agent at the same time.
Where this Indenture provides for notice in any manner, such notice may be expressly waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waiver of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 12.03. Communication by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, each Guarantor, the Trustee, the Registrar, the Collateral Agent and anyone else shall have the protection of TIA Section 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee or the Collateral Agent to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee or the Collateral Agent, as applicable:
(1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee or the Collateral Agent, as applicable, stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials.
SECTION 12.06. When Notes Disregarded.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination. Notwithstanding the foregoing, Notes owned on the Issue Date by MHR or any Related Party thereof shall not be so disregarded so long as such Notes are owned by MHR or any Related Party thereof.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 12.08. Legal Holidays.
A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 12.09. Governing Law; Waiver of Jury Trial.
This Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.
SECTION 12.10. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder, as such, of the Company or any Guarantor will have any liability for any obligations of the Company or any Guarantor under the Notes, any Guaranty or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
SECTION 12.11. Successors.
All agreements of the Company and the Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.12. Multiple Originals.
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.
SECTION 12.13. Table of Contents; Headings.
The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.
LORAL SKYNET CORPORATION
LORAL SKYNET INTERNATIONAL, L.L.C.
LORAL ASIA PACIFIC SATELLITE (HK) LIMITED
LORAL SPACECOM CORPORATION
LORAL SKYNET NETWORK SERVICES, INC.
LORAL COMMUNICATIONS SERVICES, INC.
LORAL GROUND SERVICES, L.L.C.
LORAL CYBERSTAR INTERNATIONAL, INC.
LORAL CYBERSTAR SERVICES, INC.
LORAL CYBERSTAR HOLDINGS, L.L.C.
LORAL SKYNET NETWORK SERVICES HOLDINGS L.L.C.
LORAL CYBERSTAR, L.L.C.
CYBERSTAR, L.L.C.
LORAL SATELLITE, INC.
By: /s/ Richard Mastoloni
-----------------------------------------
Name: Richard P. Mastoloni
---------------------------------------
Title: Vice President
--------------------------------------
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THE BANK OF NEW YORK,
as Trustee and as Collateral Agent
By: /s/ Geovanni Barris
-----------------------------------------
Name: Geovanni Barris
---------------------------------------
Title: Vice President
--------------------------------------
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S-2 Indenture
APPENDIX A
PROVISIONS RELATING TO THE NOTES
1. Definitions.
1.1 Certain Definitions.
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For the purposes of this Appendix A the following terms shall have the meanings indicated below:
"APPLICABLE PROCEDURES" means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depository as in effect from time to time.
"DEFINITIVE NOTE" means a certificated Note that does not include the Global Securities Legend.
"DEPOSITORY" means The Depository Trust Company, its nominees and their respective successors.
"INITIAL NOTES" means the $126.0 million of Notes issued on the Issue Date.
"NOTES CUSTODIAN" means the custodian with respect to a Global Note (as appointed by the Depository), or any successor Person thereto and shall initially be the Trustee.
"TRANSFER RESTRICTED NOTES" means Notes that bear or are required to bear the Transfer Restriction Legend.
1.2 Other Definitions.
Defined in
Term Section
---- ----------
"Additional Definitive Notes"...................................... 2.1(a)
"Additional Global Notes".......................................... 2.1(a)
"Agent Members" ................................................... 2.1(b)
"Global Notes" .................................................... 2.1(a)
"Global Note Legend"............................................... 2.3(g)(i)
"Initial Global Notes" ............................................ 2.1(a)
"Restricted Definitive Notes"...................................... 2.1(a)
"Restricted Global Notes" ......................................... 2.1(a)
"Transfer Restriction Legend"...................................... 2.3(g)(i)
"Unrestricted Definitive Notes" ................................... 2.1(a)
"Unrestricted Global Notes"........................................ 2.1(a)
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2. The Notes.
2.1 Form and Dating.
(a) General.
The Initial Notes shall be issued initially (i) in the form of one or
more permanent global notes in definitive, fully registered form (collectively,
the "INITIAL GLOBAL NOTES"), one of which may, if appropriate, bear the Transfer
Restriction Legend, and at least one of which shall not bear such legend, and
(ii) to the extent necessary, in the form of one or more Definitive Notes.
Additional Notes constituting interest paid in-kind with respect to Notes evidenced by a Global Note may be issued by the annotation of an increase in the principal amount of such Global Note or by the issuance of one or more additional global Notes in definitive, fully registered form ("ADDITIONAL GLOBAL NOTES"). Additional Global Notes evidencing interest paid in-kind with respect to Transfer Restricted Notes shall constitute Transfer Restricted Notes.
Additional Notes constituting interest paid in-kind with respect to Notes evidenced by a Definitive Note shall be issued in the form of one or more additional Definitive Notes ("ADDITIONAL DEFINITIVE NOTES"). Additional Definitive Notes evidencing interest paid in-kind with respect to Transfer Restricted Notes shall constitute Transfer Restricted Notes.
The Initial Global Notes and any Additional Global Notes are collectively referred to herein as "GLOBAL NOTES." All Global Notes shall be initially issued in each case without interest coupons and with the Global Note Legend, shall be deposited on behalf of the purchasers of such Notes represented thereby with the Notes Custodian and registered in the name of the Depository or a nominee of the Depository, and duly executed by the Company and authenticated by the Trustee as provided in this Indenture. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.
Global Notes that are Transfer Restricted Notes are referred to herein as "RESTRICTED GLOBAL NOTES," and Global Notes that are not Transfer Restricted Notes are referred to herein as "UNRESTRICTED GLOBAL NOTES." Definitive Notes that are Transfer Restricted Notes are referred to herein as "RESTRICTED DEFINITIVE NOTES," and Definitive Notes that are not Transfer Restricted Notes are referred to herein as "UNRESTRICTED DEFINITIVE NOTES."
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the
Depository or by the Trustee as the custodian of the Depository or under such Global Note, and the Company, the Trustee and any agent of the Company or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(c) Certificated Notes. Except as provided in this Section 2.1 or
Section 2.3, owners of beneficial interests in Global Notes shall not be
entitled to receive physical delivery of Definitive Notes.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on the Issue Date, $126.0 million principal amount of Notes, (2) from time to time to the extent permitted pursuant to Section 4.01(b) of the Indenture, Additional Notes for original issue in aggregate principal amounts specified in Officers' Certificates of the Company pursuant to Section 4.01(b), and (3) from time to time, Notes for issue pursuant to Sections 2.06, 2.07, 2.09, 3.06 and 9.05 of the Indenture, in each case upon receipt of an Officers' Certificate or a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such Officers' Certificate or order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository,
by a nominee of the Depository to the Depository or to another nominee of the
Depository, or by the Depository or any such nominee to a successor Depository
or a nominee of such successor Depository. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depository that it is unwilling or unable to continue to act as
Depository or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depository is not appointed by the
Company within 120 days after the date of such notice from the Depository, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee, or (iii) there shall have occurred and be
continuing a Default or an Event of Default and such exchange shall be requested
by a written notice given to the Depository by a Holder. Upon the occurrence of
any of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall
be issued in such names as the Depository shall instruct the Trustee. Global
Notes also may be exchanged or replaced, in whole or in part, as provided in
Section 2.07 of the Indenture. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.3(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.3(b) or (c) hereof, in each case subject to the requirements of
Section 2.3(f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depository, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with the following, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in a Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with Section 2.3(f) hereof and the transfer restrictions set forth in the Transfer Restriction Legend. Beneficial interests in an Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Unrestricted Global Note.
(ii) Transfers and Exchanges of Beneficial Interests in a Global
Note for Beneficial Interests in the other Global Note. In connection with
all transfers and exchanges of beneficial interests in a Global Note for
beneficial interests in the other Global Note, the transferor of such
beneficial interest must deliver to the Registrar (A) a written order from
a Participant given to the Depository in accordance with the Applicable
Procedures directing the Depository to credit or cause to be credited a
beneficial interest in the applicable Global Note in an amount equal to the
beneficial interest to be transferred or exchanged, (B) instructions given
in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase, and
(C) the documentation required by Section 2.3(f) hereof. Upon satisfaction
of all of the requirements for transfer or exchange of beneficial interests
in Global Notes contained in this Indenture (including, without limitation,
Section 2.3(f) hereof) and the Notes or otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Notes pursuant to Section 2.3(h) hereof.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon (i) delivery to the Registrar of (A) a written order from a Participant given to the Depository in accordance with the Applicable Procedures directing the Depository to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged, and (B) instructions given by the Depository to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect such transfer or exchange, and (ii) if the beneficial interest being transferred or exchanged is a beneficial interest in a Restricted Global Note, satisfaction of the conditions set forth in Section 2.3(f) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.3(h) hereof, and the Company shall execute and, upon receipt of an authentication order pursuant to Section 2.2, the Trustee shall authenticate and deliver to the Person designated
in the instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.3(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depository and the
Participant. The Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.
Any Definitive Note issued upon exchange or transfer of a beneficial interest in an Unrestricted Global Note that is issued to a Person that may be deemed to be an "underwriter" within the meaning of 11 U.S.C. Section 1145 ("SECTION 1145") or an "affiliate" or a "control person" within the meaning of the Securities Act and any Definitive Note issued upon exchange or transfer of a beneficial interest in a Restricted Global Note may, in each case, bear the Transfer Restriction Legend and, in any event, shall be subject to all applicable restrictions on transfer.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
If any Holder of a Definitive Note proposes to exchange such Note for
a beneficial interest in a Global Note or to transfer such Definitive Note to a
Person who takes delivery thereof in the form of a beneficial interest in a
Global Note, then, upon (i) delivery to the Registrar of a written order and
instructions of the types described in Section 2.3(b)(ii) above and an
endorsement or instrument of transfer as described in Section 2.3(e) below, and
(ii) if the Definitive Note being transferred or exchanged is a Restricted
Definitive Note, satisfaction of the conditions set forth in Section 2.3(f)
hereof, the Trustee shall cancel the applicable Definitive Note and increase or
cause to be increased the aggregate principal amount of the applicable Global
Note.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.3(e) and, if applicable,
Section 2.3(f), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to Section 2.3(f).
Any Definitive Note issued upon exchange or transfer of an Unrestricted Definitive Note that is issued to a Person that may be deemed to be an "underwriter" within the meaning of Section 1145 or an "affiliate" or a "control person" within the meaning of the Securities Act and any Definitive Note issued upon exchange or transfer of a Restricted Definitive Note may, in each case, bear the Transfer Restriction Legend and, in any event, shall be subject to all applicable restrictions on transfer.
(f) Transfers and Exchanges of Transfer Restricted Notes. No Person may transfer or exchange a Restricted Definitive Note, a Restricted Global Note or a beneficial interest in a Restricted Global Note (including, without limitation, the removal of the Transfer
Restriction Legend thereon) unless such transfer or exchange is made (i)
pursuant to an effective registration statement under the Securities Act, or
(ii) pursuant to an exemption from registration requirements of the Securities
Act and, in the case of clause (ii), if the Registrar or the Company so
requests, the Registrar receives an opinion of counsel in form reasonably
acceptable to the Registrar and the Company stating that (A) such transfer or
exchange is in compliance with the Securities Act and (B) if such transferee or
exchangee seeks the removal of the Transfer Restriction Legend, the restrictions
on transfer contained herein and in the Transfer Restriction Legend are no
longer required in order to maintain compliance with the Securities Act. Upon
satisfaction of the requirements of this Section 2.3(f) with respect to the
removal of the Transfer Restriction Legend, as appropriate, such Restricted
Definitive Note shall be exchanged for an Unrestricted Definitive Note or such
beneficial interest in a Restricted Global Note shall be exchanged for a
beneficial interest in a corresponding Unrestricted Global Note, and the Trustee
shall adjust the principal balances of the Global Notes pursuant to Section
2.3(h) hereof.
(g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture to the extent required by the applicable provisions of this Indenture:
(i) Transfer Restriction Legend. Each Transfer Restricted Note shall bear a legend substantially in the following form (the "TRANSFER RESTRICTION LEGEND").
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (II) PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION, SUBJECT TO THE COMPANY'S RIGHT TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED."
[INCLUDE THE FOLLOWING TWO PARAGRAPHS ONLY IF THE TRANSFER RESTRICTED
NOTE IS A DEFINITIVE NOTE:]
"THE HOLDER OF THIS NOTE AGREES THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS THE REGISTRAR MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form (the "GLOBAL NOTE LEGEND"):
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.10 of this Indenture. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an authentication order. The Company shall make available to the Trustee from time to time upon request a reasonable supply of Definitive Notes in definitive, fully registered form without interest coupons.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.09, 3.06, 4.04, 4.09 and 9.05 of this Indenture).
(iii) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same Indebtedness, and entitled to the same benefits
under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(iv) Neither the Company nor the Registrar shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Indenture and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
(v) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, the Registrar, or the Company shall be affected by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2 hereof.
(vii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.3 to effect a registration of transfer or exchange may be submitted by facsimile.
APPENDIX B
[FORM OF FACE OF NOTES]
[Insert Global Note Legend here if appropriate]
[Insert Restricted Securities Legend here if appropriate]
No. [____] $[______]
CUSIP No. [54387R AA 8]
ISIN No. [US54387RAA86]
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14% Senior Secured Cash/PIK Notes due 2015
LORAL SKYNET CORPORATION, a Delaware corporation, promises to pay to
[CEDE & CO.](1) [__], or registered assigns, the principal sum of [__] DOLLARS
[, or such greater or lesser amount as may from time to time be endorsed on the
Schedule of Increases or Decreases in Global Note attached hereto (but in no
event may such amount exceed the aggregate principal amount of Notes
authenticated pursuant to Section 2.2 of Appendix A to the Indenture referred to
below and then outstanding pursuant to Section 2.08 of the Indenture),](1) on
[__], 2015.
Interest Payment Dates: July 15 and January 15, commencing July 15, 2006.
Record Dates: July 1 and January 1.
Additional provisions of this Note are set forth on the other side of this Note.
Dated: [_________], 20[___]
LORAL SKYNET CORPORATION
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Notes referred
to in the Indenture.
[FORM OF REVERSE SIDE OF NOTES]
14% Senior Secured Cash/PIK Notes due 2015
1. Interest and Principal
LORAL SKYNET CORPORATION, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "COMPANY"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. In certain circumstances,
the Company may pay all or a portion of such interest in-kind through the
issuance of Additional Notes in lieu of cash, as more particularly described in
Section 4.01(b) of the Indenture. Subject to Section 4.01(c) of the Indenture,
interest on overdue principal (and, to the extent lawful, on overdue
installments of interest) shall accrue at the rate that is 2.0% per annum in
excess of the rate specified in the preceding sentence. The Company will pay
interest semi-annually in arrears on each Interest Payment Date. Interest on the
Notes (including Additional Notes) will accrue from the date of issuance of each
Note or, if interest has already been paid, from the date it was most recently
paid or provided for. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
The Notes will mature on October 15, 2015.
2. Method of Payment
The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of business on the Record Date next preceding the Interest Payment Date even if Notes are canceled after the Record Date and on or before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company. The Company will make all payments in respect of a certificated Note (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York (the "TRUSTEE"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Notes under an Indenture dated as of November 21, 2005 (as such may be amended or supplemented from time to time, "INDENTURE"), among the Company, the Guarantors, the Trustee and the Collateral Agent. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms.
The Notes are senior obligations of the Company.
The Indenture contains covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness; layer indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; engage in transactions with affiliates; create liens on assets; transfer or sell assets; restrict dividends or other payments from subsidiaries; and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. These covenants are subject to important exceptions and qualifications.
5. Optional Redemption
Except as set forth below, the Company will not be entitled to redeem the Notes at its option.
On and after October 15, 2009, the Company will be entitled at its option to redeem all or a portion of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption prices set forth below (expressed in percentages of principal amount) on the date of redemption (the "REDEMPTION DATE"), plus accrued and unpaid interest to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the 12-month period commencing on October 15 of the years set forth below:
Redemption
Period Price
------ ----------
2009............................................................... 110.0%
2010............................................................... 108.0%
2011............................................................... 106.0%
2012............................................................... 104.0%
2013............................................................... 102.0%
2014............................................................... 100.0%
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Subject to the right of Holders to object, as set forth below in this paragraph, prior to October 15, 2009, the Company may elect to redeem all or a portion of the Notes upon not less than 30 nor more than 60 days' notice, at the redemption price of 110% of the principal amount thereof plus accrued and unpaid interest to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest
Payment Date). In such event, (1) the Officers' Certificate required pursuant to
Section 3.01 of the Indenture shall also certify a resolution of the Board of
Directors of the Company approving such redemption and (2) such notice of
redemption shall inform the Holders of their right to object to and prevent such
redemption, and provide a reasonable mechanism by which Holders may exercise
such right. If within twenty (20) Business Days following the date that such
redemption notice is sent to the Holders, written notice is received by the
Company from the Holders of at least two-thirds (2/3) in principal amount of the
then outstanding Notes objecting to such redemption (such notices from the
Holders of such two-thirds or greater amount, collectively, the "REQUISITE
OBJECTION TO REDEMPTION NOTICE"), then the Company shall not consummate such
redemption. If the Requisite Objection to Redemption Notice is not received by
the Company by the expiration of such twenty (20) Business Day-period, then the
Company may consummate such redemption as specified in such redemption notice.
6. Notice of Redemption
Notice of redemption will be mailed by first class mail at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at the Holder's registered address. Notes in denominations of $1,000 principal amount or less may be redeemed in whole and not in part. Notes in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain other conditions are satisfied, on and after such date interest will cease to accrue on such Notes (or such portions thereof) called for redemption unless the Company defaults in making the redemption payment.
7. Put Provisions
Upon a Change of Control, each Holder will have the right to require that the Company repurchase such Holder's Notes at a purchase price set forth below, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant Record Date to receive interest due on the related Interest Payment Date), if repurchased during the 12-month period commencing for calendar year 2005 on the Issue Date and thereafter on October 15 of the years set forth below:
Purchase
Period Price
------ --------
2005................................................................. 104%
2006................................................................. 103%
2007................................................................. 102%
2008 and thereafter.................................................. 101%
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in each case as provided in, and subject to the terms of, the Indenture.
In certain circumstances, the Company must use the Net Available Cash from Asset Dispositions to make an offer to Holders to repurchase Notes at a purchase price of 100% of the principal amount, plus accrued and unpaid interest.
8. Guaranty
The payment by the Company of the principal of, and premium and interest on, the Notes is fully and unconditionally guaranteed on a joint and several senior basis by each of the Guarantors. Not all Subsidiaries of the Company are required to be Guarantors.
9. Collateral
Subject to certain exceptions described in the Indenture, the Notes are secured by security interests in and liens on the Collateral (as defined in the Indenture). Collateral may be released under certain circumstances as more particularly described in the Indenture.
10. Transfer; Exchange
The Notes are in registered form without coupons. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed or 15 days before an interest payment date, as applicable.
11. Persons Deemed Owners
The registered Holder of this Note may be treated as the Note's owner for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall be entitled to terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture, the Collateral Documents and the Notes may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Notes and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Notes. Subject to certain exceptions set forth in the Indenture, without the consent of any Noteholder, the Company, the Guarantors, and the Trustee shall be entitled to amend the Indenture, the Collateral Documents or the Notes to cure any ambiguity, omission, defect or inconsistency, to comply with Article 5 of the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes, to add guarantees with respect to the Notes, including any Guaranties, to add Collateral to further secure the Notes, to add additional covenants or surrender rights and powers conferred on the Company or any Guarantors, to comply with any request of the SEC in connection with qualifying the Indenture under the TIA, to make any change that does not adversely affect the rights of any Noteholder, or to evidence the release of a Guarantor in accordance with the Indenture.
15. Defaults and Remedies
Under the Indenture, Events of Default include: (i) defaults in any payment of interest on any Note when the same becomes due and payable, continued for 30 days; (ii) default in payment of principal on the Notes at maturity, upon optional redemption pursuant to Section 5 of the Notes, upon declaration of acceleration or otherwise, or failure by the Company to redeem or purchase Notes when required; (iii) failure by the Company or any Guarantor that is a Significant Subsidiary to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (iv) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company, or any Significant Subsidiary (whether or not a Guarantor) if the amount accelerated (or so unpaid) exceeds $50.0 million; (v) certain events of bankruptcy or insolvency with respect to the Company, or any Significant Subsidiary (whether or not a Guarantor); (vi) certain judgments or decrees for the payment of money in excess of $50.0 million against the Company or any Significant Subsidiary (whether or not a Guarantor); and (vii) certain defaults with respect to Guaranties and Collateral Documents in certain cases subject to notice and lapse of time. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 40.0% in principal amount of the Notes then outstanding may declare all the Notes to be due and payable by notice in writing to the Company and the Trustee, and upon such declaration, the Notes will be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default.
Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives reasonable indemnity or security against any loss, liability or expense. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
No director, officer, employee, incorporator or stockholder, as such, of the Company or any Guarantor will have any liability for any obligations of the Company or any Guarantor under the Notes, any Guaranty or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
18. Authentication
This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.
19. Abbreviations
Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. CUSIP Numbers
The Company in issuing the Notes may use "CUSIP" numbers and corresponding "ISINs" (if then generally in use) and, if so, the Trustee may use "CUSIP" numbers and corresponding "ISINs" in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.
21. Governing Law
This Note shall be governed by, and construed in accordance with, the laws of the state of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
22. Copies
The Company will furnish to any Noteholder upon written request and without charge to the Noteholder a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to:
Loral Skynet Corporation
600 Third Avenue
New York, NY 10016
Attention: Treasurer
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Sign exactly as your name appears on the other side of this Note.
Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The following increases or decreases in this Global Note have been made:
Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
principal amount of this principal amount of this Global Note following officer of Trustee or
Date of Exchange Global Note Global Note such decrease or increase Notes Custodian
---------------- ------------------------ ------------------------ ------------------------- -----------------------
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.04 or 4.09 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.04 or 4.09 of the Indenture, state the amount in principal amount: $_____________
Date: Your Signature:
------------ -------------------------------------
(Sign exactly as your name appears on
the other side of this Note.)
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Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
Exhibit 4.2
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is dated as of November 21, 2005 and entered into by and among LORAL SKYNET CORPORATION, a Delaware corporation ("COMPANY"), each of THE UNDERSIGNED SUBSIDIARIES of Company (each of such undersigned Subsidiaries being a "SUBSIDIARY GRANTOR" and collectively "SUBSIDIARY GRANTORS") and each ADDITIONAL GRANTOR that may become a party hereto after the date hereof in accordance with Section 18 hereof (each of Company, each Subsidiary Grantor, and each Additional Grantor being a "GRANTOR" and collectively the "GRANTORS") and THE BANK OF NEW YORK, as collateral agent (the "COLLATERAL AGENT") and as trustee (the "TRUSTEE") for the holders of the Notes issued under the Indenture referred to below (capitalized terms used in this Agreement and not otherwise defined in this Agreement, have the meanings given such terms in accordance with Section 28 of this Agreement).
RECITALS
WHEREAS, Company, the Subsidiary Grantors and the Trustee have entered into an Indenture (as the same may be amended, supplemented or otherwise modified from time to time, the "INDENTURE"), dated as of the date hereof, pursuant to which Company has issued its 14% Senior Secured Cash/PIK Notes Due 2015 (the "NOTES");
WHEREAS, the Grantors have agreed to enter into this Agreement to secure the Company's obligations under the Indenture and the Notes;
NOW, THEREFORE, in consideration of the agreements set forth herein and in the Indenture and other good and valuable consideration, receipt of which is acknowledged by the parties hereto, each Grantor hereby agrees with Collateral Agent as follows:
SECTION 1. GRANT OF SECURITY.
Each Grantor hereby assigns to Collateral Agent, and hereby grants to Collateral Agent a security interest in, all of such Grantor's right, title and interest in and to all of the personal property of such Grantor other than the Excluded Collateral (as defined below), in each case whether now or hereafter existing, whether tangible or intangible, whether now owned or hereafter acquired, wherever the same may be located and whether or not subject to the UCC, including the following (collectively, the "COLLATERAL"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Money and all Deposit Accounts, together with all amounts on deposit from time to time in such Deposit Accounts;
(d) all Documents;
(e) all General Intangibles, including all intellectual property, Payment Intangibles and Software;
1 Security Agreement
(f) all Goods, including Inventory, Equipment and Fixtures;
(g) all Instruments;
(h) all Investment Property;
(i) all Letter-of-Credit Rights and other Supporting Obligations;
(j) all Records;
(k) all Commercial Tort Claims, including those set forth on Schedule 1 annexed hereto; and
(l) all Proceeds and Accessions with respect to any of the foregoing Collateral.
It is the intention of Grantors that the description of the Collateral set forth above be construed to include the broadest possible range of assets.
Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, the following (collectively, the "EXCLUDED COLLATERAL"):
(1) any contract, agreement, instrument or other asset that by its terms would be violated, breached or terminated by an assignment as Collateral under any Collateral Document (other than to the extent that such terms prohibiting such assignment in any contract, agreement, instrument or other asset would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the applicable Uniform Commercial Code or any successor provision or provisions and other than to the extent that the Company has obtained a consent from the relevant counterparty to such assignment);
(2) any property subject to a Lien permitted by clauses (iii), (iv),
(vi), (ix), (xiii), (xvii), (xviii), (xix), (xx) and (xxi) of the definition of
Permitted Liens in the Indenture, to the extent that the contractual
arrangements governing such Lien prohibit the granting of a security interest
hereunder in such property;
(3) assets sold to a Person which is not the Company or a Restricted Subsidiary in compliance with the Indenture;
(4) assets owned by a Restricted Subsidiary after the sale of such Person or the release of the Guarantee of such Person pursuant to Section 10.06 of the Indenture or the release of the Liens pursuant to Section 11.05 of the Indenture;
(5) any domestic deposit account (i) for which the Trustee is the depositary, and (ii) of which all or a substantial portion of the funds on deposit are used for funding (w) payroll, (x) 401(k) and other retirement plans and employee benefits, including rabbi trusts for deferred compensation, (y) health care benefits and (z) escrow arrangements (e.g., environmental indemnity accounts) or (iii) (not already subject to the other clauses of this clause (5)) with an
2 Security Agreement
aggregate average ten consecutive Business Day daily balance of all funds in all such other domestic deposit accounts for all Obligors not in excess of $2.0 million;
(6) any individual parcel of owned real estate with a fair market value, as reasonably determined in good faith by the Company, not in excess of $1,000,000;
(7) any real estate leasehold interest;
(8) any outstanding stock of a direct or indirect Foreign Subsidiary of the Company that is not a Guarantor in excess of 65% of the total combined voting stock (as determined for United States federal income tax purposes) of such Foreign Subsidiary;
(9) any property of any Grantor which requires governmental regulatory approval for such Guarantor to grant the lien on such Collateral so long as the Guarantor is using or has used Commercially Reasonable Efforts to obtain such consent;
(10) any letter of credit rights for a specified purpose to the extent the beneficiary is required by applicable law to apply the proceeds of such letter of credit rights for a specified purpose;
(11) any assets securing Indebtedness permitted under Section 4.06(b)(4) of the Indenture to the extent the documents securing such Indebtedness prohibit such assets from securing other Indebtedness;
(12) cash deposits, not exceeding $5,000,000 at any time, securing Hedging Obligations permitted under the Indenture;
(13) assets subject to the Amended and Restated Satellite Agreement dated August 26, 2003, as amended, by and between the Company and APT Satellite Company Limited, until such time as the requirements set forth in Section 13 thereof have been satisfied;
(14) any collateral provided pursuant to that certain Security Agreement dated October 8, 2004 entered into among the Company, APT Satellite Company Limited and Bank of China (Hong Kong) Limited;
(15) equity interests in Earth Station Ecuador CIA Ltda.;
(16) other assets designated from time to time by the Company with a fair market value as determined in good faith by the Company in the aggregate for all assets designated not to exceed $5.0 million;
(17) transponders on Telstar 18 that are subject to the leasehold or ownership interest of APT Satellite Company Limited and the common elements on the satellite associated therewith;
(18) any contract, agreement, instrument or other asset that by its terms would be violated, breached or terminated by an assignment as Collateral under any Collateral Document if such asset is not material to the business of the Obligors taken as a whole; and
3 Security Agreement
(19) FCC Licenses to the extent (and only to the extent) that the creation of a security interest in any such FCC License would be prohibited by FCC Laws, but excluding (i) the right to receive any payment of money (including, without limitation, payment intangibles) and (ii) any proceeds, products, accessions, rents, profits, income, benefits, substitutions or replacements of any FCC License (unless and to the extent that such proceeds, products, accessions, rents, profits, income, benefits, substitutions or replacements would constitute an FCC License and FCC Laws applicable thereto prohibit the creation of a security interest in such FCC License).
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral is collateral security for, due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall be due and payable, whether on an Interest Payment Date, at maturity, pursuant to an Asset Disposition Offer or Change of Control Offer, or by acceleration, redemption or otherwise, and interest on the overdue principal of and (to the extent permitted by law) interest, if any, on the Notes and the performance of all other obligations of the Grantors to the Holders, the Trustee and the Collateral Agent under the Indenture, the Notes, the Collateral Documents and any other documents contemplated thereby (collectively the "SECURED OBLIGATIONS").
SECTION 3. GRANTORS REMAIN LIABLE.
Anything contained herein to the contrary notwithstanding, (a) each Grantor shall remain liable under any contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) Collateral Agent shall not have any obligation or liability under any contracts, licenses, and agreements included in the Collateral by reason of this Agreement, nor shall Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants as follows:
(a) PERFECTION. The security interests in the Collateral granted to
Collateral Agent hereunder constitute valid security interests and liens in the
Collateral, securing the payment of the Secured Obligations. Upon (i) the filing
of UCC financing statements naming each Grantor as "debtor", naming Collateral
Agent as "secured party" and describing the Collateral in the filing offices
with respect to such Grantor set forth on Schedule 2 annexed hereto, (ii) in the
case of the Securities Collateral consisting of certificated Securities or
evidenced by Instruments, either the filing of such UCC financing statements or
the delivery of the certificates representing such certificated Securities and
delivery of such Instruments to Collateral Agent, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank,
(iii) in the case of Copyright Registrations, the recordation of a
4 Security Agreement
Grant with the United States Copyright Office, (iv) in the case of Collateral constituting vehicles covered by a certificate of title, the annotation of the security interest granted herein on such certificate of title, (v) in relation to Collateral owned by LAPS(HK), the registration of this Agreement with the Hong Kong Companies Registry in accordance with Part III of the Companies Ordinance and the entry of the relevant provisions of this Agreement in the Register of Mortgages and Charges kept or to be kept at the registered office of LAPS(HK), and (vi) in the case of Commercial Tort Claims, in addition to the filing of such UCC financing statements, such Commercial Tort Claims having been adequately described on Schedule 1 hereto, the Collateral Agent shall have a perfected security interest on the date hereof in all Collateral (other than Unperfected Collateral).
(b) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION; LOCATIONS OF EQUIPMENT AND INVENTORY. On the date hereof, such Grantor's name as it appears in official filings in the jurisdiction of its organization, type of organization (i.e. corporation, limited partnership, etc.), jurisdiction of organization, principal place of business, chief executive office, principal office where such Grantor keeps its principal Records regarding the Accounts, Intellectual Property and originals of Chattel Paper, and organization number provided by the applicable Government Authority of the jurisdiction of organization are set forth on Schedule 3 annexed hereto. All material Equipment and Inventory is located at the places set forth on Schedule 4 annexed hereto, except for Inventory which, in the ordinary course of business, is in transit either (i) from a supplier to a Grantor, (ii) between the locations set forth on Schedule 4 annexed hereto, or (iii) to customers of a Grantor.
(c) SECURITIES COLLATERAL. On the date hereof (i) except as listed on Schedule 5(b) annexed hereto, there are no outstanding warrants, options or other rights to purchase, or other agreements outstanding with respect to, or property that is now or hereafter convertible into, or that requires the issuance or sale of, any Pledged Subsidiary Equity, (ii) Schedule 5(a) annexed hereto sets forth the Capital Stock and the Pledged Equity owned by each Grantor, and the percentage of such outstanding equity pledged; and (iii) Schedule 6 annexed hereto sets forth all of the Pledged Debt with an outstanding principal amount in excess of $100,000 owned by such Grantor.
(d) INTELLECTUAL PROPERTY COLLATERAL. On the date hereof, a true and complete list of all material Trademark Registrations and material applications for any Trademark owned or used by such Grantor, in whole or in part, is set forth on Schedule 7 annexed hereto; a true and complete list of all material Patents owned or used by such Grantor, in whole or in part, is set forth on Schedule 8 annexed hereto; a true and complete list of all material Copyright Registrations and material applications for Copyright Registrations owned by such Grantor, in whole or in part, is set forth on Schedule 9 annexed hereto.
(e) CHATTEL PAPER; LETTER-OF-CREDIT RIGHTS. As of the date hereof, all of such Grantor's material Chattel Paper and Letters of Credit are described on Schedule 10.
The representations and warranties as to the information set forth in Schedules referred to herein are made as to each Grantor (other than Additional Grantors) only as of the date hereof and as to each Additional Grantor only as of the date of the applicable Counterpart, except that, in the case of a Pledge Supplement, IP Supplement or notice delivered pursuant to Section 5(d)
5 Security Agreement
hereof, such representations and warranties are made only as of the date of such supplement or notice.
SECTION 5. FURTHER ASSURANCES COVENANTS.
(a) GENERALLY. Except as limited under the Indenture, each Grantor
agrees and covenants that from time to time, and from time to time at the
request of the Collateral Agent, such Grantor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or reasonably desirable, or that Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral (it
being agreed that if (1) no Default or Event of Default shall be continuing and
(2) no request with respect to such further action shall have been made by the
Collateral Agent, then the Grantors shall not be required to take such further
actions more than once each calendar quarter). Without limiting the generality
of the foregoing, each Grantor will at the times specified in the first sentence
of this paragraph: (i) notify Collateral Agent in writing of receipt by such
Grantor of any interest in Chattel Paper and mark conspicuously each item of
Chattel Paper and each of its records pertaining to the Collateral, with a
legend indicating that such Collateral is subject to the security interest
granted hereby, (ii) deliver to Collateral Agent all Documents and all
promissory notes and other Instruments and all original counterparts of Chattel
Paper, duly endorsed and accompanied by duly executed instruments of transfer or
assignment, (iii) (A) deliver such documents, instruments, notices, records and
consents, and take such other actions, necessary to establish that Collateral
Agent has control over electronic Chattel Paper and Letter-of-Credit Rights of
such Grantor and (B) deliver such other instruments or notices, in each case, as
may be necessary or reasonably desirable, or as Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby, (iv) furnish to Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail, (v) at any reasonable time, upon
request by Collateral Agent, exhibit the Collateral to and allow inspection of
the Collateral by Collateral Agent, or persons designated by Collateral Agent,
(vi) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect such Grantor's title to or Collateral Agent's
security interest in all or any part of the Collateral, and (vii) to the extent
required under the Indenture, use commercially reasonable efforts to obtain any
necessary consents of third parties to the creation and perfection of a security
interest in favor of Collateral Agent with respect to any Collateral. Each
Grantor hereby authorizes Collateral Agent, at the expense of the Grantors, to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral (including any financing statement
indicating that it covers "all assets" or "all personal property" of such
Grantor) without the signature of any Grantor.
(b) SECURITIES COLLATERAL. Without limiting the generality of the foregoing Section 5(a), each Grantor agrees and covenants that (i) all certificates or Instruments representing or evidencing the Securities Collateral shall be delivered to and held by or on behalf of Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by such Grantor's endorsement, where necessary, or duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory
6 Security Agreement
to Collateral Agent and (ii) it will, after obtaining any additional Capital Stock or Indebtedness, at the times specified in Section 5(a), deliver to Collateral Agent a Pledge Supplement, duly executed by such Grantor, in respect of such additional Pledged Equity or Pledged Debt; provided, that the failure of any Grantor to execute a Pledge Supplement with respect to any additional Pledged Equity or Pledged Debt shall not impair the security interest of Collateral Agent therein or otherwise adversely affect the rights and remedies of Collateral Agent hereunder with respect thereto. Upon each such acquisition, the representations and warranties contained in Section 4(a) hereof shall be deemed to have been made by such Grantor as to such Pledged Equity or Pledged Debt, whether or not such Pledge Supplement is delivered.
(c) INTELLECTUAL PROPERTY COLLATERAL. Each Grantor covenants to notify
Collateral Agent in writing, at the times specified in Section 5(a), of any
material rights to Intellectual Property Collateral acquired by such Grantor
after the date hereof. Promptly after the filing of an application for any
material Copyright Registration, each Grantor shall, at the times specified in
Section 5(a), execute and deliver to Collateral Agent an IP Supplement, and
submit a Grant for recordation with respect thereto in the United States
Copyright Office; provided, the failure of any Grantor to execute an IP
Supplement or submit a Grant for recordation with respect to any additional
Copyright Registrations shall not impair the security interest of Collateral
Agent therein or otherwise adversely affect the rights and remedies of
Collateral Agent hereunder with respect thereto. Upon delivery to Collateral
Agent of an IP Supplement, Schedules 8, 9 and 10 annexed hereto and Schedule A
to each Grant, as applicable, shall be deemed modified to include a reference to
any right, title or interest in any existing Intellectual Property Collateral or
any Intellectual Property Collateral set forth on Schedule A to such IP
Supplement. Upon each such acquisition, the representations and warranties
contained in Section 4(a) hereof shall be deemed to have been made by such
Grantor as to such Intellectual Property Collateral, whether or not such IP
Supplement is delivered.
(d) COMMERCIAL TORT CLAIMS. Grantors have no Commercial Tort Claims as of the date hereof, except as set forth on Schedule 1 annexed hereto. In the event that a Grantor shall at any time after the date hereof have any Commercial Tort Claims, such Grantor covenants to notify Collateral Agent thereof in writing, at the times specified in Section 5(a), which notice shall (i) set forth in reasonable detail the basis for and nature of such Commercial Tort Claim and (ii) constitute an amendment to this Agreement by which such Commercial Tort Claim shall constitute part of the Collateral.
SECTION 6. CERTAIN COVENANTS OF GRANTORS.
Each Grantor shall:
(a) shall ensure that the security interests in the Collateral (other
than Unperfected Collateral) granted to Collateral Agent will at all times
(except as otherwise permitted pursuant to Schedule 11.01 of the Indenture)
constitute a perfected security interests therein prior to all other Liens
(except for Permitted Liens), and that all filings and other actions necessary
or desirable to perfect and protect such security interests have been, or
promptly after the acquisition by Grantor of any such Collateral (subject to the
limitations set forth in the Indenture with respect to Unperfected Collateral)
will be, duly made or taken;
7 Security Agreement
(b) give Collateral Agent, on the date of or prior to any such change, written notice of (i) any change in such Grantor's name, identity or corporate structure and (ii) any reincorporation, reorganization or other action that results in a change of the jurisdiction of organization of such Grantor;
(c) keep Records regarding all material Collateral that are correct and accurate in all material respects at the locations described in Schedule 3 annexed hereto;
(d) upon the occurrence and during the continuance of an Event of Default, permit representatives of Collateral Agent at any time upon reasonable notice and during normal business hours to inspect and make abstracts from such Records, and each Grantor agrees to render to Collateral Agent, at such Grantor's reasonable cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto;
(e) on the Issue Date, deliver to the Collateral Agent a schedule,
substantially in the form of Schedule 6(e) attached hereto, containing a true,
correct and complete list and brief description of all of the following in which
a Grantor has an interest: (a) satellites, (b) transponders and transponder
leases (other than transponder leases where the Grantor is the lessor), (c)
licenses or rights to orbital slots, (d) assets related to Loral Skynet do
Brasil Ltda.; (e) joint venture rights and other interests in Mabuhay Space
Holdings Limited; (f) all interests in Globalstar, L.L.C.; (g) trademark rights
relating to the satellite services business; (h) all equity interests in each of
(1) XTAR, L.L.C., (2) Telstar 18, (3) Satellites Mexicanos S.A. de C.V. and (4)
Loral Skynet Network Services, Inc.; and (i) all other material assets necessary
for the operation of satellites;
(f) on the Issue Date, consummate the Restructuring Transactions with respect to the Company and its Subsidiaries (except as set forth in Schedule 6(g) attached hereto) and cause the assets described therein to be allocated among the Grantors and their Affiliates as set forth therein; and
(g) (i) within 90 days after the Issue Date consummate each Restructuring Transaction listed on Schedule 6(g) attached hereto as to which the failure to consummate such Restructuring Transaction could reasonably be expected to have a material adverse effect on the value of, or the attachment, perfection or priority of the Collateral Agent's Lien on, any Material Asset (or on any equity interest in any entity that is the direct or indirect owner of any Material Asset upon consummation of such Restructuring Transaction) (a "MATERIAL ADVERSE EFFECT") except that (X) as to the Restructuring Transactions described in that certain letter from the Grantors to the Trustee dated of even date hereof, it is agreed that they will be governed by clause (ii) below, (Y) as to the Restructuring Transactions set forth in item 2 of Schedule 6(g), it is agreed that the Grantors shall be required only to prepare and submit all required filings for recordation with the applicable intellectual property authority within the 90-day period set forth above and (Z) as to the Restructuring Transactions set forth in item 3 of Schedule 6(g), it is agreed that they will be governed by clause (ii) below except where the failure to consummate such Restructuring Transaction could reasonably be expected to have a Material Adverse Effect on the Material Assets taken as a whole, in which event the Grantors shall have 180 days from the date the Company obtains knowledge that a third party has asserted such consent right to consummate such Restructuring Transaction (or, if at the time the Company obtains knowledge
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of such assertion thereof, such consent right could not reasonably have been
expected to have a Material Adverse Effect on the Material Assets taken as a
whole, 180 days from the date such assertion reached the point where such
assertion could reasonably be expected to have a Material Adverse Effect on the
Material Assets taken as a whole) and (ii) use Commercially Reasonable Efforts
to promptly consummate all other Restructuring Transactions listed on Schedule
6(g). It is hereby agreed that the failure to effect the transfer of the one
share of Loral Asia Pacific Satellite (HK) Limited held by Loral Cyberstar
Holdings, LLC to Loral Skynet International, LLC within the period set forth
above shall not constitute a Material Adverse Effect.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO INVENTORY AND DOCUMENTS.
Each Grantor shall:
(a) if any Inventory is in possession or control of any of such Grantor's agents or processors upon the occurrence and during the continuance of an Event of Default, instruct such agent or processor to hold all such Inventory for the account of Collateral Agent and subject to the instructions of Collateral Agent; and
(b) from time to time, at the times specified in Section 5(a), following the issuance and delivery to such Grantor of any negotiable Document, deliver such Document to Collateral Agent.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS.
Except as otherwise provided herein, each Grantor, in accordance with reasonable business practices, shall continue to collect (other than customary write-offs in the ordinary course of business), at its own expense, all amounts due or to become due to such Grantor under the Accounts. In connection with such collections, each Grantor may take (and, upon the occurrence and during the continuance of an Event of Default at Collateral Agent's direction, shall take) such action as such Grantor or Collateral Agent may deem necessary or advisable to enforce collection of amounts due or to become due under the Accounts; provided, however, that Collateral Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default and upon written notice to such Grantor of its intention to do so, to (i) notify the account debtors or obligors under any Accounts of the assignment of such Accounts to Collateral Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to Collateral Agent, (ii) notify each Person maintaining a lockbox or similar arrangement to which account debtors or obligors under any Accounts have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to Collateral Agent, (iii) enforce collection of any such Accounts at the expense of Grantors, and (iv) adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. After receipt by such Grantor of the notice from Collateral Agent referred to in the proviso to the preceding sentence, (A) all amounts and proceeds (including checks and other Instruments) received by such Grantor in respect of the Accounts shall be received in trust for the benefit of Collateral Agent hereunder, and shall be forthwith paid over or delivered to Collateral Agent in the same form as so received (with any necessary endorsement and (B) such Grantor shall not,
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without the written consent of Collateral Agent, adjust, settle or compromise the amount or payment of any Account, or release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO THE SECURITIES COLLATERAL.
(a) FORM OF SECURITIES COLLATERAL. If any Securities Collateral is not a security pursuant to Section 8-103 of the UCC, no Grantor shall take any action that, under such Section, converts such Securities Collateral into a security without causing the issuer thereof to issue to it certificates or instruments evidencing such Securities Collateral, which it shall promptly deliver to Collateral Agent as provided in this Section 9(a).
(b) VOTING AND DISTRIBUTIONS. So long as no Event of Default shall have occurred and be continuing, each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Securities Collateral or any part thereof for any purpose not in violation of the terms of the Indenture.
Upon the occurrence and during the continuance of an Event of Default,
(x) upon written notice from Collateral Agent to any Grantor, all rights of such
Grantor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease, and all such
rights shall thereupon become vested in Collateral Agent who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such Grantor to receive the dividends, other distributions, principal
and interest payments which it would otherwise be authorized to receive and
retain pursuant hereto shall cease, and all such rights shall thereupon become
vested in Collateral Agent who shall thereupon have the sole right to receive
and hold as Collateral such dividends, other distributions, principal and
interest payments; and (z) all dividends, principal, interest payments and other
distributions which are received by such Grantor contrary to the provisions of
clause (y) above shall be received in trust for the benefit of Collateral Agent
and shall forthwith be paid over to Collateral Agent as Collateral in the same
form as so received (with any necessary endorsements).
In order to permit Collateral Agent to exercise the voting and other consensual rights which it 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 Collateral Agent all such proxies, dividend payment orders and other instruments as Collateral Agent may from time to time reasonably request, and (II) without limiting the effect of clause (I) above, each Grantor hereby grants to Collateral Agent an irrevocable proxy to vote the Pledged Equity and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Equity would be entitled (including giving or withholding written consents of holders of Capital Stock, calling special meetings of holders of Capital Stock and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Equity on the record books of the issuer thereof) by any other Person (including the issuer of the Pledged Equity or any officer or agent thereof), upon the occurrence of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations, the cure of such Event of Default or waiver thereof as evidenced by a writing executed by Collateral Agent. Notwithstanding the foregoing, the parties hereto acknowledge
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that proxies may not be effective for Foreign Subsidiaries, and agree that the Grantors shall not be obligated to take any action under any foreign law to cause any such proxies to be effective other than in the case of proxies with respect to Pledged Equity of issuers that are the direct or indirect legal or beneficial owners of satellites, transponders or entities that directly or indirectly own satellites or transponders.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO THE INTELLECTUAL PROPERTY COLLATERAL.
(a) Each Grantor shall, in accordance with reasonable business
practices and except as otherwise provided in this Section 10, continue to
collect (other than customary write-offs in such Grantor's prudent business
conduct), at its own expense, all amounts due or to become due to such Grantor
in respect of the Intellectual Property Collateral or any portion thereof. In
connection with such collections, each Grantor may take (and, after the
occurrence and during the continuance of any Event of Default at Collateral
Agent's reasonable direction, shall take) such action as such Grantor or
Collateral Agent may deem reasonably necessary or advisable to enforce
collection of such amounts; provided, Collateral Agent shall have the right at
any time, upon the occurrence and during the continuance of an Event of Default
and upon written notice to such Grantor of its intention to do so, to notify the
obligors with respect to any such amounts of the existence of the security
interest created hereby and to direct such obligors to make payment of all such
amounts directly to Collateral Agent, and, upon such notification and at the
expense of such Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After receipt by any
Grantor of the notice from Collateral Agent referred to in the proviso to the
preceding sentence and upon the occurrence and during the continuance of any
Event of Default, (i) all amounts and proceeds (including checks and
Instruments) received by each Grantor in respect of amounts due to such Grantor
in respect of the Intellectual Property Collateral or any portion thereof shall
be received in trust for the benefit of Collateral Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as provided by
Section 15 hereof, and (ii) such Grantor shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
(b) In addition to, and not by way of limitation of, the granting of a security interest in the Collateral pursuant hereto, each Grantor, effective upon the occurrence and during the continuance of an Event of Default, hereby assigns, transfers and conveys to Collateral Agent the nonexclusive right and license to use all Trademarks, tradenames, Copyrights, Patents or technical processes (including, without limitation, the Intellectual Property Collateral) owned by such Grantor that relate to the Collateral, together with any goodwill associated therewith, all to the extent necessary to enable Collateral Agent to realize on the Collateral in accordance with this Agreement and to enable any transferee or assignee of the Collateral to enjoy the benefits of the Collateral. This right shall inure to the benefit of all successors, assigns and transferees of Collateral Agent and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license shall be granted free of charge, without requirement that any monetary payment whatsoever be made to such Grantor. If and to the extent that any Grantor is permitted
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to license the Intellectual Property Collateral, Collateral Agent shall promptly enter into a non-disturbance agreement or other similar arrangement, at such Grantor's request and expense, with such Grantor and any licensee of any Intellectual Property Collateral permitted hereunder in form and substance reasonably satisfactory to Collateral Agent pursuant to which (i) Collateral Agent shall agree not to disturb or interfere with such licensee's rights under its license agreement with such Grantor so long as such licensee is not in default thereunder, and (ii) such licensee shall acknowledge and agree that the Intellectual Property Collateral licensed to it is subject to the security interest created in favor of Collateral Agent and the other terms of this Agreement.
SECTION 11. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints Collateral Agent as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, Collateral Agent or otherwise, from time to time in Collateral Agent's discretion during an Event of Default to take any action and to execute any instrument that Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:
(a) upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;
(b) upon the occurrence and during the continuance of an Event of Default, to receive, endorse and collect any drafts or other Instruments, Documents, Chattel Paper and other documents in connection with clause (a) above;
(c) upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce or protect the rights of Collateral Agent with respect to any of the Collateral;
(d) upon the occurrence and during the continuance of an Event of Default, to pay or discharge taxes or Liens (other than taxes not required to be discharged pursuant to the Indenture and Liens permitted under this Agreement or the Indenture) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Collateral Agent in its sole discretion, any such payments made by Collateral Agent to become obligations of such Grantor to Collateral Agent, due and payable immediately without demand;
(e) upon the occurrence and during the continuance of an Event of Default, to sign and endorse 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 relating to the Collateral; and
(f) upon the occurrence and during the continuance of an Event of Default, 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 Collateral Agent were the absolute owner
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thereof for all purposes, and to do, at Collateral Agent's option and Grantors' expense, at any time or from time to time, all acts and things that Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and Collateral Agent's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.
SECTION 12. COLLATERAL AGENT MAY PERFORM.
If any Grantor fails to perform any agreement contained herein, Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of Collateral Agent incurred in connection therewith shall be payable by Grantors under Section 16(b) hereof.
SECTION 13. STANDARD OF CARE.
The powers conferred on Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Collateral Agent accords its own property.
SECTION 14. REMEDIES.
(a) GENERALLY. If any Event of Default shall have occurred and be continuing, Collateral Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Collateral Agent on default under the UCC (whether or not the UCC applies to the affected Collateral), and also may (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of Collateral Agent forthwith, assemble all or part of the Collateral as directed by Collateral Agent and make it available to Collateral Agent at a place to be designated by Collateral Agent that is reasonably convenient to both parties, (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process, (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent Collateral Agent deems appropriate, (iv) take possession of any Grantor's premises or place custodians in exclusive control thereof, remain on such premises and use the same and any of such Grantor's equipment for the purpose of completing any work in process, taking any actions described in the preceding clause (iii) and collecting any Secured Obligation, (v) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Collateral Agent may deem commercially reasonable, and (vi) provide entitlement orders with respect to Security Entitlements and other Investment Property constituting a part of the Collateral and, without notice to any Grantor, transfer to or register in the name of Collateral Agent or any of its nominees any or all of the Securities Collateral. Collateral Agent or any Holder may be the
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purchaser of any or all of the Collateral at any such sale and Collateral Agent, as agent for and representative of Holders, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be jointly and severally liable for the deficiency and the fees of any attorneys employed by Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section 14 will cause irreparable injury to Collateral Agent, that Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and each Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities.
(b) SECURITIES COLLATERAL. Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, Collateral Agent may be compelled, with respect to any sale of all or any part of the Securities Collateral conducted without prior registration or qualification of such Securities Collateral under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Securities Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private placement may be at prices and on terms less favorable than those obtainable through a sale without such restrictions (including an offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private placement shall not be deemed, in and of itself, to be commercially unreasonable and that Collateral Agent shall have no obligation to delay the sale of any Securities Collateral for the period of time necessary to permit the issuer thereof to register it for a form of sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If Collateral Agent determines to exercise its right to sell any or all of the Securities Collateral, upon written request, each Grantor shall and shall cause each issuer of any Securities Collateral to be sold hereunder from time to time to
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furnish to Collateral Agent all such information as Collateral Agent may request in order to determine the amount of Securities Collateral which may be sold by Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.
SECTION 15. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds received by Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied as provided in subsection 6.10 of the Indenture.
SECTION 16. INDEMNITY AND EXPENSES.
(a) Grantors jointly and severally agree to indemnify Collateral Agent, Trustee and each Holder from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including, without limitation, enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Collateral Agent's, Trustee's or such Holder's negligence, willful misconduct or bad faith as finally determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Collateral Agent upon demand the amount of any and all costs and expenses incurred in connection with or permitted under the Indenture, this Agreement, the Notes and any other document executed in connection therewith, including all costs of enforcing Collateral Agent's rights under such documents.
(c) The obligations of Grantors in this Section 16 shall survive the termination of this Agreement and the discharge of Grantors' other obligations under this Agreement, the Note and the Indenture.
SECTION 17. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND RELEASE.
(a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the indefeasible payment in full of the Secured Obligations, (ii) be binding upon Grantors and their respective successors and assigns, and (iii) inure, together with the rights and remedies of Collateral Agent hereunder, to the benefit of Collateral Agent and its successors, transferees and assigns.
(b) Upon the indefeasible payment in full of all Secured Obligations, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantors. Upon any such termination Collateral Agent will, at Grantors' expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. In addition, upon the proposed sale or other disposition of any Collateral by a Grantor in accordance with the Indenture for which such Grantor desires a security interest release from Collateral Agent, such a release may be obtained pursuant to the provisions of Article 11 of the Indenture, including but not limited to Sections 11.03, 11.05 and 11.06 of the Indenture.
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SECTION 18. ADDITIONAL GRANTORS.
The initial Grantors hereunder shall be Company and such of the Subsidiaries of Company as are signatories hereto on the date hereof. From time to time subsequent to the date hereof, additional Subsidiaries of Company may become Additional Grantors, by executing a Counterpart. Upon delivery of any such Counterpart to Collateral Agent, notice of which is hereby waived by Grantors, each such Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder.
SECTION 19. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Collateral Agent and, in the case of any such amendment or modification, by Grantors; provided this Agreement may be modified by the execution of a Counterpart by an Additional Grantor in accordance with Section 18 hereof and Grantors hereby waive any requirement of notice of or consent to any such amendment. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
SECTION 20. NOTICES.
Any notice or other communication herein required or permitted to be given shall be given at the times, in the manner and to the addresses provided in Section 12.02 of the Indenture.
SECTION 21. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Collateral Agent in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.
SECTION 22. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
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SECTION 23. HEADINGS.
Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect.
SECTION 24. GOVERNING LAW; RULES OF CONSTRUCTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, IN WHICH CASE THE LAWS OF SUCH JURISDICTION SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE SECURITY INTEREST IN, OR THE REMEDIES WITH RESPECT TO, SUCH PARTICULAR COLLATERAL. The rules of construction set forth in subsection 1.04 of the Indenture shall be applicable to this Agreement mutatis mutandis.
SECTION 25. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK, NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 20 HEREOF; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT COLLATERAL AGENT RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW.
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SECTION 26. WAIVER OF JURY TRIAL.
GRANTORS AND COLLATERAL AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH GRANTOR AND COLLATERAL AGENT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR GRANTORS AND COLLATERAL AGENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT GRANTORS AND COLLATERAL AGENT HAVE ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH GRANTOR AND COLLATERAL AGENT FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 26 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
SECTION 27. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.
SECTION 28. DEFINITIONS.
(a) Each capitalized term utilized in this Agreement that is not
defined in this Agreement, but is defined in the Indenture, shall have the
meanings given such term in the Indenture. Each capitalized term utilized in
this Agreement that is not defined in the Indenture or in this Agreement, but
that is defined in the UCC, including the categories of Collateral listed in
Section 1 hereof, shall have the meanings set forth in Articles 1, 8 or 9 of the
UCC.
(b) In addition, the following terms used in this Agreement shall have the following meanings:
18 Security Agreement
"ADDITIONAL GRANTOR" means a Subsidiary of Company that becomes a party hereto after the date hereof as an additional Grantor by executing a Counterpart.
"COLLATERAL" has the meaning set forth in Section 1 hereof.
"COPYRIGHT REGISTRATIONS" means all copyright registrations issued to any Grantor and applications for copyright registration that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations set forth on Schedule 9 annexed hereto, as the same may be amended pursuant hereto from time to time).
"COPYRIGHT RIGHTS" means all common law and other rights in and to the Copyrights in the United States and any state thereof and in foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements), the right (but not the obligation) to renew and extend Copyright Registrations and any such rights and to register works protectable by copyright and the right (but not the obligation) to sue in the name of any Grantor or in the name of Collateral Agent for past, present and future infringements of the Copyrights and any such rights.
"COPYRIGHTS" means all items under copyright in various published and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software layouts, trade dress, drawings, designs, writings, and formulas (including, without limitation, the works set forth on Schedule 9 annexed hereto, as the same may be amended pursuant hereto from time to time).
"COUNTERPART" means a counterpart to this Agreement entered into by a Subsidiary of Company pursuant to Section 18 hereof substantially in the form of Exhibit VI annexed hereto.
"EVENT OF DEFAULT" means any Event of Default as defined in the Indenture.
"GRANT" means a Grant of Trademark Security Interest, substantially in the form of Exhibit I annexed hereto, and a Grant of Patent Security Interest, substantially in the form of Exhibit II annexed hereto, and a Grant of Copyright Security Interest, substantially in the form of Exhibit III annexed hereto.
"INTELLECTUAL PROPERTY COLLATERAL" means, with respect to any Grantor all right, title and interest (including rights acquired pursuant to a license or otherwise but only to the extent permitted by agreements governing such license or other use) in and to all
(a) Copyrights, Copyright Registrations and Copyright Rights, including, without limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the benefit of such Grantor), authored (as a work for hire for the benefit of such Grantor), or acquired by such Grantor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter granted or applied for, and all renewals and extensions thereof, throughout the world;
(b) Patents;
19 Security Agreement
(c) Trademarks, Trademark Registrations, the Trademark Rights and goodwill of such Grantor's business symbolized by the Trademarks and associated therewith;
(d) all trade secrets, trade secret rights, know-how, customer lists, processes of production, ideas, confidential business information, techniques, processes, formulas, and all other proprietary information; and
(e) all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits).
"IP FILING OFFICE" means the United States Patent and Trademark Office, the United States Copyright Office, or any successor or substitute office in which filings are necessary or, in the opinion of Administrative Agent, desirable in order to create or perfect Liens on any Intellectual Property Collateral to the extent required hereunder.
"IP SUPPLEMENT" means an IP Supplement, substantially in the form of Exhibit V annexed hereto.
"MATERIAL ASSET" means any asset described on Schedule 6(e) attached hereto.
"PATENTS" means all patents and patent applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned or held by a Grantor and all patents and patent applications and rights, title and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned by such Grantor in whole or in part (including, without limitation, the patents and patent applications set forth on Schedule 8 annexed hereto), all rights (but not obligations) corresponding thereto to sue for past, present and future infringements and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof.
"PLEDGED DEBT" means the Indebtedness from time to time owed to a Grantor, including the Indebtedness set forth on Schedule 6 annexed hereto and issued by the obligors named therein, the Instruments and certificates evidencing such Indebtedness and all interest, cash or other property received, receivable or otherwise distributed in respect of or exchanged therefor.
"PLEDGED EQUITY" means all Capital Stock now or hereafter owned by a Grantor, including all securities convertible into, and rights, warrants, options and other rights to purchase or otherwise acquire, any of the foregoing, including those owned on the date hereof and set forth on Schedule 5 annexed hereto, the certificates or other instruments representing any of the foregoing and any interest of such Grantor in the entries on the books of any securities intermediary pertaining thereto and all distributions, dividends and other property received, receivable or otherwise distributed in respect of or exchanged therefor.
"PLEDGED SUBSIDIARY DEBT" means Pledged Debt owed to a Grantor by any obligor that is, or becomes, a direct or indirect Subsidiary of such Grantor, of which such Grantor is a direct or indirect Subsidiary or that controls, is controlled by or under common control with such Grantor.
20 Security Agreement
"PLEDGED SUBSIDIARY EQUITY" means Pledged Equity in a Person that is, or becomes a direct Subsidiary of a Grantor.
"PLEDGE SUPPLEMENT" means a Pledge Supplement, in substantially the form of Exhibit IV annexed hereto, in respect of the additional Pledged Equity or Pledged Debt pledged pursuant to this Agreement.
"RESTRUCTURING TRANSACTION" means any transaction described on Schedule 6(f) attached hereto.
"SECURED OBLIGATIONS" has the meaning set forth in Section 2 hereof.
"SECURITIES COLLATERAL" means, with respect to any Grantor, the Pledged Equity, the Pledged Debt and any other Investment Property in which such Grantor has an interest.
"TRADEMARK REGISTRATIONS" means all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations and applications set forth on Schedule 7 annexed hereto).
"TRADEMARK RIGHTS" means all common law and other rights (but in no event any of the obligations) in and to the Trademarks in the United States and any state thereof and in foreign countries.
"TRADEMARKS" means all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade styles and/or other source and/or business identifiers and applications pertaining thereto, (except for US intent to use application for registrations unless and until a statement of use or amendment to allege use has been accepted by the United States Patent and Trademark Office), owned by a Grantor, or hereafter adopted and used, in its business (including, without limitation, the trademarks specifically set forth on Schedule 7 annexed hereto).
"UCC" means the Uniform Commercial Code, as it exists on the date of this Agreement or as it may hereafter be amended, in the State of New York.
SECTION 29. SPECIAL FCC PROVISIONS.
(a) Notwithstanding anything herein to the contrary, but subject to
Section 29(b) hereof, this Agreement, the Indenture and the other Collateral
Documents and the transactions contemplated hereby and thereby (i) do not and
will not constitute, create, or have the effect of constituting or creating,
directly or indirectly, actual or practical ownership of any Grantor or any
Subsidiary of any Grantor by the Collateral Agent or any Holder, or control,
affirmative or negative, direct or indirect, by the Collateral Agent or any
Holder over the management or any other aspect of the operation of any Grantor
or any Subsidiary of any Grantor, in each case in any way that could be deemed
to violate FCC Laws and (ii) do not and will not constitute the transfer,
assignment or disposition in any manner, voluntarily or involuntarily, directly
or indirectly, of any FCC License by any Grantor or any Subsidiary of any
Grantor in any way that could be deemed to violate FCC Laws.
21 Security Agreement
(b) Notwithstanding any other provision of this Agreement, any foreclosure, sale, transfer, assignment or other disposition of, or the exercise of any right to vote or consent with respect to, any of the Collateral as provided herein or any other action taken or proposed to be taken by the Collateral Agent hereunder which would effect an assignment or a transfer of control of any FCC Licenses or affect the operation or voting or other control of any Grantor or any Subsidiary of any Grantor or of any FCC-licensed facility thereof, shall be made pursuant to and in compliance with all FCC Laws and, if and to the extent required thereby, subject to the prior approval of the FCC.
(c) Subject to Section 29(b) hereof, if an Event of Default shall have occurred and be continuing, each Grantor shall take any action which the Collateral Agent may reasonably request in order to transfer control or assign to the Collateral Agent, or to such one or more third Persons as the Collateral Agent may designate, or to a combination of the foregoing, each FCC License controlled by such Grantor. To enforce this subsection (c), the Collateral Agent is empowered to take any action permitted by applicable law, including, without limitation, to request the appointment of a receiver from any court of competent jurisdiction. Such receiver shall be instructed to seek from the FCC an involuntary transfer of control of each such FCC License for the purpose of seeking a bona fide purchaser to whom control will ultimately be transferred. Each Grantor hereby agrees to authorize such an involuntary transfer of control upon the request of the receiver so appointed (or, if applicable, upon the request of the Collateral Agent) and, if the Grantor shall refuse to authorize the transfer, its approval may be required by the court. During the continuance of an Event of Default, each Grantor shall further use its best efforts to assist in obtaining approval of the FCC, if required, for any action or transactions contemplated by this Agreement, including, without limitation, the preparation, execution and filing with the FCC of the assignor's or transferor's portion of any application or applications for consent to the assignment of any such FCC License or transfer of control necessary or appropriate under the FCC's rules and regulations for approval of the transfer or assignment of any portion of the Collateral, together with any FCC License controlled by the Grantor. In furtherance of the foregoing, upon the occurrence and during the continuance of an Event of Default, to the extent permitted by law, each Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact with full power of substitution to execute such applications and documents and take such action on behalf of such Grantor. Each Grantor acknowledges that the appointment of the Collateral Agent as such attorney-in-fact is coupled with an interest and is irrevocable.
(d) Each Grantor acknowledges that the assignment or transfer of each FCC License is integral to the Collateral Agent's realization of the value of the Collateral, that there is no adequate remedy at law for failure by the Grantor to comply with the provisions of this Section 29, and that such failure would not be adequately compensable in damages and, therefore, agrees that the agreements contained in this Section 29 may be specifically enforced.
[Remainder of page intentionally left blank]
22 Security Agreement
IN WITNESS WHEREOF, Grantors and Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.
LORAL SKYNET CORPORATION
By: /s/ Richard Mastoloni
------------------------------------
Title: Vice President
---------------------------------
|
Notice Address:
600 Third Avenue
New York, NY 10016
Attention: Treasurer
Tel: 212-338-5605
Fax: 212-867-9167
LORAL SKYNET INTERNATIONAL, L.L.C.
LORAL SPACECOM CORPORATION
LORAL SKYNET NETWORK SERVICES,
INC.
LORAL COMMUNICATIONS SERVICES,
INC.
LORAL GROUND SERVICES, L.L.C.
LORAL CYBERSTAR INTERNATIONAL,
INC.
LORAL CYBERSTAR SERVICES, INC.
LORAL CYBERSTAR HOLDINGS, L.L.C.
LORAL SKYNET NETWORK SERVICES
HOLDINGS L.L.C.
LORAL CYBERSTAR, L.L.C.
CYBERSTAR, L.L.C.
LORAL SATELLITE, INC.
LORAL ASIA PACIFIC SATELLITE (HK)
LIMITED
By: /s/ Richard Mastoloni
------------------------------------
Name: Richard Mastoloni
Title: Vice President
|
Notice Address:
C/O Loral Space and Communications
600 Third Avenue
New York, NY 10016
Attention: Treasurer
Tel: 212-338-5605
Fax: 212-867-9167
S Security Agreement
THE BANK OF NEW YORK,
as Collateral Agent and as Trustee
By: /s/ Stacey B. Poindexter
-------------------------------------
Name: Stacey B. Poindexter
----------------------------------
Title: Assistant Vice President
----------------------------------
|
Notice Address:
101 Barclay Street, 8 West
New York, NY 10286
Attention: Corporate Trust
Division-Corporate Finance Unit
Tel.: 212-815-4770
Fax: 212-815-5707
S Security Agreement
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF] GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("GRANTOR"), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Trademark Collateral (as defined below); and
WHEREAS, the Loral Skynet Corporation, a Delaware corporation (the "COMPANY") and The Bank of New York, as Trustee, have entered into an Indenture (as the same may be amended, supplemented or otherwise modified from time to time, the "INDENTURE"), dated as of November 21, 2005, pursuant to which the Company has issued its 14% Senior Secured Cash/PIK Notes Due 2015;
WHEREAS, to secure the Company's obligations under the Indenture and the Notes, the Company, the grantors named therein and The Bank of New York, as collateral agent (the "COLLATERAL AGENT") and as Trustee have entered into a Security Agreement, dated as of November 21, 2005 (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time, being the "SECURITY AGREEMENT"), wherein Grantor has created in favor of Collateral Agent a security interest in, and Collateral Agent has become a secured creditor with respect to, the Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Grantor to Collateral Agent pursuant to the Security Agreement, Grantor hereby grants to Collateral Agent a security interest in all of Grantor's right, title and interest in and to the following, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located (the "TRADEMARK COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant to a license or otherwise) in and to all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade styles (except for US intent to use application for registrations unless and until a statement of use or amendment to allege use has been accepted by the United States Patent and Trademark Office) and/or other source and/or business identifiers and applications pertaining thereto, owned by such Grantor, or hereafter adopted and used, in its business (including, without limitation, the trademarks set forth on Schedule A annexed hereto) (collectively, the "TRADEMARKS"), all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations and applications set forth on Schedule A annexed hereto), all common law and other rights (but in no event any of the obligations) in and to the Trademarks in the United States and
Grant of Trademark Security Interest to Security Agreement
I
any state thereof and in foreign countries, and all goodwill of such Grantor's business symbolized by the Trademarks and associated therewith; and
(ii) all proceeds, products, rents and profits of or from any and all of the foregoing Trademark Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Trademark Collateral. For purposes of this Grant of Trademark Security Interest, the term "PROCEEDS" includes whatever is receivable or received when Trademark Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.
Grantor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Trademark Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.
[The remainder of this page is intentionally left blank.]
Grant of Trademark Security Interest to Security Agreement
I
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the __ day of _______, _____.
[NAME OF GRANTOR]
Grant of Trademark Security Interest to Security Agreement
I
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
Trademark Registration/ Registration/
Owner Description Appl. Number Appl. Date
----- ----------- ------------- -------------
|
Grant of Trademark Security Interest to Security Agreement
I-A
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("GRANTOR"), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, the Loral Skynet Corporation, a Delaware corporation (the "COMPANY") and The Bank of New York, as Trustee, have entered into an Indenture (as the same may be amended, supplemented or otherwise modified from time to time, the "INDENTURE"), dated as of November 21, 2005, pursuant to which the Company has issued its 14% Senior Secured Cash/PIK Notes Due 2015;
WHEREAS, to secure the Company's obligations under the Indenture and the Notes, the Company, the grantors named therein and The Bank of New York, as collateral Agent (the "COLLATERAL AGENT") and as Trustee have entered into a Security Agreement, dated as of November 21, 2005 (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time, being the "SECURITY AGREEMENT"), among Grantor, Collateral Agent and the other grantors named therein, Grantor created in favor of Collateral Agent a security interest in, and Collateral Agent has become a secured creditor with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Grantor to Collateral Agent pursuant to the Security Agreement, Grantor hereby grants to Collateral Agent a security interest in all of Grantor's right, title and interest in and to the following, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located (the "PATENT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant to a license or otherwise) in and to all patents and patent applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned or held by such Grantor and all patents and patent applications and rights, title and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned by such Grantor in whole or in part (including, without limitation, the patents and patent applications set forth on Schedule A annexed hereto), all rights (but not obligations) corresponding thereto to sue for past, present and future infringements and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof; and
(ii) all proceeds, products, rents and profits of or from any and all of the foregoing Patent Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to
Grant of Patent Security Interest to Security Agreement
II
any of the foregoing Patent Collateral. For purposes of this Grant of Patent Security Interest, the term "PROCEEDS" includes whatever is receivable or received when Patent Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.
Grantor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Patent Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.
[The remainder of this page intentionally left blank.]
Grant of Patent Security Interest to Security Agreement
II
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the ___ day of ____________, _____.
[NAME OF GRANTOR]
Grant of Patent Security Interest to Security Agreement
II
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
PATENTS ISSUED:
Patent No. Issue Date Invention Inventor(s) ---------- ---------- --------- ----------- |
PATENTS PENDING:
Applicant's Date Application Name Filed Number Invention Inventor(s) ----------- ----- ----------- --------- ----------- |
Grant of Patent Security Interest to Security Agreement
II-A
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF] GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("GRANTOR"), owns and uses in its business, and will in the future adopt and so use, various intangible assets, including the Copyright Collateral (as defined below); and
WHEREAS, the Loral Skynet Corporation, a Delaware corporation (the "COMPANY") and The Bank of New York, as Trustee, have entered into an Indenture (as the same may be amended, supplemented or otherwise modified from time to time, the "INDENTURE"), dated as of November 21, 2005, pursuant to which the Company has issued its 14% Senior Secured Cash/PIK Notes Due 2015;
WHEREAS, to secure the Company's obligations under the Indenture and the Notes, the Company, the grantors named therein and The Bank of New York, as collateral Agent (the "COLLATERAL AGENT") and as Trustee have entered into a Security Agreement, dated as of November 21, 2005 (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time, being the "SECURITY AGREEMENT"), among Grantor, Collateral Agent and the other grantors named therein, Grantor created in favor of Collateral Agent a security interest in, and Collateral Agent has become a secured creditor with respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, subject to the terms and conditions of the Security Agreement, to evidence further the security interest granted by Grantor to Collateral Agent pursuant to the Security Agreement, Grantor hereby grants to Collateral Agent a security interest in all of Grantor's right, title and interest in and to the following, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located (the "COPYRIGHT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant to a license or otherwise) under copyright in various published and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software layouts, trade dress, drawings, designs, writings, and formulas (including, without limitation, the works set forth on Schedule A annexed hereto, as the same may be amended pursuant hereto from time to time) (collectively, the "COPYRIGHTS"), all copyright registrations issued to Grantor and applications for copyright registration that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations set forth on Schedule A annexed hereto, as the same may be amended pursuant hereto from time to time) (collectively, the "COPYRIGHT REGISTRATIONS"), all common law and other rights in and to the Copyrights in the United States and any state thereof and in foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements) (the "COPYRIGHT RIGHTS"),
Grant of Copyright Security Interest to Security Agreement
III
including, without limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the benefit of Grantor), authored (as a work for hire for the benefit of Grantor), or acquired by Grantor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter granted or applied for, and all renewals and extensions thereof, throughout the world, including all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits), the right (but not the obligation) to renew and extend such Copyright Registrations and Copyright Rights and to register works protectable by copyright and the right (but not the obligation) to sue in the name of such Grantor or in the name of Collateral Agent or Lenders for past, present and future infringements of the Copyrights and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any and all of the foregoing Copyright Collateral and, to the extent not otherwise included, all payments under insurance (whether or not Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Copyright Collateral. For purposes of this Grant of Copyright Security Interest, the term "PROCEEDS" includes whatever is receivable or received when Copyright Collateral or proceeds are sold, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.
Grantor does hereby further acknowledge and affirm that the rights and remedies of Collateral Agent with respect to the security interest in the Copyright Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.
Grant of Copyright Security Interest to Security Agreement
III
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright Security Interest to be duly executed and delivered by its officer thereunto duly authorized as of the ___ day of ___________, _____.
[NAME OF GRANTOR]
Grant of Copyright Security Interest to Security Agreement
III
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. COPYRIGHT REGISTRATIONS:
Title Registration No. Date of Issue Registered Owner ----- ---------------- ------------- ---------------- |
FOREIGN COPYRIGHT REGISTRATIONS:
Country Title Registration No. Date of Issue ------- ----- ---------------- ------------- |
PENDING U.S. COPYRIGHT REGISTRATION APPLICATIONS:
Title Appl. No. Date of Application Copyright Claimant ----- --------- ------------------- ------------------ |
PENDING FOREIGN COPYRIGHT REGISTRATION APPLICATIONS:
Country Title Appl. No. Date of Application ------- ----- --------- ------------------- |
Grant of Copyright Security Interest to Security Agreement
III-A
EXHIBIT IV TO
SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This Pledge Supplement, dated as of __________________, is delivered pursuant to the Security Agreement, dated as of November 21, 2005 between ____________________, a _______________ ("GRANTOR"), the other Grantors named therein, and The Bank of New York, as Collateral Agent (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time, being the "SECURITY AGREEMENT") and Trustee. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement.
Grantor hereby agrees that the [Pledged Equity] [Pledged Debt] set forth on Schedule A annexed hereto shall be deemed to be part of the [Pledged Equity] [Pledged Debt] and shall become part of the Securities Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of _______________.
[GRANTOR]
Pledge Supplement to Security Agreement
IV
SCHEDULE A
TO
PLEDGE SUPPLEMENT
Pledge Supplement
to Security Agreement
IV-A
EXHIBIT V TO
SECURITY AGREEMENT
IP SUPPLEMENT
This IP SUPPLEMENT, dated as of _______, is delivered pursuant to and
supplements (i) the Security Agreement, dated as of November 21, 2005 (said
Security Agreement, as it may heretofore have been and as it may hereafter be
further amended, restated, supplemented or otherwise modified from time to time,
being the "SECURITY AGREEMENT"), among LORAL SKYNET CORPORATION, a Delaware
corporation, [Insert Name of Grantor] ("GRANTOR"), the other grantors named
therein, and The Bank of New York, as Collateral Agent and Trustee, and (ii) the
[Grant of Trademark Security Interest] [Grant of Patent Security Interest]
[Grant of Copyright Security Interest] dated as of ___________, _____ (the
"GRANT") executed by Grantor. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.
Grantor grants to Collateral Agent a security interest in all of Grantor's right, title and interest in and to the [Trademark Collateral] [Patent Collateral] [Copyright Collateral] set forth on Schedule A annexed hereto. All such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright Collateral] and shall be hereafter subject to each of the terms and conditions of the Security Agreement and the Grant.
IN WITNESS WHEREOF, Grantor has caused this IP Supplement to be duly executed and delivered by its duly authorized officer as of ____________.
[GRANTOR]
IP Supplement to Security Agreement
V
EXHIBIT VI TO
SECURITY AGREEMENT
[FORM OF COUNTERPART]
COUNTERPART (this "COUNTERPART"), dated as of _______, is delivered pursuant to Section 19 of the Security Agreement referred to below. The undersigned hereby agrees that this Counterpart may be attached to the Security Agreement, dated as of November 21, 2005 (said Security Agreement, as it may heretofore have been and as it may hereafter be further amended, restated, supplemented or otherwise modified from time to time being the "SECURITY AGREEMENT"; capitalized terms used herein not otherwise defined herein shall have the meanings ascribed therein), among LORAL SKYNET CORPORATION, a Delaware corporation, the other Grantors named therein, and The Bank of New York, as Collateral Agent and Trustee. The undersigned by executing and delivering this Counterpart hereby becomes a Grantor under the Security Agreement in accordance with Section 19 thereof and agrees to be bound by all of the terms thereof. Without limiting the generality of the foregoing, the undersigned hereby:
(i) authorizes the Collateral Agent to add the information set forth on the Schedules to this Agreement to the correlative Schedules attached to the Security Agreement;(1)
(ii) agrees that all Collateral of the undersigned, including the items of property described on the Schedules hereto, shall become part of the Collateral and shall secure all Secured Obligations; and
(iii) makes all covenants, representations and warranties set forth in the Security Agreement, as amended hereby, to the extent relating to the undersigned.
[NAME OF ADDITIONAL GRANTOR]
Counterpart to Security Agreement
VI
EXHIBIT 4.3
THIS SHARE MORTGAGE AGREEMENT is dated 21 November 2005 and is made
BETWEEN:
(1) LORAL SKYNET CORPORATION (formerly known as Orion, Inc.) as mortgagor (the MORTGAGOR); and
(2) THE BANK OF NEW YORK (the COLLATERAL AGENT as collateral agent and trustee for each of the Beneficiaries (as defined below)).
WHEREAS:
(A) The Mortgagor entered into an indenture (as the same may be amended, supplemented or otherwise modified from time to time, the INDENTURE), dated as of 21 November 2005 with, among others, the Collateral Agent, pursuant to which the Mortgagor has issued 14% senior secured cash/PIK notes due 2015 (the NOTES);
(B) The Mortgagor has agreed to enter into this Share Mortgage Agreement to secure its obligations under the Indenture and the Notes;
(C) It is intended by the parties to this Share Mortgage Agreement that it shall take effect as a deed notwithstanding the fact that a party may execute it under hand only.
NOW IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
Save as expressly defined in this Share Mortgage Agreement, capitalised terms defined in the Indenture or defined in the recitals to this Share Mortgage Agreement shall have the same meaning when used in this Share Mortgage Agreement. In addition:
BENEFICIARY means each of the Collateral Agent, the Trustee and the Noteholders.
COMPANIES ORDINANCE means the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).
ENFORCEMENT EVENT means the current and continuing occurrence of an Event of Default.
FINANCE DOCUMENTS means the Indenture, the Notes, the Collateral Documents and this Share Mortgage Agreement.
HK$ or HONG KONG DOLLAR means the lawful currency of Hong Kong.
HONG KONG means the Hong Kong Special Administrative Region of the People's Republic of China.
COMPANY means Loral Asia Pacific Satellite (HK) Limited.
NOTEHOLDER means a holder of the Notes, in whose name a Note is registered on the Registrar's books.
RECEIVER includes any person or persons appointed (and any additional person or persons appointed or substituted) as receiver, manager, or receiver and manager under this Share Mortgage Agreement or otherwise.
REQUIRED PERCENTAGE means the percentage of the total issued share capital of the Company which is equivalent to a 99% interest in the Company.
SECURED LIABILITIES has the meaning given to the term "Secured Obligations" in the Security Agreement.
SECURITY INTEREST means any mortgage, charge, pledge, lien, hypothecation, security assignment or other security interest or any other agreement, trust or arrangement (including a right of set-off or combination) having a similar effect.
SECURITY PERIOD means the period beginning on the date of this Share Mortgage Agreement and ending on the date on which the Collateral Agent is satisfied that all the Secured Liabilities have been unconditionally and irrevocably paid and discharged in full.
SECURITY SHARES means the Shares and the Share Rights in respect of such Shares.
SHARE MORTGAGES means the mortgages and charges created or purported to be created by Clause 3.1 (Mortgage).
SHARE RIGHTS means, in relation to the Shares:
(a) all dividends and other distributions paid or payable after the date of this Share Mortgage Agreement on all or any of the Shares; and
(b) all stocks, shares, securities (and the dividends, distributions or interest thereon), rights, money, allotments, benefits or property accruing or offered at any time by way of redemption, bonus, preference, option rights or otherwise to or in respect of any of the Shares or in substitution, conversion or exchange for any of the Shares.
SHARES means:
(a) such shares issued by the Company to the Mortgagor which represent the Required Percentage being, as at the date of this Share Mortgage Agreement, those shares which are specified against the name of the Mortgagor in Schedule 2 (Shares); and
(b) any other shares issued by the Company from time to time provided by the Mortgagor under Clause 3.3 (Maintenance of Required Percentage).
1.2 CONSTRUCTION OF SPECIFIC TERMS
(a) In this Share Mortgage Agreement, unless the context requires otherwise, a reference to:
(i) an AGENCY of a state includes any local or other authority, self regulating or other recognised body or agency, central or federal bank, department, government, legislature, minister, ministry, self regulating organisation, official or public or statutory person (whether autonomous or not) of, or of the government of, that state or any political sub-division in or of that state;
(ii) a document being IN THE AGREED FORM or IN THE APPROVED FORM means in a form agreed or, as applicable, approved by the Collateral Agent;
(iii) an AGREEMENT includes any legally binding agreement, arrangement, concession, contract, deed or franchise (in each case whether oral or written);
(iv) an AMENDMENT includes any amendment, supplement, variation, novation, modification, replacement or restatement and derivative forms shall be construed accordingly;
(v) an AUTHORISATION includes an authorisation, consent, approval, resolution, licence, permit, exemption, filing, registration, notification or notarisation;
(vi) a DISPOSAL includes a sale, transfer, letting or lending and DISPOSE shall be construed accordingly;
(vii) a provision or matter INCLUDING or which INCLUDES shall be construed without limitation to any events, circumstances, conditions, acts or matters specified after those words;
(viii) INDEBTEDNESS includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(ix) MORTGAGE includes a transfer or assignment by way of mortgage;
(x) a PARTY means a party to this Share Mortgage Agreement;
(xi) a PERSON includes any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any association, trust, fund or partnership (whether or not having separate legal personality);
(xii) a REGULATION includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(xiii) RESERVATIONS means the principle that equitable remedies are remedies which may be granted or refused at the discretion of the court, the limitation on enforcement as a result of laws relating to bankruptcy, insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other laws affecting the rights of creditors generally, the statutory time-barring of claims, defences of set-off or counterclaim, steps necessary to perfect a Security Interest where such steps are not required to be performed under the terms of any Finance Document until a future date, rules against penalties and similar principles of law in other jurisdictions relevant in the context of the Finance Documents; and
(xiv) a SHARE or SHARE CAPITAL includes a share, limited or other partnership interest, stock and any other interest in, or related to, equity.
(b) If the Collateral Agent (on the basis of legal advice received by it for this purpose) considers that an amount paid by the Mortgagor to it under any Finance Document is capable of being avoided or otherwise set aside on the liquidation or administration of the Mortgagor or otherwise, then such amount shall not be considered to have been irrevocably paid for the purposes of this Share Mortgage Agreement.
(c) The Beneficiaries shall not be concerned to see or investigate the powers or authorities of the Mortgagor or their respective officers or agents, and moneys obtained or Secured Liabilities incurred in purported exercise of such powers or authorities or by any person purporting to be the Mortgagor shall be deemed to form a part of the Secured Liabilities, and SECURED LIABILITIES shall be construed accordingly.
1.3 GENERAL CONSTRUCTION
In construing this Share Mortgage Agreement, unless the context otherwise requires:
(a) a reference to a person includes, as appropriate, its successors, permitted assignees or transferees;
(b) references to Clauses and Schedules are references to, respectively, clauses of and schedules to this Share Mortgage Agreement and references to this Share Mortgage Agreement include its Schedules;
(c) a reference to any agreement (including any Finance Document) shall be construed as a reference to that agreement as it may from time to time be amended without giving rise to a breach of that agreement or a Finance Document;
(d) a provision of law is a reference to that provision as extended, applied or amended from time to time and includes any statute, ordinance or other legislative measure and any subordinate legislation made thereunder;
(e) a time of day is a reference to Hong Kong time;
(f) the index to and the headings in this Share Mortgage Agreement are inserted for convenience only and are to be ignored in construing this Share Mortgage Agreement;
(g) words importing one gender include any other gender;
(h) words importing the plural include the singular and vice versa;
(i) where a term is defined in this Share Mortgage Agreement in plural form to mean persons or things a reference to that term in singular form shall be construed as meaning any such person or thing;
(j) a provision obliging a Mortgagor to refrain from an activity shall be construed as also obliging the Mortgagor not to enter into or permit to subsist an agreement to perform that activity unless the agreement is subject to a condition which would prevent the Mortgagor being required to perform the activity in breach of a Finance Document; and
(k) rights and obligations shall be construed as applying from time to time.
1.4 CERTIFICATES
A certificate of the Collateral Agent setting forth the amount of any Secured Liability due from the Mortgagor shall be prima facie evidence of such amount against the Mortgagor in the absence of manifest error.
2. COVENANT TO PAY
2.1 COVENANT TO PAY
The Mortgagor, as primary obligor and not merely as surety, covenants with the Collateral Agent (as agent and trustee as aforesaid) that it will on demand pay or discharge the Secured Liabilities on the date or dates on which such Secured Liabilities are expressed to become due or apply and in the manner provided in the relevant Finance Document.
3. SHARE MORTGAGE
3.1 MORTGAGE
The Mortgagor, as continuing security for the payment, discharge and performance of all the Secured Liabilities at any time owed or due to the Beneficiaries (or any of them), as sole legal and beneficial owner hereby assigns and transfers absolutely (by way of first fixed equitable mortgage) and agrees to mortgage and charge (by way of first fixed charge) in favour of the Collateral Agent (as agent and trustee for the Beneficiaries):
(a) all Shares held now or in the future by it and/or any nominee on its behalf; and
(b) all Share Rights accruing to all or any of the Shares held now or in the future by it and/or any nominee on its behalf,
PROVIDED THAT:
(i) so long as no Enforcement Event shall have occurred and be continuing, all dividends and other distributions paid or payable in respect of the Security Shares may be paid directly to the Mortgagor free from the security created under this Clause 3.1 (Mortgage) (in which case the Collateral Agent or its nominee shall promptly execute any necessary dividend mandate) and, if paid directly to the Collateral Agent, shall be paid promptly by it to the Mortgagor;
(ii) upon the occurrence and during the continuance of an Enforcement Event:
(A) all rights of the Mortgagor to receive the dividends, principal, interest payments and other distributions paid or payable in respect of the Security Shares (notwithstanding that they may have accrued in respect of an earlier period) which the Mortgagor would otherwise be authorized to receive and retain pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to receive and when and if received by the Collateral Agent (or its nominee), shall form part of the Security Shares and be held by the Collateral Agent (as agent and trustee for the Beneficiaries) on the terms of this Share Mortgage Agreement as additional security; and
(B) all dividends, principal, interest payments and other distributions paid or payable in respect of the Security Shares (notwithstanding that they may have accrued in respect of an earlier period) which are received by the Mortgagor (or any nominee of that Mortgagor) contrary to paragraph (A) above, shall be held on trust by the relevant recipient for the benefit of the Collateral Agent and shall forthwith be paid and transferred to the Collateral Agent in the same form so received to form part of the Security Shares and held by the Collateral Agent (as agent and trustee for the Beneficiaries) on the terms of this Share Mortgage Agreement as additional security;
(iii) subject to paragraph (iv) below, so long as no Enforcement Event shall have occurred and be continuing, any and all voting and other consensual rights attaching to the relevant Security Shares may be exercised by the Mortgagor provided such exercise is not in violation of the terms of any Finance Documents;
(iv) upon the occurrence of and during the continuance of an Enforcement Event:
(A) any voting and other consensual rights; or
(B) any other powers or rights under the terms of such Security Shares,
which the Mortgagor would otherwise be entitled to exercise pursuant hereto shall, upon written notice from the Collateral Agent to the Mortgagor, cease, and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other rights under the terms of such Security Shares.
(v) in order to permit the Collateral Agent to exercise the rights which it may be entitled to exercise and to receive all dividends and other distributions which it may be entitled to receive under this Clause 3.1 (Mortgage):
(A) the Mortgagor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies and other instruments as the Collateral Agent may from time to time reasonably request;
(B) without limiting the effect of paragraph (iv)(A) above, the Mortgagor irrevocably appoints the Collateral Agent as the Mortgagor's proxy to exercise all voting and other consensual rights under the terms of the Security Shares which proxy shall be effective automatically and without the necessity of any action by any other person, upon the occurrence of an Event of Enforcement and which proxy shall only terminate upon the payment in full of the Secured Liabilities, the cure of such Event of Enforcement or waiver thereof as evidenced in writing by the Collateral Agent.
3.2 BENEFIT OF SECURITY
The Mortgagor acknowledges and agrees that the Collateral Agent enters into this Share Mortgage Agreement and holds the benefit of this security and the rights conferred under this Share Mortgage Agreement as agent and trustee for each of the Beneficiaries, subject to such terms and conditions as may from time to time be set out in this Share Mortgage Agreement or in the Indenture or in any other agreement entered into between the Collateral Agent and the other Beneficiaries.
3.3 MAINTENANCE OF REQUIRED PERCENTAGE
(a) The Mortgagor shall at all times ensure that the Shares constitute 99% of the issued share capital of the Company.
(b) If at any time the Shares constitute less than the Required Percentage of the total issued share capital of the Company, the Mortgagor shall, forthwith upon notice from the Collateral Agent at any time thereafter whilst such circumstances are prevailing, make available to the Collateral Agent for the purposes of this Share Mortgage Agreement such additional shares issued by the Company as are acceptable to the Collateral Agent (in its absolute discretion) and to which the Mortgagor has full legal and beneficial title, free from all Security Interests so as to restore such percentage and shall execute all such further or other documents as may be necessary or as the Collateral Agent may require in order to constitute, render enforceable or perfect security in respect of such additional shares.
4. PERFECTION OF SECURITY, ETC.
4.1 FILINGS AND REGISTRATIONS
The Mortgagor shall on or immediately after the date of this Share Mortgage Agreement:
(a) register the charges contained in this Share Mortgage Agreement with the Hong Kong Companies Registry in accordance with Part III of the Companies Ordinance; and
(b) enter the relevant provisions of this Share Mortgage Agreement in the Register of Mortgages and Charges kept or to be kept at the registered office of the Mortgagor.
4.2 SHARES
The Mortgagor shall on the date of this Share Mortgage Agreement:
(a) deposit with the Collateral Agent or as the Collateral Agent may direct (or procure the deposit of) all bearer instruments, share certificates or other documents of title or evidence of ownership to the Shares now owned by it; and
(b) execute and deliver (and, if required to be stamped, pre-stamped) contract notes, transfer forms or other instruments of transfer in respect of such Shares in favour of the Collateral Agent and/or its nominee(s) as transferee or any purchaser as transferee (under the powers of realisation conferred by this Share Mortgage Agreement) or, if the Collateral Agent so directs, with the transferee left blank and such other documents as may be requested by the Collateral Agent in order to enable the Collateral Agent or its nominees or any purchaser (under the powers of realisation conferred by this Share Mortgage Agreement) to be registered as the owner or otherwise to obtain a legal title to such Shares.
4.3 SHARE RIGHTS
The Mortgagor shall, promptly upon the occurrence of any declaration, payment, accrual, offer or issue of any Share Rights, notify the Collateral Agent of that occurrence and procure the delivery to the Collateral Agent or as the Collateral Agent may direct of:
(a) all bearer instruments, share certificates or other documents of title representing such items; and
(b) execute and deliver (and, if required to be stamped, pre-stamped) contract notes, transfer forms or other instruments of transfer in respect of such items in favour of the Collateral Agent and/or its nominee(s) as transferees or any purchaser as transferee (under the powers of realisation conferred by this Share Mortgage Agreement) or, if the Collateral Agent so directs, with the transferee left blank and such other documents as may be reasonably requested by the Collateral Agent in order to enable the Collateral Agent or its nominees or any purchaser (under the powers of realisation conferred by this Share Mortgage Agreement) to be registered as the owner or otherwise to obtain a legal title to such items.
4.4 PERFECTION OF TITLE
The Mortgagor shall:
(a) procure that all such transfers referred to in Clause 4.2(b) and Clause 4.3(b) are, at the request of the Collateral Agent, forthwith registered by the Mortgagor or the relevant person and that share certificates or other documents of title in the name of the Collateral Agent and/or such nominee(s) or in the name of any purchaser (under the powers of realisation conferred by this Share Mortgage Agreement) in respect of all such Shares are then promptly delivered to the Collateral Agent; and
(b) from time to time promptly execute and sign any other transfers, contract notes, powers of attorney or other documents which the Collateral Agent may require:
(i) for perfecting its title or the title of any purchaser (under the powers of realisation conferred by this Share Mortgage Agreement) to any of the Security Shares; or
(ii) for vesting any of the Security Shares in itself or its nominee or in any purchaser (under the powers of realisation conferred by this Share Mortgage Agreement).
4.5 ENFORCEMENT OF SHARE MORTGAGES
Upon the occurrence and during the continuance of an Enforcement Event the Collateral Agent shall be entitled to put into force and exercise immediately as and when it may see fit any and every power possessed by the Collateral Agent by virtue of the Share Mortgages or available to a secured creditor and in particular (without limitation):
(a) to sell all or any of the Security Shares in any manner permitted by law upon such terms as the Collateral Agent shall in its absolute discretion determine;
(b) to collect, recover or compromise and give a good discharge for any moneys payable to the Mortgagor in respect of the Security Shares or in connection therewith; and
(c) to act generally in relation to the Security Shares in such manner as the Collateral Agent shall determine.
For the avoidance of doubt, the Mortgagor agrees that the enforceability of the Share Mortgage is not dependent on the performance or non-performance by any Beneficiary of its respective obligations under the Finance Documents.
5. REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES
On and as of the date of this Share Mortgage Agreement, the Mortgagor
(a) represents and warrants that, upon the registration pursuant to Clause 4.1 (Filings and registrations), the Share Mortgages constitute legal, valid and enforceable Security Interests over the Security Shares which are not subject to any prior or pari passu Security Interests (save for those created by or pursuant to this Share Mortgage Agreement in favour of the Collateral Agent and any other Security Interests expressly permitted under the Finance Documents); and
(b) represents and warrants that, it is, immediately before the grant of the Share Mortgages over the Security Shares, the beneficial owner of such Security Shares.
6. UNDERTAKINGS
7. CONTINUING SECURITY, ETC.
7.1 CONTINUING SECURITY AND FURTHER ADVANCES
The security constituted by this Share Mortgage Agreement shall be continuing, is made for securing and will extend to the ultimate balance of the Secured Liabilities, regardless of any intermediate payment or discharge in whole or in part.
7.2 REINSTATEMENT
Where any discharge (whether in respect of the obligations of the Mortgagor or any security for those obligations or otherwise) is made in whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be restored, or which the Collateral Agent considers will be avoided or must be restored, on insolvency, liquidation or otherwise without limitation, the liability of the Mortgagor under this Share Mortgage Agreement shall continue as if the discharge or arrangement had not occurred.
7.3 RETENTION OF CHARGES
(a) If the Collateral Agent shall have grounds in its absolute discretion for believing:
(i) that the Mortgagor may be insolvent or deemed to be insolvent (or otherwise unable to pay its debts as they fall due) pursuant to the provisions of the Companies Ordinance or any analogous provisions under any foreign law as at the date of any payment made by the Mortgagor to the Collateral Agent (or any Beneficiary); or
(ii) that any payment, security or other disposition made by the Mortgagor may be avoided or may require to be restored due to insolvency, liquidation or some other event affecting the Mortgagor,
the Collateral Agent shall be at liberty to retain the security contained in or created pursuant to this Share Mortgage Agreement until the expiry of a period of one month plus such statutory period within which any assurance, security, guarantee or payment can be avoided or invalidated after the payment and discharge in full of all Secured Liabilities notwithstanding any release, settlement, discharge or arrangement which may be given or made by the Collateral Agent on, or as a consequence of, such payment or discharge of liability.
(b) If at any time within such period referred to in Clause 7.3(a) above, a petition shall be presented to a competent court for an order for the winding-up or the making of an administration order in respect of the Mortgagor, or the Mortgagor shall commence to be wound up or to go into administration or any analogous proceedings shall be commenced by or against the Mortgagor, the Collateral Agent shall be at liberty to continue to retain such security for such further period as it may determine and such security shall be deemed to continue to have been held as security for the payment and discharge to the Collateral Agent of all Secured Liabilities.
7.4 CONCESSION OR COMPROMISE OF CLAIMS
In exercising its rights under Clauses 7.2 (Reinstatement) and 7.3 (Retention of charge), the Collateral Agent may concede or compromise any claim that any payment, security or other disposition is liable to avoidance or restoration.
8. OTHER SECURITY, ETC.
8.1 ADDITIONAL SECURITY/NON-MERGER
This Share Mortgage Agreement is in addition to and shall not be merged in and is not in any way excluded or prejudiced by any other security now or hereafter held by any Beneficiary in respect of the Secured Liabilities or any other amount due by the Mortgagor to any Beneficiary.
9. FURTHER ASSURANCES
(a) The Mortgagor shall at its own expense execute and do all such assurances, acts and things (including, but not limited to, making all filings and registrations necessary for the creation, perfection, protection or maintenance of any security created or intended to be created by this
Share Mortgage Agreement) as the Collateral Agent (if prior to the occurrence of an Enforcement Event, acting reasonably) may require:
(i) for perfecting or protecting the security intended to be created by this Share Mortgage Agreement over the Security Shares or any part of the Security Shares; or
(ii) for facilitating (if and when this security becomes enforceable) the realisation of the Security Shares or any part of the Security Shares; or
(iii) (if and when the security becomes enforceable) in the exercise of all powers, authorities and discretions vested in the Collateral Agent or any Receiver of the Security Shares or any part of the Security Shares or in any such delegate or sub-delegate as aforesaid.
(b) To that intent, the Mortgagor shall in particular execute all transfers, conveyances, assignments and assurances of, or agreements or other documentation relating to, such property whether to the Collateral Agent or to its nominees and give all notices, orders and directions and make all filings and registrations that the Collateral Agent may reasonably think expedient.
10. MANNER OF ENFORCEMENT OF SECURITY
After the security constituted by this Share Mortgage Agreement has become enforceable, the Collateral Agent may in its absolute discretion enforce all or any part of such security in such manner as it sees fit and shall not be liable to the Mortgagor for any loss arising from any omission on its part to take any steps to enforce such security or for the manner in which it enforces or refrains from enforcing any such security.
11. RECEIVER
11.1 APPOINTMENT OF RECEIVER
(a) At any time after this security becomes enforceable, or if the Mortgagor
so requests the Collateral Agent in writing at any time, the Collateral
Agent may without further notice appoint under seal or in writing under
its hand any one or more qualified persons to be a Receiver of all or any
part of the Security Shares, to act together or independently of the other
or others appointed to the extent applicable. The provisions of section 50
of the Conveyancing and Property Ordinance (as varied and extended by this
Share Mortgage Agreement) shall apply to a Receiver so appointed.
(b) In this clause QUALIFIED PERSON means a person who, under applicable laws
(including Part VI of the Companies Ordinance), is qualified to act as a
Receiver of the property of any company with respect to which he is
appointed.
11.2 POWERS OF RECEIVER
(a) Every Receiver appointed in accordance with Clause 11.1 (Appointment of
Receiver) shall have and be entitled to exercise all of the powers set out
in Clause 11.2(b) below in addition to those conferred by applicable laws.
If at any time there is more than one Receiver of all or any part of the
Security Shares, each such Receiver may (unless otherwise stated in any
document appointing him) exercise all of the powers conferred on a
Receiver under this Share Mortgage Agreement individually and to the
exclusion of each other Receiver.
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(b) The powers referred to in the first sentence of Clause 11.1(a) above are:
(i) TAKE POSSESSION: to take immediate possession of, get in and collect
the Security Shares or any part of the Security Shares whether
accrued before or after the date of his appointment;
(ii) BORROW MONEY: for the purpose of exercising any of the powers,
authorities and discretions conferred on him by or pursuant to this
Share Mortgage Agreement and/or of defraying any costs, charges,
losses or expenses (including his remuneration) which shall be
incurred by him in the exercise of such powers, authorities and
discretions or for any other purpose, to raise and borrow money
either unsecured or on the security of the Security Shares or any
part of the Security Shares either in priority to the security
constituted by this Share Mortgage Agreement or otherwise and
generally on such terms and conditions as he may think fit and no
person lending such money shall be concerned to enquire as to the
propriety or purpose of the exercise of such power or to see to the
application of any money so raised or borrowed;
(iii) SELL ASSETS: to sell, exchange, grant options to purchase, license,
surrender, release, disclaim, abandon, return or otherwise dispose
of, convert into money or realise all or any part of the Security
Shares by public auction or private contract and generally in such
manner and on such terms as he shall think proper or to concur in
any such transaction. Without prejudice to the generality of the
foregoing he may do any of these things for a consideration
consisting of cash, debentures or other obligations, shares, stock
or other valuable consideration and any such consideration may be
payable in a lump sum or by instalments spread over such period as
he may think fit;
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(iv) COMPROMISE: to negotiate, settle, adjust, refer to arbitration, compromise, abandon and arrange any claims, accounts, disputes, questions and demands with or by any person who is or claims to be a creditor of the Mortgagor or relating in any way to the Security Shares or any part of them;
(v) LEGAL ACTIONS: to bring, prosecute, enforce, defend and abandon all such actions, suits and proceedings in relation to the Security Shares or any part of them as may seem to him to be expedient;
(vi) RECEIPTS: to give valid receipts for all moneys and execute all assurances and things which may be proper or desirable for realising the Security Shares;
(vii) POWERS, DISCRETIONS, ETC.: to exercise any powers, discretions, voting, conversion or other rights or entitlements in relation to any of the Security Shares or incidental to the ownership of or rights in or to any Security Shares and to complete or effect any transaction entered into by the Mortgagor and complete, disclaim, abandon or modify all or any of the outstanding contracts or arrangements of the Mortgagor relating to or affecting all or any part of the Security Shares; and
(viii) GENERAL POWERS: to do all such other acts and things as he may consider desirable or necessary for realising the Security Shares or any part of them or incidental or conducive to any of the matters, powers or authorities conferred on a Receiver under or by virtue of this Share Mortgage Agreement, to exercise in relation to the Security Shares or any part of them all such powers, authorities and things as he would be capable of exercising if he were the absolute beneficial owner of them,
and to use the name of the Mortgagor for all or any of such purposes.
11.3 REMOVAL
The Collateral Agent may from time to time by writing under its hand remove any Receiver appointed by it and may, whenever it may deem it expedient, appoint a new Receiver in the place of any Receiver whose appointment may for any reason have terminated.
11.4 REMUNERATION
(a) Subject to any mandatory provisions of applicable laws which require
otherwise, the Collateral Agent may from time to time fix the remuneration
of any Receiver appointed by it (which remuneration may be or include a
commission calculated by reference to the gross amount of all moneys
received or otherwise and may include remuneration in connection with
claims, actions or proceedings made or brought against the Receiver by the
Mortgagor or any other person or the performance or discharge of any
obligation imposed upon him by statute or otherwise) but such remuneration
shall be payable by the Mortgagor alone; and
(b) the amount of such remuneration may be debited by the Collateral Agent to
any account of the Mortgagor, but shall, in any event, form part of the
Secured Liabilities and accordingly be secured on the Security Shares
under the security contained in this Share Mortgage Agreement.
11.5 EXTENT OF APPOINTMENT
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The exclusion of any Security Shares from the appointment of the Receiver shall not preclude the Collateral Agent from subsequently extending his or their appointment (or that of the Receiver replacing him or them) to that part or appointing another Receiver over any other part of the Security Shares.
11.6 RECEIVER IS AGENT OF THE MORTGAGOR
(a) Every Receiver duly appointed by the Collateral Agent under the powers in
that respect contained in this Share Mortgage Agreement shall be deemed to
be the agent of the Mortgagor for all purposes.
(b) Subject to the Companies Ordinance and any other applicable law, the
Mortgagor alone shall be responsible for the contracts, engagements, acts,
omissions, defaults and losses of the Receiver and for liabilities
incurred by the Receiver. The Beneficiaries shall not incur any liability
for them (either to the Mortgagor or to any other person whatsoever) by
reason of the Collateral Agent appointing such Receiver or for any other
reason whatsoever.
11.7 COLLATERAL AGENT MAY EXERCISE
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To the fullest extent permitted by law, all or any of the powers, authorities and discretions which are conferred by this Share Mortgage Agreement (either expressly or impliedly) upon a Receiver of the Security Shares may be exercised after the security created under this Share Mortgage Agreement becomes enforceable by the Collateral Agent in relation to the whole of such Security Shares or any part of them without first appointing a Receiver of such property or any part of it or notwithstanding the appointment of a Receiver of such property or any part of it.
12. POWER OF ATTORNEY
12.1 APPOINTMENT
The Mortgagor by way of security and to secure the performance of its obligations under this Share Mortgage Agreement and under the Finance Documents irrevocably appoints the Collateral Agent and
every Receiver of the Security Shares or any part of them appointed under this Share Mortgage Agreement and every such delegate or sub-delegate as aforesaid to be its attorney acting severally, and on its behalf and in its name or otherwise, after the occurrence of an Enforcement Event or where the Mortgagor has failed to perform any of its obligations under Clause 9 (Further Assurances):
(a) to execute and do all such assurances, acts and things which the Mortgagor is required to do and fails to do under the covenants and provisions contained in this Share Mortgage Agreement (including, without limitation, to make any demand upon or to give any notice or receipt to any person owing moneys to the Mortgagor and to execute and deliver any charges, legal mortgages, assignments or other security and any transfers of securities);
(b) generally in its name and on its behalf to exercise all or any of the powers, authorities and discretions conferred by or pursuant to this Share Mortgage Agreement or by statute on the Collateral Agent or any such Receiver, delegate or sub-delegate; and
(c) (without prejudice to the generality of the foregoing) to seal and deliver and otherwise perfect any deed, assurance, agreement, instrument or act which it or he may reasonably deem proper in or for the purpose of exercising any of such powers, authorities and discretions or so as to vest any Security Share in any purchaser or other person with whom the Collateral Agent or (as the case may be) such Receiver is dealing.
12.2 RATIFICATION
The Mortgagor ratifies and confirms and agrees to ratify and confirm whatever any such attorney as is mentioned in Clause 12.1 (Appointment) shall do or purport to do in the exercise or purported exercise of all or any of the powers, authorities and discretions referred to in such Clause 12.1 (Appointment).
13. WAIVERS, REMEDIES CUMULATIVE
(a) The rights of the Collateral Agent and each Beneficiary under this Share Mortgage Agreement:
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under general law; and
(iii) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of that right.
(b) Subject to the terms of the Indenture, the Collateral Agent may waive any breach by the Mortgagor of its obligations under this Share Mortgage Agreement.
14. SEVERABILITY
If a provision of this Share Mortgage Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction in respect of the Mortgagor, that shall not affect or impair the legality, validity or enforceability of such provision of this Share Mortgage Agreement under the law of any other jurisdiction or the legality, validity or enforceability of the remaining provisions of this Share Mortgage Agreement.
15. COVENANT TO RELEASE
15.1 GENERAL RELEASE
Upon the expiry of the Security Period, and subject to Clauses 1.2(b) (Construction of specific terms) and 7.3 (Retention of charges), the Collateral Agent and each Beneficiary shall, at the request and cost of the Mortgagor, execute and do all such deeds, acts and things as may be necessary to release the Security Shares from the security constituted by this Share Mortgage Agreement.
15.2 TRANSFER OF SECURITY SHARES
If the Collateral Agent, a Receiver or their nominees shall be required to transfer the Security Shares pursuant to Clause 15.1 (General release) or otherwise, the Collateral Agent may require the transferee to accept delivery, transfer or registration of other securities of the same type, class and denomination in lieu of the Security Shares and ensure that its nominees (if any) do likewise.
16. GOVERNING LAW
This Share Mortgage Agreement shall be governed by and construed in accordance with Hong Kong law.
17. COUNTERPARTS
This Share Mortgage Agreement may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which is an original but all of which together constitute one and the same instrument.
IN WITNESS whereof this Share Mortgage Agreement has been duly executed and delivered as a deed on the date first written above.
SCHEDULE 1
PART A - MORTGAGOR
LORAL SKYNET CORPORATION
Jurisdiction of Incorporation: [PLEASE INSERT]
Registration Number: [PLEASE INSERT]
Registered Address: [PLEASE INSERT]
Notice Address: [PLEASE INSERT]
Attn: [Secretary of State of Delaware]
[PLEASE CONFIRM]
Facsimile Number: [PLEASE INSERT]
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PART B - COLLATERAL AGENT
THE BANK OF NEW YORK
Registered Address: [PLEASE INSERT]
Notice Address: 101 Barclay Street, 8 West
New York, NY 10286
Attention: Corporate Trust
Division-Corporate Finance Unit
Facsimile Number: 212-815-5707
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SCHEDULE 2
SHARES
REGISTERED OWNER
MORTGAGOR AND (IF NOT THE
BENEFICIAL OWNER MORTGAGOR) ISSUER OF SHARES DESCRIPTION OF SHARES
---------------- ---------------- ---------------------- ------------------------
Loral Skynet Loral Skynet Loral Asia Pacific 99 ordinary
Corporation Corporation Satellite (HK) Limited shares of HK$0.10
each (share certificates
no. 05 and 07)
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SIGNATORIES TO SHARE MORTGAGE AGREEMENT
THE MORTGAGOR:
LORAL SKYNET CORPORATION
By: /s/ Richard Mastoloni
________________________________
Name: Richard Mastoloni
Title: Vice President
|
Notice Address:
c/o Loral Space and Communications
600 Third Avenue
New York, NY 10016
Attention: Treasurer
Tel: 212-338-5605
Fax: 212-867-9167
THE COLLATERAL AGENT
THE BANK OF NEW YORK
By: /s/ Stacey B. Poindexter
________________________________
Name: Stacey B. Poindexter
Title: Assistant Vice President
|
Notice Address:
101 Barclay Street, 8 West
New York, NY 10286
Attention: Corporate Trust Division-Corporate Finance Unit
Tel.: 212-815-4770
Fax: 212-815-5707
CONTENTS
CLAUSE PAGE 1. DEFINITIONS AND INTERPRETATION............................................................. 1 2. COVENANT TO PAY............................................................................ 4 3. SHARE MORTGAGE............................................................................. 5 4. PERFECTION OF SECURITY, ETC................................................................ 6 5. REPRESENTATIONS AND WARRANTIES............................................................. 8 6. UNDERTAKINGS............................................................................... 8 7. CONTINUING SECURITY, ETC................................................................... 8 8. OTHER SECURITY, ETC........................................................................ 9 9. FURTHER ASSURANCES......................................................................... 9 10. MANNER OF ENFORCEMENT OF SECURITY.......................................................... 10 11. RECEIVER................................................................................... 10 12. POWER OF ATTORNEY.......................................................................... 12 13. WAIVERS, REMEDIES CUMULATIVE............................................................... 13 14. SEVERABILITY............................................................................... 13 15. COVENANT TO RELEASE........................................................................ 14 16. GOVERNING LAW.............................................................................. 14 17. Counterparts............................................................................... 14 SCHEDULE 1..................................................................................... 15 Part A - Mortgagor.......................................................................... 15 Part B - Collateral Agent................................................................... 15 SCHEDULE 2 SHARES.............................................................................. 16 |
Page I
DATED 21 NOVEMBER 2005
LORAL SKYNET CORPORATION
as MORTGAGOR
AND
THE BANK OF NEW YORK
as COLLATERAL AGENT
SHARE MORTGAGE AGREEMENT
[FRESHFIELDS BRUCKHAUS DERINGER LOGO]
[Exhibit 4.4]
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
LORAL SPACE & COMMUNICATIONS INC.
LORAL SKYNET CORPORATION
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES HEREOF
DATED AS OF NOVEMBER 21, 2005
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1 Defined Terms........................................................................................... 1
1.2 General Interpretive Principles......................................................................... 6
ARTICLE II
DEMAND REGISTRATION
2.1 Request for Registration................................................................................ 7
2.2 Joining Holders......................................................................................... 10
2.3 Effective Registration.................................................................................. 11
2.4 Underwritten Offerings.................................................................................. 11
2.5 Priority on Demand Registrations........................................................................ 11
2.6 Withdrawal and Cancellation of Registration............................................................. 12
2.7 Registration Statement Form............................................................................. 12
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Holder Piggyback Registration........................................................................... 12
3.2 Priority on Piggyback Registrations..................................................................... 13
3.3 Withdrawals............................................................................................. 15
3.4 Underwritten Offerings.................................................................................. 15
ARTICLE IV
SHELF REGISTRATION
4.1 Shelf Registration Filing............................................................................... 15
4.2 Required Period and Shelf Registration Procedures....................................................... 18
ARTICLE V
STANDSTILL AND SUSPENSION PERIODS
5.1 Company Standstill Period............................................................................... 18
5.2 Suspension Period....................................................................................... 18
5.3 Holder Standstill Period................................................................................ 19
ARTICLE VI
REGISTRATION PROCEDURES
6.1 Company Obligations..................................................................................... 20
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TABLE OF CONTENTS
(continued)
Page
6.2 Holder Obligations...................................................................................... 24
6.3 Subsequent Registration Rights.......................................................................... 24
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Company.......................................................................... 24
7.2 Indemnification by the Holders.......................................................................... 26
7.3 Notice of Claims, Etc................................................................................... 26
7.4 Contribution............................................................................................ 27
7.5 Indemnification Payments; Other Remedies................................................................ 28
ARTICLE VIII
REGISTRATION EXPENSES
ARTICLE IX
RULE 144
ARTICLE X
MISCELLANEOUS
10.1 Notice Generally........................................................................................ 29
10.2 Successors and Assigns.................................................................................. 30
10.3 Amendments; Waivers..................................................................................... 30
10.4 Injunctive Relief....................................................................................... 30
10.5 Attorney's Fees......................................................................................... 30
10.6 Termination Of Registration Rights; Survival............................................................ 31
10.7 Severability............................................................................................ 31
10.8 Headings................................................................................................ 31
10.9 Governing Law; Jurisdiction............................................................................. 31
10.10 Counterparts and Facsimile Execution.................................................................... 31
10.11 Entire Agreement........................................................................................ 31
10.12 Further Assurances...................................................................................... 31
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November 21, 2005, by and among Loral Space & Communications Inc., a Delaware corporation ("New Loral"), Loral Skynet Corporation, a Delaware corporation ("New Skynet"), and the Holders (as hereinafter defined) of Registrable Securities (as hereinafter defined).
RECITALS
A. Subject to and on the terms and conditions set forth in that certain Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 (the "Plan"), which Plan was confirmed on August 1, 2005 by order of the United States Bankruptcy Court for the Southern District of New York, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof, the Holders shall receive, on the effective date of the Plan, from (i) New Loral shares of the New Loral Common Stock (as hereinafter defined), (ii) New Skynet shares of New Skynet Preferred Stock (as hereinafter defined), and (iii) New Skynet New Skynet Notes (as hereinafter defined), pursuant to a rights offering by New Skynet under the Plan (the "Rights Offering") and/or the Backstop Commitment Agreement (as defined in the Plan).
B. New Loral, New Skynet and the Holders are entering into this Agreement pursuant to, and as authorized by, the Bankruptcy Court order confirming the Plan.
AGREEMENTS
In consideration of the foregoing, and the agreements set forth below, the parties hereby agree with each other as follows:
ARTICLE I
DEFINITIONS.
1.1 DEFINED TERMS.
As used in this Agreement, the following capitalized terms (in their singular and plural forms, as applicable) have the following meanings:
"Action" has the meaning assigned to such term in Section 7.3 hereof.
"Additional Holders" means the Permitted Assignees of Registrable Securities who, from time to time, acquire Registrable Securities and own Registrable Securities at the relevant time, agree to be bound by the terms hereof and become Holders for purposes of this Agreement.
"Adverse Effect" has the meaning assigned to such term in Section 2.5 hereof.
"Affiliate" of a Person means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such other
Person. For purposes of this definition, the term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning assigned to such term in the introductory paragraph to this Agreement, as the same may be amended, supplemented or restated from time to time.
"Backstop Commitment Agreement" has the meaning assigned to such term in the Recitals to this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York are authorized or obligated by law or executive order to close.
"Commission" means the United States Securities and Exchange Commission and any successor United States federal agency or governmental authority having similar powers.
"Company" means, as applicable to the situation at hand, either New Loral or New Skynet.
"Company Indemnified Person" has the meaning assigned to such term in Section 7.2 hereof.
"Company Standstill Period" has the meaning assigned to such term in
Section 5.1 hereof.
"Demand Registration" means, as applicable to the situation at hand, a New Loral Common Stock Demand Registration, a New Skynet Preferred Stock Demand Registration or a New Skynet Notes Demand Registration.
"Demand Request" has the meaning assigned to such term in Section 2.1(a) hereof.
"DTC" means The Depository Trust Company, or any successor thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.
"Holder" means any (i) Person who owns Registrable Securities at the relevant time and is a party to this Agreement or (ii) any Additional Holder.
"Indemnified Person" has the meaning assigned to such term in
Section 7.1 hereof.
"Indemnitee" has the meaning assigned to such term in Section 7.3 hereof.
"Inspectors" has the meaning assigned to such term in Section 6.1(k) hereof.
"Joining Holder" has the meaning assigned to such term in Section 2.2 hereof.
"Loss" and "Losses" have the meanings assigned to such terms in
Section 7.1 hereof.
"Major Holder" means, with respect to a class of Registrable Securities, any Person or group of Affiliated Persons that hold a minimum of 25% of such class of Registrable Securities as of the effective date of the Plan or any Additional Holder that acquires the rights of such Person or group of Affiliated Persons in accordance with the terms of this Agreement.
"Majority Participating Holders" means, with respect to any registration of Registrable Securities under this Agreement, the Holder or Holders at the relevant time of at least a majority of the Registrable Securities of all Holders to be included in the Registration Statement in question.
"Material Disclosure Event" means, as of any date of determination, any pending or imminent event relating to the Company or any of its subsidiaries, which, in the good faith determination of the Board of Directors of the Company after consultation with counsel to the Company (i) requires disclosure of material, non-public information relating to such event in any Registration Statement or related Prospectus (including documents incorporated by reference therein) so that such Registration Statement would not be materially misleading, (ii) is otherwise not required to be publicly disclosed at that time (e.g., on Forms 10-K, 8-K, or 10-Q) under applicable federal or state securities laws but for the filing of such Registration Statement or related Prospectus and (iii) if publicly disclosed at the time of such event, could reasonably be expected to have a material adverse effect on the business, financial condition or prospects of the Company and its subsidiaries or would materially adversely affect a pending or proposed acquisition, merger, recapitalization, consolidation, reorganization, financing or similar transaction, or negotiations with respect thereto.
"NASD" has the meaning assigned to such term in Section 6.1(n) hereof.
"New Loral" has the meaning assigned to such term in the introductory paragraph to this Agreement.
"New Loral Common Stock" means the authorized common stock, par value $0.01 per share, of New Loral.
"New Loral Common Stock Demand Registration" has the meaning assigned to such term in Section 2.1(a) hereof.
"New Loral Common Stock Shelf Registration Statement" has the meaning assigned to such term in Section 4.1(a) hereof.
"New Loral Shelf Filing Deadline" has the meaning assigned to such term in Section 4.1(a) hereof.
"New Skynet" has the meaning assigned to such term in the introductory paragraph to this Agreement.
"New Skynet Preferred Stock" means the authorized non-convertible preferred stock, par value $0.01 per share, of New Skynet.
"New Skynet Preferred Stock Demand Registration" has the meaning assigned to such term in Section 2.1(b) hereof.
"New Skynet Preferred Stock Shelf Registration Statement" has the meaning assigned to such term in Section 4.1(b) hereof.
"New Skynet Preferred Stock Shelf Request" has the meaning assigned to such term in Section 4.1(b) hereof.
"New Skynet Notes" means the senior secured notes issued by New Skynet in connection with the Rights Offering and the Backstop Commitment Agreement.
"New Skynet Notes Demand Registration" has the meaning assigned to such term in Section 2.1(c) hereof.
"New Skynet Notes Shelf Registration Statement" has the meaning assigned to such term in Section 4.1(b) hereof.
"New Skynet Notes Shelf Request" has the meaning assigned to such term in Section 4.1(b) hereof.
"Participating Holder" means any Holder on whose behalf Registrable Securities are registered pursuant to Articles II, III or IV hereof.
"Permitted Assignee" means any (a) Affiliate of any Holder who acquires Registrable Securities from such Holder or its Affiliates; or (b) any other Person who (i) acquires any Holder's Registrable Securities in an amount of at least 2% of the total number or amount, as applicable, of outstanding securities of the applicable class of Registrable Securities calculated as of the effective date of the Plan; and (ii) shall have been designated as a Permitted Assignee by such Holder in a written notice to the Company; provided, however, that the rights of any Person designated as a Permitted Assignee referred to in the foregoing clause (b) shall be limited if, and to the extent, provided in such notice.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"Piggyback Registration" has the meaning assigned to such term in
Section 3.1 hereof.
"Plan" has the meaning assigned to such term in the Recitals to this Agreement.
"Prospectus" means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus and all material incorporated by reference in such prospectus.
"Records" has the meaning assigned to such term in Section 6.1(k) hereof.
The terms "register," "registered" and "registration" mean a registration effected by preparing and filing with the Commission a Registration Statement on an appropriate form in compliance with the Securities Act, and the declaration or order of the Commission of the effectiveness of such Registration Statement under the Securities Act.
"Registrable Securities" means (i) the shares of New Loral Common Stock held by any of the Holders (or their respective Affiliates and successors or Permitted Assigns) now or at any time in the future ("Registrable New Loral Common Stock"), (ii) the shares of New Skynet Preferred Stock held by any of the Holders (or their respective Affiliates and successors or Permitted Assigns) now or at any time in the future ("Registrable New Skynet Preferred Stock"), (iii) any New Skynet Notes held by any of the Holders (or their respective Affiliates and successors or Permitted Assigns) now or at any time in the future ("Registrable New Skynet Notes"), and (iv) any securities that may be issued or distributed or be issuable in respect thereof by way of stock dividend, stock split or other similar distribution, payment in kind with respect to any interest payment, merger, consolidation, exchange offer, recapitalization or reclassification or similar transaction or exercise or conversion of any of the foregoing; provided, however, that as to any Registrable Securities, such securities shall cease to constitute "Registrable Securities" for purposes of this Agreement if and when (i) a Registration Statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of pursuant such Registration Statement, (ii) such securities are distributed pursuant to Rule 144, (iii) such securities are otherwise sold or transferred (other than in a transaction under clause (i) or (ii) above) by a Person in a transaction in which such Person's rights under this Agreement are not assigned, (iv) such securities are no longer outstanding, (v) such securities are sold or transferred by the beneficial owner of such securities pursuant to Rule 144(k) and new certificates for such securities not bearing a legend restricting transfer under the Securities Act shall have been delivered to the Holder thereof by the Company, or (vi) such securities are, in the reasonable determination of the Holder thereof, otherwise freely-transferable by such Holder without any restriction under the Securities Act at the time such Holder desires to sell or transfer such securities. For purposes of this Agreement, a "class" of Registrable Securities shall mean all securities with the same terms and a "percentage" (or a "majority") of the Registrable Securities (or, where applicable, of any other securities) shall be determined (x) based on the number of shares of such securities, in the case of Registrable Securities which are equity securities, and (y) based on the principal amount of such securities, in the case of Registrable Securities which are debt securities.
"Registration Statement" means any registration statement of the Company filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.
"Requesting New Loral Stockholder" has the meaning assigned to such term in Section 2.1(a) hereof.
"Requesting New Skynet Preferred Stockholder" has the meaning assigned to such term in Section 2.1(b) hereof.
"Requesting New Skynet Noteholder" has the meaning assigned to such term in Section 2.1(c) hereof.
"Required Filing Date" has the meaning assigned to such term in
Section 2.1(a) hereof.
"Required Period" has the meaning assigned to such term in Section 4.2 hereof.
"Rights Offering" has the meaning assigned to such term in the Recitals to this Agreement.
"Rule 144" means Rule 144 (or any similar provision then in force) promulgated under the Securities Act.
"Rule 144(k)" means Rule 144(k) (or any similar provision then in force) promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.
"Shelf Registration Statement" means, as applicable to the situation at hand, a New Loral Common Stock Shelf Registration Statement, a New Skynet Preferred Stock Shelf Registration Statement or a New Skynet Notes Shelf Registration Statement.
"Suspension Notice" has the meaning assigned to such term in Section 5.2 hereof.
"Suspension Period" has the meaning assigned to such term in Section 5.2 hereof.
"Underwritten Offering" means a registration in which securities of the Company are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.
1.2 GENERAL INTERPRETIVE PRINCIPLES. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms "hereof," "herein," "hereunder" and similar terms refer to this Agreement as a whole (including the exhibits and schedules hereto), and references herein to Sections refer to Sections of this Agreement. The words "include," "includes" and "including," when used in this Agreement, shall be deemed to be followed by the words "without limitation."
ARTICLE II
DEMAND REGISTRATION
2.1 REQUEST FOR REGISTRATION.
(a) New Loral Common Stock. Subject to the provisions contained in this Section 2.1(a) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from time to time (each, a "Requesting New Loral Stockholder"), make a request in writing (a "Demand Request") that New Loral effect the registration under the Securities Act of any specified number of shares of Registrable New Loral Common Stock held by the Requesting New Loral Stockholders (a "New Loral Common Stock Demand Registration"); provided, however, that New Loral shall in no event be required to effect:
(i) subject to subsection (d) below, more than three (3) New Loral Common Stock Demand Registrations in total;
(ii) more than two (2) New Loral Common Stock Demand Registration in any 12-month period;
(iii) subject to New Loral's compliance with its obligations
under Article III hereof, any New Loral Common Stock Demand Registration during
the period commencing with New Loral's issuance of a notice to the Holders
pursuant to Section 3.1 hereof of a proposed registration of an Underwritten
Offering of equity securities of New Loral for its own account (except pursuant
to registrations on Form S-4 or any successor form or on Form S-8 or any
successor form relating solely to securities issued pursuant to any benefit
plan), continuing while New Loral uses reasonable efforts to pursue such
registered Underwritten Offering, and ending upon the earliest to occur of: (A)
forty five (45) days immediately following New Loral's issuance of the notice of
such proposed registered Underwritten Offering pursuant to Section 3.1 hereof,
unless, within such 45-day period, New Loral shall have (x) filed the
Registration Statement for such proposed Underwritten Offering, or (y) issued a
press release disclosing such proposed Underwritten Offering pursuant to Rule
135 (or its successor) promulgated under the Securities Act thereby enabling the
Holders to sell their Registrable New Loral Common Stock pursuant to the New
Loral Common Stock Shelf Registration Statement; (B) the abandonment, cessation
or withdrawal of such proposed registered Underwritten Offering; or (C) 90 days
immediately following the effective date of the Registration Statement
pertaining to such Underwritten Offering; and
(iv) any New Loral Common Stock Demand Registration if the New Loral Common Stock Shelf Registration Statement is then effective, and such New Loral Common Stock Shelf Registration Statement may be utilized by the Requesting New Loral Stockholder for the offering and sale of any of its Registrable New Loral Common Stock without a requirement under the Commission's rules and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(a) and in Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, New Loral shall cause to be included in a
Registration Statement on an appropriate form under the Securities Act, filed with the Commission as promptly as practicable but in any event not later than 60 days after receiving a Demand Request (the "Required Filing Date"), such shares of Registrable New Loral Common Stock as may be requested by such Requesting New Loral Stockholders in their Demand Request together with any other Registrable New Loral Common Stock as requested by Joining Holders joining in such request pursuant to Section 2.2 hereof. New Loral shall use its reasonable efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as possible after such filing. If New Loral issues a notice of a proposed Underwritten Offering of equity securities of New Loral for its own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws such offering, New Loral shall not issue a notice of a subsequent proposed registration of an Underwritten Offering of equity securities of New Loral for its own account pursuant to Section 3.1 hereof until the New Loral Common Stock Shelf Registration Statement is first declared effective.
(b) New Skynet Preferred Stock. Subject to the provisions contained in this Section 2.1(b) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from time to time (each, a "Requesting New Skynet Preferred Stockholder"), make a Demand Request that New Skynet effect the registration under the Securities Act of any specified number of shares of Registrable New Skynet Preferred Stock held by the Requesting New Skynet Preferred Stockholders (a "New Skynet Preferred Stock Demand Registration"); provided, however, that New Skynet shall in no event be required to effect:
(i) subject to subsection (d) below, more than three (3) New Skynet Preferred Stock Demand Registrations in total;
(ii) more than two (2) New Skynet Preferred Stock Demand Registration in any 12-month period;
(iii) subject to New Skynet's compliance with its obligations
under Article III hereof, any New Skynet Preferred Stock Demand Registration
during the period commencing with New Skynet's issuance of a notice to the
Holders pursuant to Section 3.1 hereof of a proposed registration of an
Underwritten Offering of equity securities of New Skynet for its own account
(except pursuant to registrations on Form S-4 or any successor form or on Form
S-8 or any successor form relating solely to securities issued pursuant to any
benefit plan), continuing while New Skynet uses reasonable efforts to pursue
such registered Underwritten Offering, and ending upon the earliest to occur of:
(A) forty five (45) days immediately following New Skynet's issuance of the
notice of such proposed registered Underwritten Offering pursuant to Section 3.1
hereof, unless, within such 45-day period, New Skynet shall have (x) filed the
Registration Statement for such proposed Underwritten Offering, or (y) issued a
press release disclosing such proposed Underwritten Offering pursuant to Rule
135 (or its successor) promulgated under the Securities Act thereby enabling the
Holders to sell their Registrable New Skynet Preferred Stock pursuant to the New
Skynet Preferred Stock Shelf Registration Statement (if any); (B) the
abandonment, cessation or withdrawal of such proposed registered Underwritten
Offering; or (C) 90 days immediately following the effective date of the
Registration Statement pertaining to such Underwritten Offering; and
(iv) any New Skynet Preferred Stock Demand Registration if the New Skynet Preferred Stock Shelf Registration Statement is then effective, and such New Skynet Preferred Stock Shelf Registration Statement may be utilized by the Requesting New Skynet Preferred Stockholder for the offering and sale of any of its Registrable New Skynet Preferred Stock without a requirement under the Commission's rules and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(b) and in Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, New Skynet shall cause to be included in a Registration Statement on an appropriate form under the Securities Act, filed with the Commission by the Required Filing Date, such shares of Registrable New Skynet Preferred Stock as may be requested by such Requesting New Skynet Preferred Stockholders in their Demand Request together with any other Registrable New Skynet Preferred Stock as requested by Joining Holders joining in such request pursuant to Section 2.2 hereof. New Skynet shall use its reasonable efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as possible after such filing. Notwithstanding anything to the contrary contained herein, a Major Holder may make a Demand Request that New Skynet effect the registration of New Skynet Preferred Stock and New Skynet Notes in a single Registration Statement and such Demand Request shall be counted, in the sole discretion of such Major Holder, as either a New Skynet Preferred Stock Demand Registration or a New Skynet Notes Demand Registration.
(c) New Skynet Notes. Subject to the provisions contained in this
Section 2.1(c) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from
time to time (each, a "Requesting New Skynet Noteholder"), make a Demand Request
that New Skynet effect the registration under the Securities Act of any
specified principal amount of Registrable New Skynet Notes held by the
Requesting New Skynet Noteholders (a "New Skynet Notes Demand Registration," and
collectively with a New Loral Common Stock Demand Registration and a New Skynet
Preferred Stock Demand Registration, as the case may be, a "Demand
Registration"); provided, however, that New Skynet shall in no event be required
to effect:
(i) subject to subsection (d) below, more than three (3) New Skynet Notes Demand Registrations in total;
(ii) more than two (2) New Skynet Notes Demand Registration in any 12-month period;
(iii) subject to New Skynet's compliance with its obligations
under Article III hereof, any New Skynet Notes Demand Registration during the
period commencing with New Skynet's issuance of a notice to the Holders pursuant
to Section 3.1 hereof of a proposed registration of an Underwritten Offering of
debt securities of New Skynet for its own account (except pursuant to
registrations on Form S-4 or any successor form or on Form S-8 or any successor
form relating solely to securities issued pursuant to any benefit plan),
continuing while New Skynet uses reasonable efforts to pursue such registered
Underwritten Offering, and ending upon the earliest to occur of: (A) forty five
(45) days immediately following New Skynet's issuance of the notice of such
proposed registered Underwritten Offering pursuant to Section 3.1 hereof,
unless, within such 45-day period, New Skynet shall have (x) filed the
Registration Statement for such proposed Underwritten Offering, or (y) issued a
press release disclosing such proposed Underwritten Offering pursuant to Rule
135 (or its successor) promulgated under the Securities Act thereby enabling the
Holders to sell their Registrable New Skynet Notes pursuant to the New Skynet
Notes Shelf Registration Statement; (B) the abandonment, cessation or withdrawal
of such proposed registered Underwritten Offering; or (C) 90 days immediately
following the effective date of the Registration Statement pertaining to such
Underwritten Offering; and
(iv) any New Skynet Notes Demand Registration if the New Skynet Notes Shelf Registration Statement is then effective, and such New Skynet Notes Shelf Registration Statement may be utilized by the Requesting New Skynet Noteholder for the offering and sale of any of its Registrable New Skynet Notes without a requirement under the Commission's rules and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(c) and in Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, New Skynet shall cause to be included in a Registration Statement on an appropriate form under the Securities Act, filed with the Commission by the Required Filing Date, such principal amount of Registrable New Skynet Notes as may be requested by such Requesting New Skynet Noteholders in their Demand Request together with any other Registrable New Skynet Notes as requested by Joining Holders joining in such request pursuant to Section 2.2 hereof. New Skynet shall use its reasonable efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as possible after such filing. Notwithstanding anything to the contrary contained herein, a Major Holder may make a Demand Request that New Skynet effect the registration of New Skynet Preferred Stock and New Skynet Notes in a single Registration Statement and such Demand Request shall be counted, in the sole discretion of such Major Holder, as a New Skynet Preferred Stock Demand Registration or a New Skynet Notes Demand Registration.
(d) Additional Demand Registration Rights. Notwithstanding and without prejudice to the provisions of subsections (a)(i), (b)(i) and (c)(i) above, in addition to the Demand Requests permitted under such subsections, any Major Holder may make at any time and the Company shall effect an aggregate of two (2), but not more than two (2), additional Demand Requests for any of a New Loral Common Stock Demand Registration, a New Skynet Preferred Stock Demand Registration or a New Skynet Notes Demand Registration.
2.2 JOINING HOLDERS. If at any time the Company proposes to register
Registrable Securities for the account of the Requesting Holders pursuant to
Section 2.1 hereof, then (i) the Company shall give, or cause to be given,
written notice of such proposed filing to all the Holders of such class of
Registrable Securities as soon as practicable (but in no event less than 30 days
before the anticipated filing date). Upon the written request of any Holder,
received by the Company no later than the 10th Business Day after receipt by
such Holder of the notice sent by the Company (each such Holder, a "Joining
Holder"), to register, on the same terms and conditions as the securities
otherwise being sold pursuant to such Demand Registration, any of its
Registrable Securities of the same class as the securities otherwise being sold
pursuant to such Demand Registration, the Company shall use its reasonable
efforts to cause such Registrable Securities to be included in the Registration
Statement proposed to be filed by the Company on the same terms and conditions
as any securities of the same class included therein. All such
requests by Joining Holders shall specify the aggregate amount and class of Registrable Securities to be registered and the intended method of distribution of the same.
2.3 EFFECTIVE REGISTRATION. A registration shall not count as a Demand Registration under this Agreement (i) unless the related Registration Statement has been declared effective under the Securities Act and has remained effective until such time as all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders (but in no event for a period of more than 180 days after such Registration Statement becomes effective not including any Suspension Period) and if, after it has become effective, an offering of Registrable Securities pursuant to a Registration Statement is not terminated by any stop order, injunction, or other order of the Commission or other governmental agency or court, or (ii) if pursuant to Section 2.5 hereof, the Requesting Holders and Joining Holders are cut back to fewer than 75% of the Registrable Securities requested to be registered and at the time of the request there was not in effect a Shelf Registration Statement.
2.4 UNDERWRITTEN OFFERINGS. If the Majority Participating Holders who are included in any offering pursuant to a Demand Registration so elect, such offering shall be in the form of an Underwritten Offering. With respect to any such Underwritten Offering pursuant to a Demand Registration, the Company shall select an investment banking firm of national standing to be the managing underwriter for the offering, which firm shall be reasonably acceptable to the Majority Participating Holders.
2.5 PRIORITY ON DEMAND REGISTRATIONS. With respect to any Underwritten Offering of Registrable Securities pursuant to a Demand Registration, no securities to be sold for the account of any Person (including the Company) other than the Requesting Holders and Joining Holders shall be included in a Demand Registration unless the managing underwriter advises the Requesting Holders in writing (or, in the case of a Demand Registration not being underwritten, the Majority Participating Holders determine) that the inclusion of such securities shall not adversely affect the price or success of the offering (an "Adverse Effect") and the Majority Holder making such Demand Request reasonably agrees. Furthermore, in the event that the managing underwriter advises the Requesting Holders in writing (or the Majority Participating Holders determine) that the amount of Registrable Securities proposed to be included in such Demand Registration by Requesting Holders and Joining Holders is sufficiently large (even after exclusion of all securities of any other Person pursuant to the immediately preceding sentence) to cause an Adverse Effect, the number of Registrable Securities to be included in such Demand Registration shall be allocated among all such Requesting Holders and Joining Holders pro rata for each Holder based on the percentage derived by dividing (i) the number of Registrable Securities that each such Holder requested to be included in such Demand Registration by (ii) the aggregate number of Registrable Securities that all Requesting Holders and Joining Holders requested to be included in such Demand Registration; provided, however, that if, as a result of such proration, any Requesting Holder or Joining Holder shall not be entitled to include in a registration all Registrable Securities of the class that such Holder had requested to be included, such Holder may elect to withdraw its request to include such Registrable Securities in such registration or may reduce the number requested to be included; provided, however, that (a) such request must be made in writing prior to the earlier of the execution of the underwriting
agreement, if any, or the execution of the custody agreement with respect to such registration, if any, and (b) such withdrawal or reduction shall be irrevocable.
2.6 WITHDRAWAL AND CANCELLATION OF REGISTRATION. Any Participating Holder may withdraw its Registrable Securities from a Demand Registration at any time and any Majority Participating Holders shall have the right to cancel a proposed Demand Registration of Registrable Securities pursuant to this Article II in accordance with Section 3.3 hereof when the request for cancellation is based upon material adverse information relating to the Company that is different from the information known to the Participating Holders at the time of the Demand Request. Upon such cancellation, the Company shall cease all efforts to secure registration and such Demand Registration shall not be counted as a Demand Registration under this Agreement for any purpose; provided, however that notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the expenses of the Participating Holders incurred in connection with such cancelled registration through the date that is seven days after the time such information became known to the Participating Holders, to the extent such expenses are as described in clauses (i) through (x) of the first sentence of Article VIII hereof.
2.7 REGISTRATION STATEMENT FORM. Registrations under this Article II shall be on such appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to the Holders of a majority of each class of Registrable Securities requesting participation in the Demand Registration and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders' requests for such registration. Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the Company proposes to effect registration by filing a registration statement on Form S-3 (or any successor or similar short-form registration statement), (y) such registration is in connection with an Underwritten Offering and (z) the managing underwriter or underwriters shall advise the Company in writing that, in its or their opinion, the use of another form of registration statement (or the inclusion, rather than the incorporation by reference, of information in the Prospectus related to a registration statement on Form S-3 (or other short-form registration statement)) is of material importance to the success of such proposed offering, then such registration shall be effected on such other form (or such information shall be so included in such Prospectus).
ARTICLE III
PIGGYBACK REGISTRATIONS.
3.1 HOLDER PIGGYBACK REGISTRATION. If the Company proposes to file a Registration Statement with respect to an offering of its securities (except pursuant to registrations on Form S-4 or any successor form or on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan) on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give written notice of such proposed filing to the Holders not less than 21 days before the anticipated filing date, describing in reasonable detail the proposed registration (including the number and class of securities proposed to be registered, the proposed date of filing of such Registration Statement, any proposed means of distribution of such securities, any proposed managing underwriter of such securities and a good faith estimate by the Company of the proposed maximum offering
price of such securities as such price is proposed to appear on the facing page of such Registration Statement), and offering such Holders the opportunity to register such number of Registrable Securities of the same class as those being registered by the Company as each such Holder may request in writing (each a "Piggyback Registration"). Upon the written request of any Holder, received by the Company no later than ten (10) Business Days after receipt by such Holder of the notice sent by the Company, to register, on the same terms and conditions as the securities otherwise being sold pursuant to such registration, any of such Holder's Registrable Securities of the same class as those being registered (which request shall state the intended method of disposition thereof if the securities otherwise being sold are being sold by more than one method of disposition), the Company shall use its reasonable efforts to cause such Registrable Securities as to which registration shall have been so requested to be included in the Registration Statement proposed to be filed by the Company on the same terms and conditions as the securities otherwise being sold pursuant to such registration; provided, however, that, notwithstanding the foregoing, the Company may at any time, in its sole discretion, without the consent of any other Holder, delay or abandon the proposed offering in which any Holder had requested to participate pursuant to this Section 3.1 or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the related Registration Statement or other governmental approvals, registrations or qualifications. In such event, the Company shall so notify each Holder that had notified the Company in accordance with this Section 3.1 of its intention to participate in such offering and the Company shall incur no liability for its failure to complete any such offering.
3.2 PRIORITY ON PIGGYBACK REGISTRATIONS.
(a) If the managing underwriter or underwriters for the related Piggyback Registration Underwritten Offering (or in the case of a Piggyback Registration not being underwritten, the Company, in good faith) advises the Holders in writing that the inclusion of such Registrable Securities would cause an Adverse Effect, then the Company shall be obligated to include in such Registration Statement only that number of Registrable Securities which, in the judgment of the managing underwriter (or the Company in good faith, as applicable), would not have an Adverse Effect; provided, however, that no such reduction shall reduce the aggregate amount of Registrable Securities included in such Registration Statement for the benefit of the requesting Holders to less than:
(i) in the case of New Loral Common Stock (A) any time that the New Loral Common Stock Shelf Registration Statement is not effective or the Holders may not otherwise utilize the New Loral Common Stock Shelf Registration Statement for the offering and sale of their Registrable New Loral Common Stock, all of the shares of Registrable New Loral Common Stock requested by the Holders to be included in such Registration Statement (but up to the maximum amount of the securities to be sold in the related Underwritten Offering), and (B) any time that the New Loral Common Stock Shelf Registration Statement is effective and the Holders may utilize the New Loral Common Stock Shelf Registration Statement for the offering and sale of their Registrable New Loral Common Stock, fifty percent (50%) of the total number of securities that are included in each such Registration Statement thereafter;
(ii) in the case of New Skynet Preferred Stock (A) any time that the New Skynet Preferred Stock Shelf Registration Statement is not effective or the Holders may not
otherwise utilize the New Skynet Preferred Stock Shelf Registration Statement for the offering and sale of their Registrable New Skynet Preferred Stock, all of the shares of Registrable New Skynet Preferred Stock requested by the Holders to be included in such Registration Statement (but up to the maximum amount of the securities to be sold in the related Underwritten Offering), and (B) any time that the New Skynet Preferred Stock Shelf Registration Statement is effective and the Holders may utilize the New Skynet Preferred Stock Shelf Registration Statement for the offering and sale of their Registrable New Skynet Preferred Stock, fifty percent (50%) of the total number of securities that are included in each such Registration Statement thereafter, and
(iii) in the case of New Skynet Notes (A) any time that the New Skynet Notes Shelf Registration Statement is not effective or the Holders may not otherwise utilize the New Skynet Notes Shelf Registration Statement for the offering and sale of their Registrable New Skynet Notes, all of the principal amount of Registrable New Skynet Notes requested by the Holders to be included in such Registration Statement (but up to the maximum amount of the securities to be sold in the related Underwritten Offering), and (B) any time that the New Skynet Notes Shelf Registration Statement is effective and the Holders may utilize the New Skynet Notes Shelf Registration Statement for the offering and sale of their Registrable New Skynet Notes, fifty percent (50%) of the total number of securities that are included in each such Registration Statement thereafter.
Any partial reduction in the number of Registrable Securities to be included in a Registration Statement pursuant to the immediately preceding sentence shall be affected by allocating the number of Registrable Securities to be included in such Registration Statement, among all the Holders requesting to be included in such Registration Statement pursuant to Section 3.1 hereof, pro rata based for each Holder on the percentage derived by dividing (i) the number of Registrable Securities that each such Holder requested to be included in such Registration Statement by (ii) the aggregate number of Registrable Securities that all Holders requested to be included in such Registration Statement; provided, however, that if, as a result of such proration, any Holder requesting to be included in such Registration Statement pursuant to Section 3.1 hereof shall not be entitled to include in a registration all Registrable Securities of the class that such Holder had requested to be included, such Holder may elect to withdraw its request to include such Registrable Securities in such registration or may reduce the number requested to be included in accordance with Section 3.3 hereof.
(b) In the case of New Loral only, subject to New Loral's compliance with its obligations under this Article III, if prior to the filing or effectiveness of the New Loral Shelf Registration Statement, New Loral initiates a proposal to register an Underwritten Offering of securities for its own account pursuant to this Article III and the Holders shall be afforded the right (whether or not exercised by the Holders) to include Registrable Securities in such Underwritten Offering in accordance with and subject to the provisions of this Article III, then the proposed registration for the account of New Loral pursuant to this Article III shall be given priority in all respects.
(c) Notwithstanding the foregoing, until the nine month anniversary of the date that the New Loral Common Stock Shelf Registration Statement is first declared effective, New Loral shall not initiate a proposal to register or otherwise conduct an Underwritten Offering of equity securities of the Company for its own account.
3.3 WITHDRAWALS. Each Holder shall have the right to withdraw its request for inclusion of all or any of its Registrable Securities in any Registration Statement pursuant to this Article III by giving written notice to the Company of its request to withdraw; provided, however, that (i) such request must be made in writing prior to the earlier of the execution of the underwriting agreement or the execution of the custody agreement with respect to such registration and (ii) such withdrawal shall be irrevocable.
3.4 UNDERWRITTEN OFFERINGS.
(a) In connection with the exercise of any registration rights granted to Holders pursuant to this Article III, if the registration is to be effected by means of an Underwritten Offering, the Company may condition participation in such registration by any such Holder upon inclusion of the Registrable Securities being so registered in such underwriting and such Holder's entering into an underwriting agreement pursuant to Section 6.2(d) hereof.
(b) With respect to any offering of Registrable Securities pursuant to this Article III in the form of an Underwritten Offering, the Company shall select an investment banking firm of national standing to be the managing underwriter for the offering.
ARTICLE IV
SHELF REGISTRATION
4.1 SHELF REGISTRATION FILING.
(a) New Loral. Subject to the provisions contained in this Section 4.1(a) and in Sections 3.2(b), 5.2 and 5.3 hereof, within thirty (30) days following the issuance by New Loral's independent public accountants of their audit report covering New Loral's post-emergence "fresh-start" financial statements (the "New Loral Shelf Filing Deadline"), New Loral shall file with the Commission a Registration Statement (the "New Loral Common Stock Shelf Registration Statement") relating to the offer and sale of all of the shares of Registrable New Loral Common Stock by the Holders to the public, from time to time, on a delayed or continuous basis. New Loral shall use its reasonable efforts to cause New Loral's independent public accountants to issue their audit report covering New Loral's post-emergence "fresh-start" financial statements as soon as practicable after the effective date of the Plan and, subject to the provisions contained in this Section 4.1(a) and in Sections 3.2(b), 5.2 and 5.3 hereof, to cause the New Loral Common Stock Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable after the filing thereof with the Commission. The New Loral Common Stock Shelf Registration Statement shall specify the intended method of distribution of the subject Registrable New Loral Common Stock substantially in the form of Exhibit A attached hereto. New Loral shall file the New Loral Common Stock Shelf Registration Statement on Form S-3 or, if New Loral or the offering of the Registrable New Loral Common Stock does not satisfy the requirements for use of such form, such other form as may be appropriate; provided, however, that if the New Loral Common Stock Shelf Registration Statement is not filed on Form S-3, New Loral shall, promptly upon meeting the requirements for use of such form, file an appropriate amendment to the New Loral Common Stock Shelf Registration Statement to convert it to Form S-3. Notwithstanding the foregoing, subject to New Loral's compliance with its obligations under Article III hereof, New
Loral shall not be obligated to take any action to effect the New Loral Common Stock Shelf Registration Statement or any amendment thereto during the following periods commencing:
(i) with New Loral's issuance of a notice to the Holders
pursuant to Section 3.1 hereof of a proposed registration of an Underwritten
Offering of equity securities of New Loral for its own account (except pursuant
to registrations on Form S-4 or any successor form or on Form S-8 or any
successor form relating solely to securities issued pursuant to any benefit
plan), continuing while New Loral uses reasonable efforts to pursue such
registered Underwritten Offering, and ending upon the earliest to occur of: (A)
forty five (45) days immediately following New Loral's issuance of the notice of
such proposed registered Underwritten Offering pursuant to Section 3.1 hereof,
unless, within such 45-day period, New Loral shall have (x) filed the
Registration Statement for such proposed Underwritten Offering, or (y) issued a
press release disclosing such proposed Underwritten Offering pursuant to Rule
135 (or its successor) promulgated under the Securities Act thereby enabling the
Holders to sell their Registrable New Loral Common Stock pursuant to the New
Loral Common Stock Shelf Registration Statement; (B) the abandonment, cessation
or withdrawal of such proposed registered Underwritten Offering; or (C) 90 days
immediately following the effective date of the Registration Statement
pertaining to such Underwritten Offering; and
(ii) on the effective date of a Registration Statement for an Underwritten Offering of equity securities of New Loral for its own account (except pursuant to registrations on Form S-4 or any successor form or on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan) and ending 90 days immediately following the effective date of the Registration Statement pertaining to such Underwritten Offering.
If New Loral issues a notice of a proposed Underwritten Offering of equity securities of New Loral for its own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws such offering, New Loral shall not issue a notice of a subsequent proposed registration of an Underwritten Offering of equity securities of New Loral for its own account pursuant to Section 3.1 hereof until the New Loral Common Stock Shelf Registration Statement is first declared effective.
(b) New Skynet. Subject to the provisions contained in this Section 4.1(b) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from time to time, request in writing (each a, "New Skynet Preferred Stock Shelf Request," or a "New Skynet Notes Shelf Request," as applicable) that New Skynet file with the Commission a Registration Statement (the "New Skynet Preferred Stock Shelf Registration Statement," or the "New Skynet Notes Shelf Registration Statement," as applicable) relating to the offer and sale of all of the shares of Registrable New Skynet Preferred Stock or all of the Registrable New Skynet Notes, as applicable, by the Holders to the public, from time to time, on a delayed or continuous basis; provided, however, that New Skynet shall in no event be required to effect more than one (1) New Skynet Preferred Stock Shelf Registration Statement and more than one (1) New Skynet Notes Shelf Registration Statement. Subject to the provisions contained in this Section 4.1(b) and in Sections 5.2 and 5.3 hereof, upon receipt of a New Skynet Preferred Stock Shelf Request or a New Skynet Notes Shelf Request, as applicable, New Skynet shall cause such applicable Shelf
Registration Statement to be filed with the Commission by the Required filing date. New Skynet shall use its reasonable efforts to cause any such Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable after the filing thereof with the Commission. Such Shelf Registration Statement shall specify the intended method of distribution of the subject Registrable New Skynet Preferred Stock or Registrable New Skynet Notes, as applicable, substantially in the form of Exhibit A attached hereto. New Skynet shall file the applicable Shelf Registration Statement on Form S-3 or, if New Skynet or the offering of the Registrable New Skynet Preferred Stock or the Registrable New Skynet Notes, as applicable, does not satisfy the requirements for use of such form, such other form as may be appropriate; provided, however, that if such Shelf Registration Statement is not filed on Form S-3, New Skynet shall, promptly upon meeting the requirements for use of such form, file an appropriate amendment to such Shelf Registration Statement to convert it to Form S-3. Notwithstanding the foregoing, subject to New Skynet's compliance with its obligations under Article III hereof, New Skynet shall not be obligated to take any action to effect the applicable Shelf Registration Statement or any amendment thereto during the following periods commencing:
(i) with New Skynet's issuance of a notice to the Holders pursuant to Section 3.1 hereof of a proposed registration of an Underwritten Offering of equity securities or debt securities, as applicable, of New Skynet for its own account (except pursuant to registrations on Form S-4 or any successor form or on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan), continuing while New Skynet uses reasonable efforts to pursue such registered Underwritten Offering, and ending upon the earliest to occur of: (A) forty five (45) days immediately following New Skynet's issuance of the notice of such proposed registered Underwritten Offering pursuant to Section 3.1 hereof, unless, within such 45-day period, New Skynet shall have (x) filed the Registration Statement for such proposed Underwritten Offering, or (y) issued a press release disclosing such proposed Underwritten Offering pursuant to Rule 135 (or its successor) promulgated under the Securities Act thereby enabling the Holders to sell their Registrable New Skynet Preferred Stock or Registrable New Skynet Notes, as applicable, pursuant to the applicable Shelf Registration Statement; (B) the abandonment, cessation or withdrawal of such proposed registered Underwritten Offering; or (C) 90 days immediately following the effective date of the Registration Statement pertaining to such Underwritten Offering; and
(ii) on the effective date of a Registration Statement for an Underwritten Offering of equity securities or debt securities, as applicable, of New Skynet for its own account (except pursuant to registrations on Form S-4 or any successor form or on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan) and ending 90 days immediately following the effective date of the Registration Statement pertaining to such Underwritten Offering.
If, following the receipt of a New Skynet Preferred Stock Shelf Request or New Skynet Notes Shelf Request, as applicable, New Skynet issues a notice of a proposed Underwritten Offering of equity securities or debt securities, as applicable, of New Skynet for its own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws such offering, New Skynet shall not issue a notice of a subsequent proposed registration of an Underwritten Offering of equity securities or debt securities, as applicable, of New Skynet for its own account pursuant to Section 3.1 hereof until the applicable Shelf Registration Statement is first declared
effective. Registrations effected pursuant to this Section 4.1(b) shall not be
counted as New Skynet Preferred Stock Demand Registrations effected pursuant to
Section 2.1(b) hereof or as New Skynet Notes Demand Registrations effected
pursuant to Section 2.1(c) hereof, as applicable.
4.2 REQUIRED PERIOD AND SHELF REGISTRATION PROCEDURES. The Company shall
(i) cause each Shelf Registration Statement to include a resale Prospectus
intended to permit each Holder to sell, at such Holder's election, all or part
of the applicable class of Registrable Securities held by such Holder without
restriction, (ii) use its reasonable efforts to prepare and file with the
Commission such supplements, amendments and post-effective amendments to such
Shelf Registration Statement as may be necessary to keep such Shelf Registration
Statement continuously effective (subject to Section 3.2(b) hereof and to any
Suspension Period(s) referred to below) for so long as the securities registered
thereunder constitute Registrable Securities (the "Required Period"), and (iii)
use its reasonable efforts to cause the resale Prospectus to be supplemented by
any required Prospectus supplement (subject to Section 3.2(b) hereof and to any
Suspension Period(s) referred to below) and permit such Prospectus to be usable
by the Holders during the Required Period.
ARTICLE V
STANDSTILL AND SUSPENSION PERIODS
5.1 COMPANY STANDSTILL PERIOD. In the event of an Underwritten Offering of Registrable Securities pursuant to Section 2.1 hereof, the Company agrees not to, without the prior written consent of the managing underwriter and the Majority Participating Holders, offer, pledge, sell, contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any securities that are the same as, or similar to, such Registrable Securities, or any securities convertible into, or exchangeable or exercisable for, any securities of the Company that are the same as, or similar to, such Registrable Securities (except pursuant to registrations on Form S-4 or any successor form, or otherwise in connection with the acquisition of a business or assets of a business, a merger, or an exchange offer for the securities of the issuer or another entity, or pursuant to a Company dividend reinvestment plan, or for issuances of securities pursuant to the conversion, exchange or exercise of then-outstanding convertible or exchangeable securities, options, rights or warrants, or pursuant to registrations on Form S-8 or any successor form or otherwise relating solely to securities offered pursuant to any benefit plan), during the period commencing 14 days prior to the effective date of the Registration Statement relating to such Registrable Securities (to the extent timely notified in writing by the Majority Participating Holders or the managing underwriter of such distribution) and ending on the 90th day after such effective date (the "Company Standstill Period").
5.2 SUSPENSION PERIOD. The Company may, by notice in writing to each Holder, postpone the filing or effectiveness of a Shelf Registration Statement or any other registration requested pursuant to this Agreement, or otherwise suspend the Demand Registration rights of the Holders and/or require the Holders to suspend use of any resale Prospectus included in a Shelf Registration Statement for any period of time reasonably determined by the Company if there shall occur a Material Disclosure Event (such period, a "Suspension Period"). Notwithstanding anything herein to the contrary, neither New Loral nor New Skynet shall be
entitled to more than an aggregate of four (4) Suspension Periods each, with respect to all Registrable Securities issued by either of them, as applicable, which Suspension Periods shall have durations of not more than thirty (30) days each (but may at the Company's reasonable determination run consecutively for a given Material Disclosure Event), during any consecutive 12 month period, and which Suspension Periods shall not exceed more than ninety (90) days in the aggregate in any consecutive 12-month period; provided, however, that if the Company deems in good faith that it is necessary to file a post-effective amendment to the Shelf Registration Statement in order to comply with Section 4 hereof, then such period of time from the date of filing such post-effective amendment until the date on which the applicable Shelf Registration Statement is declared effective under the Securities Act shall not be treated as a Suspension Period and the Company shall use its reasonable efforts to cause such post-effective amendment to be declared effective as promptly as possible. Each Holder agrees that, upon receipt of notice from the Company of the occurrence of a Material Disclosure Event (a "Suspension Notice"), such Holder shall forthwith discontinue any disposition of Registrable Securities pursuant to the applicable Shelf Registration Statement or any public sale or distribution, including pursuant to Rule 144, until the earlier of (i) the expiration of the Suspension Period and (ii) such Holder's receipt of a notice from the Company to the effect that such suspension has terminated. Any Suspension Notice shall be accompanied by a certificate of the Chief Executive Officer, Chief Financial Officer, President or any Vice President of the Company confirming the existence of the Material Disclosure Event. If so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession, of the most recent Prospectus covering such Registrable Securities at the time of receipt of such Suspension Notice. The Company covenants and agrees that it shall not deliver a Suspension Notice with respect to a Suspension Period unless Company employees, officers and directors are also prohibited by the Company for the duration of such Suspension Period from effecting any public sales of securities of the Company beneficially owned by them. In the event of a Suspension Notice, the Company shall, promptly after such time as the related Material Disclosure Event no longer exists, provide notice to all Holders that the Suspension Period has ended, and take any and all actions necessary or desirable to give effect to any Holders' rights under this Agreement that may have been affected by such notice, including the Holders' Demand Registration rights and rights with respect to any Shelf Registration Statement.
5.3 HOLDER STANDSTILL PERIOD. Each Holder of Registrable Securities (whether or not such Registrable Securities are covered by a Shelf Registration Statement or by a Registration Statement filed pursuant to Section 2.1 or 3.1 hereof) agrees to enter into a customary lock-up agreement with the managing underwriter for any Underwritten Offering of the Company's securities for its own account with respect to the same class of securities being registered pursuant to such Registration Statement, containing terms reasonably acceptable to such managing underwriter, covering the period commencing 15 days prior to the effective date of any Registration Statement relating to such securities of the Company and ending on the 90th day after such effective date (or such shorter period as shall have been agreed to by the Company's executive officers and directors in their respective lock-up agreements); provided, however, that the obligations of each Holder under this Section 5.3 shall apply only if: (i) such Holder shall be afforded the right (whether or not exercised by the Holder) to include Registrable Securities in such Underwritten Offering in accordance with and subject to the provisions of Article III hereof; (ii) each of the Company's executive officers and directors enter into lock-up
agreements with such managing underwriter, which agreements shall not contain terms more favorable to such executive officers or directors than those contained in the lock-up agreement entered into by such Holder; and (iii) the aggregate restriction periods in such Holder's lock-up agreements entered into pursuant to this Section 5.3 shall not exceed an aggregate of 180 days during any 365-day period.
ARTICLE VI
REGISTRATION PROCEDURES
6.1 COMPANY OBLIGATIONS. Whenever the Company is required pursuant to this Agreement to register Registrable Securities, it shall (it being understood and agreed that except as otherwise expressly set forth in this Article VI, if any other provision of this Agreement is more favorable to the Holders than the provisions of this Article VI, such other provision shall apply):
(a) provide the Participating Holders and their respective counsel with a reasonable opportunity to review, and comment on, any Registration Statement to be prepared and filed pursuant to this Agreement prior to the filing thereof with the Commission, and make all changes thereto as any Participating Holder may request in writing to the extent such changes are required, in the reasonable judgment of the Company's counsel, by the Securities Act and, except in the case of a registration under Article III, not file any Registration Statement or Prospectus or amendments or supplements thereto to which the holders of a majority of the class of Registrable Securities covered by the same or the underwriter or underwriters, if any, shall reasonably object;
(b) cause any such Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of such Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission promulgated thereunder and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading, or, if for any other reason it shall be necessary to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission an amendment or supplement to such Registration Statement or Prospectus which will correct such statement or omission or effect such compliance;
(c) furnish, at its expense, to the Participating Holders such number of conformed copies of such Registration Statement and of each such amendment thereto (in each case including all exhibits thereto, except that the Company shall not be obligated to furnish to any such Participating Holder more than two (2) copies of such exhibits), such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus and each supplement thereto), and such number of the documents, if any, incorporated by reference in such Registration Statement or Prospectus, as the Participating Holders reasonably may request;
(d) use its reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under such securities or "blue sky" laws of the states of the United States as the Participating Holders reasonably shall request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to do any and all other acts and things that may be necessary or advisable to enable the Participating Holders to consummate the disposition in such jurisdictions of the Registrable Securities covered by such Registration Statement, except that the Company shall not, for any such purpose, be required to qualify generally to do business as a foreign corporation in any jurisdiction in which it is not obligated to be so qualified, or to subject itself to material taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; and use its reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such securities regulatory authorities or governmental agencies as may be necessary to enable such Participating Holders to consummate the disposition of such Registrable Securities;
(e) promptly notify the Participating Holders, at any time when a Prospectus or Prospectus supplement relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the occurrence of any event as a result of which, the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, which untrue statement or omission requires amendment of the Registration Statement or supplementing of the Prospectus, and, as promptly as practicable (subject to Sections 3.2 and 5.2 hereof), prepare and furnish, at its expense, to the Participating Holders a reasonable number of copies of a supplement to such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that with respect to Registrable Securities registered pursuant to such Registration Statement, each Holder agrees that it shall not enter into any transaction for the sale of any Registrable Securities pursuant to such Registration Statement during the time after the furnishing of the Company's notice that the Company is preparing a supplement to or an amendment of such Prospectus or Registration Statement and until the filing and effectiveness thereof;
(f) use its reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to holders of its securities, as soon as practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first month of the first fiscal quarter after the effective date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(g) provide, and cause to be maintained, a transfer agent and registrar for the Registrable Securities covered by such Registration Statement (which transfer agent and registrar shall, at the Company's option, be the Company's existing transfer agent and registrar) from and after a date not later than the effective date of such Registration Statement;
(h) notify the Participating Holders and the managing underwriter, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Registration Statement, Prospectus, Prospectus supplement or post-effective amendment related to such Registration Statement has been filed, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;
(i) use its reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as practicable;
(j) in the event of an Underwritten Offering of Registrable Securities pursuant to Section 2.1 hereof, enter into customary agreements (including underwriting agreements in customary form, which may include, in the case of an Underwritten Offering on a firm commitment basis, "lock-up" obligations substantially similar to Section 5.1 hereof) and take such other actions (including using its reasonable efforts to make such road show presentations and otherwise engaging in such reasonable marketing support in connection with any such Underwritten Offering, including the obligation to make its executive officers available for such purpose if so requested by the managing underwriter for such offering) as are reasonably requested by the managing underwriter in order to expedite or facilitate the sale of such Registrable Securities;
(k) make available for inspection by each Participating Holder, any underwriter participating in any disposition pursuant to such registration, and any attorney, accountant or other agent retained by such Participating Holder or any such underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company and any of its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the officers, directors and employees of the Company to supply all information reasonably requested by any such Inspector in connection with such registration, provided, however, that (i) in connection with any such inspection, any such Inspectors shall cooperate to the extent reasonably practicable to minimize any disruption to the operation by the Company of its business and shall comply with all Company site safety rules, (ii) Records and information obtained hereunder shall be used by such Inspectors only to exercise their due diligence responsibility and (iii) Records or information furnished or made available hereunder shall be kept confidential and shall not be disclosed by such Participating Holder, underwriter or Inspectors unless (A) the disclosing party advises the other party that the disclosure of such Records or information is necessary to avoid or correct a misstatement or omission in a Registration Statement or is otherwise required by law, (B) the release of such Records or information is ordered pursuant to a subpoena or other order from a court or governmental
authority of competent jurisdiction (provided, however, that such Person shall use its reasonable efforts to provide the Company with prior written notice of such requirement to afford the Company with an opportunity to seek a protective order or other appropriate remedy in response) or (C) such Records or information otherwise become generally available to the public other than through disclosure by such Participating Holder, underwriter or Inspector in breach hereof or by any Person in breach of any other confidentiality arrangement;
(l) in connection with any registration of an Underwritten Offering
of Registrable Securities hereunder, use all reasonable efforts to furnish to
each Participating Holder and to the managing underwriter, if any, a signed
counterpart, addressed to such Participating Holder and the managing
underwriter, if any, of (i) an opinion or opinions of counsel to the Company and
(ii) a comfort letter or comfort letters from the Company's independent public
accountants pursuant to Statement on Auditing Standards No. 72 (or any successor
thereto), each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as each
such Participating Holder and the managing underwriter, if any, reasonably
requests;
(m) in connection with any registration of an Underwritten Offering of Registrable Securities hereunder, provide officers' certificates and other customary closing documents;
(n) reasonably cooperate with each seller of Registrable Securities and any underwriter in the disposition of such Registrable Securities and with underwriters' counsel, if any, in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD");
(o) use its reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange on which securities of the same class issued by the Company are then listed;
(p) cooperate with the Participating Holders and the managing underwriter, underwriters or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends;
(q) use its reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities; and
(r) not later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which certificates shall be in a form eligible for deposit with DTC (provided that such Registrable Securities are so eligible for deposit with DTC and, if not so eligible, the Company shall use reasonable efforts to cause such Registrable Securities to be so eligible for deposit with DTC).
6.2 HOLDER OBLIGATIONS. Each Holder agrees:
(a) that it shall furnish to the Company such information regarding such Holder and the plan and method of distribution of Registrable Securities intended by such Holder (i) as the Company may, from time to time, reasonably request in writing and (ii) as shall be required by law or by the Commission in connection therewith;
(b) that information obtained by it or by its Inspectors shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such information is made generally available to the public;
(c) to use its reasonable efforts, prior to making any disclosure allowed by Section 6.1(k)(iii)(A) or (B) hereof, to inform the Company that such disclosure is necessary to avoid or correct a misstatement or omission in the Registration Statement or ordered pursuant to a subpoena or other order from a court or governmental authority of competent jurisdiction or otherwise required by law; and
(d) in the case of an Underwritten Offering of Registrable Securities pursuant to this Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with the underwriters for such offering containing such representations and warranties by each Holder and such other terms and provisions as are customarily contained in such underwriting agreements, including customary indemnity and contribution provisions and "lock-up" obligations substantially similar to Section 5.3 hereof.
6.3 SUBSEQUENT REGISTRATION RIGHTS. The Company is not currently a party to, any agreement which is, or could be, inconsistent with the rights granted to the holders of Registrable Securities by this Agreement. For as long as any Major Holder of any class of Registrable Securities holds at least 50% of such class of Registrable Securities issued to such Major Holder on the effective date of the Plan, the Company shall not grant any Person any registration rights other than registration rights that are no more favorable than those being granted hereunder and that shall not be in conflict with, inconsistent with, or otherwise adverse to or lessen the rights of the Holders hereunder in any respect, including, without limitation, priority of registration or ability to transfer or otherwise dispose of Registrable Securities.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless to the full extent permitted by law (i) each Holder, such Holder's Affiliates and their respective officers, directors, managers, partners, stockholders, employees, advisors, agents and other representatives of the foregoing, and each of their respective successors and assigns, and each Person who controls any of the foregoing, within the meaning of the Securities Act and the Exchange Act, and (ii) any selling agent selected by the Holders or their affiliates with respect to such Registrable Securities (each such Person being sometimes
referred to as an "Indemnified Person"), against any and all losses, claims, damages, liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Person is a party thereto) and expenses (including reasonable costs of investigations and legal expenses), joint or several (each a "Loss" and collectively "Losses"), to which such Indemnified Person may become subject, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which such Registrable Securities were included for registration under the Securities Act, including any preliminary or summary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus) or any document incorporated by reference therein or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading; and the Company agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall have no obligation to provide any indemnification or reimbursement hereunder (i) to the extent that any such Losses (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Holder, or on the Holder's behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, or (ii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of such Holder), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary Prospectus and corrected in a final, amended or supplemented Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the final, amended or supplemented Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act, or (iii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of such Holder), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a final Prospectus but was corrected in an amended or supplemented final Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the amended or supplemented final Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act. The indemnity provided in this Section 7.1 shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Person and shall survive the transfer or disposal of the Registrable Securities by the Holder or any such other Persons. The Company will also indemnify, if applicable and if requested, underwriters, selling brokers, dealer managers and similar securities industry professionals participating in any distribution pursuant hereto, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to
the indemnification of the Indemnified Persons. This indemnity shall be in addition to any liability the Company may otherwise have.
7.2 INDEMNIFICATION BY THE HOLDERS. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each Holder shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7.1 hereof) the Company, each director and officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act and the Exchange Act (each such Person being sometimes referred to as a "Company Indemnified Person"), against Losses to which the Company or any such Persons may become subject under the Securities Act or otherwise, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which Registrable Securities were included for registration under the Securities Act, or any preliminary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus), or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading, in each case, only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder, or on such Holder's behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement; and each Holder agrees to reimburse such Company Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that a Holder's aggregate liability under this Agreement shall be limited to an amount equal to the net proceeds (after deducting the underwriter's discount and expenses) received by such Holder from the sale of such Holder's Registrable Securities pursuant to such registration.
7.3 NOTICE OF CLAIMS, ETC. Promptly after receipt by any Person entitled to indemnity under Section 7.1 or 7.2 hereof (an "Indemnitee") of notice of the commencement of any action or proceeding (an "Action") involving a claim referred to in such Sections, such Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice to such indemnifying party of the commencement of such Action; provided, however, that the failure of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations under Sections 7.1 or 7.2 hereof, except to the extent that the indemnifying party is actually prejudiced by such failure. In case an Action is brought against any Indemnitee, and such Indemnitee notifies the indemnifying party of the commencement thereof, each indemnifying party shall be entitled to participate therein and, to the extent it elects to do so by written notice delivered to the Indemnitee promptly after receiving the aforesaid notice, to assume the defense thereof with counsel selected by such Indemnitee and reasonably satisfactory to such indemnifying party. Notwithstanding the foregoing, the Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party, (ii) the indemnifying party shall not have
employed counsel to take charge of the defense of such Action, reasonably promptly after notice of the commencement thereof or (iii) such Indemnitee reasonably shall have concluded that there may be defenses available to it which are different from or additional to those available to the indemnifying party which, if the indemnifying party and the Indemnitee were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the events specified in clauses (i), (ii) or (iii) of the preceding sentence shall have occurred or otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be borne by the indemnifying party; it being understood, however, that the indemnifying party shall not, in connection with any one such claim or proceeding, or separate but substantially similar or related claims or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnitees hereunder, or for fees and expenses that are not reasonable. Anything in this Section 7.3 to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any action effected without its prior written consent (which consent shall not unreasonably be withheld or delayed), but if settled with the prior written consent of the indemnifying party, or if there shall be a final judgment adverse to the Indemnitee, the indemnifying party agrees to indemnify the Indemnitee from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement or compromise, with respect to any pending or threatened action or claim in respect of which the Indemnitee would be entitled to indemnification or contribution hereunder (whether or not the Indemnitee is an actual party to such action or claim), which (i) does not include as a term thereof the unconditional release of the Indemnitee from all liability in respect of such action or claim or (ii) includes an admission of fault, culpability or a failure to act by or on behalf of the Indemnitee.
7.4 CONTRIBUTION. If the indemnification provided for in this Article VII is unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand, which relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitee or indemnifying party, and such parties' relative intent, knowledge, access to information and opportunity to correct or mitigate the damage in respect of or prevent the untrue statement or omission giving rise to such indemnification obligation; provided, however, that a Holder's aggregate liability under this Section 7.4 shall be limited to an amount equal to the net proceeds (after deducting the underwriter's discount but before deducting expenses) received by such Holder from the sale of such Holder's Registrable Securities pursuant to such registration. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7.4 were determined solely by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
7.5 INDEMNIFICATION PAYMENTS; OTHER REMEDIES.
(a) Periodic payments of amounts required to be paid pursuant to this Article VII shall be made during the course of the investigation or defense, as and when reasonably itemized bills therefor are delivered to the indemnifying party in respect of any particular Loss as incurred.
(b) The remedies provided in this Article VII are not exclusive and shall not limit any rights or remedies that may otherwise be available to an Indemnitee at law or in equity.
ARTICLE VIII
REGISTRATION EXPENSES.
In connection with any offerings pursuant to a Registration Statement hereunder, the Company shall pay (i) all registration and filing fees, (ii) all fees and expenses of compliance with state securities or "blue sky" laws (including reasonable fees and disbursements of counsel in connection with "blue sky" laws qualifications of the Registrable Securities), (iii) printing and duplicating expenses, (iv) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (v) fees and disbursements of counsel for the Company and fees and expenses of independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters or with any required special audits), (vi) the reasonable fees and expenses of any special experts retained by the Company, (vii) fees and expenses in connection with any review of underwriting arrangements by the NASD, including fees and expenses of any "qualified independent underwriter" in connection with an Underwritten Offering, (viii) reasonable fees and expenses of not more than one counsel for the Participating Holders (as a group), (ix) fees and expenses in connection with listing, if applicable, the Registrable Securities on a securities exchange or the Nasdaq National Market, and (x) all duplicating, distribution and delivery expenses. In connection any offerings pursuant to a Registration Statement, each Participating Holder shall pay (i) any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities by such Participating Holder in connection with an Underwritten Offering; (ii) any out-of-pocket expenses of such Participating Holder including any fees and expenses of counsel to such Participating Holder (other than as set forth in clause (viii) of the immediately preceding sentence); and (iii) any applicable transfer taxes.
ARTICLE IX
RULE 144
With a view to making available to the Holders the benefits of Rule 144 and any other similar rule or regulation of the Commission that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, (i) New Loral covenants that, from and after the New Loral Shelf Filing Deadline and for so long as it is subject to Section 13 or 15(d) of the Exchange Act thereafter, and (ii) New Skynet covenants that, from and after the time that and for so long as it is subject to Section 13 or 15(d)
of the Exchange Act, it shall use its reasonable efforts to file in a timely
manner all reports required to be filed by it under the Exchange Act, and that
it shall comply with the requirements of Rule 144(c), as such Rule may be
amended from time to time (or any similar rule or regulation hereafter adopted
by the Commission), regarding the availability of current public information to
the extent required to enable any Holder to sell Registrable Securities without
registration under the Securities Act pursuant to the resale provisions of Rule
144 (or any similar rule or regulation). Upon the request of any Holder, the
Company shall promptly deliver to such Holder a written statement as to whether
it has complied with such requirements and, upon such Holder's compliance with
the applicable provisions of Rule 144 and its delivery of such documents and
certificates as the Company's transfer agent may reasonably request in
connection therewith, shall take such reasonable action as may be required
(including using its reasonable efforts to cause legal counsel to issue an
appropriate opinion) to cause its transfer agent to effectuate any transfer of
Registrable Securities properly requested by such Holder, in accordance with the
terms and conditions of Rule 144.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE GENERALLY. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be deemed sufficiently given or made if in writing and signed by the party making the same, and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback, addressed, if to any Holder, at the address of such Holder as set forth on Exhibit B hereto:
with copies to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attn: Doron Lipshitz, Esq.
Telephone: (212) 806-6440
Facsimile: (212) 806-7140
and if to New Loral or New Skynet, at:
Loral Space & Communications Inc.
600 Third Avenue
New York, NY 10016
Attn: Chief Financial Officer
Telephone:
Facsimile:
with copies to:
Loral Space & Communications Inc.
600 Third Avenue
New York, NY 10016
Attn: General Counsel
Telephone:
Facsimile:
or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail (by registered or certified mail, return receipt requested, postage prepaid), whichever is earlier.
10.2 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by any Holder other than to a Permitted Assignee (provided, however, that such Permitted Assignee agrees in writing to be bound by the terms of this Agreement), whereupon such Permitted Assignee shall be deemed to be a Holder for all purposes of this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and all successors to New Loral, New Skynet and the Holders.
10.3 AMENDMENTS; WAIVERS. Any provision of this Agreement affecting a party may be amended or modified only by a written agreement signed by each such affected party; provided, however that any approval required by the Holders of a specified class of Registrable Securities shall be effected by the Holders of a majority of the applicable class of Registrable Securities then outstanding. No provision of this Agreement affecting a party may be waived except pursuant to a writing signed by each such affected party; provided, however that any approval required by the Holders of a specified class of Registrable Securities shall be effected by the Holders of a majority of the applicable class of Registrable Securities then outstanding.
10.4 INJUNCTIVE RELIEF. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including, without limitation, specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
10.5 ATTORNEY'S FEES. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall, to the extent permitted by applicable law, be entitled to recover reasonable attorneys' fees in addition to any other available remedy.
10.6 TERMINATION OF REGISTRATION RIGHTS; SURVIVAL. All rights granted under this Agreement shall terminate with respect to any Holder at such time as such Holder ceases to own any Registrable Securities and this entire Agreement shall terminate when all Holders cease to own any Registrable Securities. The provisions of Articles VII, VIII and X shall survive any termination of this Agreement.
10.7 SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
10.8 HEADINGS. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.
10.9 GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth in Section 10.1 hereof, such service to become effective ten (10) days after such mailing.
10.10 COUNTERPARTS AND FACSIMILE EXECUTION. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by facsimile signatures.
10.11 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between New Loral, New Skynet and the Holders in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter of this Agreement.
10.12 FURTHER ASSURANCES. Each of the parties hereto shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed and delivered as of the date first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: /s/ Avi Katz
__________________________________
Name:
Title:
|
LORAL SKYNET CORPORATION
By: /s/ Avi Katz
__________________________________
Name:
Title:
|
MHR CAPITAL PARTNERS (500) LP
MHR CAPITAL PARTNERS (100) LP
BY: MHR Advisors LLC, general partner
By: /s/ Hal Goldstein
__________________________________
Name: Hal Goldstein
Title: Authorized Signatory
|
MHR INSTITUTIONAL PARTNERS II LP
MHR INSTITUTIONAL PARTNERS IIA LP
BY: MHR Institutional Advisors II LLC,
general partner
By: /s/ Hal Goldstein
__________________________________
Name: Hal Goldstein
Title: Authorized Signatory
|
MHR INSTITUTIONAL PARTNERS LP
MHRM LP
MHRA LP
BY: MHR Institutional Advisors LLC,
general partner
By: /s/ Hal Goldstein
__________________________________
Name: Hal Goldstein
Title: Authorized Signatory
|
EXHIBIT A
PLAN OF DISTRIBUTION
The selling securityholders, or their pledgees, donees, transferees, or any of their successors in interest selling shares received from a named selling securityholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus (all of whom may be selling securityholders), may sell the securities from time to time on any stock exchange or automated interdealer quotation system on which the securities are listed, in the over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at prices otherwise negotiated. The selling securityholders may sell the securities by one or more of the following methods, without limitation:
(a) block trades in which the broker or dealer so engaged shall attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of any stock exchange on which the securities are listed;
(d) ordinary brokerage transactions and transactions in which the broker solicits purchases;
(e) privately negotiated transactions;
(f) short sales;
(g) through the writing of options on the securities, whether or not the options are listed on an options exchange;
(h) through the distribution of the securities by any selling securityholder to its partners, members or stockholders;
(i) one or more underwritten offerings on a firm commitment or best efforts basis; and
(j) any combination of any of these methods of sale.
The selling securityholders may also transfer the securities by gift. The issuer does not know of any arrangements by the selling securityholders for the sale of any of the securities.
The selling securityholders may engage brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers to participate in effecting sales of the securities. These brokers, dealers or underwriters may act as principals, or as an agent of a selling securityholder.
Broker-dealers may agree with a selling securityholder to sell a specified number of the securities at a stipulated price per security. If the broker-dealer is unable to sell securities acting as agent for a selling securityholder, it may purchase as principal any unsold securities at the stipulated price. Broker-dealers who acquire securities as principals may thereafter resell the securities from time to time in transactions on any stock exchange or automated interdealer quotation system on which the securities are then listed, at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. Broker-dealers may use block transactions and sales to and through broker-dealers, including transactions of the nature described above. The selling securityholders may also sell the securities in accordance with Rule 144 under the Securities Act of 1933, as amended, rather than pursuant to this prospectus, regardless of whether the securities are covered by this prospectus.
From time to time, one or more of the selling securityholders may pledge, hypothecate or grant a security interest in some or all of the securities owned by them. The pledgees, secured parties or persons to whom the securities have been hypothecated shall, upon foreclosure in the event of default, be deemed to be selling securityholders. As and when a selling securityholder takes such actions, the number of securities offered under this prospectus on behalf of such selling securityholder shall decrease. The plan of distribution for that selling securityholder's securities shall otherwise remain unchanged. In addition, a selling securityholder may, from time to time, sell the securities short, and, in those instances, this prospectus may be delivered in connection with the short sales and the securities offered under this prospectus may be used to cover short sales.
To the extent required under the Securities Act of 1933, as amended, the aggregate amount of selling securityholders' securities being offered and the terms of the offering, the names of any agents, brokers, dealers or underwriters and any applicable commission with respect to a particular offer shall be set forth in an accompanying prospectus supplement. Any underwriters, dealers, brokers or agents participating in the distribution of the securities may receive compensation in the form of underwriting discounts, concessions, commissions or fees from a selling securityholder and/or purchasers of selling securityholders' securities for whom they may act (which compensation as to a particular broker-dealer might be in excess of customary commissions).
The selling securityholders and any underwriters, brokers, dealers or agents that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended, and any discounts, concessions, commissions or fees received by them and any profit on the resale of the securities sold by them may be deemed to be underwriting discounts and commissions.
A selling securityholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of the securities in the course of hedging the positions they assume with that selling securityholder, including, without limitation, in connection with distributions of the securities by those broker-dealers. A selling securityholder may enter into option or other transactions with broker-dealers that involve the delivery of the securities offered hereby to the broker-dealers, who may then resell or otherwise transfer those securities. A selling securityholder may also loan or pledge the securities offered hereby to a broker-dealer
and the broker-dealer may sell the securities offered hereby so loaned or upon a default may sell or otherwise transfer the pledged securities offered hereby.
A selling securityholder may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by the selling securityholder or borrowed from the selling securityholder or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from the selling securityholder in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions shall be an underwriter and, if not identified in this prospectus, shall be identified in the applicable prospectus supplement (or a post-effective amendment).
The selling securityholders and other persons participating in the sale or distribution of the securities shall be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M. This regulation may limit the timing of purchases and sales of any of the securities by the selling securityholders and any other person. The anti-manipulation rules under the Securities Exchange Act of 1934 may apply to sales of securities in the market and to the activities of the selling securityholders and their affiliates. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. These restrictions may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities.
The issuer has agreed to indemnify in certain circumstances the selling securityholders and any brokers, dealers and agents (who may be deemed to be underwriters), if any, of the securities covered by the registration statement, against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The selling securityholders have agreed to indemnify us in certain circumstances against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
The securities offered hereby were originally issued to the selling securityholders pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended. The issuer agreed to register the securities under the Securities Act of 1933, as amended, and to keep the registration statement of which this prospectus is a part effective for a specified period of time. The issuer has agreed to pay all expenses in connection with this offering, including the fees and expenses of counsel to the selling securityholders, but not including underwriting discounts, concessions, commissions or fees of the selling securityholders.
The issuer shall not receive any proceeds from sales of any securities by the selling securityholders.
The issuer cannot assure you that the selling securityholders shall sell all or any portion of the securities offered hereby.
EXHIBIT B
HOLDERS NOTICE INFORMATION
1. MHR Capital Partners LP
MHR Capital Partner (100) LP
MHR Institutional Partners LP
MHR Institutional Partners II LP
MHR Institutional Partners IIA LP
MHRM LP
MHRA LP
c/o MHR Fund Management LLC
40 West 57th Street, 24th Floor
New York, NY 10019
Attn: Hal Goldstein
Telephone: (212) 262-0005
Facsimile: (212) 262-9356
Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 21st day of November 2005, by and between Loral Space & Communications Inc., a Delaware corporation (the "Company"), Bernard L. Schwartz, a resident of New York, New York (the "Executive"), and those subsidiaries of the Company signatory hereto solely for purposes of Section 11(m) hereof.
WHEREAS, the Company desires to engage the services of the Executive and the Executive desires to be employed by the Company on the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to be assured that all proprietary and confidential information of the Company will be preserved for the exclusive benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Employment and Position. The Company hereby employs the Executive as its Chief Executive Officer and Chairman of the Board of Directors of the Company, and the Executive hereby accepts such employment under and subject to the terms and conditions hereinafter set forth.
Section 2. Term. The term of employment under this Agreement shall begin on the Effective Date, as such term is defined in the Debtors' Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated June 3, 2005, as modified (the "Plan of Reorganization"), and, unless sooner terminated as provided in Section 6, shall conclude on the first (1st) anniversary of the Effective Date (the "Term"). At the Executive's request within the last six months preceding the expiration of the Term, the Company shall, to the extent practicable within two weeks after any such request but without any obligation, provide the Executive with notice regarding whether the Company intends to renew or extend the Term under this Agreement, terminate the employment relationship between the parties on or shortly after the expiration of the Term or continue the Executive's employment on an "at will" basis with no guaranteed term. Unless the Executive's employment with the Company is terminated upon the expiration of the Term or the Term under this Agreement is renewed or extended, the Executive shall be employed by the Company after the Term on an "at will" basis.
Section 3. Duties.
(a) The Executive shall perform services consistent with the Executive's position as the Chief Executive Officer, subject to the general supervision of the Board of Directors of the Company ("Board"). The Executive will report to the Board. The Executive will be responsible for directing the operations of the Company and its
operating subsidiaries, as well as the development of strategic objectives for
consideration of the Board. The Executive will have primary responsibility for
day-to-day operations, and the senior management will report to the Executive.
The Executive will keep the Board apprised and informed on a regular basis as to
all material pending matters or developments (including any such matters or
developments pending as of the date of this Agreement), and will consult, on a
regular basis, with the Vice Chairman of the Board on the status and operating
plans of the Company and all of its subsidiaries. For purposes of this Section
3(a), a "material pending matter or development" shall include, but not be
limited to, any indication, written or oral, which is known to the Executive and
which a reasonable business person would reasonably believe in good faith is
serious and credible regarding a potential transaction involving the Company,
any of its subsidiaries or any of the Company's or its subsidiaries' assets
which, in each case, if consummated, would involve in excess of ten million
dollars ($10,000,000), and any such indication shall be communicated by the
Executive to the Executive Committee of the Board promptly upon receipt of such
knowledge. The Executive hereby agrees to devote substantially all of his
business time to the faithful performance of such duties and to the promotion
and forwarding of the business and affairs of the Company for the Term provided,
however, that Executive shall be permitted to engage in (i) other activities of
a civic, religious, political or charitable nature, (ii) managing investments of
the Executive and the Executive's family in securities, mutual funds or other
collective investment funds, limited partner interests or similar passive
investments, (iii) corporate directorships and other business activities
described in Schedule I attached hereto, or (iv) such other activities as may
hereafter be specifically approved in writing, which in each case and in the
aggregate do not materially interfere with the performance of his obligations
hereunder, provided, further, however, that Executive may not engage in any such
activities that would result in the Executive being in Competition (as defined
in Section 8(d) below).
(b) The Executive acknowledges and agrees that the Vice Chairman of the
Board will serve as Chairman of the Executive Committee of the Board. The Vice
Chairman (i) will have full discretion at all times to review the operation of
the business of the Company and its subsidiaries; (ii) will be entitled to
participate in all operational and strategic meetings, and (iii) will have full
access to all information relating to operations and, following advance
notification to the Executive, employees of the Company and its subsidiaries.
Each member of the Board ("Director") shall have, following advance notice to
the Executive, the same rights of the Vice Chairman set forth in clauses
(i),(ii) and (iii) of the immediately preceding sentence. The Vice Chairman and
any Director will have the right to bring any matter to the attention of the
Board for its consideration. The Executive shall use his reasonable best efforts
to timely facilitate compliance with any reasonable requests made by any
Director to an employee, taking into account all other duties and obligations of
such employee and their reasonable priorities.
Section 4. Compensation.
(a) Salary. In consideration of the services rendered by the Executive under this Agreement, the Company shall pay the Executive a base salary (the "Base Salary") at the annual rate of $1,887,875.00. The Base Salary shall be paid in such installments and at such times as the Company pays its salaried executives and shall be subject to all necessary withholding taxes, FICA contributions and similar deductions. The Compensation Committee ("Compensation Committee") of the Board may review from time to time the Base Salary payable to Executive hereunder and may, in its sole discretion, increase but not decrease, the Executive's salary rate. In addition, the Base Salary shall be increased effective April 22, 2006, by a percentage equal to the percentage change from the beginning until the end of the immediately preceding calendar year in the Annual Average All Items Index of the U.S. City Average Consumer Price Index for All Urban Consumers (CPI-U), as published by the U.S. Bureau of Labor Statistics or any successor index that may at the time have replaced such Index. Any such increased salary shall be and become the "Base Salary" for purposes of this Agreement.
(b) Annual Bonus. The Company shall maintain an annual Management Incentive Bonus program ("MIB Program") for corporate office executives, and Executive shall be a participant in the MIB Program and shall be entitled to an annual bonus to the extent payable under such program ("Annual Bonus"). The Executive's target annual bonus opportunity under the MIB Program shall be forty-two and one-half percent (42.5%) of the Executive's Base Salary (the "Target Annual Bonus"). The Annual Bonus for the 2005 fiscal year under the MIB Program shall be earned and determined in accordance with the terms and conditions heretofore established by the Compensation Committee of the Board of Directors of Loral Space & Communications Ltd. With respect to the Annual Bonus for the 2006 fiscal year or any subsequent fiscal year, the Board shall, in its discretion, establish the terms and conditions of the MIB Program and may amend the MIB Program (other than by reducing the Target Annual Bonus percentage set forth above) accordingly. The Annual Bonus shall be paid on or before March 15 of the year following the year to which the Annual Bonus relates.
Section 5. Benefits. In addition to the compensation detailed in Section 4 of this Agreement, the Executive shall be entitled to the following additional benefits:
(a) Paid Vacation. The Executive shall be entitled to paid vacation each calendar year which shall be appropriate and consistent with his position.
(b) SERP. Executive is entitled to, and since March 1, 2004, has been receiving payment of, a retirement benefit at the annual rate of $250,000 for his life under the Company's Supplemental Executive Retirement Plan ("SERP"). In the event Executive has received an aggregate amount of SERP payments since March 1, 2004, of less than $1,500,000 prior to his death, payment of the SERP shall continue after the Executive's death to the Executive's designated beneficiary or, if none, his estate until an aggregate amount of such SERP payments is equal to $1,500,000.00. Except for the
amount and terms of SERP benefits specifically described herein, Executive hereby releases the Company and its directors, officers, employees and affiliates from any and all claims he might otherwise have with respect to the SERP.
(c) Insurance Policy. The Company shall provide the Executive from the Effective Date through the first anniversary of such date with a term life insurance policy on the life of the Executive providing for a death benefit equal to the lesser of (i) $11 million or (ii) the maximum amount of death benefit that can be obtained for an aggregate annual premium of $300,000.00. The Executive shall be entitled to designate the beneficiaries under such policy in the event of the Executive's death or, if none, his estate shall be his beneficiary.
(d) Welfare Plans. During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, programs, practices and policies provided generally by the Company to similarly situated executives of the Company (including, without limitation, any medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs that may be provided by the Company from time to time). Such plans, programs, practices and policies are subject to change from time to time by the Company.
(e) Other Benefit Plans. During the Term, the Executive shall be entitled to participate in all savings, retirement and pension plans (including the Company's Supplemental Executive Retirement Plan), programs, practices and policies applicable generally to similarly situated executives of the Company as determined by the Board from time to time. Such plans, programs, practices and policies are subject to change from time to time by the Company.
(f) Perquisites and Other Benefits. During the Term, the Executive shall be entitled to such additional perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board. During the Term, Executive shall be entitled to receive all benefits under any individual welfare benefit arrangements (including life insurance coverage) or other benefit arrangements currently in effect for such Executive in a manner consistent with past practice, and such arrangements are listed on Schedule I attached hereto.
(g) Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable and necessary expenses actually incurred by the Executive directly in connection with the business affairs of the Company and the performance of his duties hereunder, upon presentation of proper receipts or other proof of expenditure and subject to such reasonable guidelines or limitations provided by the Company from time to time. The Executive shall comply with such reasonable limitations and reporting requirements with respect to such expenses as the Board may establish from time to time.
(h) Indemnification. In addition to indemnification obligations of the Company pursuant to Section 8.7 of the Plan of Reorganization and the terms of any
officers' liability insurance carried by the Company, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns pursuant to a separate Indemnification Agreement in the form attached hereto as Exhibit A. The Executive shall be an insured person under or otherwise covered by directors and officers liability insurance in an amount consistent with past practice. The obligations of the Company pursuant to this Section shall survive the expiration of the Term or Executive's voluntary or involuntary termination or resignation for Good Reason.
Section 6. Termination. This Agreement shall terminate at the end of the Term. The Executive's employment may end earlier as follows:
(a) Death. The employment of the Executive shall automatically terminate upon the death of the Executive.
(b) Disability. In the event of any physical or mental disability of the Executive rendering the Executive substantially unable to perform his duties hereunder for a period of at least 120 days out of any twelve-month period and the further determination that the disability is permanent with regard to the Executive's ability to return to work in his full capacity, the Executive's employment shall be terminated on account of the Executive's disability. Any determination of permanent disability shall be made by the Board in consultation with a qualified physician or physicians selected by the Board and reasonably acceptable to the Executive. The failure of the Executive to submit to a reasonable examination by such physician or physicians shall act as an estoppel to any objection by the Executive to the determination of disability by the Board.
(c) By the Company For Cause. The employment of the Executive may be terminated by the Company for Cause (as defined below) at any time effective upon written notice to the Executive; provided, however, that if such termination is based upon any event set forth in clauses (iii), (iv), (v), (vi) or (vii) below, Executive shall be given not less than ten (10) days prior written notice by the Board of the intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and Executive shall have ten (10) days after the date that such written notice has been given to Executive in which to address the Board regarding any such alleged act or failure to act. If the Board makes a determination that Cause exists, the termination shall be effective on the date immediately following the expiration of the ten (10) day notice period. For purposes hereof, the term "Cause" shall mean that the Board has determined reasonably, in good faith and based on credible evidence that one or more of the following has occurred:
(i) the Executive shall have been after the Effective Date convicted of, or shall have pleaded guilty or nolo contendere to, any felony or any other crime that would have constituted a felony under the laws of the State of New York;
(ii) the Executive shall have been indicted for any felony or any other crime that would have constituted a felony under the laws of the State of New York in connection with or arising from the Executive's employment with the Company;
(iii) the Executive shall have breached in any material respect any material provision of Section 8 hereof;
(iv) the Executive shall have committed any fraud, embezzlement, misappropriation of funds, or breach of fiduciary duty against the Company, in each case of a material nature;
(v) the Executive shall have engaged in any willful misconduct resulting in or reasonably likely to result in a material loss to the Company or substantial damage to its reputation;
(vi) the Executive shall have willfully breached in any material respect any material provision of the Company's Code of Conduct and, to the extent any such breach is curable, the Executive shall have failed to cure such breach within ten (10) days after written notice of the alleged breach is provided to the Executive; or
(vii) the Executive shall have willfully breached in any material respect any material provision of Section 3 hereof.
(d) By the Company without Cause. The Company may terminate the Executive's employment at any time without Cause effective upon written notice to the Executive.
(e) By the Executive Voluntarily. The Executive may terminate his employment at any time effective upon at least thirty (30) days prior written notice to the Company.
(f) By the Executive for Good Reason. The Executive may terminate his employment for Good Reason by providing the Company thirty (30) days' written notice setting forth in reasonable specificity the event that constitutes Good Reason, within sixty (60) days of the occurrence of such event. During such thirty (30) day notice period, the Company shall have a cure right (if curable), and, if not cured within such period, Executive's termination will be effective upon the expiration of such cure period. For this purpose, the term "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in any substantial respect with the Executive's position, authority or responsibilities or any duties which are illegal or unethical;
(ii) any material diminution of any of the Executive's significant duties, including, without limitation, any material breach of Section 3 or any act by the Board to direct operations of the Company (e.g. hiring or terminating an employee without the approval of the Executive other than the termination of an employee for "cause" as defined in such employee's employment agreement if there is one and, if such employee is not a party to an employment agreement, as defined in the Loral Space & Communications Inc. 2005 Stock Incentive Plan);
(iii) any reduction in Base Salary, the Target Annual Bonus or any of the benefits described in Section 5 of this Agreement to the extent not permitted under Section 5;
(iv) the relocation by the Company of the Executive's primary place of employment with the Company to a location not within the Borough of Manhattan, City of New York;
(v) other material breach of this Agreement by the Company; or
(vi) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company.
Notwithstanding anything in this Agreement to the contrary, any determination by the non-employee directors of the Board regarding the action the Company shall take with respect to (a) any personal claims of any of the Company's or its affiliates' officers or directors against the Company or any of its affiliates for indemnification arising from or in connection with alleged acts or omissions that occurred on or prior to the date of the commencement of the chapter 11 cases of Loral Space & Communications, Ltd. and certain of its affiliates on July 15, 2003; (b) any personal claims of Executive against the Company or any of its affiliates for indemnification; and (c) the Shared Services Agreement or the Management Agreement, each of even date herewith, by and among the Company, Loral Skynet Corporation and Space Systems/Loral, Inc., shall not constitute Good Reason.
Section 7. Termination Payments and Benefits.
(a) Voluntary Termination, Termination For Cause. Upon any termination of
employment during the Term either (i) by the Executive without Good Reason under
Section 6(e), or (ii) by the Company for Cause as provided in Section 6(c), all
payments, salary and other benefits hereunder shall cease at the effective date
of termination. Notwithstanding the foregoing, the Executive shall be entitled
to receive from the Company (i) all salary earned or accrued through the date
the Executive's employment is terminated, (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for reasonable and
necessary business expenses incurred by the
Executive through the date the Executive's employment is terminated, (iii) all other payments and benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company, including any earned and accrued, but unused vacation pay and benefits under and in accordance with the terms and provisions of the SERP (subject to the limitation provided in Section 5(b) hereof), but excluding any entitlement to severance under any Company severance policy generally applicable to the Company's salaried employees, and (iv) excluding any accrued and unpaid Annual Bonus for the immediately preceding year (collectively, "Accrued Benefits").
(b) Death. In the event of a termination due to the Executive's death
during the Term, the Company shall have no further obligations to the Executive
or his beneficiaries other than to pay to the Executive's designated beneficiary
or, if no beneficiary has been designated by the Executive, to his estate (i)
all Accrued Benefits, plus (ii) any Base Salary through the end of the calendar
month in which the Executive's death occurred, plus (iii) any accrued and unpaid
Annual Bonus for the immediately preceding year, and (iv) at the times the
Company pays its executives bonuses in accordance with its general payroll
policies, an amount equal to that portion of the Annual Bonus which but for the
Executive's death would have been earned by the Executive during the year of his
death, pro rated based on a formula, the denominator of which shall be 365 and
the numerator of which shall be the number of days during the year of his death
during which the Executive was employed by the Company on an active status (the
Accrued Benefits and the payment of the amounts set forth in clauses (iii) and
(iv) of this Section 7(b) are collectively referred to as "Enhanced Accrued
Benefits"). In addition, all SERP payments shall be continued as provided in
Section 5(b). The Executive's medical, prescription and dental coverage shall
continue for the benefit of the Executive's family members through the end of
the Term.
(c) Termination without Cause or for Good Reason. In the event that the Executive's employment is terminated during the Term by the Company without Cause or by the Executive for Good Reason, the Executive shall be entitled to receive as his exclusive right and remedy in respect of such termination, (i) all Enhanced Accrued Benefits, (ii) severance pay equal to the sum of (A) $2,000,000.00 plus (B) the remaining amount of Base Salary the Executive would have received had the Executive been employed through the end of the Term (collectively, "Severance Payments"), with such Severance Payments to be paid in a lump sum as soon as practicable on or after termination (but not later than three business days after the release described in Section 7(f) becomes effective and not revocable). In addition, the Executive shall continue to be covered, upon the same terms and conditions applicable generally to similarly situated executives who remain employed with the Company, by the same or equivalent medical, dental and life insurance coverage as in effect for the Executive immediately prior to the termination of his employment, until the earlier of (A) the first anniversary of the date of termination or (B) the date the Executive has commenced new employment and has thereby become eligible for comparable benefits, subject to the Executive's rights under COBRA. For avoidance of doubt, if the Executive is offered employment consistent with
the terms of this Agreement with the person that acquires all or substantially all of the assets or stock of New FSS or New SSL (as such terms are defined in the Plan of Reorganization), any affiliate that directly or indirectly owns such acquirer, or any successor to the acquirer or any such affiliate and such person assumes this Agreement, the Executive shall not be treated as having a termination of employment without Cause or for Good Reason, regardless of whether the Executive refuses the offer of employment, by reason of the sale of such assets or stock.
(d) Termination due to Disability. In the event that the Executive's employment is terminated during the Term due to the Disability of the Executive, the Company shall have no further obligation to the Executive other than to pay the Executive (in addition to any disability insurance payments to which the Executive is entitled pursuant to Section 5 above) all Enhanced Accrued Benefits.
(e) No Other Benefits. Except as specifically provided in this Section 7, the Executive shall not be entitled to any other compensation, severance or other benefits from the Company or any of its subsidiaries or affiliates upon the termination of this Agreement or the Executive's employment for any reason whatsoever. Payment by the Company of all Accrued Benefits, Enhanced Accrued Benefits and Severance Payments (if applicable) and contributions to the cost of the Executive's confirmed participation in the Company's group medical, dental and life insurance plans that may be due to the Executive under the applicable termination provision of this Section 7 shall constitute the entire obligation of the Company to the Executive. Notwithstanding anything contained in this Agreement to the contrary the Executive (or his beneficiary or estate) shall be entitled, under all circumstances, to payment of all amounts under and in accordance with the terms and provisions of the SERP (subject to the limitation provided in Section 5(b) hereof), including, without limitation, whether or not the Executive is employed by the Company.
(f) Condition. The Company will not be required to make the payment and provide the benefits stated in this Section 7 unless the Executive executes and delivers to the Company a waiver and release agreement in the form attached hereto as Exhibit B and such waiver and release is not unilaterally revocable by the Executive.
(g) Resignation from Company Offices. In the event of the Executive's termination of employment for any reason, the Executive shall resign and shall be deemed to have resigned immediately from the Board and any and all other directorships, offices and positions with, on behalf of, or relating to the Company or any of its subsidiaries, effective as of the date of the Executive's termination of employment with the Company.
Section 8. Restrictive Covenants.
(a) Proprietary Information. In the course of service to the Company, the Executive will have access to confidential specifications, know-how, strategic or technical data, marketing research data, product research and development data,
manufacturing techniques, confidential customer lists, sources of supply and trade secrets, all of which are confidential and may be proprietary and are owned or used by the Company, or any of its subsidiaries or affiliates. Such information shall hereinafter be called "Proprietary Information" and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Company or any of its subsidiaries or affiliates as to which the Executive may have access, whether conceived or developed by others or by the Executive alone or with others during the Executive's period of service with the Company, whether or not conceived or developed during regular working hours. Proprietary Information shall not include any records, data or information which are in the public domain during Executive's service with the Company or after the Executive's service with the Company has terminated, provided the same are not in the public domain as a consequence of disclosure by the Executive in violation of this Agreement.
(b) Non-Use and Non-Disclosure. The Executive shall not during the Term or at any time thereafter (i) disclose any Proprietary Information to any person other than (A) the Company, (B) the Company's or its affiliates' directors, officers or employees who, in the reasonable judgment of the Executive, need to know such Proprietary Information, (C) such other persons to whom the Executive has been specifically instructed to make disclosure by the Board; and in all such cases only to the extent required in the course of the Executive's service to the Company or (D) as required by law, or (ii) use any Proprietary Information, directly or indirectly, for his own benefit or for the benefit of any other person or entity.
(c) Return of Documents. All notes, letters, documents, records, tapes and other media of every kind and description containing Proprietary Information and any copies, in whole or in part, thereof (collectively, the "Documents"), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company. The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such other time or times as the Board or its designee may specify, all Documents then in the Executive's possession or control.
(d) Non-Competition. At all times during the Executive's employment with the Company or any affiliate during the Term, and for a period of twelve (12) months following the termination, during the Term, of employment with the Company or any affiliate for any reason (the "Restricted Period"), the Executive will not engage in Competition (as defined below) with the Company. For purposes of this Agreement, "Competition" shall mean engaging in, or otherwise directly or indirectly being employed by, or acting as a consultant or adviser (paid or unpaid) to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, (i) Boeing, Lockheed, Alcatel Space or Astrium, (ii) PanAmSat, SES Astra, Intelsat, New Skies Satellites, (iii) any business similar to the businesses described in clause (i) or (ii) above that competes with the services provided by the Company, or (iv) any business that competes with a business that the Company engages in or is preparing to engage in as of the date of the Executive's termination of employment with the Company, as described or otherwise contemplated in the Company's business plan for the year of such termination
of employment, and any transferee of or successor to any of the foregoing businesses. Notwithstanding anything to the contrary in this Agreement, the Executive may, directly or indirectly, own, solely as an investment, securities of a business enterprise in Competition with the Company or its subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Executive (i) is not a controlling person of or a member of a group which controls such business enterprise and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities of such business enterprise.
(e) Non-Solicitation of Employees. At all times during the Restricted Period, the Executive will not directly or indirectly solicit or in any manner encourage employees of the Company or any affiliate who were employed by the Company within the six-month period prior to the termination of the Executive's employment with the Company or any affiliate to leave its employ and will not offer or cause to be offered employment to any such person; provided, however, that the restrictions in this paragraph shall not apply to (i) general solicitations that are not specifically directed to employees of the Company or any affiliate and (ii) any administrative support staff.
(f) Non-Solicitation of Customers or Suppliers. At all times during the Restricted Period, the Executive will not knowingly solicit or in any manner encourage, directly or indirectly, customers of or suppliers to the Company or any affiliate who were customers of or suppliers to the Company or any affiliate within the twelve-month period prior to the termination of the Executive's employment with the Company or any affiliate to terminate or diminish their relationship with the Company or any affiliate.
(g) Reasonableness. The Executive has carefully considered the nature, extent and duration of the restrictions and obligations contained in this Agreement, including, without limitation, provisions of this Section 8 and acknowledges and agrees that such restrictions are fair and reasonable in all respects to protect the legitimate interests of the Company and its affiliates and that these restrictions are designed for the reasonable protection of the business of the Company and that of its affiliates.
(h) Remedies. The Executive recognizes that any breach of this Section 8 shall cause irreparable injury to the Company or its affiliates, inadequately compensable in monetary damages. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, Executive agrees that the Company or its affiliates shall be able to seek and obtain injunctive relief in the form of a temporary restraining order, preliminary injunction, or permanent injunction against the Executive to enforce this Agreement. To the extent that any damages are calculable resulting from the breach of this Agreement, the Company and its affiliates shall also be entitled to recover damages. Any recovery of damages by the Company and its affiliates shall be in addition to and not in lieu of the injunctive relief to which the Company and its affiliates are entitled. Without limiting the rights of the Company and its affiliates under this Section 8 or any other remedies that may be available to them, if a court of competent jurisdiction determines that the Executive has breached any of the provisions of this Section 8, the Company or its affiliates will have the right to cease making any payments or providing
any benefits otherwise due to Executive under the terms and conditions of this Agreement, and the right to recover the Annual Bonus that may have been paid as part of the Enhanced Accrued Benefits and the Severance Payment that the Executive may have received under this Agreement.
Section 9. Severable Provisions. The provisions of this Agreement are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.
Section 10. Notices. All notices hereunder, to be effective, shall be in writing and shall be delivered by hand or mailed by certified mail, postage and fees prepaid, as follows:
If to the Company: Loral Space & Communications Inc.
600 Third Avenue
New York, New York 10016
Attention: General Counsel
If to the Executive: Bernard L. Schwartz
944 Fifth Avenue
New York, NY 10021
|
or to such other address as a party may notify the other pursuant to a notice given in accordance with this Section 10. All notices to any person shall be deemed given when actually received by the person.
Section 11. Miscellaneous.
(a) Amendment. This Agreement may not be amended or revised except by a writing signed by the parties.
(b) Assignment and Transfer. The provisions of this Agreement shall be binding on and shall inure to the benefit of any such successor in interest to the Company. Neither this Agreement nor any of the rights, duties or obligations of the Executive shall be assignable by the Executive, nor shall any of the payments required or permitted to be made to the Executive by this Agreement be encumbered, transferred or in any way anticipated, except as required by applicable laws. This Agreement shall not be terminated solely by reason of the merger or consolidation of the Company with any corporate or other entity or by the transfer of all or substantially all of the assets of the Company to any other person, corporation, firm or entity. However, all rights of the Executive under this Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. All amounts payable to the Executive hereunder shall be paid, in the event of the Executive's death, to the Executive's estate, heirs or representatives.
(c) Withholding. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to the Executive hereunder any federal, state, local, or foreign withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise.
(d) Waiver of Breach. A waiver by the Company or the Executive of any breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by the other party.
(e) Survival of Certain Provisions. Provisions of this Agreement shall survive any termination of employment and the expiration of the Term if so provided herein or if necessary or desirable fully to accomplish the purposes of such provision, including, without limitation, the obligations of the Company under Section 7 hereof if the Executive is terminated during the Term and the obligations of the Executive under Section 8 hereof.
(f) Attorney's Fees. In the event that any action is brought to enforce any of the provisions of this Agreement, or to obtain money damages for the breach thereof, all expenses (including reasonable attorneys' fees) shall be paid by the party incurring such fees or expenses; provided, however, that the Company shall reimburse Executive for such fees and expenses to the extent that the Executive prevails on any issues raised in such action.
(g) Entire Agreement. This Agreement, the Indemnification Agreement referred to in Section 5 hereof, the Certificates of Incorporation of the Company and of each of its affiliates, the SERP, the Plan of Reorganization and the Stipulation and Agreement among the Debtors and their Directors and Officers in Respect of Certain Indemnification Claims constitute the entire understanding of the parties with respect to the subject matter hereof and supercede all prior negotiations, understandings, discussions, and agreements, whether written or oral, between them.
(h) Captions. Captions herein have been inserted solely for convenience of reference and in no way define, limit or describe the scope or substance of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and shall have the same effect as if the signatures hereto and thereto were on the same instrument.
(j) Governing Law. This Agreement shall be construed under and enforced in accordance with the laws of the State of New York.
(k) Jurisdiction and Choice of Forum. The Executive and the Company irrevocably submit for any disputes arising under or in connection with this Agreement to the exclusive jurisdiction of any state or federal court located in the State of New York. Both the Executive and the Company (i) acknowledge that the forum stated in this Section has a reasonable relation to this Agreement and to the relationship between the Executive and the Company, (ii) waive, to the extent permitted by law, any objection to personal jurisdiction or the laying of venue of any action or proceeding in the forum stated in this section, (iii) agree not to commence any such action or proceeding in any forum other than the forum stated in this section and (iv) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on the Executive and the Company. However, nothing in this Agreement precludes the Executive or the Company from bringing any action or proceeding in any court for the purposes of enforcing the provisions of this section.
(l) Acknowledgement of Representation. The Executive and the Company acknowledge that they have been represented by counsel of their own choosing and have received a full and complete explanation of their rights and obligations under this Agreement and, therefore, in the event of a dispute over the meaning of this Agreement or any provision thereof, neither party shall be entitled to any presumption of correctness in favor of the interpretation advanced by such party or against the interpretation advanced by the other party.
(m) Guarantee. (i) Each of Loral Skynet Corporation and Space Systems/Loral, Inc. (each a "Guarantor") hereby irrevocably and unconditionally guarantees the due and punctual payment and performance of all obligations of the Company under this Agreement; provided, however, that a Guarantor's guarantee obligation hereunder shall terminate and cease to have any force or effect immediately upon (x) such Guarantor ceasing to be a direct or indirect subsidiary or parent of the Company or (y) the sale of all or substantially all of such Guarantor's assets pursuant to an Approved Transaction (as defined below) in which a Guarantor does not receive all or substantially all of the consideration of such sale.
(ii) Notwithstanding anything in this Agreement to the contrary and for as long as the Guarantor's obligations hereunder are in effect, the Executive hereby acknowledges and agrees that at any time a Guarantor may effectuate, and this Agreement shall not in any way prohibit or restrict the Guarantor from effectuating, and the Executive shall not have any right or claim with respect to, rely upon, or challenge (a) any transfer by the Guarantor of any or all of its funds, assets or other property to either: (i) the Company or any of its direct or indirect subsidiaries or their successors (each a "Group Entity"), including by way of dividend, distribution, payment, lease, sale, assignment, transfer, merger, consolidation or otherwise, or (ii) any other person, pursuant to a transaction that the Guarantor's Board of Directors determines in good faith to effect in furtherance of a legitimate business purpose of the Guarantor or any Group Entity (an "Approved Transaction") or (b) the liquidation or dissolution of a Guarantor.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: /s/ Avi Katz
------------------------------------
Name: Avi Katz
Title: Vice President
/s/ Bernard L. Schwartz
----------------------------------------
Bernard L. Schwartz
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LORAL SKYNET CORPORATION (solely for purposes of Section 11(m) hereof)
By: /s/ Avi Katz
---------------------------------
Name: Avi Katz
Title: Vice President
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SPACE SYSTEMS/LORAL, INC. (solely for purposes of Section 11(m) hereof)
By: /s/ Avi Katz
---------------------------------
Name: Avi Katz
Title: Vice President
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Schedule I Outside Business Relationships
Service as a director of each of the following companies:
K&F Industries, Inc.
Satelites Mexicanos S.A. de C.V.
Perquisites and Individual Benefits
Executive Medical Reimbursement up to $4,000 each year
Use of a Company car and driver
Exhibit A Indemnification Agreement
Exhibit B Form of Release
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the ____ day of ________, ____, by and between
Loral Space & Communications Inc., a Delaware corporation (the "Company"),
[[First]] [[Last]], a resident of [[City]], [[State]]] (the "Executive") and
those subsidiaries of the Company signatory hereto solely for purposes of
Section 11(m) hereof.
WHEREAS, the Company desires to engage the services of the Executive and the Executive desires to be employed by the Company on the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to be assured that all proprietary and confidential information of the Company will be preserved for the exclusive benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Employment and Position. The Company hereby employs the Executive as its [[Title]], and the Executive hereby accepts such employment under and subject to the terms and conditions hereinafter set forth.
Section 2. Term. The term of employment under this Agreement shall begin on the Effective Date, as such term is defined in the Debtors' Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated June 3, 2005, as modified (the "Plan of Reorganization"), and, unless sooner terminated as provided in Section 6, shall conclude on the second (2nd) anniversary of the Effective Date (the "Term"). At the Executive's request within the last six months preceding the expiration of the Term, the Company shall, to the extent practicable within two weeks after any such request but without any obligation, provide the Executive with notice regarding whether the Company intends to renew or extend the Term under this Agreement, terminate the employment relationship between the parties on or shortly after the expiration of the Term or continue the Executive's employment on an "at will" basis with no guaranteed term. Unless the Executive's employment with the Company is terminated upon the expiration of the Term or the Term under this Agreement is renewed or extended, the Executive shall be employed by the Company after the Term on an "at will" basis.
Section 3. Duties. The Executive shall perform services in a managerial capacity in a manner consistent with the Executive's position as [[Title]], subject to the general supervision of the Chief Executive Officer of the Company or his designee. The Executive hereby agrees to devote his full business time to the faithful performance of such duties and to the promotion and forwarding of the business and affairs of the Company for the Term; provided, however, that Executive shall be permitted to engage in (i) other activities of a civic, religious, political or charitable nature, (ii) managing
investments of the Executive and the Executive's family in securities, mutual funds or other collective investment funds, limited partner interests or similar passive investments, (iii) corporate directorships and other business activities described in Schedule I attached hereto, or (iv) such other activities as may hereafter be specifically approved in writing, which in each case and in the aggregate do not materially interfere with the performance of his obligations hereunder, provided, further, however, that Executive may not engage in any such activities that would result in the Executive being in Competition (as defined in Section 8(d) below).
Section 4. Compensation.
(a) Salary. In consideration of the services rendered by the Executive under this Agreement, the Company shall pay the Executive a base salary (the "Base Salary") at the rate of [[Base_Salary]] per calendar year. The Base Salary shall be paid in such installments and at such times as the Company pays its salaried executives and shall be subject to all necessary withholding taxes, FICA contributions and similar deductions. The Board of Directors (the "Board") of the Company may review from time to time the Base Salary payable to Executive hereunder and may, in its sole discretion, increase but not decrease, the Executive's salary rate. Any such increased salary shall be and become the "Base Salary" for purposes of this Agreement.
(b) Annual Bonus. The Company shall maintain an annual Management
Incentive Bonus program ("MIB Program") for certain executives, and Executive
shall be a participant in the MIB Program and shall be entitled to an annual
bonus to the extent payable under such program ("Annual Bonus"). The Executive's
target annual bonus opportunity under the MIB Program shall be
[[Target_Bonus_Pctg_]] percent ([[Pctg]]%) of the Executive's Base Salary (the
"Target Annual Bonus"). The Annual Bonus for the 2005 fiscal year under the MIB
Program shall be earned and determined in accordance with the terms and
conditions heretofore established by the Compensation Committee of the Board of
Directors of Loral Space & Communications Ltd. With respect to the Annual Bonus
for the 2006 fiscal year or any subsequent fiscal year, the Board shall, in its
discretion, establish the terms and conditions of the MIB Program and may amend
the MIB Program (other than by reducing the Target Annual Bonus percentage set
forth above) accordingly. The Annual Bonus shall be paid on or before March 15
of the year following the year to which the Annual Bonus relates.
(c) Stock Options. The Company agrees to grant to the Executive an option to purchase [[Option_Grant]] shares of common stock of the Company (the "Option") pursuant to the terms of the Company's 2005 Stock Incentive Plan (the "Stock Option Plan"). Except as set forth in the Option Agreement (defined below), the Option shall have a per share exercise price equal to $19.00. Such Option shall be granted on or about the thirtieth (30th) day following the Effective Date. The Option shall have such other terms and conditions as set forth in the Option Agreement attached hereto as Exhibit A (the "Option Agreement").
Section 5. Benefits. In addition to the compensation detailed in
Section 4 of this Agreement, the Executive shall be entitled to the following
additional benefits:
(a) Paid Vacation. The Executive shall be entitled to [[Vacation_Days]] days paid vacation per calendar year in accordance with the Company's vacation policy in effect from time to time, such vacation shall extend for such periods and shall be taken at such intervals as shall be appropriate and consistent with the proper performance of the Executive's duties hereunder.
(b) Welfare Plans. During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, programs, practices and policies provided generally by the Company to similarly situated executives of the Company (including, without limitation, any medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs that may be provided by the Company from time to time). Such plans, programs, practices and policies are subject to change from time to time by the Company.
(c) Other Benefit Plans. During the Term, the Executive shall be entitled to participate in all savings, retirement and pension plans (including the Company's Supplemental Executive Retirement Plan ("SERP")), programs, practices and policies applicable generally to similarly situated executives of the Company as determined by the Board from time to time. Such plans, programs, practices and policies are subject to change from time to time by the Company.
(d) Perquisites and Other Benefits. During the Term, the Executive shall be entitled to such additional perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board. During the Term, Executive shall be entitled to receive all benefits under any individual welfare benefit arrangements (including life insurance coverage) or other benefit arrangements currently in effect for such Executive in a manner consistent with past practice, and such arrangements are listed on Schedule I attached hereto.
(e) Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable and necessary expenses actually incurred by the Executive directly in connection with the business affairs of the Company and the performance of his duties hereunder, upon presentation of proper receipts or other proof of expenditure and subject to such reasonable guidelines or limitations provided by the Company from time to time. The Executive shall comply with such reasonable limitations and reporting requirements with respect to such expenses as the Board may establish from time to time.
(f) Indemnification. In addition to indemnification obligations of the Company pursuant to Section 8.7 of the Plan of Reorganization and the terms of any officers' liability insurance carried by the Company, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns pursuant to a separate Indemnification Agreement in the form attached hereto
as Exhibit B. The Executive shall be an insured person under or otherwise covered by directors and officers liability insurance in an amount consistent with past practice. The obligations of the Company pursuant to this Section shall survive the expiration of the Term or Executive's voluntary or involuntary termination or resignation for Good Reason.
Section 6. Termination. This Agreement shall terminate at the end of the Term. The Executive's employment may end earlier as follows:
(a) Death. The employment of the Executive shall automatically terminate upon the death of the Executive.
(b) Disability. In the event of any physical or mental disability of the Executive rendering the Executive substantially unable to perform his duties hereunder for a period of at least 120 days out of any twelve-month period and the further determination that the disability is permanent with regard to the Executive's ability to return to work in his full capacity, the Executive's employment shall be terminated on account of the Executive's disability. Any determination of permanent disability shall be made by the Board in consultation with a qualified physician or physicians selected by the Board and reasonably acceptable to the Executive. The failure of the Executive to submit to a reasonable examination by such physician or physicians shall act as an estoppel to any objection by the Executive to the determination of disability by the Board.
(c) By the Company For Cause. The employment of the Executive may be terminated by the Company for Cause (as defined below) at any time effective upon written notice to the Executive; provided, however, that if such termination is based upon any event set forth in clauses (iii), (iv), (v), (vi) or (vii) below, Executive shall be given not less than ten (10) days prior written notice by the Board of the intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and Executive shall have ten (10) days after the date that such written notice has been given to Executive in which to address the Board regarding any such alleged act or failure to act. If the Board makes a determination that Cause exists, the termination shall be effective on the date immediately following the expiration of the ten (10) day notice period. For purposes hereof, the term "Cause" shall mean that the Board has determined reasonably, in good faith and based on credible evidence that one or more of the following has occurred:
(i) the Executive shall have been after the Effective Date convicted of, or shall have pleaded guilty or nolo contendere to, any felony or any other crime that would have constituted a felony under the laws of the State of New York;
(ii) the Executive shall have been indicted for any felony or any other crime that would have constituted a felony under the laws of the State of New
York in connection with or arising from the Executive's employment with the Company;
(iii) the Executive shall have breached any material provision of Section 8 hereof;
(iv) the Executive shall have committed any fraud, embezzlement, misappropriation of funds, or breach of fiduciary duty against the Company, in each case of a material nature;
(v) the Executive shall have engaged in any willful misconduct resulting in or reasonably likely to result in a material loss to the Company or substantial damage to its reputation;
(vi) the Executive shall have willfully breached in any material respect any material provision of the Company's Code of Conduct and, to the extent any such breach is curable, the Executive shall have failed to cure such breach within ten (10) days after written notice of the alleged breach is provided to the Executive; or
(vii) the Executive shall have willfully breached in any material respect any material provision of Section 3 hereof.
(d) By the Company without Cause. The Company may terminate the Executive's employment at any time without Cause effective upon written notice to the Executive.
(e) By the Executive Voluntarily. The Executive may terminate his employment at any time effective upon at least thirty (30) days prior written notice to the Company.
(f) By the Executive for Good Reason. The Executive may terminate his employment for Good Reason by providing the Company thirty (30) days' written notice setting forth in reasonable specificity the event that constitutes Good Reason, within sixty (60) days of the occurrence of such event. During such thirty (30) day notice period, the Company shall have a cure right (if curable), and, if not cured within such period, Executive's termination will be effective upon the expiration of such cure period. For this purpose, the term "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in any substantial respect with the Executive's position, authority or responsibilities or any duties which are illegal or unethical or any material diminution of any of the Executive's significant duties;
(ii) any reduction in Base Salary, the Target Annual Bonus or any of the benefits described in Section 5 of this Agreement to the extent not permitted under Section 5;
(iii) the relocation by the Company of the Executive's primary place of employment with the Company to a location not within a thirty (30) mile radius of such place of employment as of the Effective Date; provided, however, that such relocation shall not be considered Good Reason if such location is closer to the Executive's home than the Executive's primary place of employment as of the Effective Date;
(iv) other material breach of this Agreement by the Company; or
(v) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company.
Notwithstanding anything in this Agreement to the contrary, any determination by the non-employee directors of the Board regarding the action the Company shall take with respect to (a) any personal claims of any of the Company's or its affiliates' officers (including Executive) or directors against the Company or any of its affiliates for indemnification arising from or in connection with alleged acts or omissions that occurred on or prior to the date of the commencement of the chapter 11 cases of Loral Space & Communications Ltd. and certain of its affiliates on July 15, 2003; and (b) the Shared Services Agreement or the Management Agreement, each of even date herewith, by and among the Company, Loral Skynet Corporation and Space Systems/Loral, Inc., shall not constitute Good Reason.
Section 7. Termination Payments and Benefits.
(a) Voluntary Termination, Termination For Cause. Upon any termination
of employment during the Term either (i) by the Executive without Good Reason
under Section 6(e), or (ii) by the Company for Cause as provided in Section
6(c), all payments, salary and other benefits hereunder shall cease at the
effective date of termination. Notwithstanding the foregoing, the Executive
shall be entitled to receive from the Company (i) all salary earned or accrued
through the date the Executive's employment is terminated, (ii) reimbursement
for any and all monies advanced in connection with the Executive's employment
for reasonable and necessary business expenses incurred by the Executive through
the date the Executive's employment is terminated, (iii) all other payments and
benefits to which the Executive may be entitled under the terms of any
applicable compensation arrangement or benefit plan or program of the Company,
including any earned and accrued, but unused vacation pay and benefits under and
in accordance with the terms and provisions of the SERP, but excluding any
entitlement to severance under any Company severance policy generally applicable
to the Company's salaried employees, and (iv) excluding any accrued and unpaid
Annual Bonus for the immediately preceding year (collectively, "Accrued
Benefits").
(b) Death. In the event of a termination due to the Executive's death
during the Term, the Company shall have no further obligations to the Executive
or his beneficiaries other than to pay to the Executive's designated beneficiary
or, if no beneficiary has been designated by the Executive, to his estate (i)
all Accrued Benefits, plus (ii) any Base Salary through the end of the calendar
month in which the Executive's death occurred, plus (iii) any accrued and unpaid
Annual Bonus for the immediately preceding year, and (iv) at the times the
Company pays its executives bonuses in accordance with its general payroll
policies, an amount equal to that portion of the Annual Bonus which but for the
Executive's death would have been earned by the Executive during the year of his
death, pro rated based on a formula, the denominator of which shall be 365 and
the numerator of which shall be the number of days during the year of his death
during which the Executive was employed by the Company on an active status (the
Accrued Benefits and the payment of the amounts set forth in clauses (iii) and
(iv) of this Section 7(b) are collectively referred to as "Enhanced Accrued
Benefits"). In addition, any unvested stock options under the Stock Option Plan
and any deferred compensation under the Option Agreement that would have become
vested on the next date of vesting applicable thereto shall become vested and
shall remain exercisable or be paid as provided under the terms of the
applicable plan or agreement as to a portion thereof based on a formula, the
denominator of which shall be 365 and the numerator of which shall be the number
of days during the year of his death during which the Executive was employed by
the Company on an active status. The Executive's medical, prescription and
dental coverage shall continue for the benefit of the Executive's family members
through the end of the Term.
(c) Termination without Cause or for Good Reason. In the event that the Executive's employment is terminated during the Term by the Company without Cause or by the Executive for Good Reason, the Executive shall be entitled to receive as his exclusive right and remedy in respect of such termination, (i) all Enhanced Accrued Benefits, (ii) severance pay equal to the greater of (A) the amount set forth on Schedule II hereto, or (B) the remaining amount of Base Salary the Executive would have received had the Executive been employed through the end of the Term ("Severance Payments"), with such Severance Payments to be paid in a lump sum as soon as practicable on or after termination (but not later than three business days after the release described in Section 7(f) becomes effective and not revocable). In addition, all unvested stock options under the Stock Option Plan and all deferred compensation under the Option Agreement shall become fully vested and shall remain exercisable or be paid as provided under the terms of the applicable plan or agreement, and the Executive shall continue to be covered, upon the same terms and conditions applicable generally to similarly situated executives who remain employed with the Company, by the same or equivalent medical, dental and life insurance coverage as in effect for the Executive immediately prior to the termination of his employment, until the earlier of (A) the expiration of a period of months determined by dividing the lump sum amount of severance pay he receives pursuant to clause (ii) of the preceding sentence by the Executive's monthly salary rate in effect on his date of termination, or (B) the date the Executive has commenced new employment and has thereby become eligible for comparable benefits, subject to the Executive's rights under
COBRA. For avoidance of doubt, if the Executive is offered employment consistent with the terms of this Agreement with the person that acquires all or substantially all of the assets or stock of New FSS or New SSL (as such terms are defined in the Plan of Reorganization), any affiliate that directly or indirectly owns such acquirer, or any successor to the acquirer or any such affiliate and such person assumes this Agreement, the Executive shall not be treated as having a termination of employment without Cause or for Good Reason, regardless of whether the Executive refuses the offer of employment, by reason of the sale of such assets or stock.
(d) Termination due to Disability. In the event that the Executive's employment is terminated during the Term due to the Disability of the Executive, the Company shall have no further obligation to the Executive other than to pay the Executive (in addition to any disability insurance payments to which the Executive is entitled pursuant to Section 5 above) all Enhanced Accrued Benefits. In addition, any unvested stock options under the Stock Option Plan and any deferred compensation under the Option Agreement that would have become vested on the next date of vesting applicable thereto shall become vested and shall remain exercisable or be paid as provided under the terms of the applicable plan or agreement, as to a portion thereof based on a formula, the denominator of which shall be 365 and the numerator of which shall be the number of days during the year of his Disability during which the Executive was employed by the Company on an active status.
(e) No Other Benefits. Except as specifically provided in this Section 7, the Executive shall not be entitled to any other compensation, severance or other benefits from the Company or any of its subsidiaries or affiliates upon the termination of this Agreement or the Executive's employment for any reason whatsoever. Payment by the Company of all Accrued Benefits, Enhanced Accrued Benefits and Severance Payments (if applicable) and contributions to the cost of the Executive's confirmed participation in the Company's group medical, dental and life insurance plans that may be due to the Executive under the applicable termination provision of this Section 7 shall constitute the entire obligation of the Company to the Executive. Notwithstanding anything contained in this Agreement to the contrary, the Executive (or his beneficiary or estate) shall be entitled, under all circumstances, to payment of all amounts under and in accordance with the terms and provisions of the SERP, including, without limitation, whether or not the Executive is employed by the Company.
(f) Condition. The Company will not be required to make the payment and provide the benefits stated in this Section 7 unless the Executive executes and delivers to the Company a waiver and release agreement in the form attached hereto as Exhibit C and such waiver and release is not unilaterally revocable by the Executive.
(g) Resignation from Company Offices. In the event of the Executive's termination of employment for any reason, the Executive shall resign and shall be deemed to have resigned immediately from the Board (if the Executive is then a member of the Board) and any and all other directorships, offices and positions with, on behalf of,
or relating to the Company or any of its subsidiaries, effective as of the date of the Executive's termination of employment with the Company.
Section 8. Restrictive Covenants.
(a) Proprietary Information. In the course of service to the Company, the Executive will have access to confidential specifications, know-how, strategic or technical data, marketing research data, product research and development data, manufacturing techniques, confidential customer lists, sources of supply and trade secrets, all of which are confidential and may be proprietary and are owned or used by the Company, or any of its subsidiaries or affiliates. Such information shall hereinafter be called "Proprietary Information" and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Company or any of its subsidiaries or affiliates as to which the Executive may have access, whether conceived or developed by others or by the Executive alone or with others during the Executive's period of service with the Company, whether or not conceived or developed during regular working hours. Proprietary Information shall not include any records, data or information which are in the public domain during Executive's service with the Company or after the Executive's service with the Company has terminated, provided the same are not in the public domain as a consequence of disclosure by the Executive in violation of this Agreement.
(b) Non-Use and Non-Disclosure. The Executive shall not during the Term or at any time thereafter (i) disclose any Proprietary Information to any person other than (A) the Company, (B) the Company's or its affiliates' directors, officers or employees who, in the reasonable judgment of the Executive, need to know such Proprietary Information, (C) such other persons to whom the Executive has been specifically instructed to make disclosure by the Board; and in all such cases only to the extent required in the course of the Executive's service to the Company or (D) as required by law, or (ii) use any Proprietary Information, directly or indirectly, for his own benefit or for the benefit of any other person or entity.
(c) Return of Documents. All notes, letters, documents, records, tapes and other media of every kind and description containing Proprietary Information and any copies, in whole or in part, thereof (collectively, the "Documents"), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company. The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such other time or times as the Board or its designee may specify, all Documents then in the Executive's possession or control.
(d) Non-Competition. At all times during the Executive's employment
with the Company or any affiliate during the Term, and for a period of twelve
(12) months following the termination during the Term of employment with the
Company or any affiliate for any reason (the "Restricted Period"), the Executive
will not engage in Competition (as defined below) with the Company. For purposes
of this Agreement, "Competition" shall mean engaging in, or otherwise directly
or indirectly being employed
by, or acting as a consultant or adviser (paid or unpaid) to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of (i) Boeing, Lockheed, Alcatel Space or Astrium, (ii) PanAmSat, SES Astra, Intelsat, New Skies Satellites, (iii) any business similar to the businesses described in clause (i) or (ii) above that competes with the services provided by the Company, (iv) any business that competes with a business that the Company engages in as of the date of the Executive's termination of employment with the Company, as described or otherwise contemplated in the Company's business plan for the year of such termination of employment, or (v) any business that competes with a business that the Company is, to the knowledge of the Executive, preparing to engage in as of the date of the Executive's termination of employment with the Company, and any transferee of or successor to any of the foregoing businesses. Notwithstanding anything to the contrary in this Agreement, the Executive may, directly or indirectly, own, solely as an investment, securities of a business enterprise in Competition with the Company or its subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Executive (i) is not a controlling person of or a member of a group which controls such business enterprise and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities of such business enterprise.
(e) Non-Solicitation of Employees. At all times during the Restricted Period, the Executive will not directly or indirectly solicit or in any manner encourage employees of the Company or any affiliate who were employed by the Company within the six-month period prior to the termination of the Executive's employment with the Company or any affiliate to leave its employ and will not offer or cause to be offered employment to any such person; provided, however, that the restrictions in this paragraph shall not apply to (i) general solicitations that are not specifically directed to employees of the Company or any affiliate and (ii) any administrative support staff.
(f) Non-Solicitation of Customers or Suppliers. At all times during the Restricted Period, the Executive will not knowingly solicit or in any manner encourage, directly or indirectly, customers of or suppliers to the Company or any affiliate who were customers of or suppliers to the Company or any affiliate within the twelve-month period prior to the termination of the Executive's employment with the Company or any affiliate to terminate or diminish their relationship with the Company or any affiliate.
(g) Reasonableness. The Executive has carefully considered the nature, extent and duration of the restrictions and obligations contained in this Agreement, including, without limitation, provisions of this Section 8 and acknowledges and agrees that such restrictions are fair and reasonable in all respects to protect the legitimate interests of the Company and its affiliates and that these restrictions are designed for the reasonable protection of the business of the Company and that of its affiliates.
(h) Remedies. The Executive recognizes that any breach of this Section 8 shall cause irreparable injury to the Company or its affiliates, inadequately compensable in monetary damages. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, Executive agrees that the Company or its affiliates
shall be able to seek and obtain injunctive relief in the form of a temporary restraining order, preliminary injunction, or permanent injunction against the Executive to enforce this Agreement. To the extent that any damages are calculable resulting from the breach of this Agreement, the Company and its affiliates shall also be entitled to recover damages. Any recovery of damages by the Company and its affiliates shall be in addition to and not in lieu of the injunctive relief to which the Company and its affiliates are entitled. Without limiting the rights of the Company and its affiliates under this Section 8 or any other remedies that may be available to them, if a court of competent jurisdiction determines that the Executive has breached any of the provisions of this Section 8, the Company or its affiliates will have the right to cease making any payments or providing any benefits otherwise due to Executive under the terms and conditions of this Agreement, and the right to recover the Annual Bonus that may have been paid as part of the Enhanced Accrued Benefits and the Severance Payment that the Executive may have received under this Agreement.
Section 9. Severable Provisions. The provisions of this Agreement are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.
Section 10. Notices. All notices hereunder, to be effective, shall be in writing and shall be delivered by hand or mailed by certified mail, postage and fees prepaid, as follows:
If to the Company: Loral Space & Communications Inc.
600 Third Avenue
New York, New York 10016
Attention: General Counsel
If to the Executive: [[First]][[Last]]
[[Address]]
[[City]],[[State]][[Zip_Code]]
|
or to such other address as a party may notify the other pursuant to a notice given in accordance with this Section 10. All notices to any person shall be deemed given when actually received by the person.
Section 11. Miscellaneous.
(a) Amendment. This Agreement may not be amended or revised except by a writing signed by the parties.
(b) Assignment and Transfer. The provisions of this Agreement shall be binding on and shall inure to the benefit of any such successor in interest to the Company. Neither this Agreement nor any of the rights, duties or obligations of the Executive shall be assignable by the Executive, nor shall any of the payments required or permitted to be made to the Executive by this Agreement be encumbered, transferred or in any way anticipated, except as required by applicable laws. This Agreement shall not be terminated solely by reason of the merger or consolidation of the Company with any corporate or other entity or by the transfer of all or substantially all of the assets of the Company to any other person, corporation, firm or entity. However, all rights of the Executive under this Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. All amounts payable to the Executive hereunder shall be paid, in the event of the Executive's death, to the Executive's estate, heirs or representatives.
(c) Withholding. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to the Executive hereunder any federal, state, local, or foreign withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise.
(d) Waiver of Breach. A waiver by the Company or the Executive of any breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by the other party.
(e) Survival of Certain Provisions. Provisions of this Agreement shall survive any termination of employment and the expiration of the Term if so provided herein or if necessary or desirable fully to accomplish the purposes of such provision, including, without limitation, the obligations of the Company under Section 7 hereof if the Executive is terminated during the Term and the obligations of the Executive under Section 8 hereof.
(f) Attorney's Fees. In the event that any action is brought to enforce any of the provisions of this Agreement, or to obtain money damages for the breach thereof, all expenses (including reasonable attorneys' fees) shall be paid by the party incurring such fees or expenses; provided, however, that the Company shall reimburse Executive for such fees and expenses to the extent that the Executive prevails on any issues raised in such action.
(g) Entire Agreement. This Agreement, the Stock Option Plan, the Option Agreement, the Indemnification Agreement referred to in Section 5(f) hereof, the Certificates of Incorporation of the Company and of each of its affiliates, the SERP, the Plan of Reorganization and the Stipulation and Agreement among the Debtors and their Directors and Officers in Respect of Certain Indemnification Claims constitute the entire understanding of the parties with respect to the subject matter hereof and supercede all prior negotiations, understandings, discussions, and agreements, whether written or oral, between them.
(h) Captions. Captions herein have been inserted solely for convenience of reference and in no way define, limit or describe the scope or substance of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and shall have the same effect as if the signatures hereto and thereto were on the same instrument.
(j) Governing Law. This Agreement shall be construed under and enforced in accordance with the laws of the State of New York.
(k) Jurisdiction and Choice of Forum. The Executive and the Company irrevocably submit for any disputes arising under or in connection with this Agreement to the exclusive jurisdiction of any state or federal court located in the State of New York. Both the Executive and the Company (i) acknowledge that the forum stated in this Section has a reasonable relation to this Agreement and to the relationship between the Executive and the Company, (ii) waive, to the extent permitted by law, any objection to personal jurisdiction or the laying of venue of any action or proceeding in the forum stated in this section, (iii) agree not to commence any such action or proceeding in any forum other than the forum stated in this section and (iv) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on the Executive and the Company. However, nothing in this Agreement precludes the Executive or the Company from bringing any action or proceeding in any court for the purposes of enforcing the provisions of this section.
(l) Acknowledgement of Representation. The Executive and the Company acknowledge that they have been represented by counsel of their own choosing and have received a full and complete explanation of their rights and obligations under this Agreement and, therefore, in the event of a dispute over the meaning of this Agreement or any provision thereof, neither party shall be entitled to any presumption of correctness in favor of the interpretation advanced by such party or against the interpretation advanced by the other party.
(m) Guarantee. (i) Each of Loral Skynet Corporation and Space Systems/Loral, Inc. (each a "Guarantor") hereby irrevocably and unconditionally guarantees the due and punctual payment and performance of all obligations of the Company under this Agreement; provided, however, that a Guarantor's guarantee obligation hereunder shall terminate and cease to have any force or effect immediately upon (x) such Guarantor ceasing to be a direct or indirect subsidiary or parent of the Company or (y) the sale of all or substantially all of such Guarantor's assets pursuant to an Approved Transaction (as defined below) in which a Guarantor does not receive all or substantially all of the consideration of such sale.
(ii) Notwithstanding anything in this Agreement to the contrary and for as long as the Guarantor's obligations hereunder are in effect, the Executive hereby
acknowledges and agrees that at any time a Guarantor may effectuate, and this Agreement shall not in any way prohibit or restrict the Guarantor from effectuating, and the Executive shall not have any right or claim with respect to, rely upon, or challenge (a) any transfer by the Guarantor of any or all of its funds, assets or other property to either: (i) the Company or any of its direct or indirect subsidiaries or their successors (each a "Group Entity"), including by way of dividend, distribution, payment, lease, sale, assignment, transfer, merger, consolidation or otherwise, or (ii) any other person, pursuant to a transaction that the Guarantor's Board of Directors determines in good faith to effect in furtherance of a legitimate business purpose of the Guarantor or any Group Entity (an "Approved Transaction") or (b) the liquidation or dissolution of a Guarantor.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
Name:
Title:
LORAL SKYNET CORPORATION (solely for purposes of Section 11(m) hereof)
SPACE SYSTEMS/LORAL, INC. (solely for purposes of Section 11(m) hereof)
Schedule I
Outside Business Relationships
Perquisites and Individual Benefits
EXECUTIVE
LIFE EXECUTIVE
INSURANCE MEDICAL OTHER
[[LIFE_INSURANCE]] [[MEDICAL_]] [[OTHER]]
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Schedule II
Section 7(c)(iii)(A) Severance Amount
For corporate office employees:
Severance Amount per the Consent Order Approving Key Employee Retention Plan and Other Relief for Certain Employees of the Debtors' Corporate Headquarters Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code dated December 18, 2003 is equal to (x) Enhanced Severance (2003 annual base salary multiplied by the percentage applicable to the Group in which the Executive has been placed, plus (y) Standard Severance of one week of annual base salary for each year of employment with the Company and its affiliates. As of the Effective Date, the Severance Amount is set forth below.
ENHANCED STANDARD TOTAL [[ENHANCED]] [[STANDARD]] [[TOTAL]] |
Exhibit A Option Agreement
Exhibit B Indemnification Agreement
Exhibit C Form of Release
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 21st day of November, 2005, by and between Space Systems/Loral, Inc., a Delaware corporation (the "Company"), and C. Patrick DeWitt, a resident of Fremont, CA (the "Executive").
WHEREAS, the Company desires to engage the services of the Executive and the Executive desires to be employed by the Company on the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to be assured that all proprietary and confidential information of the Company will be preserved for the exclusive benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Employment and Position. The Company hereby employs the Executive as its President, and the Executive hereby accepts such employment under and subject to the terms and conditions hereinafter set forth.
Section 2. Term. The term of employment under this Agreement shall begin on the Effective Date, as such term is defined in the Debtors' Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated June 3, 2005, as modified (the "Plan of Reorganization"), and, unless sooner terminated as provided in Section 6, shall conclude on the second (2nd) anniversary of the Effective Date (the "Term"). At the Executive's request within the last six months preceding the expiration of the Term, the Company shall, to the extent practicable within two weeks after any such request but without any obligation, provide the Executive with notice regarding whether the Company intends to renew or extend the Term under this Agreement, terminate the employment relationship between the parties on or shortly after the expiration of the Term or continue the Executive's employment on an "at will" basis with no guaranteed term. Unless the Executive's employment with the Company is terminated upon the expiration of the Term or the Term under this Agreement is renewed or extended, the Executive shall be employed by the Company after the Term on an "at will" basis.
Section 3. Duties. The Executive shall perform services in a managerial capacity in a manner consistent with the Executive's position as President, subject to the general supervision of the Chief Executive Officer of Loral Space & Communications Inc. or his designee. The Executive hereby agrees to devote his full business time to the faithful performance of such duties and to the promotion and forwarding of the business and affairs of the Company for the Term, provided, however, that Executive shall be permitted to engage in (i) other activities of a civic, religious, political or charitable nature, (ii) managing investments of the Executive and the Executive's family in
securities, mutual funds or other collective investment funds, limited partner interests or similar passive investments, (iii) corporate directorships and other business activities described in Schedule I attached hereto, or (iv) such other activities as may hereafter be specifically approved in writing, which in each case and in the aggregate do not materially interfere with the performance of his obligations hereunder, provided, further, however, that Executive may not engage in any such activities that would result in the Executive being in Competition (as defined in Section 8(d) below).
Section 4. Compensation.
(a) Salary. In consideration of the services rendered by the Executive under this Agreement, the Company shall pay the Executive a base salary (the "Base Salary") at the rate of $485,000 per calendar year. The Base Salary shall be paid in such installments and at such times as the Company pays its salaried executives and shall be subject to all necessary withholding taxes, FICA contributions and similar deductions. The Board of Directors (the "Board") of Loral Space & Communications Inc. ("Parent") may review from time to time the Base Salary payable to Executive hereunder and may, in its sole discretion, increase but not decrease, the Executive's salary rate. Any such increased salary shall be and become the "Base Salary" for purposes of this Agreement.
(b) Annual Bonus. The Company shall maintain an annual bonus program ("MIB Program") for certain executives, and Executive shall be a participant in the MIB Program and shall be entitled to an annual bonus to the extent payable under such program ("Annual Bonus"). The Executive's target annual bonus opportunity under the MIB Program shall be fifty percent (50.0%) of the Executive's Base Salary (the "Target Annual Bonus"). The Annual Bonus for the 2005 fiscal year under the MIB Program shall be earned and determined in accordance with the terms and conditions heretofore established by Loral Space & Communications Ltd. With respect to the Annual Bonus for the 2006 fiscal year or any subsequent fiscal year, the Board shall, in its discretion, establish the terms and conditions of the MIB Program and may amend the MIB Program (other than by reducing the Target Annual Bonus percentage set forth above) accordingly. The Annual Bonus shall be paid on or before March 15 of the year following the year to which the Annual Bonus relates.
(c) Stock Options. The Parent has agreed to grant to the Executive an option to purchase 75,000 shares of common stock of the Parent (the "Option") pursuant to the terms of the Parent's 2005 Stock Incentive Plan (the "Stock Option Plan"). Except as set forth in the Option Agreement (defined below), the Option shall have a per share exercise price equal to $19.00. Such Option shall be granted on or about the thirtieth (30th) day following the Effective Date. The Option shall have such other terms and conditions as set forth in the Option Agreement attached hereto as Exhibit A (the "Option Agreement").
Section 5. Benefits. In addition to the compensation detailed in Section 4 of this Agreement, the Executive shall be entitled to the following additional benefits:
(a) Paid Vacation. The Executive shall be entitled to twenty-five (25) days paid vacation per calendar year in accordance with the Company's vacation policy in effect from time to time, such vacation shall extend for such periods and shall be taken at such intervals as shall be appropriate and consistent with the proper performance of the Executive's duties hereunder.
(b) Welfare Plans. During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, programs, practices and policies provided generally by the Company to similarly situated executives of the Company (including, without limitation, any medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs that may be provided by the Company from time to time). Such plans, programs, practices and policies are subject to change from time to time by the Company.
(c) Other Benefit Plans. During the Term, the Executive shall be entitled to participate in all savings, retirement and pension plans (including the Company's Supplemental Executive Retirement Plan ("SERP")), programs, practices and policies applicable generally to similarly situated executives of the Company as determined by the Board from time to time. Such plans, programs, practices and policies are subject to change from time to time by the Company.
(d) Perquisites and Other Benefits. During the Term, the Executive shall be entitled to such additional perquisites and fringe benefits appertaining to his position in accordance with any practice established by the Board. During the Term, Executive shall be entitled to receive all benefits under any individual welfare benefit arrangements (including life insurance coverage) or other benefit arrangements currently in effect for such Executive in a manner consistent with past practice, and such arrangements are listed on Schedule I attached hereto.
(e) Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable and necessary expenses actually incurred by the Executive directly in connection with the business affairs of the Company and the performance of his duties hereunder, upon presentation of proper receipts or other proof of expenditure and subject to such reasonable guidelines or limitations provided by the Company from time to time. The Executive shall comply with such reasonable limitations and reporting requirements with respect to such expenses as the Board may establish from time to time.
(f) Indemnification. In addition to indemnification obligations pursuant to Section 8.7 of the Plan of Reorganization and the terms of any officers' liability insurance carried by the Parent, the Executive (and his heirs, executors and administrators) shall be indemnified by the Company and its successors and assigns pursuant to a separate Indemnification Agreement in the form attached hereto as Exhibit B. The Executive shall be an insured person under or otherwise covered by directors and officers liability insurance in an amount consistent with past practice. The obligations of
the Company pursuant to this Section shall survive the expiration of the Term or Executive's voluntary or involuntary termination or resignation for Good Reason.
Section 6. Termination. This Agreement shall terminate at the end of the Term. The Executive's employment may end earlier as follows:
(a) Death. The employment of the Executive shall automatically terminate upon the death of the Executive.
(b) Disability. In the event of any physical or mental disability of the Executive rendering the Executive substantially unable to perform his duties hereunder for a period of at least 120 days out of any twelve-month period and the further determination that the disability is permanent with regard to the Executive's ability to return to work in his full capacity, the Executive's employment shall be terminated on account of the Executive's disability. Any determination of permanent disability shall be made by the Board in consultation with a qualified physician or physicians selected by the Board and reasonably acceptable to the Executive. The failure of the Executive to submit to a reasonable examination by such physician or physicians shall act as an estoppel to any objection by the Executive to the determination of disability by the Board.
(c) By the Company For Cause. The employment of the Executive may be terminated by the Company for Cause (as defined below) at any time effective upon written notice to the Executive; provided, however, that if such termination is based upon any event set forth in clauses (iii), (iv), (v), (vi) or (vii) below, Executive shall be given not less than ten (10) days prior written notice by the Board of the intention to terminate him for Cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based, and Executive shall have ten (10) days after the date that such written notice has been given to Executive in which to address the Board regarding any such alleged act or failure to act. If the Board makes a determination that Cause exists, the termination shall be effective on the date immediately following the expiration of the ten (10) day notice period. For purposes hereof, the term "Cause" shall mean that the Board has determined reasonably, in good faith and based on credible evidence that one or more of the following has occurred:
(i) the Executive shall have been after the Effective Date convicted of, or shall have pleaded guilty or nolo contendere to, any felony or any other crime that would have constituted a felony under the laws of the State of New York;
(ii) the Executive shall have been indicted for any felony or any other crime that would have constituted a felony under the laws of the State of New York in connection with or arising from the Executive's employment with the Company;
(iii) the Executive shall have breached any material provision of
Section 8 hereof;
(iv) the Executive shall have committed any fraud, embezzlement, misappropriation of funds, or breach of fiduciary duty against the Company, in each case of a material nature;
(v) the Executive shall have engaged in any willful misconduct resulting in or reasonably likely to result in a material loss to the Company or substantial damage to its reputation;
(vi) the Executive shall have willfully breached in any material respect any material provision of the Company's Code of Conduct and, to the extent any such breach is curable, the Executive shall have failed to cure such breach within ten (10) days after written notice of the alleged breach is provided to the Executive; or
(vii) the Executive shall have willfully breached in any material respect any material provision of Section 3 hereof.
(d) By the Company without Cause. The Company may terminate the Executive's employment at any time without Cause effective upon written notice to the Executive.
(e) By the Executive Voluntarily. The Executive may terminate his employment at any time effective upon at least thirty (30) days prior written notice to the Company.
(f) By the Executive for Good Reason. The Executive may terminate his employment for Good Reason by providing the Company thirty (30) days' written notice setting forth in reasonable specificity the event that constitutes Good Reason, within sixty (60) days of the occurrence of such event. During such thirty (30) day notice period, the Company shall have a cure right (if curable), and, if not cured within such period, Executive's termination will be effective upon the expiration of such cure period. For this purpose, the term "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent in any substantial respect with the Executive's position, authority or responsibilities or any duties which are illegal or unethical or any material diminution of any of the Executive's significant duties;
(ii) any reduction in Base Salary, the Target Annual Bonus or any of the benefits described in Section 5 of this Agreement to the extent not permitted under Section 5;
(iii) the relocation by the Company of the Executive's primary place of employment with the Company to a location not within a thirty (30) mile radius of such place of employment as of the Effective Date; provided, however, that such relocation shall not be considered Good Reason if such location is closer to the Executive's home than the Executive's primary place of employment as of the Effective Date;
(iv) other material breach of this Agreement by the Company; or
(v) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company.
Notwithstanding anything in this Agreement to the contrary, any determination by the non-employee directors of the Board regarding the action the Company shall take with respect to (a) any personal claims of any of the Company's or its affiliates' officers (including Executive) or directors against the Company or any of its affiliates for indemnification arising from or in connection with alleged acts or omissions that occurred on or prior to the date of the commencement of the chapter 11 cases of Loral Space & Communications Ltd. and certain of its affiliates on July 15, 2003; and (b) the Shared Services Agreement or the Management Agreement, each of even date herewith, by and among the Parent, Loral Skynet Corporation and the Company, shall not constitute Good Reason.
Section 7. Termination Payments and Benefits.
(a) Voluntary Termination, Termination For Cause. Upon any termination of
employment during the Term either (i) by the Executive without Good Reason under
Section 6(e), or (ii) by the Company for Cause as provided in Section 6(c), all
payments, salary and other benefits hereunder shall cease at the effective date
of termination. Notwithstanding the foregoing, the Executive shall be entitled
to receive from the Company (i) all salary earned or accrued through the date
the Executive's employment is terminated, (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for reasonable and
necessary business expenses incurred by the Executive through the date the
Executive's employment is terminated, (iii) all other payments and benefits to
which the Executive may be entitled under the terms of any applicable
compensation arrangement or benefit plan or program of the Company, including
any earned and accrued, but unused vacation pay and benefits under and in
accordance with the terms and provisions of the SERP, but excluding any
entitlement to severance under any Company severance policy generally applicable
to the Company's salaried employees, and (iv) excluding any accrued and unpaid
Annual Bonus for the immediately preceding year (collectively, "Accrued
Benefits").
(b) Death. In the event of a termination due to the Executive's death during the Term, the Company shall have no further obligations to the Executive or his beneficiaries other than to pay to the Executive's designated beneficiary or, if no
beneficiary has been designated by the Executive, to his estate (i) all Accrued
Benefits, plus (ii) any Base Salary through the end of the calendar month in
which the Executive's death occurred, plus (iii) any accrued and unpaid Annual
Bonus for the immediately preceding year, and (iv) at the times the Company pays
its executives bonuses in accordance with its general payroll policies, an
amount equal to that portion of the Annual Bonus which but for the Executive's
death would have been earned by the Executive during the year of his death, pro
rated based on a formula, the denominator of which shall be 365 and the
numerator of which shall be the number of days during the year of his death
during which the Executive was employed by the Company on an active status (the
Accrued Benefits and the payment of the amounts set forth in clauses (iii) and
(iv) of this Section 7(b) are collectively referred to as "Enhanced Accrued
Benefits"). In addition, any unvested stock options under the Stock Option Plan
and any deferred compensation under the Option Agreement that would have become
vested on the next date of vesting applicable thereto shall become fully vested
and shall remain exercisable or be paid as provided under the terms of the
applicable plan or agreement as to a portion thereof based on a formula, the
denominator of which shall be 365 and the numerator of which shall be the number
of days during the year of his death during which the Executive was employed by
the Company on an active status. The Executive's medical, prescription and
dental coverage shall continue for the benefit of the Executive's family members
through the end of the Term.
(c) Termination without Cause or for Good Reason. In the event that the Executive's employment is terminated during the Term by the Company without Cause or by the Executive for Good Reason, the Executive shall be entitled to receive as his exclusive right and remedy in respect of such termination, (i) all Enhanced Accrued Benefits, (ii) severance pay equal to the greater of (A) the amount set forth on Schedule II hereto, or (B) the remaining amount of Base Salary the Executive would have received had the Executive been employed through the end of the Term ("Severance Payments"), with such Severance Payments to be paid in a lump sum as soon as practicable on or after termination (but not later than three business days after the release described in Section 7(f) becomes effective and not revocable). In addition, all unvested stock options under the Stock Option Plan and all deferred compensation under the Option Agreement shall become fully vested and shall remain exercisable or be paid as provided under the terms of the applicable plan or agreement, and the Executive shall continue to be covered, upon the same terms and conditions applicable generally to similarly situated executives who remain employed with the Company, by the same or equivalent medical, dental and life insurance coverage as in effect for the Executive immediately prior to the termination of his employment, until the earlier of (A) the expiration of a period of months determined by dividing the lump sum amount of severance pay he receives pursuant to clause (ii) of the preceding sentence by the Executive's monthly salary rate in effect on his date of termination or (B) the date the Executive has commenced new employment and has thereby become eligible for comparable benefits, subject to the Executive's rights under COBRA. For avoidance of doubt, if the Executive is offered employment consistent with the terms of this Agreement with the person that acquires all or substantially all of the assets or stock of New FSS or New SSL (as such terms are defined in the Plan of
Reorganization), any affiliate that directly or indirectly owns such acquirer, or any successor to the acquirer or any such affiliate and such person assumes this Agreement, the Executive shall not be treated as having a termination of employment without Cause or for Good Reason, regardless of whether the Executive refuses the offer of employment, by reason of the sale of such assets or stock.
(d) Termination due to Disability. In the event that the Executive's employment is terminated during the Term due to the Disability of the Executive, the Company shall have no further obligation to the Executive other than to pay the Executive (in addition to any disability insurance payments to which the Executive is entitled pursuant to Section 5 above) all Enhanced Accrued Benefits. In addition, any unvested stock options under the Stock Option Plan and any deferred compensation under the Option Agreement that would have become vested on the next date of vesting applicable thereto shall become vested and shall remain exercisable or be paid as provided under the terms of the applicable plan or agreement, as to a portion thereof based on a formula, the denominator of which shall be 365 and the numerator of which shall be the number of days during the year of his Disability during which the Executive was employed by the Company on an active status.
(e) No Other Benefits. Except as specifically provided in this Section 7, the Executive shall not be entitled to any other compensation, severance or other benefits from the Company or any of its subsidiaries or affiliates upon the termination of this Agreement or the Executive's employment for any reason whatsoever. Payment by the Company of all Accrued Benefits, Enhanced Accrued Benefits and Severance Payments (if applicable) and contributions to the cost of the Executive's confirmed participation in the Company's group medical, dental and life insurance plans that may be due to the Executive under the applicable termination provision of this Section 7 shall constitute the entire obligation of the Company to the Executive. Notwithstanding anything contained in the Agreement to the contrary, the Executive (or his beneficiary or estate) shall be entitled, under all circumstances, to payment of all amounts under and in accordance with the terms and provisions of the SERP, including, without limitation, whether or not the Executive is employed by the Company.
(f) Condition. The Company will not be required to make the payment and provide the benefits stated in this Section 7 unless the Executive executes and delivers to the Company a waiver and release agreement in the form attached hereto as Exhibit C and such waiver and release is not unilaterally revocable by the Executive.
(g) Resignation from Company Offices. In the event of the Executive's termination of employment for any reason, the Executive shall resign and shall be deemed to have resigned immediately from the Board and any and all other directorships, offices and positions with, on behalf of, or relating to the Company or any of its subsidiaries, effective as of the date of the Executive's termination of employment with the Company.
Section 8. Restrictive Covenants.
(a) Proprietary Information. In the course of service to the Company, the Executive will have access to confidential specifications, know-how, strategic or technical data, marketing research data, product research and development data, manufacturing techniques, confidential customer lists, sources of supply and trade secrets, all of which are confidential and may be proprietary and are owned or used by the Company, or any of its subsidiaries or affiliates. Such information shall hereinafter be called "Proprietary Information" and shall include any and all items enumerated in the preceding sentence and coming within the scope of the business of the Company or any of its subsidiaries or affiliates as to which the Executive may have access, whether conceived or developed by others or by the Executive alone or with others during the Executive's period of service with the Company, whether or not conceived or developed during regular working hours. Proprietary Information shall not include any records, data or information which are in the public domain during Executive's service with the Company or after the Executive's service with the Company has terminated, provided the same are not in the public domain as a consequence of disclosure by the Executive in violation of this Agreement.
(b) Non-Use and Non-Disclosure. The Executive shall not during the Term or at any time thereafter (i) disclose any Proprietary Information to any person other than (A) the Company, (B) the Company's or its affiliates' directors, officers or employees who, in the reasonable judgment of the Executive, need to know such Proprietary Information, (C) such other persons to whom the Executive has been specifically instructed to make disclosure by the Board; and in all such cases only to the extent required in the course of the Executive's service to the Company or (D) as required by law, or (ii) use any Proprietary Information, directly or indirectly, for his own benefit or for the benefit of any other person or entity.
(c) Return of Documents. All notes, letters, documents, records, tapes and other media of every kind and description containing Proprietary Information and any copies, in whole or in part, thereof (collectively, the "Documents"), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company. The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such other time or times as the Board or its designee may specify, all Documents then in the Executive's possession or control.
(d) Non-Competition. At all times during the Executive's employment with the Company or any affiliate during the Term, and for a period of twelve (12) months following the termination during the Term of employment with the Company or any affiliate for any reason (the "Restricted Period"), the Executive will not engage in Competition (as defined below) with the Company. For purposes of this Agreement, "Competition" shall mean engaging in, or otherwise directly or indirectly being employed by, or acting as a consultant or adviser (paid or unpaid) to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of (i) Boeing, Lockheed, Alcatel Space or Astrium, (ii) PanAmSat, SES Astra, Intelsat, New Skies
Satellites, (iii) any business similar to the businesses described in clause (i) or (ii) above that competes with the services provided by the Company, (iv) any business that competes with a business that the Company engages in as of the date of the Executive's termination of employment with the Company, as described or otherwise contemplated in the Company's business plan for the year of such termination of employment, or (v) any business that competes with a business that the Company is, to the knowledge of the Executive, preparing to engage in as of the date of the Executive's termination of employment with the Company, and any transferee of or successor to any of the foregoing businesses. Notwithstanding anything to the contrary in this Agreement, the Executive may, directly or indirectly, own, solely as an investment, securities of a business enterprise in Competition with the Company or its subsidiaries which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Executive (i) is not a controlling person of or a member of a group which controls such business enterprise and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities of such business enterprise.
(e) Non-Solicitation of Employees. At all times during the Restricted Period, the Executive will not directly or indirectly solicit or in any manner encourage employees of the Company or any affiliate who were employed by the Company within the six-month period prior to the termination of the Executive's employment with the Company or any affiliate to leave its employ and will not offer or cause to be offered employment to any such person; provided, however, that the restrictions in this paragraph shall not apply to (i) general solicitations that are not specifically directed to employees of the Company or any affiliate and (ii) any administrative support staff.
(f) Non-Solicitation of Customers or Suppliers. At all times during the Restricted Period, the Executive will not knowingly solicit or in any manner encourage, directly or indirectly, customers of or suppliers to the Company or any affiliate who were customers of or suppliers to the Company or any affiliate within the twelve-month period prior to the termination of the Executive's employment with the Company or any affiliate to terminate or diminish their relationship with the Company or any affiliate.
(g) Reasonableness. The Executive has carefully considered the nature, extent and duration of the restrictions and obligations contained in this Agreement, including, without limitation, provisions of this Section 8 and acknowledges and agrees that such restrictions are fair and reasonable in all respects to protect the legitimate interests of the Company and its affiliates and that these restrictions are designed for the reasonable protection of the business of the Company and that of its affiliates.
(h) Remedies. The Executive recognizes that any breach of this Section 8 shall cause irreparable injury to the Company or its affiliates, inadequately compensable in monetary damages. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, Executive agrees that the Company or its affiliates shall be able to seek and obtain injunctive relief in the form of a temporary restraining order, preliminary injunction, or permanent injunction against the Executive to enforce this Agreement. To the extent that any damages are calculable resulting from the breach
of this Agreement, the Company and its affiliates shall also be entitled to recover damages. Any recovery of damages by the Company and its affiliates shall be in addition to and not in lieu of the injunctive relief to which the Company and its affiliates are entitled. Without limiting the rights of the Company and its affiliates under this Section 8 or any other remedies that may be available to them, if a court of competent jurisdiction determines that the Executive has breached any of the provisions of this Section 8, the Company or its affiliates will have the right to cease making any payments or providing any benefits otherwise due to Executive under the terms and conditions of this Agreement, and the right to recover the Annual Bonus that may have been paid as part of the Enhanced Accrued Benefits and the Severance Payment that the Executive may have received under this Agreement.
Section 9. Severable Provisions. The provisions of this Agreement are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.
Section 10. Notices. All notices hereunder, to be effective, shall be in writing and shall be delivered by hand or mailed by certified mail, postage and fees prepaid, as follows:
If to the Company: Space Systems/Loral, Inc.
c/o Loral Space & Communications Inc.
600 Third Avenue
New York, New York 10016
Attention: General Counsel
If to the Executive: C. Patrick DeWitt
44372 Arapaho Avenue
Fremont, CA
|
or to such other address as a party may notify the other pursuant to a notice given in accordance with this Section 10. All notices to any person shall be deemed given when actually received by the person.
Section 11. Miscellaneous.
(a) Amendment. This Agreement may not be amended or revised except by a writing signed by the parties.
(b) Assignment and Transfer. The provisions of this Agreement shall be binding on and shall inure to the benefit of any such successor in interest to the
Company. Neither this Agreement nor any of the rights, duties or obligations of the Executive shall be assignable by the Executive, nor shall any of the payments required or permitted to be made to the Executive by this Agreement be encumbered, transferred or in any way anticipated, except as required by applicable laws. This Agreement shall not be terminated solely by reason of the merger or consolidation of the Company with any corporate or other entity or by the transfer of all or substantially all of the assets of the Company to any other person, corporation, firm or entity. However, all rights of the Executive under this Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. All amounts payable to the Executive hereunder shall be paid, in the event of the Executive's death, to the Executive's estate, heirs or representatives.
(c) Withholding. The Company shall be entitled to withhold from any amounts to be paid or benefits provided to the Executive hereunder any federal, state, local, or foreign withholding or other taxes or charges which it is from time to time required to withhold. The Company shall be entitled to rely on an opinion of counsel if any question as to the amount or requirement of any such withholding shall arise.
(d) Waiver of Breach. A waiver by the Company or the Executive of any breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by the other party.
(e) Survival of Certain Provisions. Provisions of this Agreement shall survive any termination of employment and the expiration of the Term if so provided herein or if necessary or desirable fully to accomplish the purposes of such provision, including, without limitation, the obligations of the Company under Section 7 hereof if the Executive is terminated during the Term and the obligations of the Executive under Section 8 hereof.
(f) Attorney's Fees. In the event that any action is brought to enforce any of the provisions of this Agreement, or to obtain money damages for the breach thereof, all expenses (including reasonable attorneys' fees) shall be paid by the party incurring such fees or expenses; provided, however, that the Company shall reimburse Executive for such fees and expenses to the extent that the Executive prevails on any issues raised in such action.
(g) Entire Agreement. This Agreement, the Stock Option Plan, the Option Agreement, the Indemnification Agreement referred to in Section 5(f) hereof, the Certificates of Incorporation of the Company and of each of its affiliates, the SERP, the Plan of Reorganization and the Stipulation and Agreement among the Debtors and their Directors and Officers in Respect of Certain Indemnification Claims constitute the entire understanding of the parties with respect to the subject matter hereof and supercede all prior negotiations, understandings, discussions, and agreements, whether written or oral, between them.
(h) Captions. Captions herein have been inserted solely for convenience of reference and in no way define, limit or describe the scope or substance of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and shall have the same effect as if the signatures hereto and thereto were on the same instrument.
(j) Governing Law. This Agreement shall be construed under and enforced in accordance with the laws of the State of New York.
(k) Jurisdiction and Choice of Forum. The Executive and the Company irrevocably submit for any disputes arising under or in connection with this Agreement to the exclusive jurisdiction of any state or federal court located in the State of New York. Both the Executive and the Company (i) acknowledge that the forum stated in this Section has a reasonable relation to this Agreement and to the relationship between the Executive and the Company, (ii) waive, to the extent permitted by law, any objection to personal jurisdiction or the laying of venue of any action or proceeding in the forum stated in this section, (iii) agree not to commence any such action or proceeding in any forum other than the forum stated in this section and (iv) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on the Executive and the Company. However, nothing in this Agreement precludes the Executive or the Company from bringing any action or proceeding in any court for the purposes of enforcing the provisions of this section.
(l) Acknowledgement of Representation. The Executive and the Company acknowledge that they have been represented by counsel of their own choosing and have received a full and complete explanation of their rights and obligations under this Agreement and, therefore, in the event of a dispute over the meaning of this Agreement or any provision thereof, neither party shall be entitled to any presumption of correctness in favor of the interpretation advanced by such party or against the interpretation advanced by the other party.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
SPACE SYSTEMS/LORAL, INC.
By: /s/ Bernard L. Schwartz -------------------------------------------------- Name: Title: /s/ C. Patrick DeWitt ----------------------------------------------------- C. Patrick DeWitt |
Schedule I
Outside Business Relationships
Perquisites and Individual Benefits
EXECUTIVE LIFE EXECUTIVE INSURANCE MEDICAL OTHER --------- ------- ----- NONE $4,000 |
Schedule II
Section 7(c)(iii)(A) Severance Amount
Severance Amount per the Consent Order Approving Key Employee Retention Plan and Other Relief for Certain Employees of the Debtors' Corporate Headquarters Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code dated December 18, 2003 is equal to $425,040, which is 100% of Employee's 2003 annual base salary.
Exhibit A Option Agreement
Exhibit B Indemnification Agreement
Exhibit C Form of Release
Exhibit 10.4
OFFICERS' AND DIRECTORS'
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of _________, ____ by and among Loral Space & Communications Inc., a Delaware corporation (the "Company"), those subsidiaries of the Company signatories hereto solely for purpose of Section 20 of this Agreement and __________________ ("Indemnitee").
RECITALS
WHEREAS, officers and directors of publicly held corporations are increasingly exposed, in carrying out their duties and responsibilities on behalf and for the benefit of such corporations, to claims and other actions against them and are reluctant to serve unless they are provided with adequate protection through insurance and/or indemnification against the risks of such claims being asserted against them arising out of their service to and activities on behalf of such corporations; and
WHEREAS, the Board of Directors of the Company (the "Board") has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and
WHEREAS, the Board has determined that, in order to help attract and retain qualified individuals as officers and directors and in other capacities, the best interests of the Company and its stockholders will be served by attempting to maintain, on an ongoing basis, at the Company's sole expense, insurance to protect persons serving the Company and its subsidiaries as officers and directors and in other capacities from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises for many years, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation; and
WHEREAS, the Board has determined that, in order to help attract and retain qualified individuals as officers and directors and in other capacities, the best interests of the Company and its stockholders will be served by assuring such individuals that the Company will indemnify them to the maximum extent permitted by law; and
WHEREAS, the Amended and Restated Certificate of Incorporation as in effect on the date hereof (the "Certificate of Incorporation") of the Company requires, in certain circumstances described therein, and in other circumstances permits, but does not obligate the Company to provide for, the indemnification of the officers and directors of the Company, subject to certain limitations contained therein, and Indemnitee may also
be entitled to indemnification pursuant to the Delaware General Corporation Law ("DGCL"); and
WHEREAS, the Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification and the advancement of defense costs; and
WHEREAS, it therefore is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance defense costs on behalf of, the Indemnitee to the extent, and only to the extent, provided herein so that he or she will serve or continue to serve the Company free from undue concern that he or she will not be so indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of the
Certificate of Incorporation and any resolutions of the Board adopted pursuant
thereto, and shall not be deemed a substitute therefore, nor shall it be deemed
to diminish or abrogate any rights of Indemnitee thereunder; provided, however,
that this Agreement shall be construed in accordance and consistent with, and in
the event of any conflict be superseded by, and in no way creates or be used to
create indemnification obligations of the Company which are inconsistent with,
Section 8 of this Agreement and Article VII of the Certificate of Incorporation;
and
WHEREAS, Indemnitee is willing to serve, and continue to serve, and take on additional service as an officer and/or in such other capacities on the condition that he or she be indemnified as provided for herein.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve, at the will of the Company, as an officer, director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation.
2. DEFINITIONS. As used in this Agreement:
(a) A "Change in Control" shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
(i) Any Person (excluding any employee benefit plan of the Company) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's outstanding securities then entitled ordinarily to vote for the election of directors; or
(ii) During any period of two (2) consecutive years commencing on or after the effective date of a plan or reorganization with respect to the Company and approved by the United States Bankruptcy Court ("Effective Date"), the individuals who at the beginning of such period constitute the Board or any individuals who would be Continuing Directors (as defined below) cease for any reason to constitute at least a majority thereof; or
(iii) The Board shall approve a sale of all or substantially all of the assets of the Company; or
(iv) The Board shall approve any merger, consolidation, or like business combination or reorganization of the Company, the consummation of which would result in the occurrence of any event described in clause (i) or (ii), above.
Notwithstanding the foregoing, none of the events or circumstances described in clauses (i) through (iv) above shall be deemed to result in a Change in Control if such event or circumstance results in any stockholder, together with its affiliates, which beneficially owns 30% or more of the outstanding common stock of the Company as of the Effective Date or any affiliates of such stockholder increasing its equity interests in the Company, acquiring all or substantially all of the assets of the Company or increasing its representation on the Board.
(b) "Continuing Directors" shall mean the original members of the Board pursuant to the Plan and any successor to any such director and any additional director who after the Effective Date was nominated or selected by a majority of the Continuing Directors in office at the time of his or her nomination or selection.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(d) "Person" shall have the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company and (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company.
(e) "Beneficial Owner" shall have the meaning given to such term in Rule 13d-3 issued under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
(f) "Corporate Status" shall describe the status of a Person who is or was a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below), which such Person is or was serving at the request of the Company.
(g) "Disinterested Director" shall mean a member of the Board who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
(h) "Enterprise" shall mean any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent.
(i) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types and amounts customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding (as defined
below). Expenses also shall include costs incurred in connection with any appeal
resulting from any Proceeding (as defined below), including, without limitation,
the premium, security for, and other costs relating to any bond, supersedeas
bond, or other appeal bond or its equivalent. Expenses, however, shall not
include (i) amounts paid in settlement by Indemnitee or the amount of judgments
or fines against Indemnitee and (ii) except as expressly provided in Section
8(b), any amount payable by Indemnitee in connection with or related to
Proceedings in connection with events occurring before the Bankruptcy Filing or
that relate to or are in connection with Old Loral.
(j) References to "fines" shall include any excise tax assessed on a person with respect to any employee benefit plan pursuant to applicable law.
(k) References to "serving at the request of the Company" shall include, without limitation, any service provided at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company and any duties or services by such director, officer, trustee, partner, member, fiduciary, employee or agent with respect to an employee benefit plan or its participants and beneficiaries.
(l) Any action taken or omitted to be taken by a person for a purpose which he or she reasonably believed to be in the interests of the Company or an employee benefit plan or its participants and beneficiaries shall, without limitation, be deemed to have been taken in "good faith" and for a purpose which is "not opposed to the best interests of the Company", as such terms are referred to in this Agreement and used in the DGCL.
(m) The term "Proceeding" shall include any threatened, pending or completed, in each case commenced after the Bankruptcy Filing (except as expressly provided in Section 8(b)), action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative nature, including any related appeal, in which Indemnitee was, is or will be involved as a party or witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company, by reason of any action taken or not taken by him or her while acting as director, officer, trustee, partner, member, fiduciary, employee or agent of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.
(n) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is made, or is threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, fines, penalties, amounts paid in settlement (if such settlement is approved in writing in advance by the Company, which approval shall not be unreasonably withheld) (including, without limitation, all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing) (collectively, "Losses") and Expenses actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any action, discovery event, claim, issue or matter therein or related thereto, if Indemnitee acted in good faith, for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, in addition, had no reasonable cause to believe that his or her conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is made, or is threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of such Proceeding or any action, discovery
event, claim, issue or matter therein or related thereto, if Indemnitee acted in good faith, for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification, however, shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which the Proceeding was brought or, if no Proceeding was brought in a court, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, Indemnitee fairly and reasonably is entitled to indemnification for such portion of the Expenses as the court deems proper.
5. INDEMNIFICATION FOR EXPENSES WHERE INDEMNITEE IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding and in addition to any other provisions of this Agreement, to the extent that Indemnitee is a party to a Proceeding and is successful, on the merits or otherwise, in the defense of any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such successful defense. For the avoidance of doubt, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 5 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding and in addition to any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in or otherwise incurs Expenses in connection with any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.
7. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 3, 4, or 5 hereof, but subject to Article VII of the Certificate of Incorporation and Section 8 hereof, the Company shall indemnify Indemnitee to the fullest extent permitted by law and Article VII of the Certificate of Incorporation, if Indemnitee is made, or is threatened to be made, a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Losses and Expenses actually and reasonably incurred by Indemnitee in connection with the Proceeding. No indemnification shall be made under this Section 7(a) on account of Indemnitee's conduct which constitutes a breach of Indemnitee's duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.
(b) For purposes of Section 7(a), the meaning of the phrase "to the fullest extent permitted by law" shall include, but not be limited to:
i. to the fullest extent authorized or permitted by the then-applicable provisions of the DGCL that authorize or contemplate indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and
ii. to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
(c) Indemnitee shall be entitled to the prompt payment of all Expenses reasonably incurred in enforcing successfully (fully or partially) this Agreement.
8. EXCLUSIONS.
(a) Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity, including for Expenses, in connection with any Proceeding against Indemnitee:
(i) for which payment actually has been received by or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount actually received under such insurance policy or other indemnity provision; or
(ii) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee or any member of the Indemnitee's immediate family of securities of the Company within the meaning of Section 16(b) of the Exchange Act, as amended, or similar provisions of state blue sky law, state statutory law or common law; or
(iii) based upon or attributable to the Indemnitee or any member of the Indemnitee's immediate family gaining in fact any personal profit or advantage to which the Indemnitee was not legally entitled; provided that the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against Indemnitee by reason of any alleged personal profit or advantage to which the Indemnitee was not legally entitled, unless a final and non-appealable adjudication thereof adverse to the Indemnitee by a court of competent jurisdiction shall establish that Indemnitee committed act(s) of personal profit or advantage to which the Indemnitee was not legally entitled; or
(iv) prior to a Change in Control, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company (other than any Proceeding referred to in Sections 13(d) or (e) below or any other
Proceeding commenced to recover any Expenses referred to in Section 7(c) above) or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; or
(v) if the funds at issue were paid pursuant to a settlement approved by a court and indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by the court in approving the settlement; or
(vi) based upon or attributable to the fraud, willful misconduct or dishonesty of the Indemnitee seeking payment hereunder; provided that the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against Indemnitee by reason of any alleged fraud, willful misconduct or dishonesty on Indemnitee's part, unless a final and non-appealable adjudication thereof adverse to the Indemnitee by a court of competent jurisdiction shall establish that Indemnitee committed fraud, willful misconduct or act(s) of active and deliberate dishonesty, with actual dishonest purpose and intent, which act(s) were material to the cause of action so adjudicated; or
(vii) for bodily injury, sickness, disease or death of any person, or damage to or destruction of any tangible property, including loss of use thereof, not in connection with performance of employment; or
(viii) for which indemnification under this Agreement is determined by a final and non-appealable adjudication of a court of competent jurisdiction to be unlawful and violative of public policy.
(b) Notwithstanding anything to the contrary set forth in or relied upon by the Indemnitee in connection with this Agreement,
(i) for the purposes of this Agreement, the term "Company" and "Enterprise" shall specifically exclude Loral Space & Communications Ltd., a Bermuda corporation, or any direct or indirect subsidiary thereof that at the time was not or that is not a direct or indirect subsidiary of the Company (collectively, "Old Loral"), and the Company shall not have any obligations pursuant to this Agreement by virtue of any assertion by any person, entity or governmental authority or any determination of a court of competent jurisdiction, that it is a successor to Old Loral or any other entity;
(ii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the Company shall not be obligated and shall not otherwise be required to indemnify the Indemnitee for any Losses or Expenses or otherwise incurred in his or her capacity as a director or officer of Old Loral, or for serving, or having agreed to serve or allegedly to having served, at the request of or to further the interests of Old Loral as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or in any other capacity with another corporation
or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of Old Loral or of any of its affiliates and any charitable or not-for-profit enterprise, except as specifically set forth in that certain Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 of Loral Space & Communications Ltd. and its subsidiaries that are a party thereto (as the same may be amended from time to time, the "Plan");
(iii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the Company shall not be obligated and shall not otherwise be required to indemnify the Indemnitee with respect to any events or circumstances occurring prior to the filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on July 11, 2003 by Loral Space & Communications Ltd. and its subsidiaries that are a party thereto (the "Bankruptcy Filing"), except as specifically set forth in the Plan;
(iv) the Company, however, shall indemnify and hold harmless the Indemnitee from and against and for any and all obligations incurred directly or indirectly by Old Loral with respect to any taxes owed by Old Loral or the Debtors (as defined in the Plan) for the period prior to the Effective Date, including interest and penalties, to any governmental entity and as to which Old Loral or the Debtors are the primary obligor(s), as provided in the Certificate of Incorporation;
(v) except as expressly provided in Section 8(b)(iv), unless the Company expressly and unequivocably agrees hereafter in writing otherwise, any indemnification of the Indemnitee with respect to Old Loral matters which the Company is obligated to indemnify the Indemnitee pursuant to the Plan shall not be governed by this Agreement and this Agreement shall not give Indemnitee any rights whatsoever with respect to any indemnification with respect to Old Loral matters.
(c) Notwithstanding anything to the contrary set forth in this Agreement, the Company and the Indemnitee agree that: (i) their respective rights and obligations hereunder shall be construed in accordance and consistent with Article VII of the Certificate of Incorporation and Section 8 hereof, (ii) in the event of any inconsistency between this Agreement and the Certificate of Incorporation, or any provision herein and therein, the Certificate of Incorporation shall prevail in all respects and (iii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the provisions of this Agreement shall not be applicable to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8(b) hereof or is inconsistent with the Certificate of Incorporation.
9. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a) Notwithstanding any provision of this Agreement to the contrary, the Indemnitee shall be entitled to advances of Expenses incurred by him or her or on his or her behalf in connection with a Proceeding that Indemnitee claims is covered by Sections 3, 4 and 6 hereof, prior to a final determination of eligibility for indemnification
and prior to the final disposition of the Proceeding, upon the execution and delivery to the Company of an undertaking by or on behalf of the Indemnitee providing that the Indemnitee will repay such advances to the extent that it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9(a) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.
(b) The Company shall advance pursuant to Section 9(a) the Expenses incurred by Indemnitee in connection with any Proceeding within thirty (30) days after the receipt by the Company of a written statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee's ability to repay such advances. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce such right to receive advances.
(c) The Company will be entitled to participate in the Proceeding at its own expense.
(d) The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on the Indemnitee without the Indemnitee's prior written consent, which consent shall not be unreasonably withheld.
10. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
(a) Within sixty (60) days after the actual receipt by Indemnitee of notice that he or she is a party to or is requested to be a participant in (as a witness or otherwise) any Proceeding, Indemnitee shall submit to the Company a written notice identifying the Proceeding. The failure by the Indemnitee to notify the Company within such 60-day period will not relieve the Company from any liability which it may have to Indemnitee (i) otherwise than under this Agreement, and (ii) under this Agreement, provided that if the Company can establish that such failure to notify the Company in a timely manner resulted in actual prejudice to the Company, then the Company will be relieved from liability only to the extent of such actual prejudice.
(b) Indemnitee shall at the time of giving such notice pursuant to
Section 10(a) or thereafter deliver to the Company a written application for
indemnification. Such application may be delivered at such time as Indemnitee
deems appropriate in his or her sole discretion. Following delivery of such a
written application for indemnification by Indemnitee, the Indemnitee's
entitlement to indemnification shall be determined promptly according to Section
11(a) of this Agreement and the outcome of such determination shall be reported
to Indemnitee in writing within sixty (60) days of the submission of such
application.
11. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) Upon written application by Indemnitee for indemnification
pursuant to Section 10(b) or written statement by Indemnitee for advances of
Expenses pursuant to Section 9(b), a determination with respect to Indemnitee's
entitlement thereto pursuant to the mandatory terms of this Agreement, pursuant
to statute, or pursuant to other sources of right to indemnity, and pursuant to
Section 12 of this Agreement shall be made in the specific case: (i) by a
majority vote of the Disinterested Directors, whether or not such officers
otherwise would constitute a quorum of the Board; (ii) by a committee of
Disinterested Directors designated by a majority vote of such officers, whether
or not such officers would otherwise constitute a quorum of the Board, (iii) if
there are no Disinterested Directors or if so requested by (x) the Indemnitee in
his or her sole discretion or (y) the Disinterested Directors, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee or (iv) by the stockholders of the Company. Indemnitee shall
reasonably cooperate with the person, persons or entity making the determination
with respect to Indemnitee's entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless from any such costs and expenses.
(b) If it is determined that Indemnitee is entitled to indemnification
requested by the Indemnitee in a written application submitted to the Company
pursuant to Section 10(b), payment to Indemnitee shall be made within thirty
(30) days after such determination. All advances of Expenses requested in a
written statement by Indemnitee pursuant to Section 9(b) prior to a final
determination of eligibility for indemnification shall be paid in accordance
with Section 9.
(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(c). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit.
(d) If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 9(b) or 10(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof.
(e) The Company agrees to pay the reasonable fees and expenses of the Independent Counsel and to fully indemnify such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(f) Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, any Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
12. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) Presumption in Favor of Indemnitee. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted an application for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption.
(b) No Presumption Against Indemnitee. Neither the failure of the Company (including by its officers or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement nor an actual determination by the Company (including by its officers or Independent Counsel) that Indemnitee has not met the applicable standard of conduct for indemnification shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(c) Sixty Day Period for Determination. If the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of an application therefor, a determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.
(d) No Presumption from Termination of a Proceeding. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere, or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(e) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action or failure to act is based on the records or books of account of the Company or any Enterprise other than the Company, including financial statements, or on information supplied to Indemnitee by the officers of the Company or any Enterprise other than the Company in the course of their duties, or on the advice of legal counsel for the Company or any Enterprise other than the Company or on information or records given or reports made to the Company or any Enterprise other than the Company by an independent certified public accountant or by an appraiser or other expert selected by the Company or any Enterprise other than the Company, except if the Indemnitee knew or had reason to know that such records or books of account of the Company, information supplied by the officers of the Company, advice of legal counsel or information or records given or reports made by an independent certified public accountant or by an appraiser or other expert were materially false or inaccurate. The provisions of this Section 12(e) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met any applicable standard of conduct.
(f) Actions of Others. The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, member, fiduciary, employee or agent of the Company or any Enterprise other than the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
13. REMEDIES OF INDEMNITEE.
(a) Adjudication/Arbitration. In the event that (i) a determination is
made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 9 of this Agreement, (iii) subject to Section 12(c), no
determination of entitlement to indemnification shall have been made pursuant to
Section 11(a) of this Agreement within 60 days after receipt by the Company of
the application for indemnification, or (iv) payment of indemnification is not
made pursuant to Sections 3, 4, 5, 6, 7 and 11(b) of this Agreement within ten
(10) days after a determination has been made that Indemnitee is entitled to
indemnification, or after receipt by the Company of a written request for any
additional monies owed with respect to a Proceeding as to which it already has
been determined that Indemnitee is entitled to indemnification, Indemnitee shall
be entitled to an adjudication by a court of his or her entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or
her option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
(b) Indemnitee Not Prejudiced by Prior Adverse Determination. In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the prior adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) Company Bound by Prior Determination. If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) Expenses. In the event that Indemnitee, pursuant to this Section 13, seeks a judicial adjudication of or an award in arbitration to enforce his or her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication or arbitration if it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive all or part of the indemnification or
advancement of Expenses sought which the Company had disputed prior to the commencement of the judicial proceeding or arbitration.
(e) Advances of Expenses. If requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written request therefore) advance to Indemnitee the Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, if the Indemnitee has submitted an undertaking to repay such Expenses if Indemnitee ultimately is determined to not be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be. The Indemnitee's financial ability to repay any such advances shall not be a basis for the Company to decline to make such advances.
(f) Precluded Assertions by the Company. The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
14. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) Rights of Indemnitee Not Exclusive. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall, subject to Section 8 and Article VII of the Certificate of Incorporation, not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, vote of stockholders or a resolution of officers, or otherwise. No right or remedy herein conferred by this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other right or remedy.
(b) Survival of Rights. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.
(c) Change of Law. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change; provided, however, that in no event shall such change in law affect the limitations provided in Section 8(i) of the Certificate of Incorporation, as in effect on the date hereof.
(d) Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, trustee, partner, member, fiduciary, officer, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect that covers Indemnitee, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(e) Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(f) Other Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(g) Other Indemnification. The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such Enterprise.
15. DURATION OF AGREEMENT. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as any of the following: a director, officer, agent or employee of the Company or as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee served at the request of the Company; or (b) one (1) year after the final termination of any Proceeding (including after the expiration of any rights of appeal) then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement (including any rights of appeal of any Proceeding commenced pursuant to Section 13). This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.
16. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
17. ENFORCEMENT.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve, or to continue to serve, as a director, officer, employee and/or agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director, officer, employee and/or agent of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
18. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
19. D&O TAIL COVERAGE. Upon a Change of Control where a successor to all or substantially all of the assets of the Company does not agree to be bound by this Agreement, the Company shall either (i) use commercially best efforts to cause to be issued tail coverage extending its directors and officers liability insurance policy, such that it covers Indemnitee and is customary and reasonable under such circumstance, as determined by the Board in good faith, or (ii) if the Company has provided protection against liability to any director of the Company who is also an employee or nominee of MHR Fund Management LLC or its affiliates (each, an "MHR Director"), provide Indemnitee with no less than equivalent protection against liability than is provided by the Company to any MHR Director. Upon the Company's satisfaction of its obligations pursuant to this Section 19, Section 20 hereof shall cease to be of any force and effect.
20. GUARANTEE.
(a) Each of the subsidiaries of the Company party to this Agreement (each, a "Guarantor") hereby irrevocably and unconditionally guarantees the due and punctual payment of all obligations of the Company under this Agreement; provided, however, that a Guarantor's guarantee obligation hereunder shall terminate and cease to have any force or effect immediately upon (i) such Guarantor ceasing to be a direct or indirect subsidiary or parent of the Company or (ii) the sale of all or substantially all of such Guarantor's assets pursuant to an Approved Transaction (as defined below) in which a Guarantor does not receive all or substantially all of the consideration of such sale. If any subsidiary (each, a "Significant Subsidiary") of the Company, whether already existing or newly formed and whether direct or indirect, owns or acquires at any time in the future assets having a book value of $10,000,000 or more, then the Company shall promptly cause such Significant Subsidiary to become a party to this Agreement for purposes of this Section 20 and such Significant Subsidiary shall have all obligations under this Section 20 as if it had been an original party to this Agreement solely for purposes of being a Guarantor.
(b) Notwithstanding anything in this Agreement to the contrary and for as long as the Guarantor's obligations hereunder are in effect, the Indemnitee hereby acknowledges and agrees that at any time a Guarantor may effectuate, and this Agreement shall not in any way prohibit or restrict the Guarantor from effectuating, and the Indemnitee shall not have any right or claim with respect to, rely upon, or challenge (i) any transfer by such Guarantor of any or all of its funds, assets or other property to either: (x) the Company or any of its direct or indirect subsidiaries or their successors (each, a "Group Entity"), including by way of dividend, distribution, payment, lease, sale, assignment, transfer, merger, consolidation or otherwise, or (y) any other Person, pursuant to a transaction that such Guarantor's Board of Directors determines in good faith to effect in furtherance of a legitimate business purpose of such Guarantor or any Group Entity (an "Approved Transaction"), or (ii) the liquidation or dissolution of a Guarantor.
21. SUCCESSORS AND BINDING AGREEMENT.
(a) This Agreement will inure to the benefit of and be enforceable by the Indemnitee's personal or legal representatives, executors, administrators, successors, heirs, distributees, legatees and other successors.
(b) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign or delegate this Agreement
or any rights or obligations hereunder except as expressly provided in Section
21(a). Without limiting the generality or effect of the foregoing, Indemnitee's
right to receive payments hereunder will not be assignable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by the
Indemnitee's will or by the laws of descent and distribution, and, in the event
of any attempted assignment or transfer contrary to this
Section 21(b), the Company will have no liability to pay any amount so attempted to be assigned or transferred.
22. NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
if: (i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, on the date of such receipt, or
(ii) mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee subsequently shall provide in writing to the Company.
(b) If to the Company to:
Loral Space & Communications Inc.
600 Third Avenue
New York, New York 10016
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee in writing by the Company.
23. CONTRIBUTION. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
24. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws, principles or rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the "Delaware Court"), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) irrevocably appoint, to the extent such party is not a resident of the State of Delaware, Corporation Service Company; 2711 Centerville Road, Suite 400; Wilmington; New Castle County; Delaware 19808 as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
25. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
26. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
SPACE SYSTEMS/LORAL, INC.
(solely for purposes of Section 20)
LORAL SKYNET CORPORATION
(solely for purposes of Section 20)
INDEMNITEE
Address for Notices:
Attention: _____________________________
Exhibit 10.5
OFFICERS' AND DIRECTORS'
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of November 21, 2005 by and between Space Systems/Loral, Inc., a Delaware corporation (the "Company"), and C. Patrick DeWitt ("Indemnitee").
RECITALS
WHEREAS, officers and directors of publicly held corporations are increasingly exposed, in carrying out their duties and responsibilities on behalf and for the benefit of such corporations, to claims and other actions against them and are reluctant to serve unless they are provided with adequate protection through insurance and/or indemnification against the risks of such claims being asserted against them arising out of their service to and activities on behalf of such corporations; and
WHEREAS, the Board of Directors of the Company (the "Board") has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; and
WHEREAS, the Board has determined that, in order to help attract and retain qualified individuals as officers and directors and in other capacities, the best interests of the Company and its stockholders will be served by attempting to maintain, on an ongoing basis, at the Company's sole expense, insurance to protect persons serving the Company and its subsidiaries as officers and directors and in other capacities from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises for many years, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation; and
WHEREAS, the Board has determined that, in order to help attract and retain qualified individuals as officers and directors and in other capacities, the best interests of the Company and its stockholders will be served by assuring such individuals that the Company will indemnify them to the maximum extent permitted by law; and
WHEREAS, the Amended and Restated Certificate of Incorporation as in effect on the date hereof (the "Certificate of Incorporation") of the Company requires, in certain circumstances described therein, and in other circumstances permits, but does not obligate the Company to provide for, the indemnification of the officers and directors of the Company, subject to certain limitations contained therein, and Indemnitee may also
be entitled to indemnification pursuant to the Delaware General Corporation Law ("DGCL"); and
WHEREAS, the Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification and the advancement of defense costs; and
WHEREAS, it therefore is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance defense costs on behalf of, the Indemnitee to the extent, and only to the extent, provided herein so that he or she will serve or continue to serve the Company free from undue concern that he or she will not be so indemnified; and
WHEREAS, this Agreement is a supplement to and in furtherance of the
Certificate of Incorporation and any resolutions of the Board adopted pursuant
thereto, and shall not be deemed a substitute therefore, nor shall it be deemed
to diminish or abrogate any rights of Indemnitee thereunder; provided, however,
that this Agreement shall be construed in accordance and consistent with, and in
the event of any conflict be superseded by, and in no way creates or be used to
create indemnification obligations of the Company which are inconsistent with,
Section 8 of this Agreement and Article VII of the Certificate of Incorporation;
and
WHEREAS, Indemnitee is willing to serve, and continue to serve, and take on additional service as an officer and/or in such other capacities on the condition that he or she be indemnified as provided for herein.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
1. SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve, at the will of the Company, as an officer, director or key employee of the Company for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation.
2. DEFINITIONS. As used in this Agreement:
(i) Any Person (excluding any employee benefit plan of the Company) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's outstanding securities then entitled ordinarily to vote for the election of directors; or
(ii) During any period of two (2) consecutive years commencing on or after the effective date of a plan or reorganization with respect to the Company and approved by the United States Bankruptcy Court ("Effective Date"), the individuals who at the beginning of such period constitute the Board or any individuals who would be Continuing Directors (as defined below) cease for any reason to constitute at least a majority thereof; or
(iii) The Board shall approve a sale of all or substantially all of the assets of the Company; or
(iv) The Board shall approve any merger, consolidation, or like business combination or reorganization of the Company, the consummation of which would result in the occurrence of any event described in clause (i) or (ii), above.
Notwithstanding the foregoing, none of the events or circumstances described in clauses (i) through (iv) above shall be deemed to result in a Change in Control if such event or circumstance results in any stockholder, together with its affiliates, which beneficially owns 30% or more of the outstanding common stock of the Company as of the Effective Date or any affiliates of such stockholder increasing its equity interests in the Company, acquiring all or substantially all of the assets of the Company or increasing its representation on the Board.
(b) "Continuing Directors" shall mean the original members of the Board pursuant to the Plan and any successor to any such director and any additional director who after the Effective Date was nominated or selected by a majority of the Continuing Directors in office at the time of his or her nomination or selection.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(d) "Person" shall have the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company and (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company.
(e) "Beneficial Owner" shall have the meaning given to such term in Rule 13d-3 issued under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
(f) "Corporate Status" shall describe the status of a Person who is or was a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below), which such Person is or was serving at the request of the Company.
(g) "Disinterested Director" shall mean a member of the Board who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.
(h) "Enterprise" shall mean any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent.
(i) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types and
amounts customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, being or preparing to be a
witness in, or otherwise participating in, a Proceeding (as defined below).
Expenses also shall include costs incurred in connection with any appeal
resulting from any Proceeding (as defined below), including, without limitation,
the premium, security for, and other costs relating to any bond, supersedeas
bond, or other appeal bond or its equivalent. Expenses, however, shall not
include (i) amounts paid in settlement by Indemnitee or the amount of judgments
or fines against Indemnitee and (ii) except as expressly provided in Section
8(b), any amount payable by Indemnitee in connection with or related to
Proceedings in connection with events occurring before the Bankruptcy Filing or
that relate to or are in connection with Old Loral.
(j) References to "fines" shall include any excise tax assessed on a person with respect to any employee benefit plan pursuant to applicable law.
(k) References to "serving at the request of the Company" shall include , without limitation, any service provided at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company and any duties or services by such director, officer, trustee, partner, member, fiduciary, employee or agent with respect to an employee benefit plan or its participants and beneficiaries.
(l) Any action taken or omitted to be taken by a person for a purpose which he or she reasonably believed to be in the interests of the Company or an employee benefit plan or its participants and beneficiaries shall, without limitation, be deemed to have been taken in "good faith" and for a purpose which is "not opposed to the best interests of the Company", as such terms are referred to in this Agreement and used in the DGCL.
(m) The term "Proceeding" shall include any threatened, pending or completed, in each case commenced after the Bankruptcy Filing (except as expressly provided in Section 8(b)), action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and
whether of a civil, criminal, administrative or investigative nature, including any related appeal, in which Indemnitee was, is or will be involved as a party or witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, trustee, partner, member, fiduciary, employee or agent of the Company, by reason of any action taken or not taken by him or her while acting as director, officer, trustee, partner, member, fiduciary, employee or agent of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.
(n) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement.
3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is made, or is threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, fines, penalties, amounts paid in settlement (if such settlement is approved in writing in advance by the Company, which approval shall not be unreasonably withheld) (including, without limitation, all interest, assessments and other charges paid or payable in connection with or in respect of any of the foregoing) (collectively, "Losses") and Expenses actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any action, discovery event, claim, issue or matter therein or related thereto, if Indemnitee acted in good faith, for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, in addition, had no reasonable cause to believe that his or her conduct was unlawful.
4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is made, or is threatened to be made, a party to or a participant in (as a witness or otherwise) any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of such Proceeding or any action, discovery
event, claim, issue or matter therein or related thereto, if Indemnitee acted in good faith, for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification, however, shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which the Proceeding was brought or, if no Proceeding was brought in a court, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, Indemnitee fairly and reasonably is entitled to indemnification for such portion of the Expenses as the court deems proper.
5. INDEMNIFICATION FOR EXPENSES WHERE INDEMNITEE IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding and in addition to any other provisions of this Agreement, to the extent that Indemnitee is a party to a Proceeding and is successful, on the merits or otherwise, in the defense of any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such successful defense. For the avoidance of doubt, if Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section 5 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding and in addition to any other provision of this Agreement, to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness in or otherwise incurs Expenses in connection with any Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.
7. ADDITIONAL INDEMNIFICATION.
(a) Notwithstanding any limitation in Sections 3, 4, or 5 hereof, but subject to Article VII of the Certificate of Incorporation and Section 8 hereof, the Company shall indemnify Indemnitee to the fullest extent permitted by law and Article VII of the Certificate of Incorporation, if Indemnitee is made, or is threatened to be made, a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Losses and Expenses actually and reasonably incurred by Indemnitee in connection with the Proceeding. No indemnification shall be made under this Section 7(a) on account of Indemnitee's conduct which constitutes a breach of Indemnitee's duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.
(b) For purposes of Section 7(a), the meaning of the phrase "to the fullest extent permitted by law" shall include, but not be limited to:
i. to the fullest extent authorized or permitted by the then-applicable provisions of the DGCL that authorize or contemplate indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and ---
ii. to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.
(c) Indemnitee shall be entitled to the prompt payment of all Expenses reasonably incurred in enforcing successfully (fully or partially) this Agreement.
8. EXCLUSIONS.
(a) Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity, including for Expenses, in connection with any Proceeding against Indemnitee:
(i) for which payment actually has been received by or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount actually received under such insurance policy or other indemnity provision; or
(ii) for an accounting of profits made from the purchase and sale
(or sale and purchase) by Indemnitee or any member of the Indemnitee's
immediate family of securities of the Company within the meaning of
Section 16(b) of the Exchange Act, as amended, or similar provisions of state
blue sky law, state statutory law or common law; or
(iii) based upon or attributable to the Indemnitee or any member of the Indemnitee's immediate family gaining in fact any personal profit or advantage to which the Indemnitee was not legally entitled; provided that the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against Indemnitee by reason of any alleged personal profit or advantage to which the Indemnitee was not legally entitled, unless a final and non-appealable adjudication thereof adverse to the Indemnitee by a court of competent jurisdiction shall establish that Indemnitee committed act(s) of personal profit or advantage to which the Indemnitee was not legally entitled; or
(iv) prior to a Change in Control, in connection with any Proceeding
(or any part of any Proceeding) initiated by Indemnitee, including any
Proceeding (or any part of any Proceeding) initiated by Indemnitee against
the Company (other than any Proceeding referred to in Sections 13(d) or
(e) below or any other
Proceeding commenced to recover any Expenses referred to in Section 7(c) above) or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; or
(v) if the funds at issue were paid pursuant to a settlement approved by a court and indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by the court in approving the settlement; or
(vi) based upon or attributable to the fraud, willful misconduct or dishonesty of the Indemnitee seeking payment hereunder; provided that the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against Indemnitee by reason of any alleged fraud, willful misconduct or dishonesty on Indemnitee's part, unless a final and non-appealable adjudication thereof adverse to the Indemnitee by a court of competent jurisdiction shall establish that Indemnitee committed fraud, willful misconduct or act(s) of active and deliberate dishonesty, with actual dishonest purpose and intent, which act(s) were material to the cause of action so adjudicated; or
(vii) for bodily injury, sickness, disease or death of any person, or damage to or destruction of any tangible property, including loss of use thereof, not in connection with performance of employment; or
(viii) for which indemnification under this Agreement is determined by a final and non-appealable adjudication of a court of competent jurisdiction to be unlawful and violative of public policy.
(b) Notwithstanding anything to the contrary set forth in or relied upon by the Indemnitee in connection with this Agreement,
(i) for the purposes of this Agreement, the term "Company" and "Enterprise" shall specifically exclude Loral Space & Communications Ltd., a Bermuda corporation, or any direct or indirect subsidiary thereof that at the time was not or that is not a direct or indirect subsidiary of the Company (collectively, "Old Loral"), and the Company shall not have any obligations pursuant to this Agreement by virtue of any assertion by any person, entity or governmental authority or any determination of a court of competent jurisdiction, that it is a successor to Old Loral or any other entity;
(ii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the Company shall not be obligated and shall not otherwise be required to indemnify the Indemnitee for any Losses or Expenses or otherwise incurred in his or her capacity as a director or officer of Old Loral, or for serving, or having agreed to serve or allegedly to having served, at the request of or to further the interests of Old Loral as a director, officer, trustee, appointee, designee, employee, manager, partner, or agent of or in any other capacity with another corporation
or any limited liability company, partnership, joint venture, trust or other enterprise, including any employee benefit plan of Old Loral or of any of its affiliates and any charitable or not-for-profit enterprise, except as specifically set forth in that certain Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 of Loral Space & Communications Ltd. and its subsidiaries that are a party thereto (as the same may be amended from time to time, the "Plan");
(iii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the Company shall not be obligated and shall not otherwise be required to indemnify the Indemnitee with respect to any events or circumstances occurring prior to the filing of a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on July 11, 2003 by Loral Space & Communications Ltd. and its subsidiaries that are a party thereto (the "Bankruptcy Filing"), except as specifically set forth in the Plan;
(iv) the Company, however, shall indemnify and hold harmless the Indemnitee from and against and for any and all obligations incurred directly or indirectly by Old Loral with respect to any taxes owed by Old Loral or the Debtors (as defined in the Plan) for the period prior to the Effective Date, including interest and penalties, to any governmental entity and as to which Old Loral or the Debtors are the primary obligor(s), as provided in the Certificate of Incorporation;
(v) except as expressly provided in Section 8(b)(iv), unless the Company expressly and unequivocably agrees hereafter in writing otherwise, any indemnification of the Indemnitee with respect to Old Loral matters which the Company is obligated to indemnify the Indemnitee pursuant to the Plan shall not be governed by this Agreement and this Agreement shall not give Indemnitee any rights whatsoever with respect to any indemnification with respect to Old Loral matters.
(c) Notwithstanding anything to the contrary set forth in this Agreement, the Company and the Indemnitee agree that: (i) their respective rights and obligations hereunder shall be construed in accordance and consistent with Article VII of the Certificate of Incorporation and Section 8 hereof, (ii) in the event of any inconsistency between this Agreement and the Certificate of Incorporation, or any provision herein and therein, the Certificate of Incorporation shall prevail in all respects and (iii) unless the Company expressly and unequivocably agrees hereafter in writing otherwise, the provisions of this Agreement shall not be applicable to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8(b) hereof or is inconsistent with the Certificate of Incorporation.
9. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
(a) Notwithstanding any provision of this Agreement to the contrary, the Indemnitee shall be entitled to advances of Expenses incurred by him or her or on his or her behalf in connection with a Proceeding that Indemnitee claims is covered by Sections 3, 4 and 6 hereof, prior to a final determination of eligibility for indemnification
and prior to the final disposition of the Proceeding, upon the execution and delivery to the Company of an undertaking by or on behalf of the Indemnitee providing that the Indemnitee will repay such advances to the extent that it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9(a) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.
(b) The Company shall advance pursuant to Section 9(a) the Expenses incurred by Indemnitee in connection with any Proceeding within thirty (30) days after the receipt by the Company of a written statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee's ability to repay such advances. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce such right to receive advances.
(c) The Company will be entitled to participate in the Proceeding at its own expense.
(d) The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty or limitation on the Indemnitee without the Indemnitee's prior written consent, which consent shall not be unreasonably withheld.
10. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
(a) Within sixty (60) days after the actual receipt by Indemnitee of notice that he or she is a party to or is requested to be a participant in (as a witness or otherwise) any Proceeding, Indemnitee shall submit to the Company a written notice identifying the Proceeding. The failure by the Indemnitee to notify the Company within such 60-day period will not relieve the Company from any liability which it may have to Indemnitee (i) otherwise than under this Agreement, and (ii) under this Agreement, provided that if the Company can establish that such failure to notify the Company in a timely manner resulted in actual prejudice to the Company, then the Company will be relieved from liability only to the extent of such actual prejudice.
(b) Indemnitee shall at the time of giving such notice pursuant to Section 10(a) or thereafter deliver to the Company a written application for indemnification. Such application may be delivered at such time as Indemnitee deems appropriate in his or her sole discretion. Following delivery of such a written application for indemnification by Indemnitee, the Indemnitee's entitlement to indemnification shall be determined promptly according to Section 11(a) of this Agreement and the outcome of such determination shall be reported to Indemnitee in writing within sixty (60) days of the submission of such application.
11. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
(a) Upon written application by Indemnitee for indemnification pursuant
to Section 10(b) or written statement by Indemnitee for advances of Expenses
pursuant to Section 9(b), a determination with respect to Indemnitee's
entitlement thereto pursuant to the mandatory terms of this Agreement, pursuant
to statute, or pursuant to other sources of right to indemnity, and pursuant to
Section 12 of this Agreement shall be made in the specific case: (i) by a
majority vote of the Disinterested Directors, whether or not such officers
otherwise would constitute a quorum of the Board; (ii) by a committee of
Disinterested Directors designated by a majority vote of such officers, whether
or not such officers would otherwise constitute a quorum of the Board, (iii) if
there are no Disinterested Directors or if so requested by (x) the Indemnitee in
his or her sole discretion or (y) the Disinterested Directors, by Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee or (iv) by the stockholders of the Company. Indemnitee shall
reasonably cooperate with the person, persons or entity making the determination
with respect to Indemnitee's entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from
disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any costs or expenses (including attorneys'
fees and disbursements) incurred by Indemnitee in so cooperating with the
person, persons or entity making such determination shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless from any such costs and expenses.
(b) If it is determined that Indemnitee is entitled to indemnification
requested by the Indemnitee in a written application submitted to the Company
pursuant to Section 10(b), payment to Indemnitee shall be made within thirty
(30) days after such determination. All advances of Expenses requested in a
written statement by Indemnitee pursuant to Section 9(b) prior to a final
determination of eligibility for indemnification shall be paid in accordance
with Section 9.
(c) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as provided in this Section 11(c). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit.
(d) If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 9(b) or 10(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 11(a) hereof.
(e) The Company agrees to pay the reasonable fees and expenses of the Independent Counsel and to fully indemnify such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(f) Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, any Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
12. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) Presumption in Favor of Indemnitee. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted an application for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption.
(b) No Presumption Against Indemnitee. Neither the failure of the Company (including by its officers or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement nor an actual determination by the Company (including by its officers or Independent Counsel) that Indemnitee has not met the applicable standard of conduct for indemnification shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(c) Sixty Day Period for Determination. If the person, persons or entity empowered or selected under Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of an application therefor, a determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.
(d) No Presumption from Termination of a Proceeding. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere, or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and for a purpose which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(e) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action or failure to act is based on the records or books of account of the Company or any Enterprise other than the Company, including financial statements, or on information supplied to Indemnitee by the officers of the Company or any Enterprise other than the Company in the course of their duties, or on the advice of legal counsel for the Company or any Enterprise other than the Company or on information or records given or reports made to the Company or any Enterprise other than the Company by an independent certified public accountant or by an appraiser or other expert selected by the Company or any Enterprise other than the Company, except if the Indemnitee knew or had reason to know that such records or books of account of the Company, information supplied by the officers of the Company, advice of legal counsel or information or records given or reports made by an independent certified public accountant or by an appraiser or other expert were materially false or inaccurate. The provisions of this Section 12(e) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met any applicable standard of conduct.
(f) Actions of Others. The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, member, fiduciary, employee or agent of the Company or any Enterprise other than the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
13. REMEDIES OF INDEMNITEE.
(a) Adjudication/Arbitration. In the event that (i) a determination is
made pursuant to Section 11 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses is not timely
made pursuant to Section 9 of this Agreement, (iii) subject to Section 12(c), no
determination of entitlement to indemnification shall have been made pursuant to
Section 11(a) of this Agreement within 60 days after receipt by the Company of
the application for indemnification, or (iv) payment of indemnification is not
made pursuant to Sections 3, 4, 5, 6, 7 and 11(b) of this Agreement within ten
(10) days after a determination has been made that Indemnitee is entitled to
indemnification, or after receipt by the Company of a written request for any
additional monies owed with respect to a Proceeding as to which it already has
been determined that Indemnitee is entitled to indemnification, Indemnitee shall
be entitled to an adjudication by a court of his or her entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or
her option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. The Company shall not oppose Indemnitee's right to seek
any such adjudication or award in arbitration.
(b) Indemnitee Not Prejudiced by Prior Adverse Determination. In the event that a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of the prior adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 13, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) Company Bound by Prior Determination. If a determination shall have been made pursuant to Section 11(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) Expenses. In the event that Indemnitee, pursuant to this Section 13, seeks a judicial adjudication of or an award in arbitration to enforce his or her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication or arbitration if it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive all or part of the indemnification or
advancement of Expenses sought which the Company had disputed prior to the commencement of the judicial proceeding or arbitration.
(e) Advances of Expenses. If requested by Indemnitee, the Company shall (within ten (10) days after receipt by the Company of a written request therefore) advance to Indemnitee the Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, if the Indemnitee has submitted an undertaking to repay such Expenses if Indemnitee ultimately is determined to not be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be. The Indemnitee's financial ability to repay any such advances shall not be a basis for the Company to decline to make such advances.
(f) Precluded Assertions by the Company. The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
14. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
(a) Rights of Indemnitee Not Exclusive. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall, subject to Section 8 and Article VII of the Certificate of Incorporation, not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the By-Laws, any agreement, vote of stockholders or a resolution of officers, or otherwise. No right or remedy herein conferred by this Agreement is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent or subsequent assertion or employment of any other right or remedy.
(b) Survival of Rights. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.
(c) Change of Law. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change; provided, however, that in no event shall such change in law affect the limitations provided in Section 8(i) of the Certificate of Incorporation, as in effect on the date hereof.
(d) Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, trustee, partner, member, fiduciary, officer, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness or otherwise) the Company has director and officer liability insurance in effect that covers Indemnitee, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(e) Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(f) Other Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(g) Other Indemnification. The Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such Enterprise.
15. DURATION OF AGREEMENT. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as any of the following: a director, officer, agent or employee of the Company or as a director, officer, trustee, partner, member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee served at the request of the Company; or (b) one (1) year after the final termination of any Proceeding (including after the expiration of any rights of appeal) then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this Agreement (including any rights of appeal of any Proceeding commenced pursuant to Section 13). This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.
16. SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
17. ENFORCEMENT.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve, or to continue to serve, as a director, officer, employee and/or agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director, officer, employee and/or agent of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
18. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
19. D&O TAIL COVERAGE. Upon a Change of Control where a successor to all or substantially all of the assets of the Company does not agree to be bound by this Agreement, the Company shall either (i) use commercially best efforts to cause to be issued tail coverage extending its directors and officers liability insurance policy, such that it covers Indemnitee and is customary and reasonable under such circumstance, as determined by the Board in good faith, or (ii) if the Company has provided protection against liability to any director of the Company who is also an employee or nominee of MHR Fund Management LLC or its affiliates (each, an "MHR Director"), provide Indemnitee with no less than equivalent protection against liability than is provided by the Company to any MHR Director. Upon the Company's satisfaction of its obligations pursuant to this Section 19, Section 20 hereof shall cease to be of any force and effect.
20. [RESERVED]
21. SUCCESSORS AND BINDING AGREEMENT.
(a) This Agreement will inure to the benefit of and be enforceable by the Indemnitee's personal or legal representatives, executors, administrators, successors, heirs, distributees, legatees and other successors.
(b) This Agreement is personal in nature and neither of the parties
hereto will, without the consent of the other, assign or delegate this Agreement
or any rights or obligations hereunder except as expressly provided in Section
21(a). Without limiting the generality or effect of the foregoing, Indemnitee's
right to receive payments hereunder will not be assignable, whether by pledge,
creation of a security interest or otherwise, other than by a transfer by the
Indemnitee's will or by the laws of descent and distribution, and, in the event
of any attempted assignment or transfer contrary to this Section 21(b), the
Company will have no liability to pay any amount so attempted to be assigned or
transferred.
22. NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
if: (i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, on the date of such receipt, or
(ii) mailed by certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee subsequently shall provide in writing to the Company.
(b) If to the Company to:
Space Systems/Loral, Inc.
c/o Loral Space & Communications Inc.
600 Third Avenue
New York, New York 10016
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee in writing by the Company.
23. CONTRIBUTION. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is
deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
24. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws, principles or rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 13 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the "Delaware Court"), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) irrevocably appoint, to the extent such party is not a resident of the State of Delaware, Corporation Service Company; 2711 Centerville Road, Suite 400; Wilmington; New Castle County; Delaware 19808 as its agent in the State of Delaware as such party's agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
25. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
26. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
SPACE SYSTEMS/LORAL, INC
By: /s/ Bernard L. Schwartz
-----------------------------------
Name:
Title:
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INDEMNITEE
By: /s/ C. Patrick DeWitt
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Name: C. Patrick DeWitt
Address:
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Address for Notices:
EXHIBIT 10.6
AMENDMENT TO THE
SPACE SYSTEMS/LORAL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Loral Space & Communications Inc. (the "Company") sponsors the Space Systems/Loral, Inc. Supplemental Executive Retirement Plan (the "Plan"); and
WHEREAS, Bernard L. Schwartz is a participant in the Plan and was receiving monthly annuity benefits thereunder prior to the suspension of such benefits on March 1, 2004; and
WHEREAS, in connection with the Company's emergence from bankruptcy and pursuant to Section 3.10 of the Plan, Mr. Schwartz and the Company have agreed to amend the Plan to provide for a reduction of Mr. Schwartz's benefits under the Plan;
WHEREAS, all capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Plan;
NOW, THEREFORE, in consideration of certain premises and mutual covenants agreed upon by the Company and Mr. Schwartz, effective as of March 1, 2004, the Plan is hereby amended as follows (this amendment is hereinafter referred to as the "Amendment").
Section 2.1 of the Plan is amended to add the following new Section 2.1.3:
2.1.3 Formula Benefit for Mr. Schwartz. Notwithstanding any other provision of this Section 2.1 or the Plan, effective as of March 1, 2004 (the "Effective Date"), the annual benefit that Mr. Schwartz is entitled to under Section 2.1 of the Plan shall be $250,000 (the "Reduced Rate") subject to the following provisions:
2.1.3.1 Monthly Annuity Benefit Payments. The monthly annuity benefit payable to Mr. Schwartz under the Plan shall resume at the Reduced Rate commencing on the first normal monthly benefit payment date under the Plan following the date on which the Company's plan of reorganization in bankruptcy becomes effective on its terms (the "Resumption Date"). The first such monthly payment shall include a lump sum payment equal to the benefit amounts owed to Mr. Schwartz under the Plan at the Reduced Rate from the Effective Date through the Resumption Date.
2.1.3.2 Payments to Beneficiaries. To the extent that at the time of his
death Mr. Schwartz has received $1.5 million or more in benefits under the Plan
after the Effective Date (the "Minimum Amount"), neither his estate nor his
beneficiaries shall be entitled to any post-retirement death benefits under
Section 2.2 of the Plan or any other benefits under the Plan following Mr.
Schwartz's death. To the extent that Mr. Schwartz has received less than the
Minimum Amount from the Effective Date through the date of his death, following
his death his beneficiaries shall be entitled to the post-retirement death
benefits provided for under Section 2.2 of the Plan in an aggregate amount not
to exceed the excess of the Minimum Amount over the amount actually received by
Mr. Schwartz from the Effective Date through the date of his death.
2.1.3.3 Effect of Section 2.1.3. This Section 2.1.3 relates solely to the participation of and benefits payable to Mr. Schwartz under the Plan and has no effect on the participation of or benefits payable to any other Participant under the Plan. Except as expressly provided by this Section 2.1.3, the remaining terms and provisions of the Plan shall remain unchanged and continue in full force and effect.
This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused its name to be ascribed to this Amendment by its duly authorized representative and Mr. Schwartz has executed this Amendment as of the 21st day of November, 2005.
LORAL SPACE &
COMMUNICATIONS INC.
BY: /s/ Avi Katz
______________________________
NAME: Avi Katz
/s/ Bernard L. Schwartz
_________________________________
Bernard L. Schwartz
|
EXHIBIT 10.7
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
1. PURPOSE.
The purpose of the Plan is to assist the Company in attracting, retaining, motivating and rewarding Eligible Persons, and to promote the creation of long-term value for stockholders by closely aligning the interests of Participants with those of stockholders. The Plan authorizes the award of stock-based incentives to Participants to encourage such persons to expend their maximum efforts in the creation of stockholder value. The Plan is also intended to qualify certain compensation awarded under the Plan for tax deductibility under Section 162(m) of the Code to the extent deemed appropriate by the Committee which administers the Plan.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth below:
(a) "Affiliate" means, any other entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Company.
(b) "Award" means any award of an Option, SAR, Restricted Stock, Restricted Stock Unit, Stock granted as a bonus or in lieu of another award, or Other Stock-Based Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" with respect to any Participant (A) shall have the meaning set forth in the current effective employment or consulting agreement between the Company or an Affiliate, as applicable, and the Participant or (B) in the event that there is no such employment or consulting agreement or if there is no such definition in any such employment or consulting agreement, shall mean, (i) the Participant shall have been after the Effective Date convicted of, or shall have pleaded guilty or nolo contendere to, any felony or any other crime that would have constituted a felony under the laws of the State of New York; (ii) the Participant shall have been indicted for any felony or any other crime that would have constituted a felony under the laws of the State of New York in connection with or arising from the Participant's employment with the Company; (iii) the Participant shall have breached any material provision of any noncompetition, nonsolitation or confidentiality agreement with the Company or any Affiliate; (iv) the Participant shall have committed any fraud, embezzlement, misappropriation of funds, or breach of fiduciary duty against the Company or any Affiliate, in each case of a material nature; (v) the Participant shall have engaged in any willful misconduct resulting in or reasonably likely to result in a material loss to the Company or substantial damage to its reputation; or (vi) the Participant willfully breaches in any material respect any material provision of the Company's Code of Conduct and, to the extent any such breach is curable, the Participant has failed to cure such breach within ten (10) days after written notice of the alleged breach is provided to the Participant.
(e) "Change in Control" shall be deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the Exchange Act, and as used in Sections 13(d) and 14(d) thereof, including any "group" as defined in Section 13(d)(3) thereof (a "Person"), but excluding the Company, any Affiliate, any employee benefit plan sponsored or maintained by the Company or any Affiliate (including any trustee of such plan acting as trustee), and any Person who owns 20% or more of the total number of votes that may be cast for the election of directors of the Company (the "Voting Shares") as of the Effective Date, becomes the beneficial owner of 35% of the "Voting Shares"; (ii) the Company undergoes any merger, consolidation, reorganization, recapitalization or other similar business transaction, sale of all or substantially all of the Company's assets or combination of the foregoing transactions (a "Transaction"), other than a Transaction involving only the Company and one or more Affiliates, and immediately following such Transaction the shareholders of the Company immediately prior to the Transaction do not continue to own at least a majority of the voting power in the resulting entity; (iii) the persons who are the original members of the Board pursuant to the Plan of Reorganization (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of members of the Board or the board of directors of any successor to the Company, provided that any director who was not a director as of the Effective Date shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least a majority of the directors who then qualified as Incumbent Directors, either actually or by prior operation of this definition; or (iv) the shareholders of the Company approve a plan of liquidation or dissolution of the Company, or any such plan is actually implemented.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.
(g) "Committee" means a committee of two or more directors designated by the Board to administer the Plan; provided, however, that directors appointed as members of the Committee shall not be employees of the Company or any subsidiary. In appointing members of the Committee, the Board will consider whether a member is or will be a Qualified Member, but such members are not required to be Qualified Members at the time of appointment or during their term of service on the Committee, and no action of the Committee shall be void or invalid due to the participation of a member who is not a Qualified Member. If no Committee has been appointed, or if the Committee has been disbanded, or if the Board makes a determination to assume any or all powers of the Committee, any reference herein shall be deemed to be a reference to the Board; provided, however that if the Board acts as the Committee, each member of the Board who is not a an independent member of the Board under the NASDAQ independence requirements shall recuse himself or herself from any such Board action.
(h) "Company" means Loral Space & Communications Inc., a Delaware corporation.
(i) "Disability" means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.
(j) "Dividend Equivalents" shall have the meaning set forth in
Section 9 hereof.
(k) "Effective Date" shall have the meaning set forth in Section 21 hereof.
(l) "Eligible Person" means each employee of the Company or of any Affiliate, including each such person who may also be a director of the Company, each non-employee director of the Company or an Affiliate, each other person who provides substantial services to the Company and/or its Affiliates and who is designated as eligible by the Committee, and any person who has been offered employment by the Company or an Affiliate, provided that such prospective employee may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or an Affiliate. An employee on an approved leave of absence may be considered as still in the employ of the Company or an Affiliate for purposes of eligibility for participation in the Plan.
(m) "Employer" means either the Company or an Affiliate that the Participant (determined without regard to any transfer of an Award) is employed by or provides services to, as applicable.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
(o) "Expiration Date" means the date upon which the term of an Option, as determined under 6(b) hereof, or SAR, as determined under Section 7(a)(ii) hereof expires.
(p) "Fair Market Value" means on any date (A) if the Stock is listed on a national securities exchange, the mean between the highest and lowest sale prices reported as having occurred on the primary exchange with which the Stock is listed and traded on the date prior to such date, or, if there is no such sale on that date, then on the last preceding date on which such a sale was reported, (B) if the Stock is not listed on any national securities exchange but is quoted in the National Market System of the National Association of Securities Dealers Automated Quotation System ("NASDAQ-NMS") on a last sale basis, the average between the high bid price and low ask price reported on the date prior to such date, or, if there is no such sale on that date then on the last preceding date on which such a sale was reported, or (C) if the Stock is not listed on any national securities exchange or quoted in NASDAQ-NMS, but is traded in the over-the-counter market bulletin board or pink sheets on a last sale basis, the average between the high bid price and low ask price reported on the date prior to such date, or, if there is no such sale on that date then on the last preceding date on which such a sale was reported; provided, however, that for purposes of the Initial Option Grant, the Fair Market Value shall be the weighted average of the aggregate sale prices of the Stock reported for the ten trading days immediately preceding the grant date; and further provided, however, that if such definition of Fair Market Value for Options granted in connection with the Plan of Reorganization does not comply with the definition of fair market value for purposes of Section 409A of the Code or if such definition would give rise to variable accounting treatment of such Options, then Fair Market Value for such Options shall have the meaning attributable thereto in clauses (A), (B) or (C) above, as applicable, or such other meaning which complies with Section 409A and does not give rise to variable accounting treatment. If the Stock is not listed on an exchange, quoted on NASDAQ-NMS or traded in the over-the-counter market, or representative quotes are not otherwise available, the Fair Market Value shall mean the amount determined by the Board in good faith to be the fair market value per share of Stock, on a fully diluted basis.
(q) "Good Reason" with respect to any Participant (A) shall have the
meaning set forth in the current effective employment or consulting agreement
between the Company or an Affiliate, as applicable, and the Participant or (B)
in the event that there is no such employment or consulting agreement or if
there is no such definition in any such employment or consulting agreement,
shall mean, (i) the assignment to the Participant of any duties inconsistent in
any substantial respect with the Participant's position, authority or
responsibilities to or with the Company or an Affiliate, as applicable, or any
duties which are illegal or unethical or any diminution of any of the
Participant's significant duties; (ii) any reduction in base salary, or to the
extent guaranteed by a contract with the Company or an Affiliate, as applicable,
the Participant's target annual bonus or any of the benefits provided for in any
such contract to the extent such reduction is not permitted under the terms of
any such contract; (iii) the relocation by the Company of the Participant's
primary place of employment with the Company to a location not within a thirty
(30) mile radius of such place of employment as of the Effective Date; provided,
however, that such relocation shall not be considered Good Reason if such
location is closer to the Participant's home than the Participant's primary
place of employment as of the Effective Date; (iv) any material breach of any
employment or consulting agreement with the Participant by the Company, or an
Affiliate, as appropriate; or (v) the failure of the Company to obtain the
assumption in writing of its obligation to perform any employment or consulting
agreement with the Participant by any successor to all or substantially all of
the assets of the Company.
(r) "Initial Option Grant" shall mean the automatic award of options under the Plan as set forth in Section 6(h).
(s) "Mature Shares" means (A) shares of Stock for which the Participant has good title, free and clear of all liens and encumbrances, and which the Participant either (i) has held for at least six months or (ii) has purchased on the open market or (B) such shares as determined by the Committee.
(t) "New Skynet" shall have the meaning ascribed thereto in the Plan of Reorganization.
(u) "New Skynet Sale Event" means a sale of all or substantially all of the common stock or assets of New Skynet.
(v) "New SS/L" shall have the meaning ascribed thereto in the Plan of Reorganization.
(w) "New SS/L Sale Event" means a sale of all or substantially all of the common stock or assets of New SS/L.
(x) "Option" means a conditional right, granted to a Participant under Section 6 hereof, to purchase Stock at a specified price during specified time periods.
(y) "Option Agreement" means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant.
(z) "Other Stock-Based Awards" means Awards granted to a Participant under Section 11 hereof.
(aa) "Participant" means an Eligible Person who has been granted an Award under the Plan which remains outstanding, or if applicable, such other person or entity who holds an outstanding Award.
(bb) "Plan" means this Loral Space & Communications Inc. 2005 Stock Incentive Plan.
(cc) "Plan of Reorganization" means the Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of Loral Space & Communications Ltd. et al.
(dd) "Proprietary Information" with respect to any Participant means all confidential specifications, know-how, strategic or technical data, marketing research data, product research and development data, manufacturing techniques, confidential customer lists, sources of supply and trade secrets, all of which are confidential to the Company, or any of its Affiliates, and may be proprietary and are owned or used by the Company, or any of its Affiliates, including any and all of such enumerated items coming within the scope of the business of the Company, or any of its Affiliates, as to which the Participant may have access, whether conceived or developed by others or by the Participant, alone or with others, during the Participant's period of service with the Company, and whether or not conceived or developed during regular working hours. However, Proprietary Information shall not include any records, data or information which are in the public domain during the Participant's service with the Company or after the Participant's service with the Company has terminated, provided the same are not in the public domain as a consequence of disclosure by the Participant.
(ee) "Qualified Member" means a member of the Committee who is a "Non-Employee Director" within the meaning of Rule 16b-3 and an "outside director" within the meaning of Regulation 1.162-27(c) under Code Section 162(m).
(ff) "Restricted Stock" means Stock granted to a Participant under
Section 8 hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(gg) "Restricted Stock Agreement" means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Restricted Stock grant.
(hh) "Restricted Stock Unit" means a notional unit representing the right to receive one share of Stock on the Settlement Date.
(ii) "Restricted Stock Unit Agreement" means a written agreement between the Company and a Participant evidencing the terms and conditions of an individual Restricted Stock Unit grant.
(jj) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.
(kk) "Section 409A" shall mean Section 409A of the Code and the rules and regulations promulgated thereunder, including Treasury Regulation 2005-1.
(ll) "Securities Act" means the Securities Act of 1933, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
(mm) "Senior Management Employee" means an employee of the Company designated by the Chief Executive Officer of the Company as a Senior Management Employee.
(nn) "Settlement Date" shall have the meaning set forth in Section 9 hereof.
(oo) "Stock" means the Company's Common Stock, $.01 par value, and such other securities as may be substituted for Stock pursuant to Section 12 hereof.
(pp) "Stock Appreciation Right" or "SAR" means a conditional right granted to a Participant under Section 7 hereof.
3. ADMINISTRATION.
(a) Authority of the Committee. Except as otherwise provided below, the Plan shall be administered by the Committee. The Committee shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to (i) select Eligible Persons to become Participants; (ii) grant Awards; (iii) determine the type, number, and other terms and conditions of, and all other matters relating to, Awards; (iv) prescribe Award agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan; (v) construe and interpret the Plan and Award agreements and correct defects, supply omissions, or reconcile inconsistencies therein; and (vi) make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. The foregoing notwithstanding, the Board shall perform the functions of the Committee for purposes of granting Awards under the Plan to non-employee directors. In any case in which the Board is performing a function of the Committee under the Plan, each reference to the Committee herein shall be deemed to refer to the Board, except where the context otherwise requires. Any action of the Committee shall be final, conclusive and binding on all persons, including, without limitation, the Company, its Affiliates, Eligible Persons, Participants and beneficiaries of Participants.
(b) Manner of Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, (i) any action of the Committee relating to an Award intended by the Committee to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code and regulations thereunder may be taken by a subcommittee, designated by the Committee or the Board, composed solely of two or more Qualified Members; and (ii) any action relating to an Award granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Company may be taken either by such a subcommittee or by the Committee but with each such member
who is not a Qualified Member abstaining or recusing himself or herself from such action, provided that, upon such abstention or recusal, the Committee remains composed of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of the Plan. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.
(c) Delegation. The Committee may delegate to officers or employees of the Company or any Affiliate, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including but not limited to administrative functions, as the Committee may determine appropriate. The Committee may appoint agents to assist it in administering the Plan. Notwithstanding the foregoing or any other provision of the Plan to the contrary, any Award granted under the Plan to any person or entity who is not an employee of the Company or any of its Affiliates shall be expressly approved by the Committee.
4. SHARES AVAILABLE UNDER THE PLAN.
(a) Number of Shares Available for Delivery. Subject to adjustment as provided in Section 12 hereof, the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be 1,390,452. Shares of Stock delivered under the Plan shall consist of authorized and unissued shares or previously issued shares of Stock reacquired by the Company on the open market or by private purchase.
(b) Share Counting Rules. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award. To the extent that an Award expires or is canceled, forfeited, settled in cash or otherwise terminated or concluded without a delivery to the Participant of the full number of shares to which the Award related, the undelivered shares will again be available for Awards. Shares withheld in payment of the exercise price or taxes relating to an Award and shares equal to the number surrendered in payment of any exercise price or taxes relating to an Award shall be deemed to constitute shares not delivered to the Participant and shall be deemed to again be available for Awards under the Plan; provided, however, that, where shares are withheld or surrendered more than ten years after the date of the most recent shareholder approval of the Plan or any other transaction occurs that would result in shares becoming available under this Section 4(b), such shares shall not become available if and to the extent that it would constitute a material revision of the Plan subject to shareholder approval under then applicable rules of the principle stock exchange or automated quotation system on which the shares are then listed or designated for trading.
5. ELIGIBILITY; LIMITATIONS ON AWARDS.
(a) Grants to Eligible Persons. Awards may be granted under the Plan only to Eligible Persons.
(b) 162(m) Limitation. Subject to Section 12 relating to adjustments, no Employee shall be eligible to be granted Options or Stock Appreciation Rights covering more than 500,000 shares of Stock during any calendar year.
6. OPTIONS.
(a) General. Except as provided in the Initial Option Grant, Options granted hereunder shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The provisions of separate Options shall be set forth in an Option Agreement, which agreements need not be identical.
(b) Term. Except as provided in the Initial Option Grant, the term of each Option shall be set by the Committee at the time of grant; provided, however, that no Option granted hereunder shall be exercisable after the expiration of ten (10) years from the date it was granted.
(c) Exercise Price. Except as provided in the Initial Option Grant, the exercise price per share of Stock for each Option shall be set by the Committee at the time of grant but shall not be less than the par value of a share of Stock.
(d) Payment for Stock. Payment for shares of Stock acquired pursuant to Options granted hereunder shall be made in full, upon exercise of the Options in immediately available funds in United States dollars, by certified or bank cashier's check or, in the discretion of the Committee, (i) by surrender to the Company of Mature Shares held by the Participant; (ii) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of sale or loan proceeds sufficient to pay the aggregate Option exercise price; (iii) through a net exercise of the Options whereby the Participant instructs the Company to withhold that number of shares of Stock having a Fair Market Value equal to the aggregate exercise price of the Options being exercised and deliver to the Participant the remainder of the shares subject to exercise or (iv) by any other means approved by the Committee. Anything herein to the contrary notwithstanding, the Company shall not directly or indirectly extend or maintain credit, or arrange for the extension of credit, in the form of a personal loan to or for any director or executive officer of the Company through the Plan in violation of Section 402 of the Sarbanes-Oxley Act of 2002 ("Section 402 of SOX"), and to the extent that any form of payment would, in the opinion of the Company's counsel, result in a violation of Section 402 of SOX, such form of payment shall not be available.
(e) Vesting. Except as provided in the Initial Option Grant, Options shall vest and become exercisable in such manner and on such date or dates set forth in the Option Agreement, as may be determined by the Committee; provided, however, that notwithstanding any vesting dates contained herein or otherwise set by the Committee, the Committee may in its sole discretion accelerate the vesting of any Option, which acceleration shall not affect the terms and conditions of any such Option other than with respect to vesting. Unless otherwise specifically determined by the Committee and except for Options that are specifically subject to automatic accelerated vesting upon termination of employment, the vesting of an Option shall occur only while the Participant is employed or rendering services to the Company or an Affiliate and all vesting shall cease upon a Participant's termination of employment or services
for any reason. If an Option is exercisable in installments, such installments or portions thereof which become exercisable shall remain exercisable until the Option expires either on the Expiration Date or earlier following a termination of employment as set forth in the Option Agreement. Unless otherwise determined by the Committee, Options shall vest only as to full shares of Stock, rounded down to the nearest full share, except that the last tranche to vest with respect to any Option Award shall encompass the full number of shares subject to the Option Award.
(f) Transferability of Options. An Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. Notwithstanding the foregoing, Options shall be transferable to the extent provided in the Option Agreement or as otherwise determined by the Committee.
(g) Termination of Employment or Service. Except as provided in the Initial Option Grant or as may otherwise be provided by the Committee in the Option Agreement other than with respect to the Initial Option Grant:
(i) If prior to the Expiration Date, a Participant's employment or service, as applicable, with the Employer terminates for any reason other than (A) by the Employer for Cause, or (B) by reason of the Participant's death or Disability, (1) all vesting with respect to the Options shall cease, (2) any unvested Options shall expire as of the date of such termination, and (3) any vested Options shall remain exercisable until the earlier of the Expiration Date or the date that is three (3) months after the date of such termination.
(ii) If prior to the Expiration Date, a Participant's
employment or service, as applicable, with the Employer terminates by
reason of such Participant's death or Disability, (A) all vesting with
respect to the Options shall cease, (B) any unvested Options shall expire
as of the date of such termination, and (C) any vested Options shall
expire on the earlier of the Expiration Date or the date that is twelve
(12) months after the date of such termination due to death or Disability
of the Holder. In the event of a Participant's death, the Options shall
remain exercisable by the person or persons to whom a Participant's rights
under the Options pass by will or the applicable laws of descent and
distribution until its expiration, but only to the extent the Options were
vested by such Participant at the time of such termination due to death.
(iii) If prior to the Expiration Date, a Participant's employment or service, as applicable, with the Employer is terminated by the Employer for Cause, all Options (whether or not vested) shall immediately expire as of the date of such termination.
(h) Initial Option Grant. On the date that is thirty days following the Effective Date, the individuals listed on the schedule approved by the Board of Directors of Loral Space & Communications Ltd. to be granted Options pursuant to the Plan upon the Company's emergence from bankruptcy (the "Approved List") shall automatically be granted Options with respect to the number of shares listed across from each individuals name on the Approved List. The Options granted to those individuals identified as Senior Management on the Approved List shall
have such terms and conditions as set forth in the Option Agreement for Senior Management, attached as Exhibit A hereto. The Options granted to those individuals identified as Non-Senior Management on the Approved List shall have such terms and conditions as set forth in the Option Agreement for Non-Senior Management, attached as Exhibit B hereto.
7. STOCK APPRECIATION RIGHTS.
(a) General. The Committee is authorized to grant SARs to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise, or if necessary to conform to the requirements of 409A, on each vesting date thereof, the value of the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.
(ii) Term. The term of each SAR shall be set by the Committee at the time of grant; provided, however, that no SAR granted hereunder shall be exercisable after the expiration of ten (10) years from the date it was granted.
(iii) Grant Price. The grant price per share of Stock for each SAR shall be set by the Committee at the time of grant.
(iv) Other Terms. The Committee shall determine at the date of grant or thereafter: (A) the time or times at which and the circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements); (B) the method of exercise; (C) the method of settlement; (D) whether cash or Stock will be payable to the Participant upon exercise of the SAR; (E) the method by or forms in which Stock will be delivered or deemed to be delivered to Participants; (F) whether or not a SAR shall be alone, in tandem or in combination with any other Award; and (G) and any other terms and conditions of any SAR.
(b) Termination of Employment or Service. Except as may otherwise be provided by the Committee in the applicable Award agreement:
(i) If prior to the Expiration Date, a Participant's employment or service, as applicable, with the Employer terminates for any reason other than (A) by the Employer for Cause, or (B) by reason of the Participant's death or Disability, (1) all vesting with respect to the SARs shall cease, (2) any unvested SARs shall expire as of the date of such termination, and (3) any vested SAR shall remain exercisable until the earlier of the Expiration Date or the date that is ninety (90) days after the date of such termination.
(ii) If prior to the Expiration Date, a Participant's employment or service, as applicable, with the Employer terminates by reason of such Participant's death or Disability, (A) all vesting with respect to the SARs shall cease, (B) any unvested SARs shall expire as of the date of such termination, and (C) any vested SARs shall expire on
the earlier of the Expiration Date or the date that is twelve (12) months after the date of such termination due to death or Disability of the Holder. In the event of a Participant's death, the SARs shall remain exercisable by the person or persons to whom a Participant's rights under the SARs pass by will or the applicable laws of descent and distribution until its expiration, but only to the extent the SARs were vested by such Participant at the time of such termination due to death.
(iii) If prior to the Expiration Date, a Participant's employment or service, as applicable, with the Employer is terminated by the Employer for Cause, all SARs (whether or not vested) shall immediately expire as of the date of such termination, and such Participant shall have no further rights with respect thereto.
8. RESTRICTED STOCK.
(a) General. Restricted Stock granted hereunder shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The terms and conditions of each Restricted Stock grant shall be evidenced by a Restricted Stock Agreement, which agreements need not be identical. Subject to the restrictions set forth in Section 8(b), except as otherwise set forth in the applicable Restricted Stock Agreement, the Participant shall generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock. The Committee shall determine whether or not dividends shall accrue on shares of Restricted Stock. At the discretion of the Committee, cash dividends and stock dividends, if any, with respect to the Restricted Stock may be either currently paid to the Participant or withheld by the Company for the Participant's account. A Participant's Restricted Stock Agreement may provide that cash dividends or stock dividends so withheld shall be subject to forfeiture to the same degree as the shares of Restricted Stock to which they relate. Except as otherwise determined by the Committee, no interest will accrue or be paid on the amount of any cash dividends withheld.
(b) Restrictions on Transfer. In addition to any other restrictions set forth in a Participant's Restricted Stock Agreement, until such time that the Restricted Stock has vested pursuant to the terms of the Restricted Stock Agreement, which vesting the Committee may in its sole discretion accelerate at any time, the Participant shall not be permitted to sell, transfer, pledge, or otherwise encumber the Restricted Stock. Notwithstanding anything contained herein to the contrary, the Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted Stock Award, such action is appropriate.
(c) Certificates. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, that
the Restricted Stock shall be held in book entry form rather than delivered to the Participant pending the release of the applicable restrictions.
(d) Termination of Employment or Service. Except as may otherwise be provided by the Committee in the Restricted Stock Agreement, if, prior to the time that the Restricted Stock has vested, a Participant's employment or service, as applicable, terminates for any reason, (i) all vesting with respect to the Restricted Stock shall cease, and (ii) at any time following such termination, and upon written notice to the Participant, the Company shall have the right to repurchase from the Participant any unvested shares of Restricted Stock at a purchase price equal to the original purchase price paid for the Restricted Stock, or if the original purchase price is $0, such unvested shares of Restricted Stock shall be forfeited by the Participant for no consideration.
9. RESTRICTED STOCK UNITS
(a) General. Restricted Stock Units granted hereunder shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. The terms and conditions of each Restricted Stock Unit grant shall be evidenced by a Restricted Stock Unit Agreement. No shares of Stock shall be issued at the time a Restricted Stock Unit grant is made, and the Company will not be required to set aside a fund for the payment of any such Award; provided, however, that for purposes of Section 4(a) hereof, a share of Stock shall be deemed awarded at the time of grant. The Committee shall determine whether or not dividends shall accrue on Restricted Stock Units. If the Committee so determines, recipients of Restricted Stock Units shall be entitled to an amount equal to the cash dividends paid by the Company upon one share of Stock for each Restricted Stock Unit then credited to such recipient's account ("Dividend Equivalents"). The Committee shall, in its sole discretion, determine whether to credit to the account of, or to currently pay to, such Participant the Dividend Equivalents. A Participant's Restricted Stock Unit Agreement may provide that Dividends Equivalents shall be subject to forfeiture to the same degree as the shares of Restricted Stock Units to which they relate. Except as otherwise determined by the Committee, no interest will accrue or be paid on Dividend Equivalents credited to a recipient's account.
(b) Conditions of Grant. Restricted Stock Units awarded to any Eligible Person shall be subject to (i) forfeiture until the expiration of the restricted period, to the extent provided in the Restricted Stock Unit Agreement, and to the extent such Awards are forfeited, all rights of the recipient to such Awards shall terminate without further obligation on the part of the Company, and (ii) such other terms and conditions as may be set forth in the applicable Award agreement. Notwithstanding anything contained herein to the contrary, the Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock Units whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted Stock Unit Award, such action is appropriate.
(c) Settlement of Restricted Stock Units. Upon a date or dates on or following the expiration of the restricted period as shall be determined by the Committee and set forth in a Participant's Restricted Stock Unit Agreement (the "Settlement Date(s)"), unless earlier forfeited, the Company shall settle the Restricted Stock Unit by delivering (i) a number of shares of Stock equal to the number of Restricted Stock Units then vested and not otherwise
forfeited, and (ii) if applicable, a number of shares of Stock having a value equal to any unpaid Dividend Equivalents accrued with respect to the Restricted Stock Units. The Company may, in the Committee's sole discretion, settle a Restricted Stock Unit Award in (A) cash, (B) in the delivery of shares of Stock or other property, (C) partially in cash and partially in the delivery of shares of Stock and/or other property, or (D) partially in the delivery of shares of Stock and partially in the delivery of other property. A settlement in cash or other property shall be based on the value of the shares of Stock otherwise to be delivered on the Settlement Date.
(d) Creditor's Rights. A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Agreement.
(e) Termination of Employment or Service. Except as may otherwise be provided in by the Committee in the Restricted Stock Unit Agreement, if, prior to the time that the Restricted Stock Unit has vested, a Participant's employment or service, as applicable, terminates for any reason, all Restricted Stock Units that have not vested on or prior the date of such termination shall be forfeited, and vested Restricted Stock Units shall be settled as soon as practicable following the date of such termination; provided, however, if such Participant's employment or service, as applicable, was terminated by the Employer for Cause, all Restricted Stock Units, whether or not then vested, shall be forfeited, and such Participant shall have no further rights with respect thereto.
10. BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS.
The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations of the Company or a subsidiary of the Company under the Plan or under other plans or compensatory arrangements, subject to such terms and conditions as shall be determined by the Committee.
11. OTHER STOCK-BASED AWARDS.
The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of the Plan.
12. ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
(a) Capitalization Adjustments. The aggregate number of shares of Stock which may be granted or purchased pursuant to Awards granted hereunder, the number of shares of Stock covered by each outstanding Award, the maximum number of shares of Stock with respect to which any one person may be granted Options or Stock Appreciation Rights in any calendar year, and the price per share thereof in each such Award shall be equitably and proportionally adjusted or substituted, as determined by the Committee in good faith and in its sole discretion, as to the number, price or kind of a share of Stock or other consideration subject to such Awards or as otherwise determined by the Committee in good faith to be fair and equitable (i) in the event of changes in the outstanding Stock or in the capital structure of the
Company by reason of stock dividends or extraordinary dividends payable in cash or any other form of consideration, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Award, (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any substantial dilution or enlargement of the rights granted to, or available for, Participants in the Plan, or (iii) for any other reason which the Committee determines, in its sole discretion and acting in good faith, to otherwise warrant equitable adjustment. Absent manifest error, any adjustment shall be conclusively determined by the Committee; provided, in each case, the fair value of the Option immediately following any such adjustment shall be equal to the fair value of the Option immediately prior to such adjustment.
(b) Capital Distribution. In the event that there is a capital distribution to all holders of Stock (whether as a result of a borrowing or other form of distribution) then the number of shares of Stock available for delivery in connection with Awards under the Plan and exercise price and number of shares of Stock subject to exercise of all outstanding Options shall be equitably adjusted to reflect the change in value of the outstanding Stock as a result of such distribution.
(c) Fractional Shares. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an Award.
13. CHANGE IN CONTROL
(a) Change in Control of the Company. In the event of a Change in Control all outstanding Awards shall become immediately vested and exercisable, the restrictions thereon shall lapse and all such Awards shall become immediately payable or subject to settlement. In the event of a Change in Control, it will not be a violation of Section 19 hereunder for the Committee to cancel any or all outstanding Awards in exchange for a cash payment to each Award holder having a value equal to the value of each such Award at the time of such Change in Control. Furthermore, it will not be a violation of Section 19 hereunder for the Committee to cancel, without any such payment, any or all outstanding Awards having no value at the time of such Change in Control.
(b) New Skynet or New SS/L Sale Event/Subsidiary Employees. In the event of a New Skynet Sale Event, all outstanding Awards held by employees or service providers of New Skynet shall become immediately vested and exercisable, the restrictions thereon shall lapse and all such Awards shall become immediately payable or subject to settlement. In the event of a New SS/L Sale Event, all outstanding Awards held by employees or service providers of New SS/L shall become immediately vested and exercisable, the restrictions thereon shall lapse and all such Awards shall become immediately payable or subject to settlement. Moreover, notwithstanding any limits on the exercisability of any Option following a Participant's termination of employment with New Skynet or New SS/L, as applicable, as set forth in any Option Agreement, Options held by employees or service providers of New Skynet or New SS/L, as applicable, shall remain exercisable for the shorter of (i) one year following the New Skynet Sale Event or New SS/L Sale Event, as applicable or (ii) the remaining term of the Option as set forth in the Option Agreement.
(c) New Skynet or New SS/L Sale Event/Corporate Headquarters Employees. In the event of a New Skynet Sale Event or a New SS/L Sale Event, (i) 50% of all outstanding unvested Awards held by employees of the Company assigned to the Company's corporate headquarters shall become immediately vested and exercisable, the restrictions thereon shall lapse and all such Awards shall become immediately payable or subject to settlement if the New Skynet Sale Event or a New SS/L Sale Event occurs on or prior to the first anniversary of the Effective Date, or (ii) one-third of all outstanding unvested Awards held by employees of the Company assigned to the Company's corporate headquarters shall become immediately vested and exercisable, the restrictions thereon shall lapse and all such Awards shall become immediately payable or subject to settlement if the New Skynet Sale Event or a New SS/L Sale Event occurs after the first anniversary but on or prior to the second anniversary of the Effective Date.
(d) Change in Control under Section 409A. Notwithstanding anything herein to the contrary, to the extent that any Award hereunder, either in whole or in part, is deemed to provide for the deferral of compensation within the meaning of Section 409A, there shall be no distribution of any such deferred compensation on account of a Change in Control, a New Skynet Sale Event or a New SS/L Sale Event unless such event also constitutes a "Change in Control Event" within the meaning of Section 409A or such distribution is otherwise allowable under Section 409A.
14. USE OF PROCEEDS.
The proceeds received from the sale of Stock pursuant to the Plan shall be used for general corporate purposes.
15. RIGHTS AND PRIVILEGES AS A STOCKHOLDER.
Except as otherwise specifically provided in the Plan, no person shall be entitled to the rights and privileges of stock ownership in respect of shares of Stock which are subject to Awards hereunder until such shares have been issued to that person.
16. EMPLOYMENT OR SERVICE RIGHTS.
No individual shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. Neither the Plan nor any action taken hereunder shall be construed as giving any individual any right to be retained in the employ or service of the Company or an Affiliate.
17. COMPLIANCE WITH LAWS.
The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell and shall be prohibited from offering to sell or selling any shares of Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale or resale under the Securities Act any of the shares of Stock to be offered or sold under the Plan or any shares of Stock issued upon exercise or settlement of Awards. If the shares of Stock offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer of such shares and may legend the Stock certificates representing such shares in such manner as it deems advisable to ensure the availability of any such exemption.
18. WITHHOLDING OBLIGATIONS.
As a condition to the exercise or vesting, as applicable, of any Award, the Committee may require that a Participant satisfy, through deduction or withholding from any payment of any kind otherwise due to the Participant, or through such other arrangements as are satisfactory to the Committee, the minimum amount of all Federal, state and local income and other taxes of any kind required to be withheld in connection with such vesting or exercise. The Committee, in its discretion, may permit shares of Stock to be used to satisfy tax withholding requirements and such shares shall be valued at their Fair Market Value as of the settlement date of the Award.
19. AMENDMENT OF THE PLAN OR AWARDS.
(a) Amendment of Plan. The Board at any time, and from time to time, may amend the Plan; provided, however, that without further stockholder approval the Board shall not make any amendment to the Plan which would increase the maximum number of shares of Stock which may be issued pursuant to Awards under the Plan, except as contemplated by Section 12 hereof, or, which would otherwise violate the shareholder approval requirements of the national securities exchange on which the Stock is listed or Nasdaq, as applicable.
(b) No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless the Participant consents in writing.
(c) Amendment of Stock Awards. The Committee, at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the rights under any Award shall not be impaired by any such amendment unless the Participant consents in writing.
20. TERMINATION OR SUSPENSION OF THE PLAN.
The Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board and no Awards may be granted under the Plan after it is terminated; provided, however, that the Plan shall continue to be administered with respect to outstanding Awards until all such Awards have been fully exercised or otherwise expire by their terms.
21. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective as of the effective date of the Plan of Reorganization.
22. MISCELLANEOUS.
(a) Awards to Participants Outside of the United States. The Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant's residence or employment abroad, shall be comparable to the value of such Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 22(a) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is modified.
(b) No Liability of Committee Members. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
(c) Payments Following Accidents or Illness. If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.
(d) Designation and Change of Beneficiary. Each Participant may file with the Company a written designation of one or more persons as the beneficiary who shall be entitled to receive the rights or amounts payable with respect to an Award due under the Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Company shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received
by the Company prior to the Participant's death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by the Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate. Any beneficiary of the Participant receiving an Award hereunder shall remain subject to the terms of the Plan and the applicable Award agreement.
(e) Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware without reference to the principles of conflicts of laws thereof.
(f) Funding. No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.
(g) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in relying, acting or failing to act, and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and its Affiliates and upon any other information furnished in connection with the Plan by any person or persons other than himself.
(h) Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.
(i) Section 409A Compliance. To the extent that any payments or
benefits provided hereunder are considered deferred compensation subject to
Section 409A, the Company intends for this Agreement to comply with the
standards for nonqualified deferred compensation established by 409A (the "409A
Standards"). To the extent that any terms of the Plan would subject Participants
to gross income inclusion, interest or an additional tax pursuant to Section
409A, those terms are to that extent superseded by the 409A Standards. The
Company reserves the right to amend Awards granted hereunder to cause such
Awards to comply with or be exempt from Section 409A.
EXHIBIT A
[FORM OF SENIOR MANAGEMENT OPTION AGREEMENT]
EXHIBIT B
[FORM OF NON-SENIOR MANAGEMENT OPTION AGREEMENT]
EXHIBIT 10.8
SENIOR MANAGEMENT
NON-QUALIFIED
STOCK OPTION AGREEMENT
UNDER
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of this _____ day of ________, ____ (the "Grant Date"), by and between Loral Space & Communications Inc., a Delaware corporation (the "Company"), and _______________ (the "Optionee").
WHEREAS, the Optionee is employed by or providing services to the Company or an Affiliate in a key capacity, and the Company desires to have Optionee remain in such employment or service and to afford Optionee the opportunity to acquire, or enlarge, Optionee's stock ownership of the Company's Common Stock, par value $.01 per share (the "Stock"), so that Optionee may have a direct proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall have the same meaning as set forth in Company's 2005 Stock Incentive Plan (the "Plan").
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the terms and conditions set forth herein and
in the Plan, the Company hereby grants to the Optionee, during the period
commencing on the Grant Date and ending on the date that is seven years
from the Grant Date (the "Option Period"), the right and option (the right
to purchase any one share of Stock hereunder being an "Option") to
purchase from the Company, at an exercise price of [$____] per share (the
"Option Price"), an aggregate of [______] shares of Stock (the "Share
Number"). The Options are not intended to be "incentive stock options", as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.
[NOTE: SUBJECT TO COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED ("SECTION 409A"), THE OPTIONS SHALL HAVE A PER
SHARE EXERCISE PRICE OF $19.00 (THE "TARGET EXERCISE PRICE"). SECTION
409A, PLACES CERTAIN RESTRICTIONS ON STOCK OPTIONS THAT HAVE A PER SHARE
EXERCISE PRICE LESS THAN THE FAIR MARKET VALUE OF A SHARE OF THE
UNDERLYING STOCK AT THE TIME OF GRANT. IF THE TARGET EXERCISE PRICE IS
LESS THAN THE FAIR MARKET VALUE OF A SHARE OF STOCK ON THE GRANT DATE (THE
"GRANT DATE VALUE"), THE OPTIONS SHALL HAVE AN OPTION PRICE EQUAL TO THE
GRANT DATE VALUE RATHER THAN THE TARGET EXERCISE PRICE.]
[NOTE: IF THE TARGET EXERCISE PRICE IS LESS THAN THE GRANT DATE VALUE, THE COMPANY SHALL ESTABLISH A DEFERRED COMPENSATION BOOKKEEPING ACCOUNT FOR THE OPTIONEE AND INCLUDE THE FOLLOWING SECTION IN THIS OPTION AGREEMENT.]
2. [DEFERRED COMPENSATION ACCOUNT. As of the Grant Date, the Company shall establish a deferred compensation bookkeeping account for the Optionee (the "Deferred Compensation Account") and shall credit to the Deferred Compensation Account a dollar amount equal to (A) the difference between the Option Price and $19.00 (the "Target Exercise Price"), multiplied by (B) the Share Number. The Deferred Compensation Account shall become vested in the same proportion as the Options vest and becomes exercisable, including any accelerated vesting upon (A) a termination of the Optionee's employment or service by the Company or an Affiliate without Cause, (B) a termination of the Optionee's employment or service with the Company and all Affiliates by the Optionee for Good Reason, (C) a Change in Control (as defined in the Plan), (D) a New Skynet Sale Event (as defined in the Plan), but only to the extent that the Optionee is an employee or service provider of New Skynet, or (E) a New SS/L Sale Event (as defined in the Plan), but only to the extent that the Optionee is an employee or service provider of New SS/L.
(a) The vested portion of the Deferred Compensation Account shall be distributed to the Optionee upon the earlier to occur of (i) a termination of the Optionee's employment or service with the Company and all Affiliates, (ii) a Change in Control, (iii) a New Skynet Sale Event, but only to the extent that the Optionee is an employee or service provider of New Skynet, (iv) a New SS/L Sale Event, but only to the extent that the Optionee is an employee or service provider of New SS/L, and (v) the date which is the seventh anniversary of the Grant Date; provided, however, that in the event the Optionee is determined to be a "specified person," as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, including Treasury Notice 2005-1 ("Notice 2005-1") ("Section 409A"), as of the date of the Optionee's termination of employment or service, any distribution of the Deferred Compensation Account scheduled to be made upon such termination shall be delayed for six months or such other period as required to comply with Section 409A; and further provided, however, that there shall be no distribution upon a Change in Control, a New Skynet Sale Event or a New SS/L Sale Event unless such event also constitutes a "Change in Control Event" with respect to the Optionee under Notice 2005-1 or such distribution is otherwise an allowable distribution under Section 409A.
(b) Amounts in the Deferred Compensation Account shall be subject to forfeiture upon termination of the Optionee's employment with the Company to the same extent as the Option is subject to forfeiture pursuant to Section 4 herein.
(c) Except as provided below, the value of the Deferred Compensation Account shall not be credited with interest or be subject to any rate of return. Upon any exercise of all or a portion of the Options, the corresponding portion of the Deferred Compensation Account shall automatically be converted into an interest-
bearing account from the date of such exercise through the date of distribution. For example, if 50% of the Options are exercised, 50% of the Deferred Compensation Account shall be converted into an interest-bearing account. Once converted, the amounts credited to this interest-bearing Deferred Compensation Account shall receive a rate of return equal to the highest rate of return then available to the Company in an interest-bearing account. To the extent possible, the Company will seek to avoid or, if not avoidable, to minimize any administrative expense incurred in maintaining the interest-bearing Deferred Compensation Account. However, the balance in the interest-bearing Deferred Compensation Account attributable to the rate of return on the interest-bearing Deferred Compensation Account shall be reduced, but not below the principal amount, by any administrative expense incurred by the Company in maintaining the interest-bearing Deferred Compensation Account.
(d) While all or a portion of the Options remain unexercised and outstanding, the corresponding portion of the Deferred Compensation Account shall be linked to the value of the Stock as follows. To the extent the value of the Stock declines to a level between the Option Price and the Target Exercise Price (the "Spread Value Zone"), the corresponding portion of the Deferred Compensation Account shall also decline in the same percentage as the Stock declines as measured against the Target Exercise Price and the value of the corresponding portion of the Deferred Compensation Account shall track the percentage increase or decrease in the value of the Stock while its value remains in the Spread Value Zone such that if the value of the Stock declines to the Target Exercise Price or below, the value of the corresponding portion of the Deferred Compensation Account shall decline to zero and if the value of the Stock rebounds to the Option Price, the corresponding portion of the Deferred Compensation Account shall regain its proportional full value. To the extent the Stock rises above the Option Price the corresponding portion of the Deferred Compensation Account shall not rise above its proportional full value.
(e) The amounts credited to the Deferred Compensation Account will be subject to all applicable legally required tax withholding as determined by the Company, unless such determination is unreasonable.
(f) It is intended that this Agreement be structured so as to avoid any tax under Section 409A(a)(B). To the extent that the Optionee has reason to believe that the Deferred Compensation Account will subject the Optionee to a tax under Section 409A(a)(B), the Optionee may request that this Agreement be restructured to avoid any such tax. To the extent the Optionee requests any such restructuring, the Company agrees to enter into good faith negotiations with the Optionee to accommodate such restructuring to the extent possible so as to avoid any such tax.
(g) In no event shall this Agreement and any restructuring thereof result in the Company incurring any cost or expense to a greater extent than the Company would have incurred had the Option been granted with an Option Price equal to the Target Exercise Price.]
3. EXERCISE OF OPTIONS.
(a) Subject to the terms and conditions set forth herein and provided the Optionee's employment continues, the Options shall vest and become exercisable in accordance with the following schedule:
(i) one-fourth of the Options shall vest and become exercisable on the one-year anniversary of the Effective Date;
(ii) an additional one-fourth of the Options shall vest and become exercisable on the two-year anniversary of the Effective Date;
(iii) an additional one-fourth of the Options shall vest and become exercisable on the three-year anniversary of the Effective Date; and
(iv) the remainder of the Options shall vest and become exercisable on the four-year anniversary of the Effective Date (each such anniversary date shall hereafter be referred to as a "Vesting Date" and the period between the date hereof and the first Vesting Date and the subsequent periods between Vesting Dates shall hereafter be referred to as "Vesting Periods").
(b) The Options shall vest only as to full shares of Stock rounded down to the nearest full share during the first three vesting dates and all fractions shall be amalgamated and become exercisable on the last vesting date. Except as otherwise stated in this Agreement, the Options shall expire on the seven-year anniversary of the Effective Date.
4. TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment or service with the Company and all Affiliates is terminated for Cause, all Options [and the full value of the Deferred Compensation Account] (whether vested or not) shall immediately expire.
(b) If the Optionee resigns from employment or service with the Company and all Affiliates other than for "Good Reason," all unvested Options [and the unvested portion of the Deferred Compensation Account] shall expire and all vested Options shall remain exercisable for the shorter of (i) three months following the date of termination or (ii) the remainder of the Option Period.
(c) If the Optionee's employment or service with the Company and all Affiliates is terminated by the Company or an Affiliate other than for Cause or the Optionee resigns for "Good Reason" during the time that the Optionee's employment with the Company is subject to an employment agreement between the Optionee and the Company and such employment agreement so provides, all unvested Options [and the unvested portion of the Deferred Compensation Account] shall vest immediately. If the Optionee's employment with the Company and all Affiliates is terminated by the Company or an Affiliate other than for Cause or the Optionee resigns for "Good Reason" during the time that the Optionee's employment with the Company is no longer subject to an employment agreement between the Optionee and the Company and such employment is on an "at-will" basis, the unvested Options that are scheduled to vest on the next Vesting Date immediately following such termination date [and the corresponding portion of the Deferred Compensation Account] shall vest on a pro rata basis where the number of Options subject to pro rata vesting is equal to the number of Options subject to vesting on such Vesting Date multiplied by a fraction, the numerator of which shall be equal to the number of days the Optionee was employed during the applicable Vesting Period and the denominator of which shall be equal to 365 [(the "Pro Rata Fraction"), and the portion of
the Deferred Compensation Account subject to pro rata vesting is that portion subject to vesting on such Vesting Date multiplied by the Pro Rata Fraction] and all other unvested Options [and the unvested portion of the Deferred Compensation Account] remaining at the time of such termination after application of such pro rata vesting shall expire. In the event that the Optionee's employment with the Company and all Affiliates is terminated by the Company or an Affiliate other than for Cause or the Optionee resigns for "Good Reason" (regardless of whether the Optionee's employment is then subject to an employment agreement), all vested Options (including those that vest upon such termination) shall remain exercisable for the shorter of (i) the Post Termination Exercise Period (as defined below) or (ii) the remainder of the Option Period. The Post Termination Exercise Period shall mean (x) the period that is two years following the date of termination, if the termination occurs prior to the third anniversary of the Grant Date, (y) the period that is one year following the date of termination, if the termination occurs on or following the third anniversary of the Grant Date but prior to the fifth anniversary of the Grant Date, or (z) the period that is three months following the date of termination, if the termination occurs on or following the fifth anniversary of the Grant Date; provided, however, that if the Optionee's employment is terminated on account of death or Disability, the Post Termination Exercise Period shall not be shorter than one year following the date of the Optionee's termination of employment.
(d) If the Optionee's employment with the Company and all
Affiliates terminates on account of the Optionee's death or Disability all
unvested Options [and the unvested portion of the Deferred Compensation
Account] shall immediately expire and all vested Options will remain
exercisable for the shorter of (i) the Post Termination Exercise Period or
(ii) the Option Period.
(e) For purposes of clarification, neither a New FSS Sale Event nor a New SS/L Sale Event, shall in and of itself, be considered a termination of the Optionee's employment with the Company and all Affiliates without Cause or an event constituting "Good Reason."
5. METHOD OF EXERCISING OPTION.
(a) Options which have become exercisable may be exercised by delivery of written notice of exercise to the Committee accompanied by payment of the Option Price. Payment for shares of Stock acquired pursuant to Options shall be made in full, upon exercise of the Options in immediately available funds in United States dollars, by certified or bank cashier's check or, in the discretion of the Committee, (i) by surrender to the Company of Mature Shares held by the Participant; (ii) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of sale or loan proceeds sufficient to pay the aggregate Option exercise price; (iii) through a net exercise of the Options whereby the Participant instructs the Company to withhold that number of shares of Stock having a fair market value equal to the aggregate Option Price of the Options being exercised and deliver to the Participant the remainder of the shares subject to exercise or (iv) by any other means approved by the Committee. For purposes of this paragraph, the term "Mature Shares" shall mean shares of Stock for which the Optionee has good title, free and clear of all liens and encumbrances, and which the Optionee either (i) has held for at least six months or (ii) has purchased on the open market.
(b) At the time of exercise, (i) the Company shall have the right to withhold from the number of shares of Stock to be issued upon exercise, the minimum number of shares necessary or (ii) at the discretion of the Committee, the Optionee shall be obligated to pay to the Company such amount as the Company deems necessary, in either event, to satisfy its obligation to withhold Federal, state or local income or other taxes incurred by reason of the exercise or the transfer of shares thereupon.
6. ISSUANCE OF SHARES. As promptly as practical after receipt by
the Company of a written notice of exercise and full payment to the
Company of the aggregate Option Price and any required income tax
withholding amount, the Company shall issue or transfer to the Optionee
the number of shares of Stock with respect to which Options have been so
exercised, or the net number of shares of Stock in the event of an
exercise pursuant to Section 5(a)(iii), or to the extent applicable in
Section 5(a)(iv), or after application of Section 5(b), or both, and shall
deliver to the Optionee (or the Optionee's estate or beneficiary, if
applicable) a certificate or certificates therefore, registered in the
name of the Optionee (or such estate or beneficiary).
7. NON-TRANSFERABILITY. The Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution and are exercisable during the Optionee's lifetime only by Optionee. No assignment or transfer of the Options, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and become of no further effect.
8. RIGHTS AS STOCKHOLDER. Neither the Optionee nor a permitted transferee of the Options shall have any rights as a stockholder with respect to any share of Stock covered by the Options until the Optionee or any transferee shall have become the holder of record of such share, and no adjustment shall be made for dividends or distributions or other rights in respect of such share for which the record date is prior to the date upon which the Optionee or any transferee shall become the holder of record thereof.
9. COMPLIANCE WITH LAW. Notwithstanding any of the provisions hereof, the Optionee hereby agrees that Optionee will not exercise the Options, and that the Company will not be obligated to issue or transfer any shares of Stock to the Optionee hereunder, if the exercise hereof or the issuance or transfer of such shares shall constitute a violation by the Optionee or the Company of any provisions of any law or regulation of any governmental authority. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company shall in no event be obliged to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other affirmative action in order to cause the exercise of the Options or the issuance or transfer of shares of Stock pursuant thereto to comply with any law or regulation of any governmental authority.
10. NOTICE. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided, provided that, unless and until some other address be so
designated, all notices or communications by the Optionee to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices or communications by the Company to the Optionee may be given to the Optionee personally or may be mailed to Optionee at the Optionee's last known address, as reflected in the Company's records.
11. BINDING EFFECT. Subject to Section 7 hereof, this Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.
12. GOVERNING LAW. This Agreement shall be construed and interpreted in accordance with the laws of the state of Delaware, without regard to the principles of conflicts of law thereof.
13. PLAN. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between discretionary terms and provisions of the Plan and the express provisions of this Agreement, this Agreement shall govern and control. In all other instances of conflicts or inconsistencies or omissions, the terms and provisions of the Plan shall govern and control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: ____________________________
Name:
Title:
Accepted:
EXHIBIT 10.9
NON-SENIOR MANAGEMENT
NON-QUALIFIED
STOCK OPTION AGREEMENT
UNDER
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of this ______ day of ________, ____ (the "Grant Date"), by and between Loral Space & Communications Inc., a Delaware corporation (the "Company"), and _______________ (the "Optionee").
WHEREAS, the Optionee is employed by or providing services to the Company or an Affiliate in a key capacity, and the Company desires to have Optionee remain in such employment or service and to afford Optionee the opportunity to acquire, or enlarge, Optionee's stock ownership of the Company's Common Stock, par value $.01 per share (the "Stock"), so that Optionee may have a direct proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall have the same meaning as set forth in Company's 2005 Stock Incentive Plan (the "Plan").
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the terms and conditions set forth herein
and in the Plan, the Company hereby grants to the Optionee, during the
period commencing on the Grant Date and ending on the date that is seven
years from the Grant Date (the "Option Period"), the right and option (the
right to purchase any one share of Stock hereunder being an "Option") to
purchase from the Company, at an exercise price of [$____] per share (the
"Option Price"), an aggregate of [______] shares of Stock (the "Share
Number"). The Options are not intended to be "incentive stock options", as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.
[NOTE: SUBJECT TO COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED ("SECTION 409A"), THE OPTIONS SHALL HAVE A PER
SHARE EXERCISE PRICE OF $19.00 (THE "TARGET EXERCISE PRICE"). SECTION
409A, PLACES CERTAIN RESTRICTIONS ON STOCK OPTIONS THAT HAVE A PER SHARE
EXERCISE PRICE LESS THAN THE FAIR MARKET VALUE OF A SHARE OF THE
UNDERLYING STOCK AT THE TIME OF GRANT. IF THE TARGET EXERCISE PRICE IS
LESS THAN THE FAIR MARKET VALUE OF A SHARE OF STOCK ON THE GRANT DATE (THE
"GRANT DATE VALUE"), THE OPTIONS SHALL HAVE AN OPTION PRICE EQUAL TO THE
GRANT DATE VALUE RATHER THAN THE TARGET EXERCISE PRICE.]
[NOTE: IF THE TARGET EXERCISE PRICE IS LESS THAN THE GRANT DATE VALUE, THE
COMPANY SHALL ESTABLISH A DEFERRED COMPENSATION BOOKKEEPING ACCOUNT FOR
THE OPTIONEE AND INCLUDE THE FOLLOWING SECTION IN THIS OPTION AGREEMENT.]
2. [DEFERRED COMPENSATION ACCOUNT. As of the Grant Date, the Company shall establish a deferred compensation bookkeeping account for the Optionee (the "Deferred Compensation Account") and shall credit to the Deferred Compensation Account a dollar amount equal to (A) the difference between the Option Price and $19.00 (the "Target Exercise Price"), multiplied by (B) the Share Number. The Deferred Compensation Account shall become vested in the same proportion as the Options vest and becomes exercisable, including any accelerated vesting upon (A) a termination of the Optionee's employment or service by the Company or an Affiliate without Cause, (B) a termination of the Optionee's employment or service with the Company and all Affiliates by the Optionee for Good Reason, (C) a Change in Control (as defined in the Plan), (D) a New Skynet Sale Event (as defined in the Plan), but only to the extent that the Optionee is an employee or service provider of New Skynet, or (E) a New SS/L Sale Event (as defined in the Plan), but only to the extent that the Optionee is an employee or service provider of New SS/L.
(a) The vested portion of the Deferred
Compensation Account shall be distributed to the Optionee upon the
earlier to occur of (i) a termination of the Optionee's employment
or service with the Company and all Affiliates, (ii) a Change in
Control, (iii) a New Skynet Sale Event, but only to the extent that
the Optionee is an employee or service provider of New Skynet, (iv)
a New SS/L Sale Event, but only to the extent that the Optionee is
an employee or service provider of New SS/L, and (v) the date which
is the seventh anniversary of the Grant Date; provided, however,
that in the event the Optionee is determined to be a "specified
person," as defined in Section 409A of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder, including Treasury Notice 2005-1 ("Notice 2005-1")
("Section 409A"), as of the date of the Optionee's termination of
employment or service, any distribution of the Deferred Compensation
Account scheduled to be made upon such termination shall be delayed
for six months or such other period as required to comply with
Section 409A; and further provided, however, that there shall be no
distribution upon a Change in Control, a New Skynet Sale Event or a
New SS/L Sale Event unless such event also constitutes a "Change in
Control Event" with respect to the Optionee under Notice 2005-1 or
such distribution is otherwise an allowable distribution under
Section 409A.
(b) Amounts in the Deferred Compensation Account shall be subject to forfeiture upon termination of the Optionee's employment with the Company to the same extent as the Option is subject to forfeiture pursuant to Section 4 herein.
(c) Except as provided below, the value of the Deferred Compensation Account shall not be credited with interest or be subject to any rate of return. Upon any exercise of all or a portion of the Options, the corresponding portion of the Deferred Compensation Account shall automatically be converted into an interest-bearing account from the date of such exercise through the date of distribution. For example, if 50% of the Options are exercised, 50% of the Deferred Compensation Account shall be converted into an interest-bearing account. Once converted, the amounts credited to this interest-
bearing Deferred Compensation Account shall receive a rate of return equal to the highest rate of return then available to the Company in an interest-bearing account. To the extent possible, the Company will seek to avoid or, if not avoidable, to minimize any administrative expense incurred in maintaining the interest-bearing Deferred Compensation Account. However, the balance in the interest-bearing Deferred Compensation Account attributable to the rate of return on the interest-bearing Deferred Compensation Account shall be reduced, but not below the principal amount, by any administrative expense incurred by the Company in maintaining the interest-bearing Deferred Compensation Account.
(d) While all or a portion of the Options remain unexercised and outstanding, the corresponding portion of the Deferred Compensation Account shall be linked to the value of the Stock as follows. To the extent the value of the Stock declines to a level between the Option Price and the Target Exercise Price (the "Spread Value Zone"), the corresponding portion of the Deferred Compensation Account shall also decline in the same percentage as the Stock declines as measured against the Target Exercise Price and the value of the corresponding portion of the Deferred Compensation Account shall track the percentage increase or decrease in the value of the Stock while its value remains in the Spread Value Zone such that if the value of the Stock declines to the Target Exercise Price or below, the value of the corresponding portion of the Deferred Compensation Account shall decline to zero and if the value of the Stock rebounds to the Option Price, the corresponding portion of the Deferred Compensation Account shall regain its proportional full value. To the extent the Stock rises above the Option Price the corresponding portion of the Deferred Compensation Account shall not rise above its proportional full value.
(e) The amounts credited to the Deferred Compensation Account will be subject to all applicable legally required tax withholding as determined by the Company, unless such determination is unreasonable.
(f) It is intended that this Agreement be
structured so as to avoid any tax under Section 409A(a)(B). To the
extent that the Optionee has reason to believe that the Deferred
Compensation Account will subject the Optionee to a tax under
Section 409A(a)(B), the Optionee may request that this Agreement be
restructured to avoid any such tax. To the extent the Optionee
requests any such restructuring, the Company agrees to enter into
good faith negotiations with the Optionee to accommodate such
restructuring to the extent possible so as to avoid any such tax.
(g) In no event shall this Agreement and any restructuring thereof result in the Company incurring any cost or expense to a greater extent than the Company would have incurred had the Option been granted with an Option Price equal to the Target Exercise Price.]
3. EXERCISE OF OPTIONS.
(a) Subject to the terms and conditions set forth herein and provided the Optionee's employment continues, the Options shall vest and become exercisable in accordance with the following schedule:
(i) one-fourth of the Options shall vest and become exercisable on the one-year anniversary of the Effective Date;
(ii) an additional one-fourth of the Options shall vest and become exercisable on the two-year anniversary of the Effective Date;
(iii)an additional one-fourth of the Options shall vest and become exercisable on the three-year anniversary of the Effective Date; and
(iv) the remainder of the Options shall vest and become exercisable on the four-year anniversary of the Effective Date.
(b) The Options shall vest only as to full shares of Stock rounded down to the nearest full share during the first three vesting dates and all fractions shall be amalgamated and become exercisable on the last vesting date. Except as otherwise stated in this Agreement, the Options shall expire on the seven-year anniversary of the Effective Date hereof.
4. TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment or service with the Company and all Affiliates is terminated for Cause, all Options [and the full value of the Deferred Compensation Account] (whether vested or not) shall immediately expire.
(b) If the Optionee resigns from employment or service with the Company and all Affiliates other than for "Good Reason," all unvested Options [and the unvested portion of the Deferred Compensation Account] shall expire and all vested Options shall remain exercisable for the shorter of (i) three months following the date of termination or (ii) the remainder of the Option Period.
(c) If the Optionee's employment or service with the Company and all Affiliates is terminated by the Company or an Affiliate other than for Cause or the Optionee resigns for "Good Reason", all unvested Options [and the unvested portion of the Deferred Compensation Account] shall vest immediately and all vested Options (including those that vest upon such termination) shall remain exercisable for the shorter of (i) the Post Termination Exercise Period (as defined below) or (ii) the remainder of the Option Period. The Post Termination Exercise Period shall mean (x) the period that is two years following the date of termination, if the termination occurs prior to the third anniversary of the Grant Date, (y) the period that is one year following the date of termination, if the termination occurs on or following the third anniversary of the Grant Date but prior to the fifth anniversary of the Grant Date, or (z) the period that is three months following the date of termination, if the termination occurs on or following the fifth anniversary of the Grant Date; provided, however, that if the Optionee's employment is terminated on account of death or Disability, the Post Termination Exercise Period shall not be shorter than one year following the date of the Optionee's termination of employment.
(d) If the Optionee's employment or service with the Company and all Affiliates terminates on account of the Optionee's death or Disability all unvested
Options [and the unvested portion of the Deferred Compensation Account] shall immediately expire and all vested Options will remain exercisable for the shorter of (i) the Post Termination Exercise Period or (ii) the Option Period.
(e) For purposes of clarification, neither a New FSS Sale Event nor a New SS/L Sale Event, shall in and of itself, be considered a termination of the Optionee's employment with the Company and all Affiliates without Cause or an event constituting "Good Reason."
5. METHOD OF EXERCISING OPTION.
(a) Options which have become exercisable may be
exercised by delivery of written notice of exercise to the Committee
accompanied by payment of the Option Price. Payment for shares of Stock
acquired pursuant to Options shall be made in full, upon exercise of the
Options in immediately available funds in United States dollars, by
certified or bank cashier's check or, in the discretion of the Committee,
(i) by surrender to the Company of Mature Shares held by the Participant;
(ii) by delivering to the Committee a copy of irrevocable instructions to
a stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the aggregate Option exercise price; (iii)
through a net exercise of the Options whereby the Participant instructs
the Company to withhold that number of shares of Stock having a fair
market value equal to the aggregate Option Price of the Options being
exercised and deliver to the Participant the remainder of the shares
subject to exercise or (iv) by any other means approved by the Committee.
For purposes of this paragraph, the term "Mature Shares" shall mean shares
of Stock for which the Optionee has good title, free and clear of all
liens and encumbrances, and which the Optionee either (i) has held for at
least six months or (ii) has purchased on the open market.
(b) At the time of exercise, (i) the Company shall have the right to withhold from the number of shares of Stock to be issued upon exercise, the minimum number of shares necessary or (ii) at the discretion of the Committee, the Optionee shall be obligated to pay to the Company such amount as the Company deems necessary, in either event, to satisfy its obligation to withhold Federal, state or local income or other taxes incurred by reason of the exercise or the transfer of shares thereupon.
6. ISSUANCE OF SHARES. As promptly as practical after receipt
by the Company of a written notice of exercise and full payment to the
Company of the aggregate Option Price and any required income tax
withholding amount, the Company shall issue or transfer to the Optionee
the number of shares of Stock with respect to which Options have been so
exercised, or the net number of shares of Stock in the event of an
exercise pursuant to Section 5(a)(iii), or to the extent applicable in
Section 5(a)(iv), or after application of Section 5(b), or both, and shall
deliver to the Optionee (or the Optionee's estate or beneficiary, if
applicable) a certificate or certificates therefore, registered in the
name of the Optionee (or such estate or beneficiary).
7. NON-TRANSFERABILITY. The Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution and are exercisable during the Optionee's lifetime only by Optionee. No assignment or transfer of the Options, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and become of no further effect.
8. RIGHTS AS STOCKHOLDER. Neither the Optionee nor a permitted transferee of the Options shall have any rights as a stockholder with respect to any share of Stock covered by the Options until the Optionee or any transferee shall have become the holder of record of such share, and no adjustment shall be made for dividends or distributions or other rights in respect of such share for which the record date is prior to the date upon which the Optionee or any transferee shall become the holder of record thereof.
9. COMPLIANCE WITH LAW. Notwithstanding any of the provisions hereof, the Optionee hereby agrees that Optionee will not exercise the Options, and that the Company will not be obligated to issue or transfer any shares of Stock to the Optionee hereunder, if the exercise hereof or the issuance or transfer of such shares shall constitute a violation by the Optionee or the Company of any provisions of any law or regulation of any governmental authority. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company shall in no event be obliged to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other affirmative action in order to cause the exercise of the Options or the issuance or transfer of shares of Stock pursuant thereto to comply with any law or regulation of any governmental authority.
10. NOTICE. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided, provided that, unless and until some other address be so designated, all notices or communications by the Optionee to the Company shall be mailed or delivered to the Company at its principal executive office, and all notices or communications by the Company to the Optionee may be given to the Optionee personally or may be mailed to Optionee at the Optionee's last known address, as reflected in the Company's records.
11. BINDING EFFECT. Subject to Section 7 hereof, this Agreement shall be binding upon the heirs, executors, administrators and successors of the parties hereto.
12. GOVERNING LAW. This Agreement shall be construed and interpreted in accordance with the laws of the state of Delaware, without regard to the principles of conflicts of law thereof.
13. PLAN. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between discretionary terms and provisions of the Plan and the express provisions of this Agreement, this Agreement shall govern and control. In all other instances of conflicts or inconsistencies or omissions, the terms and provisions of the Plan shall govern and control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: ______________________________
Name:
Title:
Accepted:
EXHIBIT 10.10
$20,000,000
AMENDED AND RESTATED
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
between
SPACE SYSTEMS/LORAL, INC.,
as Borrower,
and
JPMORGAN CHASE BANK, N.A.
Dated as of November 21, 2005
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................. 1
1.01. Defined Terms.............................................. 2
1.02. Terms Generally............................................ 8
1.03. Accounting Terms; GAAP..................................... 8
Section 2. LETTERS OF CREDIT........................................... 8
2.01. General.................................................... 9
2.02. Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions......................................................... 9
2.03. Expiration Date............................................ 9
2.04. Transfer of Existing Letters of Credit..................... 10
2.05. Reimbursement.............................................. 10
2.06. Obligations Absolute; Limitation of Liability.............. 11
2.07. Practices.................................................. 13
2.08. Disbursement Procedures.................................... 13
2.09. Termination and Reduction of Commitment.................... 13
2.10. Fees....................................................... 13
2.11. Default Rate of Interest................................... 14
2.12. Increased Costs............................................ 14
2.13. Taxes...................................................... 15
2.14. Payments Generally; Treatment.............................. 16
Section 3. COLLATERAL.................................................. 16
3.01. Cash Collateral............................................ 16
3.02. Currency Exchange Rate Fluctuations........................ 16
Section 4. CONDITIONS PRECEDENT........................................ 17
4.01. Conditions to Closing Date................................. 17
4.02. Conditions to Each Credit Event............................ 18
Section 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.................. 19
5.01. Corporate Status........................................... 19
5.02. Corporate Power and Authority.............................. 19
5.03. No Violation............................................... 19
5.04. Governmental Approvals..................................... 20
5.05. Litigation................................................. 20
5.06. True and Complete Disclosure............................... 20
5.07. Tax Returns and Payments................................... 20
5.08. Compliance with Statutes, etc.............................. 21
5.09. Investment Company Act..................................... 21
|
5.10. Properties................................................. 21
5.11. Financial Condition; No Material Adverse Change............ 21
5.12. Use of Proceeds............................................ 21
5.13. The Confirmation Order..................................... 22
5.14. Security Interests......................................... 22
Section 6. AFFIRMATIVE COVENANTS....................................... 22
6.01. Financial Statements....................................... 22
6.02. Certificates; Other Information............................ 23
6.03. Maintenance of Existence; Compliance....................... 23
6.04. Notices.................................................... 23
6.05. Books, Records and Inspections............................. 24
6.06. Taxes...................................................... 24
Section 7. NEGATIVE COVENANTS.......................................... 24
7.01. Amendment to Plan.......................................... 24
7.02. Liens...................................................... 24
7.03. Collateral Requirement..................................... 25
Section 8. EVENTS OF DEFAULT........................................... 25
Section 9. MISCELLANEOUS............................................... 26
9.01. Right of Setoff............................................ 26
9.02. Notices.................................................... 27
9.03. Expenses; Indemnity........................................ 28
9.04. Benefit of Agreement....................................... 29
9.05. No Waiver; Remedies Cumulative............................. 29
9.06. Calculations; Computations................................. 29
9.07. Governing Law; Submission to Jurisdiction; Venue; Waiver of
Jury Trial......................................................... 30
9.08. Confidentiality............................................ 30
9.09. Counterparts............................................... 30
9.10. Headings Descriptive....................................... 30
9.11. Amendment or Waiver........................................ 30
9.12. Survival................................................... 30
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EXHIBITS
Exhibit A - Form of Officers' Certificate of the Borrower (Plan Effective
Date)
Exhibit B - Form of Officers' Certificate of the Borrower (Corporate
Documents)
SCHEDULE
Schedule 1 - Existing Letters of Credit
|
AMENDED AND RESTATED LETTER OF CREDIT REIMBURSEMENT AGREEMENT (this "Agreement"), dated as of November 21, 2005, between Space Systems/Loral, Inc. (the "Borrower"), a corporation existing under the laws of the State of Delaware and successor in interest to the DIP Borrower referenced below, and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank) (the "Bank").
WHEREAS, on July 15, 2003 (the "Petition Date"), Space Systems/Loral, Inc. and certain of its affiliates (collectively, the "Debtors") filed voluntary petitions for relief in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") under Chapter 11 of the Bankruptcy Code (as defined below), Case No. 03-41710 (RDD) (the "Bankruptcy Proceeding");
WHEREAS, on August 1, 2005, the Bankruptcy Court entered the Confirmation Order (as defined below) confirming the Debtors' Fourth Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 (as in effect on the date of confirmation thereof pursuant to the Confirmation Order, the "Plan");
WHEREAS, pursuant to (i) the Letter of Credit Reimbursement Agreement, dated as of April 2, 2004 (as amended, supplemented or otherwise modified, the "Existing L/C Agreement") between Space Systems/Loral, Inc., as a debtor and a debtor-in-possession (the "DIP Borrower"), and the Bank and (ii) the Orders, the Bank has issued Letters of Credit for the account of the DIP Borrower during the Bankruptcy Proceeding, and the DIP Borrower granted to the Bank a first priority perfected security interest in the Collateral and a Superpriority Claim to secure repayment of the obligations under the Existing L/C Agreement;
WHEREAS, the DIP Borrower and the Borrower have requested that the Existing L/C Agreement be amended and restated in its entirety such that any Existing Letters of Credit issued and outstanding as of the Effective Date of the Plan will become Letters of Credit issued and outstanding under this Agreement and, pursuant to the Plan and the Confirmation Order, the letter of credit facility described herein shall continue to be available to the Borrower, as a reorganized Debtor, for the issuance of Letters of Credit after the Plan Effective Date;
WHEREAS, the Bank is willing to amend and restate the Existing L/C Agreement as provided in this Agreement; and
WHEREAS, it is the intent of the parties hereto that (i) this Agreement amend and restate in its entirety the Existing L/C Agreement and effect the assumption by the Borrower of the obligations of the DIP Borrower outstanding under the Existing L/C Agreement and (ii) all liens and security interests created under the Credit Documents will not be cancelled or discharged and will secure the obligations of the Borrower under this Agreement;
NOW, THEREFORE, in consideration of the above premises, the Borrower and the Bank hereby agree to amend and restate the Existing L/C Agreement in its entirety as follows:
Section 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
1.01. Defined Terms.
As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"Affiliate" shall mean, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
"Agreement" shall mean this Amended and Restated Letter of Credit Reimbursement Agreement, as amended, supplemented or otherwise modified from time to time.
"Alternative Currency" shall mean Euros or Yen.
"Alternative Currency Letter of Credit" shall mean any Letter of Credit having a face amount denominated in an Alternative Currency.
"Availability Period" shall mean the period from and including the Closing Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitment.
"Bank" shall have the meaning provided in the preamble.
"Bankruptcy Code" shall mean Title 11 of the United States Code, 11 U.S.C.Sections 101 et seq., as now or hereafter in effect, or any successor thereto.
"Bankruptcy Court" shall have the meaning provided in the recitals hereto.
"Bankruptcy Proceeding" shall have the meaning provided in the recitals hereto.
"Bid Bonds" shall mean bonds or other credit support provided by the Borrower in respect of bids made by the Borrower for contracts to build satellites and related components.
"Borrower" shall have the meaning provided in the preamble.
"Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.
"Cash Collateral Account" shall have the meaning provided in the Cash Collateral Agreement.
"Cash Collateral Agreement" shall mean the Amended and Restated Cash Collateral Agreement, dated as of even date herewith, between the Borrower and the Bank, as amended, supplemented or otherwise modified from time to time.
"Change in Law" shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation
or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by the Bank (or, for purposes of Section 2.13(b), by any lending office of the Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
"Closing Date" shall mean the date on which all of the conditions set forth in Section 4.01 shall have been satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder and the rulings based thereon. Section references to the Code are to the Code, as in effect at the date of this Agreement, and to any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall have the meaning assigned thereto in the Cash Collateral Agreement.
"Commitment" shall mean the commitment of the Bank hereunder to
issue Letters of Credit, as it may be reduced from time to time pursuant to
Section 2.09. The amount of the Commitment on the Closing Date is $20,000,000.
"Confirmation Order" shall mean any order of the Bankruptcy Court confirming a Plan pursuant to Section 1129 of the Bankruptcy Code, which shall be in form and substance satisfactory to the Bank and otherwise satisfy the conditions set forth in Section 4.01(b).
"Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Documents" shall mean this Agreement and the Cash Collateral Agreement.
"Credit Event" shall mean the issuance, amendment, renewal or extension of any Letter of Credit.
"Debtors" shall have the meaning provided in the recitals hereto.
"Default" shall mean any event, act or condition specified in
Section 8, which with notice or lapse of time, or both, would, unless cured or
waived, constitute an Event of Default.
"DIP Borrower" shall have the meaning provided in the recitals hereto.
"Dollars" and the symbol "$" shall each mean freely transferable lawful money of the United States.
"Dollar Equivalent" shall mean of any amount, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, and (b) if such amount is expressed in an Alternative Currency, (i) for purposes of determining the amount of a Reimbursement Obligation, such amount shall be determined at the time that the Bank makes the LC Disbursement giving rise to such Reimbursement Obligation and (ii) in all other cases, the equivalent of such amount in Dollars determined using the rate of exchange quoted by JPMorgan Chase Bank, N.A. in New York, New York at 11:00 a.m. (New York time) on the date of determination to prime banks in New York for the spot purchase in the New York foreign exchange market of such amount of Dollars with such Alternative Currency.
"Drawing Document" shall mean any draft or other document presented for purposes of demanding payment under a Letter of Credit.
"EMU Legislation" shall mean the legislative measures of the European Union for introduction of, changeover to or operation of the euro in one or more Participating Member States.
"Euro" and the symbol "E" shall mean the single currency of Participating Member States introduced in accordance with the provision of Article 123 of the Treaty and, in respect of all payments to be made under this Agreement in Euro, means immediately available, freely transferable funds in such currency.
"Event of Default" shall have the meaning provided in Section 8.
"Excluded Taxes" shall mean, with respect to the Bank, (a) Taxes
that are imposed on its overall net income by the United States, Taxes that are
imposed on its overall net income (and franchise taxes imposed in lieu thereof)
by the jurisdiction under the laws of which the Bank is organized, Taxes that
are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the jurisdiction in which the Bank's Payment Office is located or
(b) in the event that payments are made under the Credit Documents to a
jurisdiction outside the United States, any United States withholding taxes
payable with respect to such payments under the Credit Documents under laws
(including any statute, treaty or regulation) in effect on the Closing Date (but
excluding any United States withholding taxes payable as a result of any Change
in Law occurring after the Closing Date) and any similar tax imposed by any
other jurisdiction in which the Bank is located.
"Existing Letters of Credit" shall mean the collective reference to the Letters of Credit issued and outstanding under this Agreement as of the Closing Date for the account of the Borrower and identified on Schedule 1 hereto.
"Federal Funds Effective Rate" shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Bank from three federal funds brokers of recognized standing selected by it.
"Fees" shall mean all amounts payable pursuant or referred to in
Section 2.10.
"Final Order" shall mean the Final Order Authorizing Space Systems/Loral, Inc. to Obtain Post-Petition Financing Pursuant to 11 U.S.C. Sections 105, 363, 364(c)(1), 364(c)(2) and 364(e), entered by the Bankruptcy Court on or about April 13, 2004.
"Good Faith" shall mean honesty in fact in the conduct of the transaction concerned.
"Governmental Authority" shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Instructions" has the meaning given to it in Section 2.02.
"Interim Order" shall mean the Interim Order (A) Authorizing Space Systems/Loral, Inc. to Obtain Post-Petition Financing Pursuant to 11 U.S.C. Sections 105, 362, 364(c)(1), 364(c)(2) and 364(e) and (B) Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001(c), entered by the Bankruptcy Court on or about April 1, 2004.
"ISP" shall mean International Standby Practices 1998 (International Chamber of Commerce Publication Number 590) and any subsequent revision thereof adhered to by the Bank.
"LC Disbursement" shall mean a payment made by the Bank pursuant to a Letter of Credit.
"LC Exposure" shall mean, at any time, the Dollar Equivalent of the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.
"Letter of Credit" shall mean any letter of credit issued for the
account of the Borrower pursuant to Section 2.01, which letter of credit shall
be (i) a standby letter of credit, (ii) issued for the purposes permitted by
Section 5.12, (iii) denominated in Dollars or an Alternative Currency, and (iv)
otherwise in such form as may be approved by the Bank.
"Letter of Credit Application" shall mean an application submitted to the Bank by the Applicant requesting the opening of a Letter of Credit.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the
UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of the Borrower to perform any of its obligations under this Agreement
or (c) the rights of or benefits available to the Bank under this Agreement or
the Credit Documents.
"Maturity Date" shall mean December 31, 2006.
"Notice Office" shall mean the collective reference to the following three offices or such other office as the Bank may hereafter designate in writing: (i) JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, Attn: Richard C. Smith; (ii) JPMorgan Treasury Services, Global Trade Services, Standby Production, 10420 Highland Manor Dr. (Bl. 2, Floor 4), Tampa Bay, Florida 33610, Attn: James Alonzo; and (iii) JPMorgan Chase Bank, N.A., Global Credit Operations, 575 Washington Blvd, Floor 21, Jersey City, New Jersey 07310, Attn: Douglas Ogle.
"Obligations" shall mean the collective reference to the unpaid amount of Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in this Agreement after the maturity of the Reimbursement Obligations and interest accruing at the then applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Bank, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, or the other Credit Documents, or any Letter of Credit, or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Bank that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements, and all Fees).
"Orders" shall mean the collective reference to the Interim Order and the Final Order.
"Other Taxes" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.
"Participating Member State" shall mean a member of the European Communities that adopts or has adopted the Euro as its currency in accordance with EMU Legislation.
"Payment Office" shall mean the Bank's office located at JPMorgan Treasury Services, Global Trade Services, Standby Production, 10420 Highland Manor Dr. (Bl. 2, Floor 4), Tampa Bay, Florida 33610, Attn: James Alonzo.
"Person" shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
"Plan" shall have the meaning provided in the recitals.
"Plan Effective Date" shall mean the date as of which the conditions precedent to effectiveness set forth in the Plan have been satisfied or waived in accordance therewith.
"Quarterly Payment Date" shall mean the last Business Day of each March, June, September and December.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
"Reimbursement Obligation" shall mean the obligation of the Borrower to reimburse to the Bank any LC Disbursements pursuant to Section 2.05.
"Requirement of Law" shall mean as to any Person, the Articles of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
"Standard Letter of Credit Practice" shall mean, for the Bank, any domestic or foreign law or letter of credit practices applicable in the city in which the Bank issued the Letter of Credit or for its branch or correspondent, such laws and practices applicable in the city in which it has advised or negotiated the Letter of Credit, as the case may be. Such practices shall be those of (i) banks that regularly issue letters of credit in the particular city and (ii) required or permitted under the ISP or the UCP, as applicable.
"subsidiary" shall mean, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Superpriority Claim" shall mean a claim against the Borrower in the Bankruptcy Proceeding which is an administrative expense claim having priority over any or all administrative expenses of the kind in Sections 503(b) or 507(b) of the Bankruptcy Code, including a claim pursuant to Section 364(c)(1) of the Bankruptcy Code.
"Taxes" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
"UCC" shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.
"UCP" shall mean the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 and any subsequent revision thereof adhered to by the Bank.
"United States" and "U.S." shall each mean the United States of America.
"Yen" and the symbol "Y" shall mean freely transferable and lawful money of Japan.
1.02. Terms Generally.
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
1.03. Accounting Terms; GAAP.
Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Bank that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Bank notifies the Borrower that the Bank requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
Section 2. LETTERS OF CREDIT.
2.01. General.
Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit denominated in Dollars or an Alternative Currency in support of its obligations by delivering a Letter of Credit Application, at any time and from time to time during the Availability Period and, subject to the terms and conditions set forth herein and any other legal or regulatory requirements applicable to the Bank, the Bank shall issue such Letters of Credit; provided that no Letter of Credit shall be issued if after giving effect to such issuance (i) the aggregate LC Exposure would exceed the Commitments and (ii) the aggregate LC Exposure in respect of Letters of Credit denominated in an Alternative Currency would exceed $12,000,000. For purposes of determining compliance with this Section 2.01, the LC Exposure for each Alternative Currency Letter of Credit shall be at the time of issuance thereof the amount equal to 110% of the Dollar Equivalent of the face amount of such Alternative Currency Letter of Credit. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
2.02. Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
deliver (or transmit by electronic communication, if arrangements for doing so
have been approved by the Bank) to the Bank two (2) Business Days in advance of
the requested date of issuance, amendment, renewal or extension) a Letter of
Credit Application requesting the issuance of a Letter of Credit, or a notice
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the requested date of issuance, amendment, renewal or extension
(which shall be a Business Day), of the date on which such Letter of Credit is
to expire (which shall comply with Section 2.03), the face amount of such Letter
of Credit, the name and address of the beneficiary thereof, a description of the
transaction to be supported by such Letter of Credit and such other information
(collectively, the "Instructions") as shall be necessary to prepare, amend,
renew or extend such Letter of Credit. Absent manifest error, the Bank's records
of the content of any Instruction shall be conclusive. A Letter of Credit shall
be issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension, the aggregate LC Exposure shall not exceed any of the
limits specified in the proviso in Section 2.01 and the conditions specified in
Section 4.02, as applicable, are satisfied. Promptly after issuing any Letter of
Credit, the Bank will provide the Borrower with a copy thereof. Each request for
an issuance, amendment, renewal or extension of a Letter of Credit shall be
irrevocable unless modified or rescinded by the Borrower prior to 10:00 a.m.
(New York City time) on the proposed date of issuance, amendment, renewal or
extension specified in the Borrower's request.
2.03. Expiration Date.
(a) Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided that any Letter of Credit with a one-year term may provide for an annual renewal if such renewal is consented to by the Bank and all conditions precedent specified in Section 4 are met at the time of such renewal.
(b) If the Maturity Date occurs prior to the expiration of any Letter of Credit, such Letter of Credit shall be replaced and returned to the Bank undrawn and marked "cancelled" on or prior to the Maturity Date.
2.04. Transfer of Existing Letters of Credit. Each party hereto
agrees that, on and at all times after the Plan Effective Date, each of the
Existing Letters of Credit shall be deemed to be a Letter of Credit issued
pursuant hereto by the Bank for the account of the Borrower for all purposes
hereunder and under the other Credit Documents; provided that nothing in this
Section 2.04 shall extend, modify or otherwise affect the existing expiration
date of any such Existing Letter of Credit.
2.05. Reimbursement.
(a) If the Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse the Bank for such LC Disbursement by paying directly to the Bank in immediately available funds an amount in Dollars, equal to such LC Disbursement or, in the case of an LC Disbursement in respect of an Alternative Currency Letter of Credit, in the Dollar Equivalent thereof, plus any taxes, fees, charges or other costs or expenses incurred by the Bank in connection with such payment which are obligations of the Borrower hereunder (the amounts described in the foregoing clauses (a) and (b) in respect of any drawing, collectively, the "Payment Amount") on (i) the Business Day on which the Borrower receives notice from the Bank of an LC Disbursement, if such notice is received on such Business Day prior to 10:00 A.M., New York City time, or (ii) if clause (i) above does not apply, the Business Day immediately following the day on which the Borrower receives such notice. Each such payment shall be made to the Bank at the Payment Office. Interest shall be payable on each Payment Amount from the date of the applicable drawing until the Business Day next succeeding the date of the relevant notice at the Federal Funds Effective Rate and, thereafter until payment in full of the Payment Amount, at the rate set forth in Section 2.11.
(b) Unless the Borrower has reimbursed the Bank in accordance with clause (a) above or otherwise advised the Bank in writing, prior to 3:00 P.M, New York City time on the date that any Reimbursement Obligation is due, that the Borrower will satisfy such Reimbursement Obligation by making a payment to the Bank prior to 10:00 a.m. (New York City time) of the next Business Day in accordance with Section 2.05(a) above, the Borrower authorizes the Bank upon any drawing under any Letter of Credit, and the Bank is hereby authorized and directed, without notice to any Person, to withdraw Collateral from the Cash Collateral Account in an amount equal to such Reimbursement Obligation in satisfaction thereof
(with any losses upon liquidation of any investments required to make such transfer being for the account of the Borrower).
2.06. Obligations Absolute; Limitation of Liability.
(a) The Borrower's obligation to reimburse LC Disbursements, and
the Bank's rights to apply Collateral to such Obligations, as provided in
Section 2.05 and in the Cash Collateral Agreement shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and the Cash Collateral Agreement under any and
all circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit, this Agreement or the Cash Collateral
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Bank under a Letter of Credit against presentation
of a draft or other document that does not comply with the terms of such Letter
of Credit, (iv) payment against presentation of any Drawing Document which is
signed, issued or presented by a Person (or a transferee of such Person)
purporting to be a successor or transferee of the beneficiary of the Letter of
Credit; (v) the Bank or any of its branches or affiliates being the beneficiary
of the Letter of Credit; (vi) the Bank or any correspondent honoring a drawing
against a Drawing Document up to the amount available under the Letter of Credit
even if such Drawing Document claims an amount in excess of the amount available
under the Letter of Credit; (vii) the existence of any claim, set-off, defense
or other right that the Borrower or any other Person may have at any time
against any beneficiary, any assignee of proceeds, the Bank or any other Person;
(viii) the Bank or any correspondent having previously paid against fraudulently
signed or presented Drawing Documents (whether or not the Borrower reimbursed
the Bank for such drawing); or (ix) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section 2.06, constitute a legal or equitable discharge of,
or provide a right of setoff against, the Borrower's obligations hereunder.
(b) Neither the Bank nor any of its Affiliates, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in clause (a) above), or for any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Bank; provided that the foregoing shall not be construed to excuse the Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Bank (as finally determined by a court of competent jurisdiction), the Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(c) Without limiting any other provision of this Agreement, the Bank: (i) may (but shall not be obligated to) honor a presentation under a Letter of Credit which on its face substantially complies with the terms of the Letter of Credit; (ii) may honor a presentation of any Drawing Documents which appear on their face to have been signed, presented or issued (X) by any purported successor or transferee of any beneficiary or other party required to sign, present or issue the Drawing Documents or (Y) under a new name of the beneficiary; (iii) shall not be responsible for the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness, or legal effect of any presentation under any Letter of Credit or of any Drawing Documents; (iv) may (but shall not be obligated to) disregard any non-documentary conditions stated in any Letter of Credit; (v) may act upon any Instruction which it, in Good Faith believes to have been given by a Person or entity authorized to give such Instruction; (vi) shall not be responsible for any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document, (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation; (vii) shall not be responsible for any acts, omissions or fraud by, or the solvency of, any beneficiary, any nominated Person or any other Person; (viii) may assert or waive any provision of the UCP or ISP which primarily benefits an issuing bank of a letter of credit, including, any requirement that any Drawing Document be presented to it at a particular hour or place; (ix) may pay any paying or negotiating bank (designated or permitted by the terms of any Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under the Standard Letter of Credit Practice applicable to it; and (x) may act or not act as required or permitted under Standard Letter of Credit Practice applicable to it where it has issued, confirmed, advised or negotiated the Letter of Credit, as the case may be.
(d) The Borrower shall notify the Bank of (i) any noncompliance with any Instruction, any other irregularity with respect to the text of the Letter of Credit or any amendment thereto or any claim of an unauthorized, fraudulent or otherwise improper Instruction, within one (1) Business Day prior to the issuance or amendment of any Letter of Credit and (ii) subject to the limitations of liability of the Bank in Section 5-109 of the UCC, any objection the Borrower may have to the Bank's honor or dishonor of any presentation under the Letter of Credit or any other action or inaction taken or proposed to be taken by the Bank under or in connection with this Agreement or any Letter of Credit, within three (3) Business Days after the Borrower receives notice of the objectionable action or inaction. The failure to so notify the Bank within said times shall discharge the Bank from any loss or liability that the Bank could have avoided or mitigated had it received such notice, to the extent that the Bank could be held liable for damages hereunder; provided that, if the Borrower shall not provide such notice to the Bank within three (3) Business Days of the date of receipt in the case of clause (i) or ten (10) Business Days from the date of receipt of clause (ii), then the Bank shall have no liability whatsoever for such noncompliance, irregularity, action or inaction and the Borrower shall be precluded from raising such noncompliance, irregularity or objection as a defense or claim against the Bank. The Borrower's acceptance or retention of any Drawing Documents presented under or in connection with a Letter of Credit (whether or not the document is genuine) shall ratify the Bank's honor of the presentation and preclude the Borrower from raising
a defense, set-off or claim with respect to the Bank's honor of the Letter of Credit. The Bank shall not be required to seek any waiver of discrepancies from the Borrower or to grant any waiver of discrepancies that the Borrower approves or Instructions.
2.07. Practices.
Letters of Credit shall be subject to the ISP, or, if specified in
Part I of the Letter of Credit Application, the UCP.
2.08. Disbursement Procedures.
The Bank shall, following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Bank shall promptly notify the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Bank with respect to any such LC Disbursement.
2.09. Termination and Reduction of Commitment.
(a) Unless previously terminated, the Commitment shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitment; provided that (i) each reduction of the Commitment shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitment if the then current LC Exposure or any of the sublimits set forth in Section 2.01 would exceed the Commitment.
(c) The Borrower shall notify the Bank of any election to terminate or reduce the Commitment under paragraph (b) of this Section 2.09 at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Each notice delivered by the Borrower pursuant to this Section 2.09 shall be irrevocable. Any termination or reduction of the Commitment shall be permanent.
2.10. Fees.
(a) The Borrower agrees to pay to the Bank a facility fee, which shall accrue at the rate of 0.05% per annum on the daily amount of the Commitment (whether used or unused) during the period from and including the date hereof to but excluding the date on which the Obligations are paid in full. Accrued facility fees shall be payable in arrears on each Quarterly Payment Date and on the date on which the Commitment terminates, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitment terminates shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(b) The Borrower shall pay to the Bank a fee for the issuance, renewal, extension or amendment of a Letter of Credit in an amount equal to 0.25% or, in the case of a Letter of Credit issued, renewed, extended or amended at any time after June 30, 2006, 0.30% of the face amount of such Letter of Credit, to be paid upon the date of issuance, renewal, extension or amendment of each Letter of Credit.
(c) On or before the Closing Date, the Borrower shall pay to the Bank an amendment fee of $25,000.
(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Bank. Fees paid shall not be refundable under any circumstances.
2.11. Default Rate of Interest.
If any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to 2% plus the Federal Funds Effective Rate.
2.12. Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by the Bank; or
(ii) impose on the Bank any other condition affecting this Agreement or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to the Bank of issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by the Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to the Bank such additional amount or amounts as will compensate the Bank for such additional costs incurred or reduction suffered.
(b) If the Bank shall determine that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on the Bank's capital or on the capital of the Bank's holding company as a consequence of this Agreement or the Letters of Credit issued by the Bank, to a level below that which the Bank or the Bank's holding company could have achieved but for such Change in Law (taking into consideration the Bank's policies and the policies of the Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Bank, such additional amount or amounts as will compensate the Bank or the Bank's holding company for any such reduction suffered.
(c) A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or its holding company as specified in paragraph (a) or (b) of this Section 2.12 shall be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay the Bank the amount shown as due on any such certificate within 20 days after receipt thereof.
(d) Failure or delay on the part of the Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of the Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate the Bank pursuant to this Section 2.12 for any increased costs or reductions incurred more than 270 days prior to the date that the Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.
2.13. Taxes.
(a) Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.13) the Bank receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Bank within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Bank on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.13) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by the Bank shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Bank the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Bank.
(e) If the Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.13 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Bank and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund);
provided that the Borrower, upon the request of the Bank, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Bank in the event the
Bank is required to repay such refund to such Governmental Authority. This
Section shall not be construed to require the Bank to make available its Tax
returns (or any other information relating to its Taxes which it deems
confidential) to the Borrower or any other person.
2.14. Payments Generally; Treatment.
(a) The Borrower shall make each payment required to be made by it hereunder (whether of, fees or reimbursement of LC Disbursements, or of any other amounts payable hereunder, or otherwise) in immediately available funds, without set-off or counterclaim. Any amounts received after 12:00 noon, New York City time on any date may, in the discretion of the Bank, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Bank at its offices at the Payment Office. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to the Bank to pay fully the aggregate amount of unreimbursed LC Disbursements plus interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees, and (ii) second, towards payment of unreimbursed LC Disbursements then due hereunder.
(c) Subject to the provision of Section 8, upon the maturity (whether by acceleration or otherwise) of any of the Obligations under this Agreement or any Credit Document, the Bank shall be entitled to immediate cash payment of such Obligations.
Section 3. COLLATERAL.
3.01. Cash Collateral.
To secure the prompt payment and performance to the Bank of the Obligations of the Borrower under the Letters of Credit, the Borrower has simultaneously herewith entered into the Cash Collateral Agreement pursuant to which the Borrower grants to the Bank a continuing first priority security interest, senior to all other Liens, if any, in the Collateral. Collateral held in the Cash Collateral Account shall not be available for use by the Borrower or any of its subsidiaries or Affiliates for any purpose.
3.02. Currency Exchange Rate Fluctuations.
(a) In the event that at any time the Borrower determines that by reason of currency exchange rates any aggregate or individual limits or sublimits set forth in Section 2.01
have been breached, in each case, by more than 5%, the Borrower shall
immediately notify the Bank (which notice shall promptly be confirmed in
writing). Nothing herein shall obligate the Borrower to monitor currency
exchange rates so as to make such determination but shall comply with this
Section 3.02 and Section 4 of the Cash Collateral Agreement if, nonetheless, any
such determination has been made.
(b) The Bank will calculate the LC Exposure (including any portion made in any Alternative Currency) and in any event on each date of receipt of a Letter of Credit Application or request to amend, renew or extend an outstanding Letter of Credit and otherwise not less frequently than once each calendar month.
In the event that on any date the Bank calculates that by reason of currency exchange rates any limits set forth in the proviso in Section 2.01 have been breached, in each case, by more than 5%, the Bank shall give notice to such effect to the Borrower.
Section 4. CONDITIONS PRECEDENT.
4.01. Conditions to Closing Date. The effectiveness of this Agreement and the agreement of the Bank to permit the issuance of any Letter of Credit hereunder from and after the Plan Effective Date is subject to satisfaction of the following conditions precedent:
(a) Execution and Delivery. The Bank shall have received duly executed counterparts from the Borrower, in its capacity as a reorganized Debtor, and the Bank to this Agreement and the Cash Collateral Agreement;
(b) Confirmation of the Plan. The Bank shall have received a copy of
the Confirmation Order entered by the Bankruptcy Court approving the Plan, which
Confirmation Order shall (i) be in form and substance satisfactory to the Bank,
(ii) authorize the Borrower, as a reorganized Debtor, to enter into this
Agreement and the other Credit Documents, pay the fees and expenses required
thereunder and perform its obligations thereunder, (iii) provide that
notwithstanding anything to the contrary in the Plan or the Confirmation Order
the Obligations shall not be discharged (and the Pledgor, pursuant to Section
1141(d)(4) of the Bankruptcy Code, shall waive any such discharge), (iv) provide
that the Credit Documents shall constitute legal, valid, binding and authorized
obligations of the Borrower, as a reorganized Debtor, (v) provide that Liens
granted under the Credit Documents shall continue in full force and effect and
shall remain binding, enforceable first priority Liens on and security interests
in the Collateral to secure the Obligations and (vi) have become a Final Order
(as defined in the Plan in effect on the date hereof);
(c) Occurrence of the Plan Effective Date. The Plan Effective Date shall have occurred, and the Bank shall have received a certificate, dated the Closing Date, signed by the Secretary or any Assistant Secretary, and attested to by the President, any Vice President or the Treasurer of the Borrower, in the form of Exhibit A hereto;
(d) Corporate Documents; Proceedings.
The Bank shall have received (i) a certificate, dated the Closing Date, signed by the Secretary or any Assistant Secretary, and attested to by the President, any Vice President or
the Treasurer of the Borrower, in the form of Exhibit B hereto with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws, as each may have been amended and restated, of the Borrower and the resolutions of the Borrower referred to in such certificate and (ii) a certificate of the Secretary of State of the State of Delaware certifying the good standing of the Borrower in such jurisdiction and listing all charter documents of the Borrower on file therewith.
(e) Opinion of Counsel. The Bank shall have received from counsel to the Borrower an opinion addressed to the Bank and dated the Closing Date in form, scope and substance satisfactory to the Bank;
(f) Payment of Fees. The Borrower shall have paid all costs, fees and expenses due to the Bank on or prior to the Closing Date (including, without limitation, reasonable legal fees and expenses due pursuant to Section 9.03) to the extent due; and
(g) Existing Letters of Credit. The Cash Collateral Account shall have Collateral in an amount equal to (x) in the case of Existing Letters of Credit or Obligations denominated in Dollars, at least one hundred five (105%) of the LC Exposure in respect of such Existing Letters of Credit and (y) in the case of Existing Letters of Credit denominated in an Alternative Currency, at least one hundred ten percent (110%) of the LC Exposure in respect of such Existing Letters of Credit.
4.02. Conditions to Each Credit Event. Each Credit Event is subject to the satisfaction of the following conditions:
(a) Sufficient Collateral.
The Bank shall have received sufficient Collateral in respect of such Credit Event in accordance with the terms of the Cash Collateral Agreement;
(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date, either before or immediately after giving effect to such Credit Event requested to be made on such date;
(c) Representations and Warranties.
All representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; and
(d) Letter of Credit Request. The Bank shall have received a request for the extension, amendment or renewal of any Letter of Credit meeting the requirements of Section 2.02 or a Letter of Credit Application, such request or Letter of Credit Application to include a certification by the Borrower, that after giving effect to the issuance, renewal, amendment or
extension of the requested Letter of Credit and the proposed use of any proceeds thereof, that the conditions precedent in this Section 4.02 shall have been satisfied.
Section 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Bank to enter into this Agreement and issue Letters of Credit, the Borrower makes the following representations and warranties to, and agreements with, the Bank, all of which shall survive the execution and delivery of this Agreement and the issuance of any Letter of Credit, with the execution and delivery of this Agreement and the occurrence of each Credit Event being deemed to constitute a representation and warranty that the matters specified in this Section 5 are true and correct on and as of the date of such execution and delivery and the date of each such Credit Event:
5.01. Corporate Status.
The Borrower, in its capacity as a reorganized Debtor, (i) is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its formation or incorporation, (ii) has the power and authority to own its property and assets and to transact the business in which it is engaged and (iii) is duly qualified as a foreign company or corporation and in good standing in each jurisdiction where the failure to so qualify or be in good standing would have a material adverse effect on such corporation.
5.02. Corporate Power and Authority.
Upon the occurrence of the Plan Effective Date, pursuant to the terms of the Plan and the Confirmation Order, the Borrower, in its capacity as a reorganized Debtor, has the corporate power and authority to execute, deliver and perform the terms and provisions of this Agreement, any Letter of Credit Application or request for an amendment, renewal or extension of a Letter of Credit, any Instructions and the Cash Collateral Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance by it of this Agreement and the Cash Collateral Agreement. Upon the occurrence of the Plan Effective Date, the Borrower has duly executed and delivered this Agreement and the Cash Collateral Agreement, and each of this Agreement, its Reimbursement Obligations under all Letters of Credit and the Cash Collateral Agreement constitutes, and any Letter of Credit Application or request for an amendment, renewal or extension of a Letter of Credit will constitute, its legal, valid and binding obligation enforceable in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at law).
5.03. No Violation.
Upon the occurrence of the Plan Effective Date, neither the execution, delivery or performance by the Borrower of this Agreement or the Cash Collateral Agreement, nor compliance by it with the respective terms and provisions thereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (other than pursuant to the Credit Documents) upon any of the property or assets of the Borrower pursuant to the terms of, any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other agreement, contract or instrument to which the Borrower is a party or by which it or any of its property or assets is bound or to which it may be subject, including the Plan or (iii) will violate any provision of the by-laws or Certificate of Incorporation of the Borrower.
5.04. Governmental Approvals.
Upon the occurrence of the Plan Effective Date, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except as have been obtained or made prior to the Closing Date), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance of this Agreement or the Cash Collateral Agreement or (ii) the legality, validity, binding effect or enforceability of this Agreement or the Cash Collateral Agreement.
5.05. Litigation.
Except as publicly or otherwise disclosed to the Bank prior to the date hereof, there are no actions, suits or proceedings pending or, to the best knowledge of the Borrower, threatened with respect to any Credit Document.
5.06. True and Complete Disclosure.
All factual information heretofore or contemporaneously furnished by or on behalf of the Borrower in writing to the Bank (including, without limitation, all information contained in the Credit Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein is true and accurate in all material respects on the date as of which such information is dated or certified and does not omit to state any fact necessary to make such information not misleading at such time in light of the circumstances under which such information was provided, it being understood that any projections delivered were prepared in Good Faith on assumptions believed by the Borrower to be appropriate but actual results may materially differ from the projections.
5.07. Tax Returns and Payments.
The Borrower and its Subsidiaries have filed all Tax returns required to be filed by it and has paid all income Taxes payable by it which have become due pursuant to such Tax returns and all other Taxes and assessments payable by it which have become due, other than those which (a) are not material, (b) payment of which has been stayed as a result of the Bankruptcy Proceeding or (c) are being contested in good faith and for which adequate reserves have been established. Each of the Borrower and its Subsidiaries has paid, or has provided adequate reserves (in the good faith judgment of the management of the Borrower) for the payment of, all federal and state income Taxes applicable for all prior fiscal years and for the current fiscal year to the date hereof.
5.08. Compliance with Statutes, etc.
The Borrower is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such noncompliance as would not, in the aggregate, have a material adverse effect on the business, operations, property, assets or financial condition of the Borrower.
5.09. Investment Company Act.
The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended.
5.10. Properties.
(a) The Borrower has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.
(b) The Borrower owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
5.11. Financial Condition; No Material Adverse Change.
(a) The Borrower has heretofore furnished to the Bank (i) the consolidated balance sheet and statements of income, stockholders equity and cash flows of Loral Space & Communications, Ltd. as of and for the fiscal year ended December 31, 2003, reported on by Deloitte & Touche LLP, independent public accountants and (ii) the Form 10-Qs filed by Loral Space & Communications, Ltd. for the fiscal quarters ended March 31, 2004, June 30, 2004 and September 30, 2004. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Loral Space & Communications, Ltd. and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, and solely in the case of the Form 10-Qs referenced in clause (ii) above, subject to year end audit adjustments and the absence of footnotes.
(b) Except as may have been disclosed in the Form 10-Qs for the fiscal quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 of Loral Space & Communications Ltd., since December 31, 2003, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.
5.12. Use of Proceeds.
The Letters of Credit requested hereunder shall be used only to provide credit support (x) in connection with Bid Bonds and bids made by the Borrower for contracts to build satellites and related components and (y) for general corporate purposes, including, without limitation, workers' compensation obligations.
5.13. The Confirmation Order.
As of the date of the submission of a Letter of Credit Application or the request for a renewal, amendment or extension of a Letter of Credit, the Confirmation Order has not been stayed, amended, vacated, reversed, rescinded or otherwise modified in any respect (except in accordance with the terms hereof).
5.14. Security Interests.
The security interests and the Liens granted pursuant to this Agreement and the Cash Collateral Agreement upon the occurrence of the Plan Effective Date are (a) valid first priority security interests in all of the Collateral and the Cash Collateral Account, as collateral security for the Obligations, enforceable in accordance with the terms hereof against all creditors of the Borrower and its affiliates and any Persons purporting to purchase any Collateral from the Borrower and (b) prior to all other security interests and Liens on the Collateral.
Section 6. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Closing Date and until the Commitment has terminated, and all Letters of Credit have terminated and, Fees and all other obligations incurred hereunder and under the other Credit Documents, are paid in full, the Borrower shall:
6.01. Financial Statements.
Furnish to the Bank:
(a) as soon as available, but in any event within 75 days after the end of each fiscal year of the Borrower, the annual report of Loral Space & Communications Ltd. on Form 10-K, and for any financial statements and related materials delivered after the Plan Effective Date, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Deloitte & Touche LLP or other independent certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 40 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the quarterly report of Loral Space & Communications Ltd. reported on Form 10-Q;
(c) as soon as is available, but in any event not later than 10 days after the Borrower furnishes its annual report on Form 10-K to the Bank pursuant to clause (a) above, the Borrower's quarterly operating statements for the last quarter in such fiscal year in the form of the Borrower's monthly operating statements in the form previously provided to the Bank; and
(d) as soon as is available, but in any event not later than 10 days after the Borrower furnishes its quarterly reports on Form 10-Q to the Bank pursuant to clause (b) above, the Borrower's monthly operating statements in the form previously provided to the Bank.
All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied (except as approved by such accountants or officer, as the case may be, and disclosed in reasonable detail therein) consistently throughout the periods reflected therein and with prior periods.
6.02. Certificates; Other Information.
Furnish to the Bank:
(a) concurrently with the delivery of any financial statements pursuant to Section 6.01, a certificate of a responsible officer of the Borrower stating that such responsible officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate;
(b) promptly, such additional financial and other information as the Bank may from time to time reasonably request.
6.03. Maintenance of Existence; Compliance.
(a)(i) Preserve, renew and keep in full force and effect its organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except, in the case of clause (ii) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Requirements of Law, the noncompliance with which, in the aggregate, could reasonably be expected to have a Material Adverse Effect of the type set forth in clauses (b) and (c) of the definition thereof, except for any such Requirements of Law being contested in good faith by appropriate proceedings.
6.04. Notices.
Promptly give notice to the Bank of:
(a) the occurrence of any Default or Event of Default;
(b) any litigation, or proceeding or, to the knowledge of the Borrower, any investigation that, in each case, may exist at any time between the Borrower or any of its Subsidiaries or Affiliates and any Governmental Authority, that if adversely determined, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding to which the Borrower or any of its
Subsidiaries or Affiliates is a party (i) the primary purpose of which is to
challenge the legality, validity or enforceability of the Credit Documents, or
(ii) seeks to prohibit the ownership or operation by the Borrower or any of its
Subsidiaries or Affiliates of all or a material portion of their respective
businesses or assets; or
(d) any development or event (other than any litigation or proceeding) that has had or could reasonably be expected to have a Material Adverse Effect.
6.05. Books, Records and Inspections.
(a) Keep proper books of record and account entries in conformity with generally accepted accounting principles reflecting all dealings and transactions in relation to its business and activities.
(b) Permit officers and designated representatives of the Bank to visit and inspect, under guidance of officers of the Borrower or such Subsidiary, any of the properties of the Borrower or such Subsidiary, and to examine the books of record and account of the Borrower or such Subsidiary and discuss the affairs, finances and accounts of the Borrower or such Subsidiary with, and be advised as to the same by, its and their officers, all at such reasonable times and intervals and to such reasonable extent as the Bank may request.
6.06. Taxes.
Pay and discharge or cause to be paid and discharged when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its property (real, personal or mixed), or upon any part thereof; provided, however, that the failure of the Borrower to pay any such Tax, assessment, charge, levy or claim shall not constitute a breach of this covenant if (a) such payment is not material or (b) for so long as the amount, applicability or validity thereof shall concurrently be contested in good faith by appropriate and timely proceedings diligently conducted, and if such reserve or other appropriate provision, if any, as shall be required by generally accepted accounting principles shall have been made therefor, and neither the Borrower's nor any such Subsidiary's title to or right to use of any of its property is impaired in any material respect by reason of such contest.
Section 7. NEGATIVE COVENANTS.
The Borrower hereby agrees that, so long as the Commitments remain in effect, any Letter of Credit remains outstanding or any other amount is owing to the Bank, the Borrower shall not:
7.01. Amendment to Plan.
On or after the Plan Effective Date, make or consent to any amendment to the Plan (as the same is in effect on the Plan Effective Date) that could reasonably be expected to materially and adversely affect (i) the ability of the Borrower to perform its obligations hereunder or under any of the Credit Documents entered into on or as of the Plan Effective Date or (ii) the rights and remedies of the Bank hereunder or under any of the Credit Documents or with respect to the Collateral.
7.02. Liens.
Create, incur, assume or suffer to exist any Lien upon any Collateral, whether now owned or hereafter acquired, except for Liens securing the Borrower's obligations to the Bank under this Agreement and the other Credit Documents.
7.03. Collateral Requirement.
Fail at any time to maintain the Collateral pursuant to the terms of this Agreement and the Cash Collateral Agreement.
Section 8. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events and the continuance thereof beyond any applicable grace period (each an "Event of Default")
(a) the Borrower shall (i) default, and such default shall continue for one or more Business Days, in the payment of any Reimbursement Obligation in respect of any LC Disbursement when and as the same shall become due and payable, (ii) default, and such default shall continue unremedied for two or more Business Days, in the payment when due of any interest on any such amounts or (iii) default, and such default shall continue unremedied for five or more Business Days, in payment when due of any Fees or any other amounts owing hereunder; or
(b) any representation, warranty or statement made by the Borrower in this Agreement or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or
(c) the Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in (i) this Agreement or the Cash Collateral Agreement and such default shall continue unremedied for a period of 30 days or (ii) Section 6.04(a), Section 7 or Section 4 of the Cash Collateral Agreement; or
(d) any material provision of any Credit Document shall, for any reason, cease to be valid and binding on the Borrower; or
(e) the Confirmation Order is stayed, reversed, vacated or otherwise modified after the date hereof in any manner that could reasonably be expected to materially and adversely affect the Borrower's ability to perform its obligations under the Credit Documents; or
(f) (i) the Borrower shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any of its Affiliates shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower in any case, proceeding or other action of a nature referred to in clause (i) above that (A) results in the entry of an order for relief or any such adjudication or appointment
or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Borrower any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets that
results in the entry of an order for any such relief that shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) the Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in the foregoing clause (i), (ii), or (iii); or (v) the Borrower shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(g) the Bank shall at any time cease to have a validly perfected, first priority Lien on the Collateral;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and all amounts owing
under this Agreement and the other Credit Documents (including all amounts of
Reimbursement Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable and (B) if such event is
any other Event of Default, the Bank may take any or all of the following
actions, upon written notice to the Borrower: (i) declare the Commitment to be
terminated forthwith, whereupon the Commitment of the Bank to renew, amend or
issue any Letters of Credit shall forthwith terminate immediately; and/or (ii)
declare all amounts owing under this Agreement and the other Credit Documents
(including all amounts of Reimbursement Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be immediately due and payable; and/or (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms and/or (iv) charge, set-off and otherwise apply all or any part of the
Collateral against unpaid Obligations then due or which subsequently become due.
With respect to all Letters of Credit with respect to which presentment for
honor shall not have occurred at the time of an acceleration pursuant to this
Section 8, amounts held in the Cash Collateral Account shall be applied by the
Bank to the payment of drafts drawn under such Letters of Credit, and the unused
portion thereof after all such Letters of Credit have expired or been fully
drawn upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the other Credit Documents. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the other Credit Documents shall have been paid in full, the balance, if
any, in the Cash Collateral Account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto). Except as expressly provided
above in this Section 8, presentment, demand, protest and all other notices of
any kind are hereby expressly waived by the Borrower.
Section 9. MISCELLANEOUS
9.01. Right of Setoff.
In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, the Bank is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Borrower or to any other Person (other than upon five (5) Business Days' written notice to the Borrower), any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by the Bank, including all deposits held in the Cash Collateral Account, in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Bank, or any branch or agency thereof to or for the credit or the account of the Borrower against and on account of the Obligations and liabilities of the Borrower to the Bank under this Agreement or under any of the other Credit Documents, and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether the Bank shall have made any demand hereunder and although such Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.
9.02. Notices.
Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telecopier) or by telephone (but if by telephone, confirmed immediately by telecopier) and mailed or telecopied: if to the Borrower, at its address specified opposite its signature below; if to the Bank, at the Notice Office; or, as to the Borrower, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower. No such notice or communication shall be effective until received.
9.03. Expenses; Indemnity.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Bank and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Bank, in connection with the preparation, negotiation and administration of the Credit Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses paid to third parties by the Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Bank, including the reasonable fees, charges and disbursements of any counsel for the Bank in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with any Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Letters of Credit.
(b) The Borrower shall indemnify the Bank and each Affiliate of the Bank (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees,
charges and disbursements of any expert witness or counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
transactions contemplated hereby; (ii) any Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit);
(iii) any transfer, sale, delivery, surrender, or endorsement of any Drawing
Document at any time(s) held by any Indemnitee in connection with any Letter of
Credit; (iv) any independent undertakings issued by the beneficiary of any
Letter of Credit; (v) any unauthorized, fraudulent or improper Instructions or
error in computer transmission; (vi) the acts or omissions, whether rightful or
wrongful, of any present or future de jure or de facto governmental or
regulatory authority or cause or event beyond the control of such Indemnitee;
(vii) any actual or alleged presence or release of hazardous materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries,
or any environmental liability related in any way to the Borrower or any of its
Subsidiaries; or (viii) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
(c) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby, or Letter of Credit or the use of the proceeds thereof.
(d) All amounts due under this Section 9.03 shall be payable not later than 15 days after written demand therefor.
9.04. Benefit of Agreement.
This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that the Borrower may not assign or transfer any of its rights or obligations hereunder or under any other Credit Document without the prior written consent of the Bank. The Bank may at any time grant participations in any or all of its rights and/or obligations hereunder to another financial institution; provided that in the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant's rights against such Bank in respect of such participation to be those set forth in the agreement executed by such Bank in favor of the participant relating thereto) and all amounts payable by the Borrower hereunder shall be determined as if such Bank had not sold such participation, except that the participant shall be entitled to receive the additional amounts under Section 2.12 to, and only to, the extent that such Bank would be entitled to such benefits if the participation had not
been entered into or sold; and provided further, that the Bank shall not transfer, grant or assign any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) reduce the principal amount thereof, or increase such participant's participating interest in any Commitment over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of any Commitment and that an increase in any Commitment shall be permitted without the consent of any participant if such participant's participation is not increased as a result thereof) or (ii) permit the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement except in accordance with the terms hereof and thereof.
9.05. No Waiver; Remedies Cumulative.
No failure or delay on the part of the Bank in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower or the Bank shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Credit Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Bank would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Bank to any other or further action in any circumstances without notice or demand.
9.06. Calculations; Computations.
All computations of interest in respect of Fees and interest hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or Fees are payable.
9.07. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.
(a) This Agreement and the other Credit Documents and the rights and obligations of the parties hereunder and thereunder shall be construed in accordance with and be governed by the law of the State of New York. Any legal action or proceeding between the Borrower and any other party to this Agreement or any other Credit Document arising out of or with respect to this Agreement or any other Credit Document must be brought in the state courts of the State of New York located in the County of New York or in the courts of the United States for the Southern District of New York, and the Borrower submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding or judgment. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.02, such service to become effective 30 days after such mailing. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
(b) Each of the Bank and the Borrower hereby irrevocably waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in Section 9.07(a) and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) Each of the Borrower and the Bank waives, to the fullest extent it may legally and effectively do so, any right it may have to jury trial in any legal proceeding directly or indirectly arising out of or relating to each of the Borrower's and the Bank's rights and obligations under this Agreement or transactions contemplated hereby (whether based on contract, tort or any other theory).
9.08. Confidentiality.
The Bank shall hold, and shall cause its participants and prospective participants, if any, to agree to hold, all non-public information obtained pursuant to the requirements of any Credit Document which has been identified as such by the Borrower in accordance with its customary procedure for handling confidential information of such nature and in accordance with safe and sound banking practices and in any event may make disclosure reasonably required by any bona fide assignee, transferee or participant or as legally required or reasonably requested by any governmental agency or representative thereof or pursuant to legal process.
9.09. Counterparts.
This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the Bank.
9.10. Headings Descriptive.
The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
9.11. Amendment or Waiver.
Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by the Bank and, in the case of any amendment, by the Borrower.
9.12. Survival.
All indemnities set forth herein including, without limitation, in Sections 2.06 and 9.03 shall survive the execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.
SPACE SYSTEMS/LORAL, INC.
By /s/ Avi Katz ------------------------------------- Name: Title: |
Address:
Attention:
Fax number:
Telephone:
JPMORGAN CHASE BANK, N.A.
By: /s/ Richard C. Smith ------------------------------------- Name: Richard C. Smith Title: Vice President |
Exhibit 10.11
AMENDED AND RESTATED CASH COLLATERAL AGREEMENT
AMENDED AND RESTATED CASH COLLATERAL AGREEMENT, dated as of November 21, 2005 (this "Agreement"), between Space Systems/Loral, Inc. (the "Pledgor"), a corporation existing under the laws of the State of Delaware and successor in interest to the DIP Pledgor referenced below, and JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank) (the "Bank").
W I T N E S S E T H
WHEREAS, pursuant to the Letter of Credit Reimbursement Agreement, dated as of April 2, 2004 (as heretofore amended, supplemented or otherwise modified, the "Existing L/C Agreement"), between Space Systems/Loral, Inc., as a debtor and a debtor-in-possession (the "DIP Pledgor"), and the Bank, the Bank has issued Letters of Credit at the request of, and for the account of, the DIP Pledgor;
WHEREAS, pursuant to the Cash Collateral Agreement, dated as of April 2, 2004 (as heretofore amended, supplemented or otherwise modified, the "Existing Cash Collateral Agreement"), between the DIP Pledgor and the Bank, the DIP Pledgor granted to the Bank a first priority perfected security interest in the Collateral and a Superpriority Claim (each as defined in the Existing L/C Agreement) pursuant to Section 364(c) of the Bankruptcy Code to secure repayment of the obligations under the Existing L/C Agreement; and
WHEREAS, the Bank and the DIP Pledgor have agreed to amend and restate the Existing L/C Agreement in its entirety and, concurrently therewith, amend and restate the Existing Cash Collateral Agreement in its entirety such that the Liens granted to the Bank will not be cancelled or discharged as a result of the occurrence of the Plan Effective Date and such Liens will continue to secure the obligations of the Borrower under the Amended and Restated Letter of Credit Reimbursement Agreement, dated as of even date herewith (as amended, supplemented or otherwise modified from time to time, the "Reimbursement Agreement");
NOW, THEREFORE, in consideration of the above premises, the Pledgor and the Bank hereby agree to amend and restate the Existing Cash Collateral Agreement in its entirety as follows:
Section 1. DEFINITIONS. Capitalized terms used herein but not otherwise defined shall have the meaning ascribed thereto in the Reimbursement Agreement.
Section 2. PLEDGE AND ASSIGNMENT. As security for the payment of all Obligations of the Pledgor in respect of the Letters of Credit, under the Reimbursement Agreement and under this Agreement, the Pledgor
hereby irrevocably assigns and pledges to the Bank, and hereby grants to the Bank, a first priority security interest in (i) the Pledgor's account, number 323-351832 (for credit to Space Systems Loral Inc.), with the Bank at its offices at 270 Park Avenue, 20th Floor, New York, NY 10017 (hereinafter called the "Cash Collateral Account") which Cash Collateral Account shall be under the sole dominion and control of the Bank, (ii) all cash from time to time deposited into the Cash Collateral Account, (iii) all Investments (as defined in Section 5 hereof) and certificates and instruments, if any, from time to time representing or evidencing the Cash Collateral Account and (iv) to the extent not covered by clauses (i) through (iii) above, all proceeds and products of any and all of the foregoing (collectively, the "Collateral"). Cash, Investments, security entitlements or other investments held or carried in the Cash Collateral Account shall not be available for use by the Pledgor or any of its subsidiaries or Affiliates for any purpose.
Section 3. REMEDIES UPON DEFAULT.
(a) The Pledgor hereby agrees that if any amount payable by it in respect of the Obligations is not paid when due (whether upon demand, at stated maturity, by acceleration or otherwise), the Bank may, by giving five (5) Business Days' notice to the Pledgor: (i) charge, set-off and otherwise apply all or any part of the Cash Collateral against the Obligations then due (or which become due) or any part thereof or (ii) exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party under the Uniform Commercial Code in effect in the State of New York at that time. Without limiting the generality of clause (ii) above, the Bank may sell, redeem, collect or otherwise realize on the Collateral or any portion thereof in one or more parcels at a public or private sale, at its offices or elsewhere, for cash, on credit or for future delivery and on such other terms as the Bank may deem commercially reasonable and without notice or demand except to the extent required by law (and if any such notice may be required by law the Pledgor agrees that at least 5 Business Days' notice shall constitute reasonable notification). The Bank shall not be obligated to make any such sale of Collateral regardless of whether notice of such sale has been given and may adjourn any such sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by the Bank as Collateral and all cash proceeds received by the Bank in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Bank, then or at any time thereafter be applied in whole or in part by the Bank against all or any part of the Obligations then due (or which become due) in such order as the Bank may elect. Any surplus of such cash or cash proceeds held by the Bank and remaining after payment in full of all of the Obligations after expiry or termination of all Letters of Credit shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
Section 4. MAINTAINING THE CASH COLLATERAL ACCOUNT.
(a) The Pledgor hereby further agrees that so long as any Letters of Credit or Obligations are outstanding, it will deposit and maintain at all times an amount in the Cash Collateral Account equal to (x) in the case of Letters of Credit or Obligations denominated in Dollars at least one hundred five percent (105%) of the LC Exposure in respect of such Letters of
Credit, and (y) in the case of Letters of Credit denominated in an Alternative Currency at least one hundred ten percent (110%) of the LC Exposure in respect of such Letters of Credit.
(b) If at any time the Collateral maintained in the Cash Collateral
Account in respect of any outstanding Alternative Currency Letters of Credit is
less than 110% of the then Dollar Equivalent of the LC Exposure relating to such
Alternative Currency Letters of Credit, then the Pledgor shall, within three (3)
Business Days after receipt of notice from the Bank delivered in accordance with
Section 3.02 of the Reimbursement Agreement, deposit an amount in Dollars in the
Cash Collateral Account equal to the amount required such that the Collateral in
the Cash Collateral Account is not less than 110% of the Dollar Equivalent of
the LC Exposure relating to such Alternative Currency Letters of Credit. In the
event that the Collateral maintained in the Cash Collateral Account in respect
of any outstanding Alternative Currency Letters of Credit is more than 110% of
the then Dollar Equivalent of the LC Exposure relating to such Alternative
Currency Letter of Credit, or in the event that the Collateral maintained in the
Cash Collateral Account in respect of any other Letter of Credit is more than
105% of the LC Exposure relating to such other Letter of Credit, so long as no
Default or Event of Default has occurred and is continuing, the Bank will, no
more often than one time per each fiscal quarter, upon request from the
Borrower, transfer such excess, as determined by the Bank in Good Faith, to an
account of the Borrower.
Section 5. INVESTING AMOUNTS IN THE ACCOUNTS.
If requested by the Pledgor, the Bank will, from time to time, (a) invest amounts on deposit in the Cash Collateral Account in such deposits, commercial paper and securities (the "Investments") as the Pledgor may select and the Bank may approve in its reasonable discretion and (b) invest interest or dividends paid on the Investments and reinvest other proceeds of such Investments which may mature or be sold in new deposits, commercial paper or securities as the Pledgor may select and the Bank may approve in its discretion. Interest and proceeds which are not invested or reinvested shall be deposited and held in the Cash Collateral Account; provided that the Pledgor may at any time or from time to time request release of such interest and proceeds in accordance with Section 4 hereof. The Bank will only approve Investments in which it can obtain a first-priority, perfected security interest, which may require the Pledgor to execute, and the Pledgor hereby agrees to execute promptly, necessary documents.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Pledgor hereby represents to the Bank that: (a) the execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action, and do not and will not violate any law or regulation applicable to it or will not violate any law or regulation applicable to it or contravene any loan, credit or other agreement to which it is a party or by which it or its properties are bound, (b) it is the legal and beneficial owner of the Collateral free and clear of any lien, security interest or other charge or encumbrance except for the security interest created by this Agreement, (c) this Agreement constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally and by general equitable principles (regardless of whether the issue of enforceability is considered in a proceeding in equity or at
law), and creates in favor of the Bank a perfected, first priority security interest in the Collateral, enforceable in accordance with its terms, (d) no consent of any other person (including, without limitation, stockholders or creditors of the Pledgor or any of its subsidiaries or of any parent company of the Pledgor), and no consent, license, permit, approval or authorization of, exemption by, or registration, filing or declaration with, any governmental authority is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by or against the Pledgor, other than consents that have already been obtained and which remain in full force and effect, (e) the execution, delivery and performance of this Agreement will not result in the creation or imposition of any lien (other than the Liens in favor of the Bank under this Agreement) on any of its properties or assets pursuant to the provisions of any contractual obligation, and (f) there is no litigation, suit, action, investigation, inquiry or other proceeding presently pending which could reasonably be expected to affect the value of the Collateral or, to the knowledge of the Pledgor, threatened against the Pledgor or any of its subsidiaries or any of their properties or assets, by or before any arbitrator or any governmental authority and no preliminary or permanent injunction or order by a state or Federal court has been entered in connection with this Agreement.
Section 7. COVENANTS.
The Pledgor covenants and agrees with the Bank that:
(a) The Pledgor will not (1) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral, or
(2) create, incur or permit to exist any Lien or option in favor of, or any
claim of any person with respect to, any of the Collateral, or any interest
therein, except for the Liens created by this Agreement.
(b) The Pledgor will maintain the Liens created by this Agreement as a first priority, perfected security interest and defend the right, title and interest of the Bank in and to the Collateral against the claims and demands of all persons whomsoever. At any time and from time to time, upon the written request of the Bank, and at the sole expense of the Pledgor, the Pledgor will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Bank reasonably may request for the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted.
Section 8. WAIVER.
The Pledgor hereby waives presentation of any instrument or document evidencing any indebtedness or liability to the Bank, demand of payment, protest and notice of non-payment or protest.
Section 9. EXPENSES.
The Pledgor further agrees that it will pay the Bank upon written demand any and all reasonable expenses (including reasonable fees and expenses of its counsel) which the Bank may incur in connection with the exercise or enforcement of any of the rights of the Bank hereunder.
Section 10. CONTINUING SECURITY INTEREST.
This Agreement shall create a continuing Lien on the Collateral and shall (a) remain in full force and effect until the payment in full of the Obligations and the expiration or cancellation of all outstanding Letters of Credit, (b) be binding upon the Pledgor and its successors and assigns (provided that any assignment by the Pledgor may be made only with the prior written consent of the Bank), and (c) inure to the benefit of the Bank and its successors, transferees and assigns. Upon the payment in full of the Obligations and the expiration or cancellation of all outstanding Letters of Credit, the Pledgor shall be entitled to the return, upon its request and at its expense, of such of the Collateral as shall not have been applied pursuant to the terms of this Agreement. It is the intention of the parties hereto that the Liens created hereby in favor of the Bank shall continue from and after the Plan Effective Date to constitute continuing, perfected first priority security interests in the Collateral, as security for the Obligations. Accordingly, effective on the Plan Effective Date, the Pledgor confirms that it has granted, and does hereby grant, to the Bank, a security interest in all right, title and interest of the Pledgor in and to the Collateral as security for the Obligations.
Section 11. FURTHER ASSURANCES.
At the cost and expense of the Borrower, the Borrower shall execute and file all such further documents and instruments, and perform such other acts, as the Bank may request to maintain the Liens granted to the Bank in connection with this Agreement and the Reimbursement Agreement and to maintain the priority of such Liens granted pursuant to this Agreement and the Reimbursement Agreement. Pursuant to the New York UCC and any other applicable law, the Borrower authorizes the Bank to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of the Borrower in such form and in such offices the Bank reasonably determines appropriate to perfect the security interests of the Bank under this Agreement and the Reimbursement Agreement. A photographic or other reproduction of this Agreement shall be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.
Section 12. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor consent to departure by the Pledgor herefrom shall in any event by effective unless the same shall be in writing and signed by the Bank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 13. NOTICES.
All notices, requests and demands to or upon the Bank or the Pledgor to be effective shall be in writing (including telecopier) or by telephone (but if by telephone, confirmed immediately by telecopier) and shall be deemed to have been duly given or made (1) when delivered by hand or (2) if given by mail, when deposited in the mails by certified mail, return receipt requested, or (3) if by fax or similar electronic transfer, when sent and receipt has been confirmed, addressed to the Bank or the Pledgor at its address or transmission number for notices set forth below its signature hereto. The Bank and the Pledgor may change their
addresses and transmission numbers for notices by notice in the manner provided in this paragraph.
Section 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; JURY TRIAL.
(a) This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and be governed by the law of the State of New York. Any legal action or proceeding between the Pledgor and any other party to this Agreement arising out of or with respect to this Agreement may be brought in the state courts of the State of New York, located in the County of New York, or in the courts of the United States for the Southern District of New York, and the Pledgor submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action or proceeding or judgment. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 13, such service to become effective 30 days after such mailing. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. Nothing herein shall affect the right of the Bank to bring any legal action or proceeding against the Pledgor in any court having jurisdiction with respect thereto.
(b) Each of the Bank and the Pledgor hereby irrevocably waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to in Section 14(a). Each of the Plegdor and the Bank hereby further irrevocably waive and agree not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) Each of the Pledgor and the Bank waives, to the fullest extent it may legally and effectively do so, any right it may have to jury trial in any legal proceeding directly or indirectly arising out of or relating to each of the Pledgor's and the Bank's rights and obligations under this Agreement or transactions contemplated hereby (whether based on contract, tort or any other theory).
Section 15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.
IN WITNESS WHEREOF, the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first above written.
SPACE SYSTEMS/LORAL, INC.
By: /s/ Avi Katz ------------------------------------- Name: Title: |
Address:
Attention:
Fax number:
Telephone:
Agreed and Accepted:
JPMORGAN CHASE BANK, N.A.
By: /s/ Richard C. Smith --------------------------------------- Name: Richard C. Smith Title: Vice President |
JPMorgan Chase Bank, N.A.
270 Park Avenue
New York, New York 10017
Attention:
Fax number:
Telephone:
Exhibit 99.1
[Logo Loral Space & Communications]
600 Third Avenue
New York, NY 10016
FOR IMMEDIATE RELEASE
NEWS
Contact: Jeanette Clonan
(212) 338-5658
John McCarthy
(212) 338-5345
LORAL EMERGES FROM CHAPTER 11
Two Core Business Units And Management Team Remain In Place
Company Has Strengthened Balance Sheet, Little Debt, Strong Backlog
Upon Distribution, New Common Stock To Be Traded On NASDAQ Under Ticker LORL
NEW YORK - November 22, 2005 - Loral Space & Communications Inc. today announced that it has officially concluded its reorganization and has successfully emerged from chapter 11.
Bernard L. Schwartz, Loral's chairman and chief executive officer, said: "Loral has reached an important milestone with its emergence from chapter 11. It is a great triumph for the men and women of our workforce, who stayed focused on their jobs, upheld our high manufacturing and service standards and kept Loral in the forefront of the industry.
"Over the last two-and-a-half years, we have created a stronger, leaner and more efficient Loral. We have won new awards and customers, and we continue to seek and capture opportunities in many new and traditional markets. We are confident that the momentum we have built will benefit all our constituents."
Throughout the chapter 11 process, Space Systems/Loral (SS/L) remained the premier manufacturer of commercial satellites, increasing its market share and winning more than a third of the dollar value of all contracts awarded over the last 18 months, more than any other commercial satellite manufacturer. Loral Skynet's fleet is well-positioned to serve areas with high growth potential such as Asia, Europe, Latin America, the Middle East and the trans-Atlantic market. Skynet has also expanded its services beyond traditional FSS leases with the introduction of new IP-based data services. Loral's new XTAR joint venture has been awarded contracts for service to the U.S. State Department and the Spanish Ministry of Defense.
Loral exits chapter 11 with approximately $180 million in cash. During the chapter 11 reorganization, Loral did not require any debtor-in-possession (DIP) financing, and, as of its emergence from chapter 11, has only $126 million of debt in the form of the notes issued by Loral Skynet. Loral Skynet has also issued $200 million of preferred stock to certain creditors of Loral Orion.
Members of Loral's new board of directors, in addition to chairman and CEO Bernard L. Schwartz and non-executive vice chairman Michael B. Targoff, are Sai S. Devabhaktuni, Hal Goldstein, John D. Harkey Jr., Robert B. Hodes, Dean Olmstead, Mark H. Rachesky and Arthur L. Simon.
In accordance with the Plan of Reorganization, the company is issuing 20 million shares of new common stock in Loral Space & Communications Inc. to certain of its creditors. Loral's prior common and preferred stock was cancelled as of November 21, 2005 with no distribution made to holders of such stock.
When shares of the new Loral Space & Communications Inc. common stock are distributed, they will begin trading on the NASDAQ market under the ticker "LORL." Loral Space & Communications Inc. common stock is currently trading as a "when-issued" stock on the over-the-counter (OTC) market under the ticker "LRALV."
Business Segments
Satellite Manufacturing - Space Systems/Loral
Space Systems/Loral's backlog at the end of the third quarter was $902 million, compared with $399 million a year earlier. Since the beginning of Loral's reorganization in July 2003, Space Systems/Loral has received orders for nine satellites from seven separate customers, more than any other manufacturer during the same time period. Orders came from a wide variety of service providers: FSS operators, mobile telephony providers, digital audio radio service (DARS) and direct-to-home service providers, including leading operators such as DIRECTV, EchoStar, Intelsat, PanAmSat and XM Satellite Radio. SS/L has delivered and launched nine satellites over the last 24 months.
Satellite Services - Loral Skynet
Loral Skynet had a backlog of $502 million at the end of the third quarter versus $529 million a year earlier. During the last two years, Loral Skynet shifted its focus from primarily a fixed satellite services operator to a full-service communications solutions provider with hybrid space/terrestrial capabilities. Skynet's fleet of satellites strategically positioned around the globe in combination with its terrestrial communications resources can provide customers with one-stop connectivity. In addition, Skynet shares resources with Loral`s XTAR joint venture, allowing each to cross-market capacity to governments around the world.
Copies of Loral's Plan of Reorganization, as confirmed, and Disclosure Statement are available on the Loral website at www.loral.com. The documents also are available via the court's website, at www.nysb.uscourts.gov. Please note that a PACER password is required to access documents on the Bankruptcy Court's website. Loral's bankruptcy case number is 03-41710 (RDD).
Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband
communications, wireless telephony, weather monitoring and air traffic management. For more information, visit Loral's web site at www.loral.com.
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This document 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. In addition, Loral Space & Communications Inc. or its representatives may make forward-looking statements, orally or in writing, which may be included in, but are not limited to, various filings made from time to time with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized executive officer of the company. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. Many of these factors and conditions are also described in the section of the annual report on Form 10-K for the fiscal year ended December 31, 2004 of Loral Space & Communications Ltd. (the predecessor registrant to the company) ("Ltd."), entitled "Commitments and Contingencies," and Ltd's other filings with the Securities and Exchange Commission. The reader is specifically referred to these documents.