<PAGE> 1
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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) JUNE 23, 1997
COMMISSION FILE NUMBER: 1-14180
------------------------
LORAL SPACE & COMMUNICATIONS LTD.
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
TELEPHONE: (212) 697-1105
JURISDICTION OF INCORPORATION: ISLANDS OF BERMUDA
IRS IDENTIFICATION NUMBER: 13-3867424
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<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 23, 1997, Loral Space & Communications Ltd., a Bermuda company (the
"Company" or "Loral"), acquired, subject to certain governmental approvals, the
24.5% minority interest in Space Systems/Loral, Inc., a Delaware corporation
("SS/L"), held in the aggregate by Aerospatiale SNI ("Aerospatiale") and Alcatel
Espace ("Alcatel") for consideration consisting in the aggregate of 8,042,922
shares of Loral common stock and 1,063,663 shares of Loral 6% Series C
Convertible Redeemable Preferred Stock. After giving effect to these
acquisitions, Loral owns 100% of SS/L.
Aerospatiale and Alcatel, together with Finmeccanica S.p.A., whose minority
interest in SS/L had previously been acquired by Loral in exchange for Loral
securities, will retain their alliance relationship with SS/L including their
representation on the Board of Directors of SS/L.
SS/L is a full-service provider of commercial communications satellite
systems and services, including, launch and insurance procurement and mission
operations from its mission control center in Palo Alto, California.
ITEM 5. OTHER EVENTS.
On April 15, 1997, pursuant to a Transaction Agreement dated as of March
20, 1997 between Loral and Alenia Inc. ("Alenia"), Loral acquired from Alenia
1,488,372 limited partner interests in Loral/Qualcomm Satellite Services, L.P.
("LQSS"), managing general partner of Globalstar, L.P., for $80 million in cash.
On June 19, 1997, pursuant to a Purchase and Sale Agreement dated as of
June 19, 1997 between Loral and Alcatel Spacecom, Loral acquired from Alcatel
Spacecom 720,000 limited partner interests in LQSS in exchange for $17,487,360
in cash and 1,255,684 shares of Loral common stock.
After giving effect to these transactions, Loral owns, directly or
indirectly, approximately 38% of Globalstar, on a fully diluted basis.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Financial Statements of Space Systems/Loral, Inc. and Independent Auditors'
Report*
(B) PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Consolidated Financial Statements of Loral
Space & Communications Ltd., Space Systems/Loral, Inc. and AT&T Skynet
Satellite Services as of March 31, 1997 and for the three months ended March
31, 1997 and the nine months ended December 31, 1996.
(C) EXHIBITS.
<TABLE>
<S> <C>
Exhibit 10.1 Exchange Agreement dated as of June 18, 1997 among Loral Space &
Communications Ltd., Aerospatiale SNI and Alcatel Espace
Exhibit 10.2 Alliance Agreement dated as of June 23, 1997 among Loral Space &
Communications Ltd., Aerospatiale SNI, Alcatel Espace and Finmeccanica
S.p.A.
Exhibit 10.3 Registration Rights Agreement (Series C Preferred Stock) dated as of
March 31, 1997 between Loral Space & Communications Ltd. and
Finmeccanica S.p.A. and dated as of June 23, 1997 among Loral Space &
Communications Ltd., Aerospatiale SNI and Alcatel Espace
Exhibit 10.4 Registration Rights Agreement (Common Stock) dated as of June 23, 1997
among Loral Space & Communications Ltd., Aerospatiale SNI and Alcatel
Espace
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Exhibit 10.5 Transaction Agreement dated as of March 20, 1997 between Loral Space &
Communications Ltd. and Alenia Inc.
Exhibit 10.6 Purchase and Sale Agreement dated as of June 19, 1997 between Loral
Space & Communications Ltd. and Alcatel Spacecom
</TABLE>
- ---------------
* Incorporated by reference to the Company's Annual Report on Form 10-K for the
period from April 1, 1996 to December 31, 1996. Financial Statements as of and
for the three months ended March 31, 1997 are not required because Space
Systems/Loral, Inc. is included in the consolidated financial statements of
Loral included in Loral's Quarterly Report on Form 10-Q for the first quarter
of 1997.
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 LTD.
--------------------------------------
Registrant
By: /s/ MICHAEL P. DEBLASIO
------------------------------------
Michael P. DeBlasio
Senior Vice President -- Finance
Date: July 8, 1997
2
<PAGE> 4
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND NINE MONTHS ENDED DECEMBER 31, 1996
The following unaudited pro forma condensed consolidated balance sheet as
of March 31, 1997 and statements of income for the three months ended March 31,
1997 and the nine months ended December 31, 1996 give effect to the acquisition
between March 25, 1997 and June 23, 1997 by Loral Space & Communications Ltd.
("Loral") of the remaining Space Systems/Loral ("SS/L") common stock not
previously owned, pursuant to agreements negotiated in February 1997, and the
acquisition by Loral of AT&T Skynet Satellite Services ("Skynet") on March 14,
1997. The unaudited pro forma condensed consolidated balance sheet assumes the
acquisitions occurred as of March 31, 1997. The unaudited pro forma condensed
consolidated statements of income assume the acquisitions occurred as of April
1, 1996. The unaudited pro forma balance sheet information presented is based on
the historical unaudited condensed consolidated balance sheet of Loral as of
March 31, 1997 which includes the assets and liabilities of SS/L and Skynet as
of that date. The pro forma income statement information for the three months
ended March 31, 1997 is based on the historical unaudited condensed consolidated
statement of income of Loral which includes the results of the operations of
SS/L from January 1, 1997 and the elimination of minority interest, and of
Skynet for the period January 1, 1997 to March 14, 1997. The pro forma income
statement information for the nine months ended December 31, 1996 is based on
the historical condensed consolidated statements of income of Loral and SS/L as
well as the condensed statement of income of Skynet for that period. The
unaudited pro forma condensed consolidated financial statements reflect the
purchase method of accounting and the adjustments and assumptions described in
the accompanying notes.
The pro forma adjustments are based upon preliminary estimates of fair
values. Actual adjustments will be based on final appraisals and other analyses
of fair values. The unaudited pro forma condensed consolidated balance sheet and
statements of income should be read in conjunction with the audited consolidated
financial statements and notes of the respective companies. The pro forma data
may not be indicative of the results that actually would have occurred if the
acquisitions had taken place on April 1, 1996, or future results.
3
<PAGE> 5
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(In thousands, except share data)
<TABLE>
<CAPTION>
LORAL PRO FORMA
AS REPORTED CONSOLIDATED
----------- PRO FORMA ----------
ADJUSTMENTS
-----------
(NOTE 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 605,566 $ (9,220)(a) $ 596,346
Contracts in process............................. 321,432 -- 321,432
Inventories...................................... 101,553 -- 101,553
Other assets..................................... 91,839 -- 91,839
---------- --------- ----------
Total current assets..................... 1,120,390 (9,220) 1,111,170
Property, plant and equipment, net............... 677,897 -- 677,897
Cost in excess of net assets acquired, less
amortization.................................. 384,785 56,996(a)(c) 441,781
Long-term receivables............................ 86,902 -- 86,902
Investments in affiliates........................ 232,218 18,651(c) 250,869
Other assets..................................... 79,450 -- 79,450
---------- --------- ----------
$ 2,581,642 $ 66,427 $2,648,069
========== ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................ $ 2,146 -- 2,146
Accounts payable................................. 132,880 -- 132,880
Accrued employment costs......................... 38,060 -- 38,060
Customer advances................................ 50,706 -- 50,706
Accrued interest................................. 8,079 -- 8,079
Other current liabilities........................ 66,799 -- 66,799
Income taxes payable............................. 6,589 -- 6,589
Deferred income taxes............................ 62,710 -- 62,710
---------- --------- ----------
Total current liabilities................ 367,969 -- 367,969
Deferred income taxes............................ 41,159 -- 41,159
Pension and other postretirement liabilities..... 54,175 -- 54,175
Long-term liabilities............................ 19,192 -- 19,192
Long-term debt................................... 231,532 -- 231,532
Minority interest................................ 120,573 (120,573)(a) --
Convertible preferred equivalent obligations..... 677,379 (677,379)(a)(e) --
Shareholders' equity:
Series A convertible preferred stock, par
value $.01.................................. 459 -- 459
Series C convertible preferred stock, par
value $.01.................................. -- 139(a)(e) 139
Common stock, par value $.01.................. 1,911 80(a) 1,991
Paid-in capital............................... 1,058,822 864,160(a)(e) 1,922,982
Retained earnings............................. 8,471 -- 8,471
---------- --------- ----------
Total shareholders's equity.............. 1,069,663 864,379 1,934,042
---------- --------- ----------
$ 2,581,642 $ 66,427 $2,648,069
========== ========= ==========
</TABLE>
4
<PAGE> 6
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(In thousands, except per share amounts)
Periods combined:
Loral: January 1, 1997 to March 31, 1997
Skynet: January 1, 1997 to March 14, 1997
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
LORAL SKYNET --------------- CONSOLIDATED
-------- -------- (NOTE 1) ------------
<S> <C> <C> <C> <C>
Revenues................................. $340,353 $ 17,938 $ (24,829)(c) $333,462
Costs and expenses....................... 331,138 14,066 (21,243)(c)(h) 323,961
-------- -------- --------------- ------------
Operating income....................... 9,215 3,872 (3,586) 9,501
Interest income (expense), net........... 10,139 (2,500) (5,573)(b)(g) 2,066
-------- -------- --------------- ------------
Income before income taxes, minority
interest and equity in net loss of
affiliates.......................... 19,354 1,372 (9,159) 11,567
Income taxes............................. 9,339 576 (2,616)(d)(i) 7,299
-------- -------- --------------- ------------
Income before minority interest and
equity in net loss of affiliates.... 10,015 796 (6,543) 4,268
Minority interest........................ (3,244) -- 3,244(c) --
Equity in net loss of affiliates......... (7,177) -- -- (7,177)
-------- -------- --------------- ------------
Net income (loss)...................... $ (406) $ 796 $ (3,299) $ (2,909)
======== ======= ============ =========
Earnings (loss) per share (note 2):
Primary................................ $ 0.00 $ (0.01)
-------- ------------
Fully diluted.......................... $ 0.00 $ (0.01)
-------- ------------
Weighted average shares outstanding:
Primary................................ 236,989 245,032
-------- ------------
Fully diluted.......................... 236,989 245,032
-------- ------------
</TABLE>
5
<PAGE> 7
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED DECEMBER 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO
FORMA
ADJUSTMENTS PRO FORMA
LORAL SS/L SKYNET -------- CONSOLIDATED
-------- ---------- -------- (NOTE 1) ------------
<S> <C> <C> <C> <C> <C>
Revenues............................. $ 5,088 $1,017,653 $ 84,435 $(96,488)(c) $ 1,010,688
Costs and expenses................... 17,606 963,517 39,051 (59,913)(c)(h) 960,261
------- ---------- ------- ------- ----------
Operating income (loss)............ (12,518) 54,136 45,384 (36,575) 50,427
Interest income (expense), net....... 28,699 6,081 (11,305) (30,767)(b)(g) (7,292)
------- ---------- ------- ------- ----------
Income before income taxes and
equity in net loss of
affiliates...................... 16,181 60,217 34,079 (67,342) 43,135
Income taxes......................... 2,912 27,643 13,369 (23,248)(d)(i) 20,676
------- ---------- ------- ------- ----------
Income before equity in net loss of
affiliates...................... 13,269 32,574 20,710 (44,094) 22,459
Equity in net loss of affiliates..... (4,392) (1,549) -- (13,396)(c) (19,337)
------- ---------- ------- ------- ----------
Net income......................... $ 8,877 $ 31,025 $ 20,710 $(57,490) $ 3,122
======= ========== ======= ======= ==========
Earnings per share (note 2):
Primary............................ $ 0.04 $ 0.01
------- ----------
Fully diluted...................... $ 0.04 $ 0.01
------- ----------
Weighted average shares outstanding:
Primary............................ 229,396 241,026
======= ==========
Fully diluted...................... 229,396 241,026
======= ==========
</TABLE>
6
<PAGE> 8
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND NINE MONTHS ENDED DECEMBER 31, 1996
1. The following facts and assumptions in notes (a) through (e) were used
in determining the pro forma effect of the increase in Loral's ownership of SS/L
to 100%.
a) Pursuant to agreements negotiated in December 1996 and February
1997, Loral acquired 49% of SS/L from four international aerospace and
communications companies (the "Alliance Partners") between March 25, 1997
and June 23, 1997 for $374 million. The first two transactions, in which
Loral acquired 24.5% of SS/L for $93.5 million in cash and $93.5 million in
convertible preferred equivalent obligations ("CPEOs") were reflected in
Loral's historical unaudited condensed consolidated balance sheet as of
March 31, 1997. The remaining 24.5% of SS/L was acquired on June 23, 1997,
subject to certain governmental approvals, for $187.0 million, consisting
of 8,042,922 shares of Loral common stock and 1,063,663 shares of Loral 6%
Series C convertible redeemable preferred stock. Pro forma adjustments to
the March 31, 1997 balance sheet assume the June transactions occurred as
of March 31, 1997.
In August 1996, Loral increased its ownership of SS/L to 51% through
the acquisition of an 18.3% interest held by certain partnerships
affiliated with Lehman Brothers (the "Lehman Partnerships") for $110.0
million including cash of $4 million, 7.5 million shares of Loral common
stock and 267,256 shares of common stock of Globalstar Telecommunications
Ltd. previously held by a Loral subsidiary. In accordance with the terms of
Loral's agreement with the Lehman Partnerships, the purchase price was
increased by $9.2 million in April 1997.
Loral increased its ownership of SS/L to 75.5% during the first
quarter of 1997. Accordingly, Loral discontinued the equity method of
accounting and began consolidating the results of SS/L as of January 1,
1997, with a reduction for SS/L's earnings attributable to its other
shareholders.
The acquisition of SS/L common stock has been accounted for as a
purchase. The cost in excess of net assets acquired arising from this
acquisition is being amortized over 40 years. Loral's historical unaudited
condensed consolidated statement of income for the three months ended March
31, 1997 reflects the results of operations of SS/L from January 1, 1997
and the elimination of the minority interest of the SS/L equity not owned
by Loral during the period. Loral's historical unaudited condensed
consolidated statement of income for the nine months ended December 31,
1996 includes SS/L's operations using the equity method of accounting. Pro
forma adjustments assume that Loral had acquired 100% of the common stock
of SS/L as of April 1, 1996.
b) The purchase price for SS/L was determined through arm's length
bargaining between Loral and the Alliance Partners and Loral and the Lehman
Partnerships. The cash portion of the acquisition was financed with cash on
hand. The unaudited pro forma condensed consolidated statements of income
reflect charges for interest expense of 7% on the cash portion of the
purchase price and 6% on the CPEOs and preferred stock portion of the
purchase price.
c) The estimated excess of purchase price over net assets acquired of
$119.9 million is being amortized over 40 years. Further, the unaudited pro
forma condensed consolidated balance sheet includes $51.2 million to record
the estimated proportionate excess of fair value of SS/L's investment in
Globalstar over the carrying value. The pro forma adjustment of $18.7
million represents the increment related to the 24.5% of SS/L acquired
subsequent to March 31, 1997. Other pro forma adjustments for the three
months ended March 31, 1997 include elimination of SS/L's sales to Skynet
of $24.8 million and related cost of sales of $22.5 million for the period
from January 1, 1997 through March 14, 1997, the date of the Skynet
acquisition, and elimination of the minority interest remaining in SS/L
during the period. Other pro forma adjustments for the nine months ended
December 31, 1996 include elimination of SS/L's sales to Skynet of $96.5
million and related cost of sales of $82.1 million and elimination of
Loral's equity in the net income of SS/L based on its historical ownership
interest during the period.
7
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
Other adjustments related to differences between fair values of assets
acquired and their carrying amounts are currently being evaluated. However,
any effect is not expected to be significant.
d) A statutory (Federal and state) tax rate of 41%, adjusted for
non-deductible interest and goodwill, was assumed with respect to the pro
forma adjustments.
e) The CPEOs were subject to mandatory exchange into shares of Loral's
6% Series C Convertible Redeemable Preferred Stock ("Preferred Stock")
after approval by shareholders on April 30, 1997. Accordingly, a pro forma
adjustment has been included in the unaudited pro forma condensed
consolidated balance sheet to reflect the exchange of all CPEOs into
Preferred Stock.
The following facts and assumptions in notes (f) through (i) were used in
determining the pro forma effect of the acquisition of Skynet from AT&T.
f) On March 14, 1997 Loral acquired certain assets of Skynet for
$478.1 million in cash. The price reflects a reduction from the $712.5
million price originally agreed upon in September 1996 arising from an
adjustment resulting from the failure of Skynet's Telstar 401 Satellite in
January 1997. The price is subject to further adjustment based upon net
assets delivered at closing, as defined.
This acquisition has been accounted for as a purchase. Loral's
historical unaudited condensed consolidated statement of income for the
three months ended March 31, 1997 reflects the operations of Skynet from
the date of acquisition through March 31, 1997. The Skynet historical
unaudited condensed statement of income included in the unaudited pro forma
condensed consolidated statement of income for the three months ended March
31, 1997 represents its operating results from January 1, 1997 to the date
of acquisition and excludes the charge related to the loss of the Telstar
401 Satellite. Pro forma adjustments have been calculated for that period.
The Skynet historical unaudited condensed statement of income included in
the unaudited pro forma condensed consolidated statement of income for the
nine months ended December 31, 1996 includes the operations of Skynet for
the entire period. The Skynet operations have been calculated by deducting
the Skynet operations for the three month period ended March 31, 1996 from
the Skynet operations for the year ended December 31, 1996. Revenues,
operating income and net income for Skynet for the three months ended March
31, 1996 were $39.9 million, $19.0 million and $9.3 million, respectively.
Pro forma adjustments have been calculated for the nine month period.
g) The purchase price for Skynet was determined through arm's length
bargaining between Loral and AT&T. The acquisition was initially financed
with cash on hand. A significant portion of the purchase price is expected
to be refinanced with debt. The pro forma adjustment for interest expense
reflects charges for interest based on an adjusted purchase price of $478.1
million for the three months ended March 31, 1997 and an unadjusted
purchase price of $712.5 million for the nine months ended December 31,
1996 at an assumed interest rate of 7%, reduced for capitalized interest of
$2.9 million for the three months ended March 31, 1997 and $7.5 million for
the nine months ended December 31, 1996 and interest expense recorded by
Skynet of $2.5 million for the three months ended March 31, 1997 and $11.3
million for the nine months ended December 31, 1996. The unadjusted
purchase price of $712.5 million was used as the basis of the interest
expense calculation during the nine months ended December 31, 1996 because
Telstar 401 was operating and generating revenues during that entire
period.
h) The estimated excess of purchase price over net assets acquired of
$96.1 million is being amortized over 40 years. Other purchase accounting
adjustments to the unaudited pro forma condensed consolidated statement of
income for the three months ended March 31, 1997, pursuant to the
provisions of Accounting Principles Board Opinion No. 16, include charges
for depreciation over an estimated weighted average 12.5 year life of the
excess of fair value of depreciable fixed assets over the historical book
value of $12.9 million. Other purchase accounting adjustments to the
unaudited pro forma condensed consolidated statement of income for the nine
months ended December 31, 1996 include
8
<PAGE> 10
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
charges for depreciation over an estimated weighted average ten year life
of the excess of fair value of depreciable fixed assets over the historical
book value of $246.9 million. For purposes of this adjustment, fair value
of depreciable fixed assets includes the estimated fair value of Telstar
401, and historical book value includes the carrying value of Telstar 401.
i) A statutory (Federal and state) tax rate of 39% was assumed with
respect to the pro forma adjustments.
2. Primary and fully diluted earnings per share are computed based upon the
weighted average number of shares of common stock and common equivalent shares
(Series A Convertible Preferred Stock) outstanding, after giving pro forma
effect to the shares issued for the transactions described above.
9
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------------- -------------------------------------------------------------------------------
<S> <C>
Exhibit 10.1 Exchange Agreement dated as of June 18, 1997 among Loral Space & Communications
Ltd., Aerospatiale SNI and Alcatel Espace
Exhibit 10.2 Alliance Agreement dated as of June 23, 1997 among Loral Space & Communications
Ltd., Aerospatiale SNI, Alcatel Espace and Finmeccanica S.p.A.
Exhibit 10.3 Registration Rights Agreement (Series C Preferred Stock) dated as of March 31,
1997 between Loral Space & Communications Ltd. and Finmeccanica S.p.A. and
dated as of June 23, 1997 among Loral Space & Communications Ltd., Aerospatiale
SNI and Alcatel Espace
Exhibit 10.4 Registration Rights Agreement (Common Stock) dated as of June 23, 1997 among
Loral Space & Communications Ltd., Aerospatiale SNI and Alcatel Espace
Exhibit 10.5 Transaction Agreement dated as of March 20, 1997 between Loral Space &
Communications Ltd. and Alenia Inc.
Exhibit 10.6 Purchase and Sale Agreement dated as of June 19, 1997 between Loral Space &
Communications Ltd. and Alcatel Spacecom
</TABLE>
10
<PAGE> 1
Exhibit 10.1
EXCHANGE AGREEMENT
by and among
LORAL SPACE & COMMUNICATIONS LTD.,
AEROSPATIALE SNI and
ALCATEL ESPACE
----------------------------------------
Dated as of June 18, 1997
----------------------------------------
<PAGE> 2
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of June 18, 1997 ("Agreement"), by and
among LORAL SPACE & COMMUNICATIONS LTD., a company organized under the laws of
Bermuda ("Loral"), AEROSPATIALE SNI, a societe nationale industrielle organized
under the laws of France ("Aerospatiale"), and ALCATEL ESPACE, a societe anonyme
organized under the laws of France ("Alcatel") (Aerospatiale and Alcatel
collectively the "Stockholders").
W I T N E S S E T H :
WHEREAS, on the date hereof, (i) Aerospatiale owns 490 shares of
Common Stock, par value $.10 per share, of SS/L (shares of such Common Stock the
"SS/L Shares") and (ii) Alcatel owns 490 SS/L Shares;
WHEREAS, on March 25, 1997, pursuant to an Exchange Agreement, dated
as of December 19, 1996, as amended by Amendment No. 1 thereto, dated as of
February 6, 1997 (such Exchange Agreement, as so amended, the "DASA Agreement"),
Loral SpaceCom Corporation, a Delaware corporation ("Holdings"), acquired the
490 SS/L Shares owned by Daimler-Benz Aerospace AG ("DASA") in exchange for
$93.5 million in cash;
WHEREAS, on March 31, 1997, pursuant to a Transaction Agreement,
dated as of March 20, 1997 (the "Finmeccanica Agreement"), Loral acquired the
490 SS/L Shares owned by Finmeccanica S.p.A., a societe par azione organized
under the laws of Italy ("Finmeccanica"), in exchange for $92.3 million
aggregate principal amount of Loral's 6% Convertible Preferred Equivalent
Obligations due 2006 (the "CPEOs") having a market value of $93.5 million; and
WHEREAS, the parties hereto desire for each of the Stockholders to
exchange their SS/L Shares for Loral securities, as set forth in this Agreement,
while at the same time, preserving their strategic alliance with SS/L in the
field of Space Systems.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1
<PAGE> 3
1. THE EXCHANGE
1.1. Exchange.
1.1.1. At the Closing described in Section 1.2. below, Aerospatiale
agrees to transfer to Loral the 490 SS/L Shares held by Aerospatiale (the
"Aerospatiale SS/L Shares"), and Loral agrees to issue and deliver to
Aerospatiale: (i) 3,837,300 shares of Loral Common Stock, par value $.01 per
share ("LSC Common Stock"), and (ii) 514,200 shares of Loral's 6% Series C
Convertible Redeemable Preferred Shares, par value $.01 per share ("LSC Series C
Preferred Shares").
1.1.2. At the Closing described in Section 1.2. below, Alcatel
agrees to transfer to Loral the 490 SS/L Shares held by Alcatel (the "Alcatel
SS/L Shares"), and Loral agrees to issue and deliver to Alcatel: (i) 4,205,622
shares of LSC Common Stock and (ii) 549,463 shares of LSC Series C Preferred
Shares.
1.1.3. The LSC Series C Preferred Shares issued to the Stockholders
pursuant to this Agreement shall be issued under Schedule III to Loral's Second
Amended and Restated Bye-laws (the "Series C Schedule"), a complete and accurate
copy of which is attached hereto as Exhibit A, and, upon execution by the
Stockholders of the Registration Rights Agreement, dated March 31, 1997 ("Series
C Reg Rights Agreement"), by and among certain parties including Loral and
Finmeccanica, a copy of which is attached hereto as Exhibit B, the Stockholders
will be entitled to all the rights of an "Initial Purchaser" and a "Holder"
thereunder with this Agreement constituting a "Purchase Agreement" for all
purposes of the Series C Reg Rights Agreement.
1.2. Closing.
1.2.1. Time and Place of Closing. The closing ("Closing") of the
transactions contemplated by Section 1.1. (the "Exchange") shall take place at
the law offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, New York 10022 or such other place upon which the parties
hereto may agree and shall occur on June 23, 1997 or such other date upon which
the parties hereto may agree (the "Closing Date").
1.2.2. Deliveries at Closing. At the Closing,
(a) Loral will deliver to the Stockholders share certificates
for their respective shares of (i) LSC Common Stock to be issued hereunder (such
stock the "LSC Stock") and (ii) LSC Series C Preferred Shares to be issued
hereunder (the "LSC Preferred Stock"), all registered in the name or names and
denominations as each Stockholder will have requested at least two (2) business
days prior to Closing;
(b) Aerospatiale will deliver to Loral (or a direct or
indirect wholly owned subsidiary of Loral) certificates representing the
Aerospatiale SS/L Shares, duly endorsed for transfer or accompanied by stock
powers duly executed in blank;
2
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(c) Alcatel will deliver to Loral (or a direct or indirect
wholly owned subsidiary of Loral) certificates representing the Alcatel SS/L
Shares, duly endorsed for transfer or accompanied by stock powers duly executed
in blank;
(d) Loral will deliver to each of the Stockholders the items
required by Section 4.1.1. as a condition to the obligations of the Stockholders
to consummate the Exchange;
(e) Aerospatiale will deliver to Loral the items required by
Section 4.1.2. as a condition to Loral's obligation to consummate the Exchange;
and
(f) Alcatel will deliver to Loral the items required by
Section 4.1.2. as a condition to Loral's obligation to consummate the Exchange.
1.2.3. Stock Transfer Taxes. Loral will bear all United States stock
transfer taxes, direct or indirect, attributable to the share transfers in the
Exchange.
2. NOMINAL VALUE
2.1. For purposes of this Agreement and related arrangements between
the parties, including the Alliance Agreement in the form set forth in Exhibit
F, the term "Nominal Value" shall mean, regardless of actual value, market value
or selling price: (i) with respect to Aerospatiale, (A) $17.0563 for each share
of Loral Common Stock until an aggregate of 3,837,300 shares of such stock have
been sold or otherwise disposed by Aerospatiale as described in Section
8.1(a)(ii) of the Alliance Agreement, and thereafter, an amount per share as
determined in accordance with Clause (i)(B), and (B) $54.5508 for each Loral 6%
Convertible Redeemable Preferred Share or any group of Loral securities
(including, subject to Clause (i)(A), any Loral Common Stock) into which such
Share was converted or for which it was exchanged (the Share or such group of
Loral securities the "Convertible Preferred Security"); (ii) with respect to
Alcatel, (A) $15.5625 for each share of Loral Common Stock until an aggregate of
4,205,622 shares of such stock have been sold or otherwise disposed of by
Alcatel as described in Section 8.1(a)(ii) of the Alliance Agreement, and
thereafter, an amount per share as determined in accordance with Clause (ii)(B),
and (B) $51.0498 for each Convertible Preferred Security, and (iii) with respect
to Finmeccanica, $50.6563 for each Convertible Preferred Security. The foregoing
dollar figures will be adjusted appropriately to reflect the effect of
conversions, exchanges, splits, combinations, stock dividends, capital
distributions and similar capital adjustments. Hypothetical examples
illustrating the intended operation of Section 8.1(a)(ii) of the Alliance
Agreement are contained in Exhibit M attached hereto.
3. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Loral. Loral represents
and warrants to each of the Stockholders as follows:
3.1.1. Loral Organization; Capitalization. Loral is a company duly
organized, validly existing and in good standing under the laws of the Islands
of Bermuda and has all requisite corporate power and authority to own its
properties and assets and to conduct its
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business as now conducted. The authorized capital stock of Loral consists of (a)
750,000,000 shares of Common Stock, par value $.01 per share, of which
191,168,755 shares are issued and outstanding and, without giving effect to the
transactions contemplated hereby, 97,533,912 additional shares are reserved for
issuance upon the exercise or conversion of outstanding options, warrants or
convertible securities; (b) 150,000,000 shares of Series A Non-Voting
Convertible Preferred Stock, par value $.01 per share, of which 45,896,977
shares are outstanding and none of which have been reserved for issuance; (c)
750,000 shares of Series B Preferred Stock, par value $.01 per share, no shares
of which are outstanding, and 250,000 shares of which have been reserved for
issuance upon the exercise of outstanding rights; and (d) 20,000,000 shares of
LSC Series C Preferred Shares, of which 13,845,774 shares are outstanding, and
none of which are reserved for issuance.
3.1.2. Authorization and Validity of Agreement. Loral has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Loral's obligations hereunder have been, or will have been on the Closing Date,
duly authorized by the Board of Directors of Loral, and no other corporate
proceedings on the part of Loral are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Loral and is
the legal, valid and binding obligation of Loral.
3.1.3. No Conflict or Violation. The execution, delivery and
performance by Loral of this Agreement do not and will not violate or conflict
with any provision of the charter documents or bye-laws of Loral, and do not and
will not violate any provision of any agreement or instrument to which Loral is
a party or by which it is bound, or any order, judgment or decree of any court
or other governmental or regulatory authority to which Loral is subject.
3.1.4. Validity of Securities. The shares of LSC Stock and LSC
Preferred Stock have been, or will have been as of the Closing Date, duly
authorized for issuance and sale to Aerospatiale and Alcatel pursuant to this
Agreement, and when duly executed and delivered against payment therefor as
provided herein, will be validly issued, fully paid and non-assessable; the
stock certificates evidencing the LSC Stock and LSC Preferred Stock will be in
due and proper form and comply with all applicable legal requirements; the
issuance of the LSC Stock and LSC Preferred Stock will not be subject to any
call, preemptive or other similar rights.
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3.1.5.Repurchase of SS/L Shares from DASA and Finmeccanica.
(a) On March 25, 1997, pursuant to the DASA Agreement,
Holdings acquired DASA's right, title and interest in and to SS/L Shares for
$93.5 million in cash. The DASA Agreement, a complete and accurate copy of which
is attached hereto as Exhibit C, is in full force and effect, without amendment
or breach by any party; Loral has not provided, and is not obligated to provide,
CPEOs or other consideration to DASA having an aggregate value of more than
$93.5 million, and Loral has made no purchases, or agreements, understandings or
letters of intent, creating or leading to an obligation to pay "additional
consideration" under the DASA Agreement.
(b) On March 31, 1997, pursuant to the Finmeccanica Agreement,
Loral acquired Finmeccanica's right, title and interest in and to SS/L Shares in
exchange for $92.3 million aggregate principal amount of CPEOs having a market
value of $93.5 million. The Finmeccanica Agreement, a complete and accurate copy
of which is attached hereto as Exhibit D, is in full force and effect, without
amendment or breach by any party; Loral has not provided, and is not obligated
to provide, CPEOs or other consideration to Finmeccanica having an aggregate
value of more than $93.5 million, and Loral has made no purchases or agreements,
understandings or letters of intent, creating or leading to an obligation to pay
"additional consideration" under the Finmeccanica Agreement. In addition,
Finmeccanica has not been granted, and does not have, any rights or benefits
with respect to SS/L that have not been, or at Closing will not be, granted on
an equal basis to the Stockholders.
(c) All periods during which "additional consideration" is to
be measured or calculated under the DASA Agreement, Finmeccanica Agreement, and
that certain Agreement, dated August 9, 1996, by and among Loral, Holdings (as
defined herein), Lehman Brothers Capital Partners II, L.P., Lehman Brothers
Merchant Banking Portfolio Partnership L.P., Lehman Brothers Offshore Investment
Partnership L.P. and Lehman Brothers Offshore Investment Partnership-Japan L.P.,
have expired.
3.1.6.LSC Corp. Matters.
(a) LSC Corp. Organization; Ownership. Loral Space &
Communications Corporation ("LSC Corp.") is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted. Loral owns, and will own as
of the Closing Date, all the outstanding shares of capital stock (having any
voting power) of LSC Corp.
(b) Authorization and Validity of Closing Agreements. LSC
Corp. has the corporate power to enter into each of the agreements and the
amendment, as applicable, referred to in Section 4.1.1.(e) (collectively the
"Closing Agreements") and to carry out its obligations thereunder. The execution
and delivery of the Closing Agreements and the performance of LSC Corp.'s
obligations thereunder have been, or will have been on the Closing Date, duly
authorized by the Board of Directors of LSC Corp., and no other corporate
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proceedings on the part of LSC Corp. are necessary to authorize such execution,
delivery and performance.
(c) No Conflict or Violation. The execution, delivery and
performance by LSC Corp. of the Closing Agreements do not and will not violate
or conflict with any provision of the charter documents or by-laws of LSC Corp.,
and do not and will not violate any provision of any agreement or instrument to
which LSC Corp. is a party or by which it is bound, or any order, judgment or
decree of any court or other governmental or regulatory authority to which LSC
Corp. is subject.
3.1.7. Holdings Matters.
(a) Holdings Organization; Ownership. Loral SpaceCom
Corporation ("Holdings") is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and assets and to conduct
its business as now conducted. LSC Corp. owns, and will own as of the Closing
Date, all the outstanding shares of capital stock (having any voting power) of
Holdings.
(b) Authorization and Validity of Closing Agreements. Holdings
has the corporate power to enter into, as applicable, each of the Closing
Agreements and to carry out its obligations thereunder. The execution and
delivery of the Closing Agreements and the performance of Holdings' obligations
thereunder have been, or will have been on the Closing Date, duly authorized by
the Board of Directors of Holdings, and no other corporate proceedings on the
part of Holdings are necessary to authorize such execution, delivery and
performance.
(c) No Conflict or Violation. The execution, delivery and
performance by Holdings of the Closing Agreements do not and will not violate or
conflict with any provision of the charter documents or by-laws of Holdings, and
do not and will not violate any provision of any agreement or instrument to
which Holdings is a party or by which it is bound, or any order, judgment or
decree of any court or other governmental or regulatory authority to which
Holdings is subject.
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3.1.8. SS/L Matters.
(a) SS/L Organization; Capitalization. SS/L is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted. The
authorized capital stock of SS/L consists of 100,000 SS/L Shares and 100,000
shares of preferred stock, par value $.10 per share, of which 4,000 SS/L Shares
are issued and outstanding and no SS/L Shares are reserved for issuance upon the
exercise or conversion of outstanding options, warrants or convertible
securities. Without giving effect to the transactions contemplated hereby, 3,020
SS/L Shares are held by Holdings, and 490 SS/L Shares are held by each of
Aerospatiale and Alcatel. There are no outstanding options, warrants, agreements
or rights (including contingent rights) for any person to acquire any SS/L
Shares or any interest therein.
(b) Authorization and Validity of Closing Agreements. SS/L has
the corporate power to enter into each of the Closing Agreements and to carry
out its obligations thereunder. The execution and delivery of the Closing
Agreements and the performance of SS/L's obligations thereunder have been, or
will have been on the Closing Date, duly authorized by the Board of Directors of
SS/L, and no other corporate proceedings on the part of SS/L are necessary to
authorize such execution, delivery and performance.
(c) No Conflict or Violation. The execution, delivery and
performance by SS/L of the Closing Agreements do not and will not violate or
conflict with any provision of the Certificate of Incorporation or By-Laws of
SS/L, and do not and will not violate any provision of any agreement or
instrument to which SS/L is a party or by which it is bound, or any order,
judgment or decree of any court or other governmental or regulatory authority to
which SS/L is subject.
3.1.9. Registration and Resale of LSC Common Stock and LSC Series C
Preferred Shares. The shares of LSC Common Stock and LSC Series C Preferred
Shares issued hereunder, and, when issued, the shares of LSC Common Stock
issuable upon conversion of the LSC Series C Preferred Shares issued hereunder,
all have been duly registered under the U.S. Securities Act of 1933, as amended
(pursuant to Securities Act Registration Number 333-26517, on Form S-3), and
applicable state securities laws (collectively the "Securities Laws") and
admitted for trading on the New York Stock Exchange. Other than restrictions
imposed by the Securities Laws, the shares of LSC Common Stock issued hereunder,
the shares of LSC Series C Preferred Shares issued hereunder, and, when issued,
the shares of LSC Common Stock issuable upon conversion of the LSC Series C
Preferred Shares, are not subject to any legal or contractual restrictions on
resale other than as may be set forth in the Alliance Agreement in the form
attached hereto as Exhibit F.
3.2. Representations and Warranties of Aerospatiale. Aerospatiale
represents and warrants to Loral as follows:
3.2.1. Organization. Aerospatiale is a societe nationale
industrielle duly organized, validly existing and in good standing under the
laws of the Republic of France, and
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has all requisite corporate power and authority to own its properties and assets
and to conduct its business as now conducted.
3.2.2. Authorization and Validity of Agreement. Aerospatiale has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Aerospatiale's obligations hereunder have been, or will have been on the Closing
Date, duly authorized by the appropriate governing body of Aerospatiale, and no
other corporate proceedings on the part of Aerospatiale are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by Aerospatiale and is the legal, valid and binding obligation of
Aerospatiale.
3.2.3. No Conflict or Violation. The execution, delivery and
performance by Aerospatiale of this Agreement do not and will not violate or
conflict with any provision of the charter documents or by-laws (or
corresponding instruments under the laws of France) of Aerospatiale, and do not
and will not violate any provision of any agreement or instrument to which
Aerospatiale is a party or by which it is bound, or any order, judgment or
decree of any court or other governmental or regulatory authority to which
Aerospatiale is subject.
3.2.4. Title to SS/L Shares. Aerospatiale holds good and valid title
to the Aerospatiale SS/L Shares, which shares are owned by Aerospatiale free and
clear of any lien or other right or claim, except to the extent set forth in the
Stockholders Agreement, dated as of April 22, 1991, by and among SS/L, the
Stockholders, Finmeccanica (through its predecessor in interest), Loral
Corporation, a New York corporation ("Old Loral"), and Loral Aerospace Holdings,
Inc., a Delaware corporation ("Old Holdings"), as amended by Amendment No. 1 to
Stockholders Agreement, dated as of November 10, 1992, by and among the parties
to the aforementioned Stockholders Agreement, DASA and Loral Aerospace
Corporation, a Delaware Corporation ("LAC") (such Stockholders Agreement, as
amended by such Amendment No. 1, hereinafter the "Stockholders Agreement"), and
when such SS/L Shares are acquired by Loral in accordance with the terms of this
Agreement, Loral will acquire good and valid title to such SS/L Shares free of
any lien or other right or claim created or suffered by Aerospatiale.
3.2.5. No Brokers or Agents. Aerospatiale has not retained the
services of any broker or agent in connection with the Exchange.
3.3. Representations and Warranties of Alcatel. Alcatel
represents and warrants to Loral as follows:
3.3.1. Organization. Alcatel is a societe anonyme duly organized,
validly existing and in good standing under the laws of the Republic of France,
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted.
3.3.2. Authorization and Validity of Agreement. Alcatel has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Alcatel's obligations hereunder have been, or will have been on the Closing
Date, duly authorized by the appropriate governing body of
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Alcatel, and no other corporate proceedings on the part of Alcatel are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly executed by Alcatel and is the legal, valid and binding obligation of
Alcatel.
3.3.3. No Conflict or Violation. The execution, delivery and
performance by Alcatel of this Agreement do not and will not violate or conflict
with any provision of the charter documents or by-laws (or corresponding
instruments under the laws of France) of Alcatel, and do not and will not
violate any provision of any agreement or instrument to which Alcatel is a party
or by which it is bound, or any order, judgment or decree of any court or other
governmental or regulatory authority to which Alcatel is subject.
3.3.4. Title to SS/L Shares. Alcatel holds good and valid title to
the Alcatel SS/L Shares, which shares are owned by Alcatel free and clear of any
lien or other right or claim, except to the extent set forth in the Stockholders
Agreement, and when such SS/L Shares are acquired by Loral in accordance with
the terms of this Agreement, Loral will acquire good and valid title to such
SS/L Shares free of any lien or other right or claim created or suffered by
Alcatel.
3.3.5. No Brokers or Agents. Alcatel has not retained the services
of any broker or agent in connection with the Exchange.
4. CONDITIONS TO CLOSING
4.1. Conditions to the Closing.
4.1.1. Conditions to Obligations of Each of the Stockholders. The
obligations of each Stockholder to consummate the Exchange are subject to the
satisfaction or waiver, at or prior to the Closing Date, of the following
conditions:
(a) the representations and warranties of Loral contained
herein shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date;
(b) Loral shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date;
(c) such Stockholder shall have received a certificate signed
by an executive officer of Loral to the effect that the conditions set forth in
paragraphs (a) and (b) above have been satisfied;
(d) such Stockholder shall have received an opinion, dated the
Closing Date, from Appleby, Spurling & Kempe as to due formation of Loral and
the legality of the LSC Common Stock and LSC Series C Preferred Shares issued to
such Stockholder;
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(e) Loral and, as applicable, LSC Corp., Holdings, and the
other parties thereto (other than such Stockholder) shall have executed and
delivered to such Stockholder, the Series C Reg Rights Agreement, attached
hereto as Exhibit B, the Registration Rights Agreement in the form of Exhibit E
attached hereto, the Alliance Agreement in the form of Exhibit F attached
hereto, and the Amendment No. 2 to Operational Agreement (amending the
Operational Agreement dated April 22, 1991 as amended by Amendment No. 1, dated
November 10, 1992 (the "Operational Agreement")) in the form of Exhibit G
attached hereto;
(f) the By-Laws of SS/L shall have been amended and restated
by the adoption of the resolutions in the form of Exhibit J attached hereto, and
such Stockholder shall have received a certificate, dated the Closing Date, from
the Secretary of SS/L attesting to and attaching true and complete copies of the
SS/L Certificate of Incorporation and By-Laws; and
(g) The Series C Schedule attached hereto as Exhibit A shall
be in full force and effect.
4.1.2. Conditions to Obligations of Loral. The obligations of Loral
to consummate the Exchange are subject to the satisfaction or waiver, at or
prior to the Closing Date, of the following conditions:
(a) the representations and warranties of each Stockholder
contained herein shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date;
(b) each Stockholder shall have performed and complied in all
material respects with all agreements required by this Agreement to be performed
or complied with by it on or prior to the Closing Date;
(c) Loral shall have received from each Stockholder a
certificate signed by an executive officer of such Stockholder to the effect
that the conditions set forth in paragraphs (a) and (b) above have been
satisfied; and
(d) each Stockholder shall have executed and delivered (i) to
Loral the Series C Reg Rights Agreement attached hereto as Exhibit B, and (ii)
to Loral and, as applicable, LSC Corp., Holdings, and the other parties thereto
(other than such Stockholder) the Registration Rights Agreement in the form of
Exhibit E attached hereto, the Alliance Agreement in the form of Exhibit F
attached hereto, and the Amendment No. 2 to Operational Agreement in the form of
Exhibit G attached hereto.
4.1.3. Conditions to Obligations of Loral and Each of the
Stockholders. The obligations of Loral and each of the Stockholders to
consummate the Exchange are subject to the satisfaction or waiver at or prior to
the Closing Date, of the following conditions:
(a) The Defense Investigative Service of the United States
Department of Defense ("DoD") shall have countersigned and returned the letter
dated June 17, 1997, from counsel for Loral, in the form of Exhibit K attached
hereto; and
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(b) Finmeccanica shall have executed and delivered to Loral
and each of the Stockholders the Alliance Agreement in the form of Exhibit F
hereto, and the Amendment No. 2 to Operational Agreement in the form of Exhibit
G attached hereto.
5. TERMINATION
5.1. Termination. If Closing has not been completed on or
before July 31, 1997 for any reason, any Stockholder that did not default in
its obligations hereunder may terminate this Agreement without penalty.
5.2. Restated Stockholders Agreement. Upon termination pursuant to
Section 5.1. and demand by a Stockholder that did not default in its obligations
under this Agreement, the parties hereto promptly shall execute and deliver the
Restated Stockholders Agreement in the form attached hereto as Exhibit L for the
purposes of implementing among themselves the Term Sheet, dated as of July 2,
1996, by and among SS/L, Loral, the Stockholders, DASA and Finmeccanica. The
provisions of this Section 5.2. shall survive any termination of this Agreement.
6. MISCELLANEOUS
6.1. United States Department of Defense.
6.1.1. Loral, SS/L and each Stockholder shall, and each shall use
its reasonable best efforts to cause DoD to, execute and deliver as soon as
reasonably possible the Security Control Agreement in the form of Exhibit H
attached hereto and the Visitation Procedures Agreement in the form of Exhibit I
attached hereto, and, to that end, each Stockholder shall consider in good faith
any changes that DoD may propose to those agreements. Each Stockholder agrees
not to reject any modification to either or both of the aforesaid agreements
proposed by DoD unless such modification would adversely affect the rights of
such Stockholder under the Alliance Agreement (including the Schedules and
Attachments thereto) or the Operational Agreement (including the Schedules and
Attachments thereto). Each Stockholder hereby confirms that it is not its
intention or desire to exercise the rights it may have pursuant to Section
6.1.2.
6.1.2. If the parties hereto have consummated the Exchange and the
DoD has not executed, on or prior to December 31, 1997 (i) the Security Control
Agreement in the form of Exhibit H attached hereto (as it may be modified in
accordance with Section 6.1.1.) and the Visitation Procedures Agreement in the
form of Exhibit I attached hereto (as it may be modified in accordance with
Section 6.1.1.), then each Stockholder shall have the right ("Swap Back Option")
to transfer to Loral all, but not less than all, of the LSC Common Stock and LSC
Series C Preferred Shares issued to such Stockholder in the Exchange in exchange
for SS/L Shares representing 12.25% of the total number of SS/L Shares issued
and outstanding. A Stockholder may elect to exercise the Swap Back Option by
delivery of a notice to Loral by January 23, 1998. The closing date of the
transactions contemplated by exercise of Swap Back Options shall occur on the
later of (A) February 6, 1998 and (B) the expiration of all regulatory holding
periods
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(including waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended) and the obtaining of all governmental approvals, if
any, applicable to such transactions (including, with respect to Aerospatiale,
the approval of the French Ministry of Defense ("MOD") required pursuant to
Decret No.53-707 of 9 August 1953, modified by Decret No. 78-173 of 16 February
1978 (such approval, the "MOD Approval")). Upon closing of the transactions
contemplated by exercise of Swap Back Options, each Stockholder participating in
the Swap Back Option, Loral, LSC Corp., Holdings, and all stockholders of SS/L
not included among the foregoing parties shall thereupon become parties to the
Restated Stockholders Agreement in the form of Exhibit L attached hereto.
6.2. French Ministry of Defense
6.2.1. Aerospatiale shall promptly apply for, and use its reasonable
best efforts to obtain, as soon as possible, MOD Approval for Aerospatiale's
investment in Loral in accordance with this Agreement. Aerospatiale promptly
shall provide Loral copies of all correspondence to and from the MOD in
connection with this application, and shall keep Loral informed of relevant
developments.
6.2.2. If on or prior to December 31, 1997 (or such later date prior
to June 30, 1998, as Loral may designate by notice to the Stockholders), the MOD
shall have rejected in writing, or otherwise have failed to approve,
Aerospatiale's investment pursuant to this Agreement, Aerospatiale shall have
the right ("MOD Option") to transfer to Loral all, but not less than all, of the
LSC Common Stock and LSC Series C Preferred Shares issued to Aerospatiale in the
Exchange, in return for SS/L Shares representing 12.25% of the total number of
SS/L shares issued and outstanding. The MOD Option would be exercisable by
Aerospatiale by delivery of a notice to Loral by no later than January 23, 1998.
The closing date of the transactions contemplated by exercise of the MOD Option
shall occur on the later of (A) two weeks after delivery of the aforesaid notice
to Loral, and (B) the expiration of all regulatory holding periods (including
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended) and the obtaining of all governmental approvals, if any, applicable
to such transactions.
6.2.3. Upon consummation of the transactions contemplated by
exercise of the MOD Option, Aerospatiale, Loral, LSC Corp., Holdings, and all
stockholders of SS/L not included among the foregoing parties shall thereupon
execute and deliver, and become parties to, the Restated Stockholders Agreement
in the form of Exhibit L attached hereto. In addition, Aerospatiale and Loral
shall execute and deliver any waivers, consents or other agreements as may be
reasonably requested to prevent the rights of Aerospatiale under the aforesaid
agreements from conflicting with or limiting the rights of the other Strategic
Participants under the Alliance Agreement and Operational Agreement.
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6.3. Consents and Waivers by Stockholders.
6.3.1. Effective upon the Closing, each of the Stockholders hereby
(a) consents to the Loral/Lockheed Martin Transaction (as defined below) in so
far as such transaction, together with subsequent transactions completed by
Loral, LSC Corp., and Holdings prior to the date hereof, relate to the rights
and obligations between Loral and LSC Corp. (as successors in interest to Old
Loral) and Holdings (as successor in interest to Old Holdings and LAC), on the
one hand, and the Stockholders, on the other hand, under the Stockholders
Agreement and other agreements with respect to SS/L and (b) waives any and all
put or call rights it may have in connection with the Loral/Lockheed Martin
Transaction.
6.3.2. The "Loral/Lockheed Martin Transaction" shall mean the
following actions taken pursuant to a Restructuring, Financing and Distribution
Agreement, dated as of January 7, 1996, by and among certain parties including
Old Loral, Old Holdings, LAC, and Lockheed Martin Corporation, a Maryland
corporation ("Lockheed Martin"), on or before April 23, 1996, collectively: (i)
LAC acted to assign and transfer to Old Holdings all of LAC's right, title and
interest in and to SS/L Shares and all of its rights and obligations under and
with respect to the Stockholders Agreement and certain other agreements relating
to SS/L; (ii) Old Holdings acted to assign and transfer to Old Loral all of Old
Holdings' right, title and interest in and to SS/L Shares (including those
received from LAC) and all of its rights and obligations under and with respect
to the Stockholders Agreement and certain other agreements relating to SS/L
(including those received from LAC); (iii) Old Loral acted to transfer all such
rights, titles, interests and obligations to Loral; (iv) Loral acted through a
series of transactions to transfer to Holdings all rights, titles, interests and
obligations Loral received from Old Holdings, including the SS/L Shares and the
rights and obligations of Old Holdings and LAC under and with respect to the
Stockholders Agreement and certain other agreements relating to SS/L; (v) Old
Loral distributed as a dividend to its stockholders 80% of the capital stock of
Loral; (vi) Lockheed Martin acquired 20% of the capital stock of Loral; and
(vii) Lockheed Martin acquired Old Loral through merger with and into a wholly
owned subsidiary corporation of Lockheed Martin.
6.4. Effectiveness of the Stockholders Agreement. The Stockholders
Agreement remains in full force and effect with respect to the respective rights
and obligations between SS/L, Loral and LSC Corp. (Loral and LSC Corp. as
successors in interest to Old Loral) and Holdings (as successor in interest to
Old Holdings and LAC), on the one hand, and the Stockholders, on the other hand,
prior to and through Closing. Upon completion of Closing, the Stockholders
Agreement shall terminate with respect to the Stockholders. Nothing hereunder
shall constitute a termination or release by a Stockholder of the continuing
obligations that: (i) the other parties to the Stockholders Agreement have
following termination of the Stockholders Agreement, or (ii) DASA has following
the termination of the Operational Agreement with respect to DASA; the
Stockholders hereby reserve their respective rights with respect to such
continuing obligations.
6.5. Several Rights and Obligations. The respective rights and
obligations of the Stockholders hereunder are several, not joint.
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6.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the doctrine of conflicts of laws.
6.7. No Waivers; Amendments.
6.7.1. No failure or delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
6.7.2. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed
by each party hereto.
6.8. Survival of Provisions. The representations and warranties,
covenants and agreements contained in this Agreement shall survive and remain in
full force and effect, regardless of any investigation made by or on behalf of
any of the Stockholders, or by or on behalf of Loral, and shall survive delivery
of the LSC Stock, LSC Preferred Stock, Aerospatiale SS/L Shares and Alcatel SS/L
Shares.
6.9. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and supersedes any and
all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
6.10. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
6.11. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
6.12. Press Releases and Public Announcements. Any press releases
and public announcements or disclosures relating to the transactions
contemplated hereby shall be made only if mutually agreed upon by the parties
hereto, except to the extent a party has been advised in writing by counsel
(with a copy provided to the other parties) that failure to disclose would
violate applicable law or stock exchange regulation, provided that any such
required disclosure will, to the extent practicable, be subject to prior
consultation among the parties.
6.13. Expenses. Except as otherwise set forth in this Agreement,
each party to this Agreement shall bear all the fees, costs and expenses that
are incurred by it in connection with the transactions contemplated hereby,
including, without limitation, attorneys' fees and fees of financial advisors
and investment bankers engaged by such party.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Michael B. Targoff
----------------------------------------------
Name: Michael B. Targoff
Title: President and Chief Operating Officer
AEROSPATIALE SNI
By: /s/ Michel Delaye
----------------------------------------------
Name: Michel Delaye
Title: Le Directeur, Aerospatiale Espace &
Defense
ALCATEL ESPACE
By: /s/ JC Husson
----------------------------------------------
Name: Jean Claude Husson
Title: President and CEO
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<PAGE> 1
Exhibit 10.2
ALLIANCE AGREEMENT
ALLIANCE AGREEMENT ("Agreement"), dated as of June 23, 1997, by and
among LORAL SPACE & COMMUNICATIONS LTD., a Bermuda company ("Loral"), LORAL
SPACE & COMMUNICATIONS CORPORATION, a Delaware corporation ("LSC Corp."), LORAL
SPACECOM CORPORATION, a Delaware corporation ("Holdings") (Loral, LSC Corp. and
Holdings sometimes referred to herein collectively as the "Loral Entities"),
SPACE SYSTEMS/LORAL, INC., a Delaware corporation ("SS/L"), AEROSPATIALE SNI, a
societe nationale industrielle organized under the laws of France
("Aerospatiale"), ALCATEL ESPACE, a societe anonyme organized under the laws of
France ("Alcatel"), and FINMECCANICA S.p.A., a societe par azione organized
under the laws of Italy ("Finmeccanica") (Aerospatiale, Alcatel and Finmeccanica
collectively the "Strategic Participants").
W I T N E S S E T H:
WHEREAS, SS/L, Aerospatiale, Alcatel, Finmeccanica (through its
predecessor in interest), Loral Corporation, a New York corporation ("Old
Loral"), and Loral Aerospace Holdings, Inc., a Delaware corporation ("Old
Holdings"), executed a certain Stockholders Agreement dated as of April 22,
1991, involving, inter alia, shares of common stock, par value $.10 per share,
of SS/L ("Common Stock") (the shares of Common Stock at any time issued by SS/L
and any successor thereto being referred to as the "SS/L Shares"); and
WHEREAS, the aforementioned parties to the Stockholders Agreement
dated April 22, 1991 and Deutsche Aerospace AG, a corporation organized under
the laws of Germany ("DASA"), and Loral Aerospace Corp., a Delaware corporation
("LAC"), executed Amendment No. 1 to Stockholders Agreement, dated as of
November 10, 1992 (such Stockholders Agreement as amended by such Amendment No.
1, hereinafter the "Stockholders Agreement"); and
WHEREAS, pursuant to a certain Restructuring, Financing and
Distribution Agreement, dated as of January 7, 1996, by and among certain
parties including Old Loral, Old Holdings, LAC, and Lockheed Martin Corporation,
a Maryland corporation ("Lockheed Martin"), on or before April 23, 1996: (i) LAC
acted to assign and transfer to Old Holdings all of LAC's right, title and
interest in and to SS/L Shares and all of its rights and obligations under and
with respect to the Stockholders Agreement and certain other agreements relating
to SS/L; (ii) Old Holdings acted to assign and transfer to Old Loral all of Old
Holdings' right, title and interest in and to SS/L Shares (including those
received from LAC) and all of its rights and obligations under and with respect
to the Stockholders Agreement and certain other agreements relating to SS/L
(including those received from LAC); (iii) Old Loral acted to transfer all such
rights, titles, interests and obligations to Loral; (iv) Loral acted through a
series of transactions to transfer to Holdings all rights, titles, interests and
obligations Loral received from Old Holdings, including the SS/L Shares and the
rights and obligations of Old Holdings and LAC under and with respect to the
Stockholders Agreement and certain other agreements relating to SS/L; (v) Old
Loral distributed as a dividend to its stockholders 80% of the capital stock of
Loral; (vi) Lockheed Martin acquired 20% of the capital stock of Loral; and
(vii) Lockheed Martin acquired
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<PAGE> 2
Old Loral through merger with and into a wholly owned subsidiary corporation of
Lockheed Martin (all such events collectively the "Loral/Lockheed Martin
Transaction"); and
WHEREAS, the parties hereto, together with DASA, are parties to a
certain Term Sheet dated as of July 2, 1996 (the "1996 Term Sheet") setting
forth certain statements relating to their respective rights and obligations
under the Stockholders Agreement and other agreements with respect to SS/L; and
WHEREAS, DASA has assigned and transferred to Holdings all of its
SS/L Shares; and
WHEREAS, Finmeccanica has assigned and transferred to Loral all of
its SS/L Shares pursuant to a "Transaction Agreement," dated March 20, 1997, by
and between Loral and Finmeccanica (the "Transaction Agreement"); and
WHEREAS, Aerospatiale and Alcatel have exchanged their SS/L Shares
for consideration from Loral, pursuant to an "Exchange Agreement," dated June
18, 1997, by and among Loral, Aerospatiale and Alcatel (the "Exchange
Agreement"); and
WHEREAS, after giving effect to the aforementioned transactions and
as of the date hereof, Loral and Holdings own all outstanding SS/L Shares; and
WHEREAS, in light of the foregoing and their continued common
interest in the operation of SS/L and in order to maintain and extend their
strategic cooperation with respect thereto, the parties hereto desire to modify
their respective rights and obligations by entering into this Alliance Agreement
which shall replace the Stockholders Agreement, and by executing this day
Amendment No. 2 to the Operational Agreement, dated this date, amending the
Operational Agreement, dated April 22, 1991, by and among SS/L, Loral and LSC
Corp. (as successors in interest to Old Loral), Holdings (as successor in
interest to Old Holdings) and the Strategic Participants, as amended by
Amendment No. 1, dated as of November 10, 1992 (such Operational Agreement as so
amended the "Operational Agreement"); and
WHEREAS, the parties contemplate entering into a "Security Control
Agreement" and "Visitation Procedures Agreement" with the United
States Department of Defense.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings:
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<PAGE> 3
"Aerospatiale" shall have the meaning set forth in the Preamble.
"Affected Permitted Transferee" of any Person shall mean (i) a
Transferee who, at the time any SS/L Shares were Transferred to it, was a
Permitted Transferee of such Person and who thereafter ceased to be a Permitted
Transferee of such Person, and also shall mean (ii) a Transferee who has
acquired any SS/L Shares through a chain of Transfers, each of which was made to
a transferor's Permitted Transferee, through which SS/L Shares have moved from
such Person to that Transferee.
"Affected SP" shall have the meaning set forth in Section 6.1(b).
"Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly Controlling, Controlled by, or under common Control with,
that Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Alcatel" shall have the meaning set forth in the Preamble.
"Alliance Policy" shall have the meaning set forth in Section
6.3(a).
"Annual Budgets" shall mean the annual budgets that the Loral
Entities cause SS/L management to develop in order to implement the Strategic
Plan.
"Blocked Matter" shall have the meaning set forth in Section 3.3.
"Business Day" shall mean each day other than Saturdays, Sundays and
days when commercial banks are authorized to be closed for business in New York,
New York.
"Business Opportunity" shall have the meaning set forth in
Section 2.2.
"Cause" shall have the meaning set forth in Section 3.1(c).
"Change of Control" with respect to a party hereto shall mean the
occurrence of one or more of the following events after the date hereof: (i) a
Person or group (as that term is used in Section l3(d)(3) of the Exchange Act)
of Persons that does not Control such party as of the date hereof (or is not
Controlled by a Person that Controls such party as of the date hereof) shall
have become the beneficial owner or have control over the voting of securities
of such party (or any Permitted Transferee which has acquired SS/L Shares from a
Loral Entity pursuant to the terms of this Agreement), representing a majority
of the combined voting power of the outstanding securities of such party (or
such Permitted Transferee), ordinarily having the right to vote in the election
of directors, or (ii) directors representing a Person or group (as so defined)
of Persons that does not Control such party as of the date hereof (or is not
Controlled by a Person that Controls such party as of the date hereof) shall
constitute a majority of the Board of Directors of such party (or such Permitted
Transferee), or (iii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of such party (or such Permitted Transferee), to any Person or
group (as so defined) of Persons that does not Control such party as of the date
hereof (or is not Controlled by a Person
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<PAGE> 4
that Controls such party as of the date hereof), or (iv) the shareholders of
such party (or such Permitted Transferee), shall approve any plan or proposal
for the liquidation or dissolution of such party (or such Permitted Transferee);
provided that a Privatization or Public Offering of shares of a Strategic
Participant or its direct or indirect parent company shall not constitute a
Change of Control of such Strategic Participant.
"Change of Control Notice" shall have the meaning set forth in
Section 5.3(b).
"Change of Control Transfer" shall have the meaning set forth in
Section 5.3(a).
"Charter Documents" shall mean the Certificate of Incorporation and
By-laws of SS/L attached hereto as Schedules 7.1(a)(i) and 7.1(a)(ii),
respectively.
"Classified Information" shall have the meaning set forth in
Section 6.2(b).
"Combined" shall have the meaning set forth in Section 2.2(a).
"Common Stock" shall have the meaning set forth in the first
Recital.
"Control" shall mean (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person
whether through the ownership of voting securities, by contract or otherwise,
including such power being obtained through one or more steps in connection with
a corporate restructuring.
"Convertible Preferred Security" shall have the meaning set forth in
the definition of the term "Nominal Value" herein.
"DASA" shall have the meaning set forth in the second Recital.
"Direct Exchange" shall have the meaning set forth in Section
5.4(a).
"DoD" shall mean the United States Department of Defense.
"Election Notice" shall have the meaning set forth in Section
5.4(b).
"Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
"Exchange Agreement" shall have the meaning set forth in the
seventh Recital.
"Exchange Closing Date" shall have the meaning set forth in
Section 5.4(h).
"Exchange Notice" shall have the meaning set forth in Section
5.4(b).
"Exchange Option" shall have the meaning set forth in Section
5.4(a).
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<PAGE> 5
"Fair Market Value" shall mean the per share fair market value of
SS/L's Common Stock based on a valuation of SS/L and its Subsidiaries as if SS/L
and its Subsidiaries were to be sold in their entirety to a purchaser to whom
SS/L has long term strategic value with a reasonable amount of time to negotiate
and consummate such sale.
"Finmeccanica" shall have the meaning set forth in the Preamble.
"Floor Reimbursement Amount" shall have the meaning set forth in
Section 3.3(c).
"FOCI" shall have the meaning set forth in Section 6.1(a).
"Holdings" shall have the meaning set forth in the Preamble.
"Holdings Nominees" shall have the meaning set forth in Section
3.1(a).
"ICC" shall have the meaning set forth in Section 9.1(a).
"Indirect Exchange" shall have the meaning set forth in Section
5.4(a).
"LAC" shall have the meaning set forth in the second Recital.
"Lockheed Martin" shall mean Lockheed Martin Corporation, a Maryland
corporation, and each of its Subsidiaries and Affiliates.
"Loral" shall have the meaning set forth in the Preamble.
"Loral Change of Control" shall have the meaning set forth in
Section 5.3(a).
"Loral Common Stock" shall mean Common Stock, par value $.01 per
share, of Loral.
"Loral Entities" shall have the meaning set forth in the Preamble.
"Loral Exchange Agreement Securities" shall mean the Loral
securities which Aerospatiale or Alcatel each received pursuant to the Exchange
Agreement and Finmeccanica received pursuant to the Transaction Agreement, any
Loral securities into which the foregoing Loral securities are converted or for
which they are exchanged, and any Loral securities resulting from or received
with respect to the foregoing securities as a result of any capital splits,
combinations, stock dividends, capital distributions or similar capital
adjustments. Any Loral securities that a Strategic Participant may hold which
are of the same class or series as, and are in addition to, Loral Exchange
Agreement Securities shall not be "Loral Exchange Agreement Securities."
"Loral Qualified Affiliate" shall mean an Affiliate of Loral in
which none of the minority investors who, individually, own more than 20% of
such Affiliate, provide products or services that substantially compete with
products or services provided by a Strategic Participant.
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"Loral/Lockheed Martin Transaction" shall have the meaning set
forth in the third Recital.
"LSC Corp." shall have the meaning set forth in the Preamble.
"Management Liaison Committee" shall have the meaning set forth
in Section 4.2.
"MOD" shall mean the French Ministry of Defense.
"MOD Approval" shall have the meaning set forth in Section 5.3(k).
"1996 Term Sheet" shall have the meaning set forth in the fourth
Recital.
"Net Proceeds" shall have the meaning set forth in Section 5.4(d).
"Nominal Value" shall have the meaning given to it in the Exchange
Agreement. The Nominal Value for each Convertible Preferred Security, with
respect to Finmeccanica, shall be $50.6563, which Nominal Value shall not be
amended without the consent of Finmeccanica.
"Notices" shall have the meaning set forth in Section 9.7.
"NYSE" shall mean the New York Stock Exchange.
"Offer Price" shall have the meaning set forth in Section 5.3(c).
"Old Holdings" shall have the meaning set forth in the first
Recital.
"Old Loral" shall have the meaning set forth in the first Recital.
"Operational Agreement" shall have the meaning set forth in the
ninth Recital.
"Other Investment Bank" shall have the meaning set forth in
Section 5.3(d).
"Outstanding SS/L Shares" shall have the meaning set forth in
Section 5.3(b).
"Participant Investment Bank" shall have the meaning set forth in
Section 5.3(d).
"Permitted Sale Period" shall have the meaning set forth in
Section 5.3(g).
"Permitted Transferee" shall mean, in the case of any party hereto,
any Subsidiary of which such party holds, directly or indirectly, 80% or more of
the voting power, or any corporation of which such party is such an 80% or
greater Subsidiary.
"Person" shall mean an individual or a corporation, partnership,
trust, or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
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"Privatization" shall mean the direct or indirect transfer or sale
by instrumentalities of the Republic of France or Republic of Italy through one
or more related transactions of equity or voting interests of a Strategic
Participant or of a company that directly or indirectly owns or controls a
Strategic Participant, in which a Person or group (as that term is used in
Section 13(d)(3) of the Exchange Act) of Persons does not acquire Control of
such Strategic Participant.
"Prorated Excess Value" shall have the meaning set forth in
Section 5.4(e).
"Public Offering" shall mean, with respect to any Person, any
underwritten public offering of equity securities of such Person pursuant to an
effective registration statement under the Securities Act or any other
applicable law, in which a Person or group (as that term is used in Section
13(d)(3) of the Exchange Act) of Persons does not acquire Control of such
Strategic Participant.
"Purchase Closing Date" shall have the meaning set forth in
Section 5.3(k).
"Purchase Notice" shall have the meaning set forth in Section
5.3(e).
"Purchase Option" shall have the meaning set forth in Section
5.3(e).
"Qualified Third Party" shall mean a Third Party whose status as a
stockholder of SS/L would not place SS/L's facility clearance in jeopardy under
applicable DoD security rules and regulations as determined by the Defense
Investigative Service.
"Reimbursement Amount" shall have the meaning set forth in
Section 3.3(b).
"Remaining Loral Securities" shall mean the Loral Exchange Agreement
Securities that a Strategic Participant shall hold at any given time.
"Remaining Portion" shall have the meaning set forth in Section
5.4(c).
"Restated Stockholders Agreement" shall mean a "Restated
Stockholders Agreement" for SS/L, in substantially the form of Schedule I.A..
"Scope of Business" shall have the meaning set forth in Section
2.1.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Second Purchase Notice" shall have the meaning set forth in
Section 5.3(e).
"Securities Act" shall mean the United States Securities Act of
1933, as amended, and the rules and regulations thereunder.
"Securities Laws" shall have the meaning set forth in Section
3.3(a).
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"Security Control Agreement" shall have the meaning set forth in
the final Recital.
"Sole Dissenter" shall have the meaning set forth in Section
3.3(a).
"Space Systems" shall mean all civil, scientific and military
satellites, other spacecraft (including, without limitation, satellites with
integrated upper stage launchers, space station hardware and planetary mission
hardware but excluding other launchers, space planes and manned transfer and
manned reentry vehicles), all subsystems thereof, and all other related
hardware, software and services (including ground control services and related
hardware and software) for space communications, military, surveillance and
remote sensing applications, meteorology/environmental, earth observation,
scientific research and other space mission applications, but not including
telecommunications users' earth stations.
"SP Nominee" shall have the meaning set forth in Section 3.1(a).
"SP U.S. Assignee" shall mean a Qualified Third Party organized in
the United States which is designated by the Strategic Participants to purchase
interests which such Strategic Participant is entitled to purchase under Section
5.3 of this Agreement, provided that such Qualified Third Party shall have
agreed in writing, effective upon consummation of such purchase, to be bound by
this Agreement, and such agreement shall have been delivered and be otherwise
reasonably satisfactory for such purpose to Holdings.
"SS/L Eligible Programs" shall have the meaning set forth in the
Operational Agreement.
"SS/L Shares" shall have the meaning set forth in the first
Recital.
"Stockholders Agreement" shall have the meaning set forth in
second Recital.
"Strategic Participant" shall mean (i) Aerospatiale, Alcatel and
Finmeccanica until such time as such Person's rights as a Strategic Participant
terminate pursuant to Section 8.1, and also shall mean (ii) any successor or
assignee of a Strategic Participant who shall become a Strategic Participant
pursuant to Section 5.3 or 9.5 and until such time as such successor's or
assignee's rights as a Strategic Participant terminate pursuant to Section 8.1.
"Strategic Plan" shall mean the 1997 Space Systems/Loral Strategic
Plan in effect on the date hereof, as it may be amended from time to time
pursuant to Section 3.2(b)(ix).
"Subsidiary" shall mean, with respect to any Person, any corporation
or other entity of which a majority (or such other percentage as may be
expressly stated herein) of the capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
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"Technology" shall mean written and oral information, drawings and
documents in which SS/L or the Strategic Participants have rights of ownership,
which is directly related to the design, engineering, development, manufacture,
test, delivery, use, control, operation or maintenance of Space Systems, or
which advances the state of the art of Space Systems, but not including general
scientific, mathematical or engineering principles.
"Third Party" shall mean any prospective purchaser of SS/L Shares
that is not a Permitted Transferee of Loral.
"Third Party Transfer" shall have the meaning set forth in
Section 5.2(b).
"Transaction Agreement" shall have the meaning set forth in the
sixth Recital.
"Transfer" shall mean any transfer, sale, assignment, pledge,
hypothecation, encumbrance or other disposition of ownership of, or Control
over, an item or right.
"Transferee" shall mean a Person to whom or to which a Transfer
is made.
All references to "this Agreement," and the words "herein,"
"hereunder," "hereof," "hereinafter" and words of similar import, when used
herein shall mean and refer to this Alliance Agreement, as from time to time
amended.
ARTICLE II
SCOPE OF BUSINESS OF SS/L
Section 2.1 Scope of Business. SS/L shall engage in the design,
development, manufacture, sale and launch of Space Systems and the operation
thereof to the extent such operation occurs in connection with launch services
and before turnover of a Space System to a customer. SS/L shall not engage in
any business outside the scope of business set forth in the preceding sentence
(the "Scope of Business") without the unanimous written consent of the Strategic
Participants (except that this prohibition shall not prevent SS/L from
purchasing other products or services and reselling them to customers as part of
a contract to supply Space Systems). Nothing contained in this Section 2.1 shall
be deemed to prohibit SS/L from engaging in ordinary business activities
incidental to the conduct of its principal business or from taking any action
contemplated by the Strategic Plan, including activities authorized by the
Annual Budget of SS/L or any action incidental thereto.
Section 2.2 Additional Satellite Businesses. (a) Loral and its
Affiliates (other than SS/L) shall not acquire, develop, conduct or pursue any
business opportunities within the Scope of Business of SS/L set forth in the
first sentence of Section 2.1 (each, a "Business Opportunity"), unless the
Business Opportunity is Combined (as defined below) with SS/L. For the purposes
of this Section 2.2 a Business Opportunity shall be "Combined" with SS/L if it
is both controlled and owned by SS/L, which, by way of example, would include
merger into SS/L or acquisition by SS/L, in either case with the result that the
interests acquired by Loral or its
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Affiliates through pursuit of such Business Opportunity are owned and controlled
by SS/L. Any Business Opportunity Combined with SS/L pursuant to the immediately
preceding sentence shall be subject to the direction and control of the SS/L
Board of Directors.
(b) This Section 2.2 shall not be construed to prohibit, constrain
or limit the pursuit or development by Loral or any of its Affiliates of any
business with respect to the design, engineering, development, manufacture,
test, delivery, use, control, operation, maintenance or sale of any device,
instrument, component, machine, program or service that is used or applied
generally in the defense or electronics business, notwithstanding the similar
use or application of such device, instrument, component, machine or program in
any space-related business.
Section 2.3 No Limitations on Strategic Participants. Except as
expressly set forth herein or in the Operational Agreement, nothing contained
herein shall be construed to prohibit, constrain or limit in any way any
business activity of any of the Strategic Participants.
ARTICLE III
GOVERNANCE OF SS/L
Section 3.1 SS/L Board of Directors. (a) The number of members of
the SS/L Board of Directors shall be equal to the sum of (i) at least four plus
(ii) the number of Strategic Participants at any time. Holdings shall be
entitled, but not required, to nominate four members (the "Holdings Nominees")
to the SS/L Board of Directors. Each Strategic Participant shall be entitled,
but not required, to nominate one member (each person so nominated an "SP
Nominee") to the SS/L Board of Directors. The SS/L Board of Directors shall meet
at least two (2) times in each year.
(b)(i) Loral and Holdings shall vote all of their respective SS/L
Shares at any regular or special meeting of the stockholders of SS/L called for
the purpose of filling positions on the SS/L Board of Directors, or in any
written consent executed in lieu of such a meeting of stockholders, and agrees
to take all actions otherwise necessary, to ensure the election to the SS/L
Board of Directors of each of the SP Nominees as described herein.
(ii) SS/L, Loral and Holdings shall call, or cause the
appropriate officers and directors of SS/L to call, a special meeting of
stockholders of SS/L and to vote all of the SS/L Shares owned or held of record
by Loral and Holdings for, or to take all actions by written consent in lieu of
any such meeting necessary to cause, the removal (with or without cause) of any
SP Nominee if the Strategic Participant that had nominated such SP Nominee
requests such director's removal for any reason. The applicable Strategic
Participant shall have the right to designate a new SP Nominee in the event any
SP Nominee shall be removed or shall vacate his directorship for any reason.
(c) Except as provided in Section 3.1(b)(ii) hereof, each of Loral
and Holdings hereby agrees that, at any time that it is then entitled to vote
for the election or removal
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of directors, it will not vote to remove any SP Nominee unless such removal
shall be at the request of the Strategic Participant that nominated such
director, provided that if a majority of the Holdings Nominees determines that
any SP Nominee has engaged in conduct that warrants the removal of such SP
Nominee for Cause, then the Strategic Participant that had appointed such SP
Nominee shall request that such SP Nominee be removed from the SS/L Board of
Directors and Loral and Holdings may each vote its SS/L Shares to remove such
director. In addition, if a majority of the SP Nominees determines that any
Holdings Nominee has engaged in conduct that warrants the removal of such
Holdings Nominee for Cause, then Holdings shall remove such Holdings Nominee
from the SS/L Board of Directors. For the purposes of this Section 3.1(c),
"Cause" shall mean the willful engaging by a director in conduct which is
demonstrably and materially injurious to SS/L (other than in the exercise of
such director's voting rights as a member of the SS/L Board of Directors), or
the director's conviction of any crime constituting a felony.
(d) No party shall, without the consent of Holdings or the
applicable Strategic Participant, as the case may be, take any action that under
the Charter Documents or this Agreement requires the approval of at least one
Holdings Nominee or SP Nominee, as the case may be, if the only Holdings
Nominees or SP Nominees, as the case may be, approving such action are Persons
whose removal from the SS/L Board of Directors has been requested by Holdings or
the applicable Strategic Participant, as the case may be, pursuant to this
Agreement at or prior to the time of such action. Each of the parties hereto
further covenants that it will use reasonable efforts to prevent any action from
being taken by the SS/L Board of Directors during the pendency of any vacancy
due to death, resignation, or removal of a director, unless the party entitled
to have a person nominated by it elected to fill such vacancy shall have failed,
for a period of ten (10) days after notice of such vacancy, to nominate a
replacement; provided that the provisions of this sentence shall not apply in
circumstances in which action must be taken by the SS/L Board of Directors to
protect the best interests of SS/L.
(e) The initial Holdings Nominees and SP Nominees are listed on
Schedule 3.1(e) to the Agreement.
(f) Each of the Loral Entities agrees that it will cause the SS/L
Board of Directors not to delegate the right to take or approve any action to
the Executive Committee or any other committee of the SS/L Board of Directors
unless such delegation shall have received the prior, written approval (which
may be by facsimile) of each of the Strategic Participants.
Section 3.2 Actions by SS/L Board of Directors. (a) So long as any
SP Nominees have been designated pursuant to this Agreement, neither SS/L nor
any Subsidiary of SS/L shall take any action regarding the matters set forth in
Section 3.2(b) below, unless such matters are duly approved by the SS/L Board of
Directors.
(b) Approval of the matters set forth below by the SS/L Board of
Directors shall require a majority of a quorum of the SS/L Board of Directors
and: (Y) at any time when there are three (3) SP Nominees, the approval of at
least two (2) SP Nominees, and (Z) at any time when there are two (2) SP
Nominees, at least one (1) SP Nominee; it being understood that
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for purposes of this Section 3.2(b), an SP Nominee's abstention or failure to
vote at a duly convened meeting of the SS/L Board of Directors shall be deemed
approval:
(i) any issuance or sale of its capital stock or of securities
convertible into, exchangeable for or otherwise granting the right to
acquire its capital stock (including options, warrants and other rights)
to any person other than Loral or a person who is and remains a Subsidiary
of Loral;
(ii) any appointment as the chief executive officer,
president, chief operating officer or executive vice president of SS/L of
an individual who has not, as of the time of such appointment, served as a
senior officer of SS/L for at least two years immediately preceding such
appointment;
(iii) the granting of (A) an exclusive license or (B) a
nonexclusive license outside the ordinary course of business, to a third
party (other than Loral and Loral Qualified Affiliates) of any Technology
related to the business of SS/L;
(iv) if the amount of participation as a team member or
subcontractor in connection with SS/L Eligible Programs undertaken after
the date of this Agreement awarded to date by SS/L to the Strategic
Participants is less than the minimum amount contemplated by Section
2.2(c)(i) of the Operational Agreement (as such target participation is
amended or modified from time to time as contemplated thereby), any
contract or agreement with a third party (other than Loral and its
Affiliates) for the purchase of products or services that a Strategic
Participant is able to provide on competitive terms and is in the business
of providing;
(v) any technology-related agreements with Lockheed
Martin other than as described in paragraph (xviii) of this Section
3.2(b);
(vi) any new agreements with Lockheed Martin, other than under
the immediately preceding clause, that involve payment of more than
$100,000 in cash or equivalent services; and the provision by SS/L or
Loral to Lockheed Martin of any confidential SS/L information, provided
that no such approval is required for SS/L to renew agreements between
SS/L and Lockheed Martin Tactical Systems, Inc. (formerly known as Loral
Corporation) or its subsidiaries, that were properly authorized and in
effect on April 23, 1996, each of which is identified in Schedule
3.2(b)(vi) hereto;
(vii) any (A) acquisition or disposition of (x) a controlling
interest in, or a majority of the voting stock or equity of, any
corporation or other entity or (y) any other assets not in the ordinary
course of business of SS/L the aggregate fair market value of which is
greater than $500,000 in the case of any acquisition or $5,000,000 in the
case of a disposition or (B) disposition of a line of business;
(viii) entering into a new line of business or developing a
new product that varies materially from the lines of business set forth in
the Strategic Plan, provided
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such new line of business or new product is within the Scope of Business
of SS/L set forth in Section 2.1 of this Agreement;
(ix) the adoption of, or material amendment to, the
Strategic Plan;
(x) the taking of any corporate action for the (A)
commencement of a voluntary case under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (B) consent to the
entry of any order for relief in an involuntary case under any such law to
the extent that the giving or withholding of such consent is within SS/L's
discretion, (C) consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of it or of any substantial part of its property or (D)
making by it of a general assignment for the benefit of creditors;
(xi) any conveyance, sale, lease, assignment, contribution to
a joint venture, transfer or other disposition of all or substantially all
of its property, business or assets (including, without limitation,
inventory, receivables and leasehold interests), whether now owned or
hereafter acquired;
(xii) any merger, consolidation, recapitalization or other
reorganization with or into any other Person;
(xiii) any contract with a third party, other than Loral or
its Affiliates, constituting (A) a teaming arrangement, other than teaming
arrangements with local contracting parties necessary or desirable, in the
judgment of the senior management of SS/L, to secure any contract or
promote any bid in a country other than the United States, France and
Italy, (B) a general agreement for strategic purposes or (C) any other
agreements material to the business, operations or financial condition of
SS/L out of the ordinary course of business of SS/L;
(xiv) the election or appointment to the SS/L Board of
Directors of any Person who is a representative of any third party;
(xv) elimination of, or reductions in, elements of SS/L's
operations that would materially and adversely affect SS/L's operation as
a satellite prime contractor;
(xvi) any material amendment to or modification of or waiver
of, any material right under any agreement or instrument with respect to
which approval under the provisions of this Section 3.2(b) was previously
required;
(xvii) initiation of a litigation, arbitration or other
proceeding (except for proceedings between SS/L and a Strategic
Participant) involving more than (A) $5,000,000 or (B) $3,000,000 if such
litigation, arbitration or other proceeding is against, or names as an
adverse party, a significant customer of any Strategic Participant other
than an agency or instrumentality of the U.S. government;
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(xviii) any agreement providing for SS/L to provide any
technology or intellectual property rights to Lockheed Martin;
(xix) any amendment to the By-laws or the Certificate of
Incorporation of SS/L.
Section 3.3 Blocked Matters.(a) Notwithstanding Section 3.2 above,
in the event that any matter referred in paragraphs (vii) through (xix),
inclusive, of Section 3.2(b) above, is approved over the opposition of one (1)
SP Nominee (such matter a "Blocked Matter"; the Strategic Participant that
designated that SP Nominee the "Sole Dissenter"), then SS/L may proceed with the
implementation and consummation of the Blocked Matter, provided that
(i) If within thirty (30) days after the date on which the
Blocked Matter is approved: (A) the Sole Dissenter, at its discretion,
sells all of its then Remaining Loral Securities in the principal market
where such Remaining Loral Securities are traded, and (B) to the extent
Remaining Loral Securities may not be sold on the market without
registration under the U.S. Securities Act of 1933, as amended and
applicable state securities laws ("Securities Laws"), the Sole Dissenter
exercises its right to require Loral to register the sale of any of its
then Remaining Loral Securities pursuant to the Securities Laws and then
sells such Remaining Loral Securities promptly after the effectiveness of
such registration, then, promptly following any such sale, Loral shall pay
such Sole Dissenter any "Reimbursement Amount" that may be due; or
(ii) If (A) the Sole Dissenter does not sell all its then
Remaining Loral Securities pursuant to Section 3.3(a)(i), and (B) during
the period from the thirty-first (31st) through the ninetieth (90th) day
after the date on which the Blocked Matter is approved such Sole
Dissenter, at its discretion, sells all of its then Remaining Loral
Securities in the principal market where such Remaining Loral Securities
are traded, then, promptly following any such sale Loral shall pay such
Sole Dissenter any "Floor Reimbursement Amount" that may be due.
(b) For purposes of this Section 3.3 and Section 6.1, "Reimbursement
Amount" shall mean, with respect to a sale of all of a Strategic Participant's
then Remaining Loral Securities, the product of multiplying (i) the amount by
which the net proceeds per share of such sale or sales, after payment of all
reasonable expenses, fees and commissions related thereto, are less than the
higher of (X) the applicable Nominal Values of such Remaining Loral Securities
held by the applicable Strategic Participant or (Y) the average of the high and
low trading prices of Loral Common Stock and the Convertible Preferred
Securities, as applicable, on the principal market where such securities are
traded for the five trading days immediately preceding the date on which the
Sole Dissenter voted against approval of a Blocked Matter (or, in applying
Section 6.1, for the five trading days immediately preceding the Strategic
Participant's written objection pursuant to Clause 6.1(b)(i)(Z)); by (ii) the
number of such Remaining Loral Securities.
(c) For purposes of this Section 3.3, "Floor Reimbursement Amount"
shall mean, with respect to a sale of all of a Strategic Participant's then
Remaining Loral Securities,
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the product of multiplying (i) the amount by which the net proceeds per share of
such sale or sales, after payment of all reasonable expenses, fees and
commissions related thereto, are less than the lower of (X) the average of the
high and low trading prices of Loral Common Stock and Convertible Preferred
Securities, as applicable, on the principal market where such securities are
traded for each of the five trading days immediately preceding the date on which
the Sole Dissenter voted against approval of a Blocked Matter, or (Y) the
average of the high and low trading prices of Loral Common Stock and Convertible
Preferred Securities, as applicable, on each trading day during the thirty (30)
days after the date on which the Blocked Matter is approved; by (ii) the number
of such Remaining Loral Securities.
(d) The dollar amounts set forth in the preceding Clause 3.3(b)(X)
will be adjusted accordingly to reflect the effect of conversions, exchanges,
splits, combinations, stock dividends, capital distributions and similar capital
adjustments. Any Reimbursement Amount or Floor Reimbursement Amount shall be
payable in the form of (A) cash or (B) at Loral's election, shares of Loral
Common Stock which upon sale on the NYSE would provide the Strategic Participant
Net Proceeds at least equal to the Reimbursement Amount or Floor Reimbursement
Amount.
Section 3.4 Appointment of Officers.(a) The Chairman/Chief Executive
Officer, Vice Chairman, President/Chief Operating Officer and Executive Vice
President of SS/L shall be nominated by Holdings and approved by a majority of
the SS/L Board of Directors (subject to Section 3.2(b)(ii)). From and after the
date hereof, the individuals listed on Schedule 3.4(a) hereto shall hold the
offices set forth opposite their respective names until their resignation or
removal therefrom.
(b) If so requested by at least two (2) Strategic Participants,
Holdings shall instruct the Holdings Nominees to vote for the removal of any
officer of SS/L (A) if such officer shall intentionally take any action that
such officer knows is inconsistent with the terms of this Agreement or (B) for
Cause (as defined in Section 3.1(c)).
ARTICLE IV
MANAGEMENT OF SS/L
Section 4.1 Strategic Plan. (a) Strategic Plan. The Strategic Plan
will be amended and updated from time to time as provided herein and will be
implemented by the management of SS/L through SS/L's annual budgets. The Loral
Entities each agree to cause the management of SS/L to develop annual budgets
("Annual Budgets") which are designed to implement the Strategic Plan and to
manage SS/L in a manner which is consistent with the Strategic Plan.
(b) Procedures. The President/Chief Operating Officer of SS/L, with
the advice and assistance of the Management Liaison Committee, will prepare an
amended and updated Strategic Plan each year, and will submit a preliminary
version of such amended and updated plan to the SS/L Board of Directors on or
before February 15 of each year. Any such
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amended and updated Strategic Plan shall not become effective unless and until
it has been approved and adopted by the SS/L Board of Directors in accordance
with the provisions of Section 3.2(b)(ix). If, upon the advice and with the
counsel of the Management Liaison Committee, the President/Chief Operating
Officer of SS/L deems it appropriate at any time to amend the Strategic Plan
more frequently than as provided for in the preceding sentence, he may at any
time recommend such amendments to the SS/L Board of Directors for its
consideration.
(c) Contents. The Strategic Plan as amended from time to time will,
insofar as practicable, be of the same scope and level of detail as the
Strategic Plan approved by the SS/L Board of Directors in April 1996, as amended
in June 1996.
Section 4.2 Management Liaison Committee. (a) Membership. Loral and
each of the Strategic Participants will each appoint one member to a Management
Liaison Committee of SS/L. Any party appointing a member of the Management
Liaison Committee may change its appointee at any time and from time to time as
it, in its sole discretion, deems appropriate, by notification to the
President/Chief Operating Officer of SS/L.
(b) Location/Expenses. SS/L will provide, at its expense, reasonable
office, secretarial and other support facilities at the principal offices of
SS/L in Palo Alto for each such member and will reimburse each such member for
reasonable travel expenses incurred in connection with travel on assignments
requested by the President/Chief Operating Officer of SS/L (which, without
limitation, will not be deemed to include any travel to or from the United
States and the country of incorporation of the appointing party or travel
requested by or for the benefit of the appointing party). All other expenses
associated with such member, including without limitation, salary, benefits and
relocation expenses, will be borne by the party appointing such member.
(c) Meetings. The members of the Management Liaison Committee will
meet twice a month with the President/Chief Operating Officer of SS/L, and such
members of his staff as the President/Chief Operating Officer may from time to
time deem appropriate, to discuss all matters affecting SS/L which are of
significance at the time, and any other SS/L matters which the President/Chief
Operating Officer of SS/L or any member deems appropriate. The President/Chief
Operating Officer of SS/L will preside at each meeting. Minutes will be kept of
each meeting, copies of which will be circulated to the members promptly after
the meeting and submitted for their approval at the subsequent meeting. A copy
of the draft minutes and a copy of the approved minutes shall be submitted
promptly to the Chairman of the Defense Security Committee (as defined in the
Security Control Agreement).
(d) Functions/Responsibilities. Except as otherwise specifically
provided herein, the principal function of the Management Liaison Committee will
be to advise and assist the President/Chief Operating Officer of SS/L and the
Managing Directors of the Strategic Participants in developing and carrying out
the Strategic Plan and to facilitate the working relationships between SS/L and
the Strategic Participants on all joint issues (programs, research and
development, quality, facilities, senior management personnel, etc.).
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(e) Access to Information. SS/L shall at all times comply in all
respects with all U.S. Government security requirements and export control laws.
To the extent permitted by such requirements and subject to all other
governmental laws, regulations and contractual restrictions, (a) Loral will
cause SS/L to give each member of the Management Liaison Committee access to all
pertinent information, records, facilities and personnel of SS/L, including but
not limited to, SS/L's regular, monthly management meetings, financial data
regarding program and company performance and information regarding the status
of SS/L's material activities in pursuing new businesses and developing new
ventures, and (b) SS/L will ensure that each such member is fully and regularly
informed on a current basis of the ongoing programs and of the elements of the
SS/L operations relevant to the implementation of the Strategic Plan. SS/L will
use reasonable efforts to obtain waivers or consents consistent with applicable
U.S. laws and regulations under any agreements with third parties that restrict
the Strategic Participants' access to information otherwise available to them
under this Section 4.2(e).
ARTICLE V
RESTRICTIONS ON TRANSFER OF CONTROL OF SS/L
Section 5.1 Transfers in Accordance with this Agreement. Each of
Loral and Holdings shall not, directly or indirectly, Transfer, in one or a
series of transactions, any SS/L Shares, permit SS/L to issue any Common Stock
or change or otherwise directly or indirectly Transfer Control over SS/L, except
as expressly permitted by this Agreement.
Section 5.2 Permitted Transfers. (a) Loral or Holdings may Transfer
any SS/L Shares then owned by it, and Holdings may permit SS/L to issue SS/L
Shares, to Loral or to a Permitted Transferee of Loral provided that Loral or
Holdings, as the case may be, shall give each Strategic Participant prior
written notice of such Transfer or issuance. After giving effect to such
Transfer or issuance, any SS/L Shares owned by such Permitted Transferee shall
be deemed to be owned by Loral for purposes of this Agreement for so long as
such Transferee remains a Permitted Transferee of Loral while holding SS/L
Shares.
(b) Holdings may Transfer SS/L Shares to a Third Party provided such
Transfer does not cause a Change of Control of SS/L to occur ("Third Party
Transfer"), and provided further that Holdings shall give each Strategic
Participant written notice describing such Third Party Transfer promptly after
agreeing to the Third Party Transfer and in any event no later than ten (10)
days before such Third Party Transfer is consummated.
(c) Notwithstanding Sections 5.2(a) and 5.2(b), above, no Transfer
or issuance of SS/L Shares shall be effective unless (i) the transferee or
subscriber that is not a party to this Agreement shall have executed and
delivered to SS/L and each Strategic Participant, as a condition precedent to
such Transfer or issuance, an instrument or instruments reasonably satisfactory
to the Strategic Participants, confirming that the Transferee or subscriber
agrees to assume the obligations of Holdings under this Agreement, and (ii) the
Transferee or subscriber is a Qualified Third Party.
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(d) Any subsequent Transfer of SS/L Shares acquired by (i) a Third
Party Transferee, or (ii) a Permitted Transferee or Affected Permitted
Transferee of Loral, shall be subject to the provisions of this Section 5.2 in
the same manner as though such SS/L Shares were owned by Holdings, for which
purposes all references to Holdings in this Section 5.2 (other than in Section
5.2(f) below)) shall also be deemed to refer to such Third Party Transferee,
Permitted Transferee or Affected Permitted Transferee.
(e) Any Transfer of SS/L Shares owned by Loral shall be subject to
the restrictions set forth in this Section 5.2 with respect to the Transfer of
SS/L Shares owned by Holdings, for which purposes all references to Holdings
therein shall be deemed also to refer to Loral.
(f) If Holdings should cease to own more than 50% of the outstanding
voting Common Stock of SS/L, Holdings shall lose all rights hereunder as
Holdings (including without limitation the right pursuant to this Agreement to
designate members of the SS/L Board of Directors). Promptly following such
event, at Loral's request, every party hereto shall vote for, and otherwise use
its reasonable best efforts to cause the certificate of incorporation of SS/L to
be amended to provide for, cumulative voting for the election of directors (as
such procedure is described in Section 214 of the General Corporation Law of the
State of Delaware).
Section 5.3 Purchase Options of Strategic Participants. (a) Except
pursuant to and in accordance with this Section 5.3, (i) none of the Loral
Entities may, directly or indirectly, through one or a series of transactions,
conduct, permit or suffer to exist a Change of Control over SS/L (which, for the
avoidance of doubt, would include a Change of Control of any of the Loral
Entities or any Loral Permitted Transferee that holds SS/L Shares) (any such
Change of Control being a "Loral Change of Control"), and (ii) Holdings may not
Transfer SS/L Shares if such Transfer would cause a Change of Control of SS/L
(such Transfer a "Change of Control Transfer").
(b) Prior to any Loral Change of Control or Change of Control
Transfer, Loral shall give written notice to each of the Strategic Participants
(such notice the "Change of Control Notice") setting forth (i) that a Loral
Change of Control or a Change of Control Transfer will occur; (ii) if a Loral
Change of Control will occur, the circumstances and relevant facts of such
Change of Control, including information with respect to pro forma historical
income, cash flow and capitalization of the relevant Loral Entity or Loral
Permitted Transferee, as the case may be, after giving effect to such Loral
Change of Control, provided that if such information is unavailable at the time
of delivery of such Change of Control Notice, Loral shall provide such
information to each Strategic Participant as promptly as practicable after such
information becomes available; (iii) all the stockholders of SS/L, the number of
SS/L Shares owned by each stockholder of SS/L, and the aggregate number of SS/L
Shares then issued and outstanding (all such shares the "Outstanding SS/L
Shares").
(c) The Change of Control Notice for a Loral Change of Control shall
offer to sell the Outstanding SS/L Shares to the Strategic Participants for a
cash price per share equal to the then Fair Market Value of SS/L as determined
in good faith by the SS/L Board of Directors
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subject to adjustment pursuant to Section 5.3(d). The Change of Control Notice
for a Change of Control Transfer, shall offer to sell SS/L to the Strategic
Participants for a cash price set forth in such notice equal to the price per
share at which the Outstanding SS/L Shares are being offered for sale (such cash
price or the Fair Market Value, as the case may be, the "Offer Price"). The
Change of Control Notice shall constitute an irrevocable offer by each of
Holdings, Loral, the Loral Permitted Transferees, Loral Affected Permitted
Transferees and Third Party Transferees set forth as SS/L stockholders in the
Change of Control Notice, to sell their respective SS/L Shares to each of the
Strategic Participants, pro rata, at the Offer Price, subject to adjustment
pursuant to Section 5.3(d).
(d) If any Strategic Participant is unwilling to accept the Fair
Market Value determined by the SS/L Board of Directors, then such Strategic
Participant shall select an internationally recognized investment bank (the
"Participant Investment Bank") within seven (7) days of receiving the Change of
Control Notice containing the proposed Fair Market Value, and the Participant
Investment Bank shall make a determination of the Fair Market Value. If Loral
and any of the affected Strategic Participants are unable to agree upon the Fair
Market Value within 20 days after the Participant Investment Bank delivers its
Fair Market Value determination, Loral and such Strategic Participants shall
within 10 days select another internationally recognized investment bank (the
"Other Investment Bank"), which shall make its determination of the Fair Market
Value. In such event, the Fair Market Value shall be the average of the three
determinations, disregarding any determination that is more than 20% larger or
smaller than the determination that is between the highest and the lowest
determinations. SS/L shall cooperate with all such investment banks in
connection with the determination of Fair Market Value and shall give the
selected investment banks access to the books, records and personnel of SS/L and
its Subsidiaries (including all historical and projected financial and operating
information reasonably necessary to determine Fair Market Value), and SS/L shall
pay all fees and expenses of such investment banks incurred in connection with
the determination of Fair Market Value.
(e) Within thirty (30) Business Days of receipt of the Change of
Control Notice (or within thirty (30) Business Days following final
determination of Fair Market Value pursuant to Section 5.3(d)), each of the
Strategic Participants may elect to purchase ("Purchase Option"), on a pro rata
basis, the Outstanding SS/L Shares at the Offer Price and on the terms and
conditions set out in the Change of Control Notice by delivery of a notice (a
"Purchase Notice") to Loral, with copies to SS/L and the other Strategic
Participants, stating that such Strategic Participant elects to purchase its pro
rata portion of the Outstanding SS/L Shares at the Offer Price and on the terms
and conditions set out in the Change of Control Notice. Each Strategic
Participant shall be entitled to purchase its "pro rata" portion of the
Outstanding SS/L Shares, which shall be computed by multiplying the number of
Outstanding SS/L Shares by the fraction, the numerator of which is the number of
shares of Loral Common Stock (including the number of such shares receivable
upon conversion of any Convertible Preferred Securities) comprising the then
Remaining Loral Securities of such Strategic Participant and the denominator of
which is the number of all shares of Loral Common Stock comprising such
Remaining Loral Securities of the Strategic Participants as a group. Any
Outstanding SS/L Shares not covered by a Purchase Notice may be purchased by the
other Strategic Participants on
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the terms and conditions set out in this Section 5.3(e). Notice to exercise this
right (the "Second Purchase Notice") must be given within ten (10) Business Days
after the expiration of the thirty (30)-day period referred to above. Delivery
of a Purchase Notice or a Second Purchase Notice shall constitute a contract
between each of Holdings, Loral, Loral Permitted Transferees, Loral Affected
Permitted Transferees and Third Party Transferees set forth as SS/L stockholders
in the Change of Control Notice, on the one hand, and such Strategic
Participant, on the other, for the sale and purchase of the applicable portion
of the Outstanding SS/L Shares at the Offer Price and upon the other applicable
terms and conditions set forth in the Change of Control Notice.
(f) The rights of each Strategic Participant under this Section 5.3:
(i) are conditioned upon the purchase of all (and not less than all) of the
Outstanding SS/L Shares by one or more Strategic Participants pursuant to the
aforementioned procedures and (ii) may be assigned in whole or in part to one or
more SP U.S. Assignees in which case all references to Strategic Participants in
Section 5.3 shall be deemed also to refer to such SP U.S. Assignee.
(g) If the Strategic Participants fail to deliver Purchase or Second
Purchase Notices with respect to all of the Outstanding SS/L Shares specified in
the Change of Control Notice as provided in Section 5.3(e), then Loral, LSC
Corp., Holdings or the Loral Permitted Transferee, as the case may be, may,
within one (1) year (such period the "Permitted Sale Period") following the
expiration of the deadlines for delivery of such notices set forth in Section
5.3(e), complete the Loral Change of Control or the Change of Control Transfer,
as the case may be, described in the Change of Control Notice; provided that (a)
the per share price of any SS/L Shares Transferred in connection with such
Change of Control Transfer is at least 95% of the Offer Price and (b) the terms
and conditions applicable to such Change of Control Transfer are similar in all
material respects to the terms and conditions set forth in the Change of Control
Notice; provided further that the Strategic Participants shall have the
opportunity to exercise the rights set forth in Section 5.4, as a condition
precedent to consummation of such Loral Change of Control or such Change of
Control Transfer.
(h) If the Strategic Participants do not purchase the Outstanding
SS/L Shares as provided in Section 5.3(e) and the Loral Change of Control or the
Change of Control Transfer does not occur as set forth in Section 5.3(b), the
Purchase Option procedures set forth in Sections 5.3(b), 5.3(c), 5.3(d) and
5.3(e) shall again apply in connection with any subsequent Loral Change of
Control or Change of Control Transfer.
(i) Any SS/L Shares acquired by a Permitted Transferee or Affected
Permitted Transferee of Loral, shall be subject to the provisions of this
Section 5.3 in the same manner as though such SS/L Shares were owned by
Holdings, for which purposes all references to Holdings in this Section 5.3
shall also be deemed to refer to such Permitted Transferee or Affected Permitted
Transferee.
(j) Any Transfer of SS/L Shares owned by Loral shall be subject to
the restrictions set forth in this Section 5.3 with respect to the Transfer of
SS/L Shares owned by Holdings, for which purposes all references to Holdings
therein shall be deemed also to refer to Loral.
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(k) The Purchase Notices delivered by Strategic Participants shall
designate a closing date (the "Purchase Closing Date") which (i) if delivered in
connection with a Loral Change of Control Transfer, shall not be more than ten
(10) Business Days after the later of (A) the last Purchase or Second Purchase
Notice delivered by a Strategic Participant or (B) the expiration of all
regulatory holding periods (including waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the
obtaining of all governmental approvals, if any, applicable to such purchase or
(ii) if delivered in connection with a Loral Change of Control, shall be the
later of (A) the time of closing of the transactions causing the Loral Change of
Control and (B) the expiration of all regulatory holding periods (including
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended) and the obtaining of all governmental approvals, if any, applicable
to such purchase, including, with respect to Aerospatiale, the approval of the
MOD required pursuant to Decret No.53-707 of 9 August 1953, modified by Decret
No. 78-173 of 16 February 1978 (such approval, the "MOD Approval"). The closing
shall be held at 10:00 a.m., local time on the Purchase Closing Date at the
principal office of Loral, or at such other time or place as the parties to such
transaction mutually agree.
(l) On the Purchase Closing Date, each of Holdings, Loral, Loral
Permitted Transferees, Loral Affected Permitted Transferees and Third Party
Transferees set forth as SS/L stockholders in the Change of Control Notice
shall, with respect to the SS/L Shares each owns, deliver (i) certificates
appropriately endorsed and representing the SS/L Shares being sold, free and
clear of any lien, claim or encumbrance and (ii) such other documents including,
without limitation, executed stock powers and evidence of ownership and
authority, as the purchasers may reasonably request. The purchase price shall be
paid by wire transfer of immediately available U.S. funds (or such other
currency as the parties thereto may agree) no later than 2:00 p.m. on the
Purchase Closing Date.
Section 5.4 Exchange Options of Strategic Participants. (a) Subject
to Section 5.3, prior to a Loral Change of Control or Change of Control
Transfer, each Strategic Participant shall have the option ("Exchange Option")
to elect either (i) to transfer to Loral its then Remaining Loral Securities
and, in exchange therefor, Loral shall transfer SS/L Shares to such Strategic
Participant (the "Direct Exchange"), or, at Loral's direction (ii) to sell its
then Remaining Loral Securities on the principal market where such Remaining
Loral Securities are traded and to use the Net Proceeds from such sale to
purchase SS/L Shares from Loral (the "Indirect Exchange"), provided that no
Direct Exchange or Indirect Exchange may occur unless Strategic Participants
holding at least a majority in Nominal Value of all the then Remaining Loral
Securities elect to exercise their Exchange Options.
(b) The Strategic Participants may elect to exercise their rights
under this Section 5.4 by delivery of a notice ("Exchange Notice") to Loral
within thirty (30) days after receiving the Change of Control Notice for such
Loral Change of Control or Change of Control Transfer, provided that if within
this thirty (30) day period a Strategic Participant (i) determines in good faith
that it needs additional time to decide whether to exercise the Exchange Option
and (ii) notifies Loral accordingly, then, such Strategic Participant shall have
an additional fifteen (15) days following the thirty (30) day period to exercise
the Exchange Option. During such
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period, Loral shall provide the Strategic Participants such additional
information relating to such Loral Change of Control or Change of Control
Transfer not already provided pursuant to Section 5.3(b) as any Strategic
Participant may reasonably request. A Strategic Participant may, at its
election, condition exercise of its Exchange Option on consummation of such
Loral Change of Control or Change of Control Transfer, such election to be set
forth in the Exchange Notice. Within five (5) Business Days after a Strategic
Participant delivers an Exchange Notice to Loral, Loral shall deliver a written
notice ("Election Notice") to such Strategic Participant electing either a
Direct Exchange or Indirect Exchange, provided that if Loral does not deliver
such notice within the five (5)-day period described above, Loral shall be
deemed to have elected a Direct Exchange.
(c) For purposes of a Direct Exchange:
(i) the per share value of the portion of such Remaining Loral
Securities consisting of Loral Common Stock would be equal to the average
of the high and low prices of Loral Common Stock on the NYSE for the five
(5) trading days immediately preceding the date of delivery of the
Exchange Notice by such Strategic Participant;
(ii) the per share value of the portion of such Remaining
Loral Securities consisting of Convertible Preferred Securities would be
equal to the average of the high and low trading prices (or, if
applicable, the high and low bid and asked prices) of such securities on
their principal trading markets for the five (5) trading days immediately
preceding the date of delivery of the Exchange Notice by such Strategic
Participant;
(iii) the per share value of any portion of such Remaining
Loral Securities not described in paragraphs (i) or (ii) above (the
"Remaining Portion") would be equal to the average of the high and low
prices or bid and asked prices, as the case may be, of such Remaining
Portion as quoted on the principal market where such securities are traded
for the five (5) trading days immediately preceding the date of delivery
of the Exchange Notice by such Strategic Participant; and
(iv) the per share value of SS/L Shares would be equal to the
Offer Price or, as applicable, the Fair Market Value as adjusted pursuant
to Section 5.3(d).
(d) If a Strategic Participant exercises its Exchange Option and
Loral elects the Indirect Exchange pursuant to Section 5.4(b), such Strategic
Participant shall, within five (5) Business Days following receipt of the
Election Notice, sell its then Remaining Loral Securities on the principal
market where such Remaining Loral Securities are traded, provided that, to the
extent any such Remaining Loral Securities may not be sold on the market without
registration under Securities Laws, Loral shall register the sale of such
Remaining Loral Securities under the Securities Law promptly after delivery of
the Election Notice and the Strategic Participant shall sell such Remaining
Loral Securities promptly after the effectiveness of such registration. Such
Strategic Participant shall use the net proceeds from the sale of its then
Remaining Loral Securities pursuant to this Section 5.4(d) (after payment of all
expenses in connection therewith,
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including fees, commissions and capital gain or income taxes, if any) (the "Net
Proceeds") to purchase from Loral, and Loral shall be obligated to sell to such
Strategic Participant, the same number of SS/L Shares that the Strategic
Participant would have obtained in a Direct Exchange.
(e) If Direct Exchanges or Indirect Exchanges would cause the
participating Strategic Participants to receive in the aggregate a number of
SS/L Shares that exceed 49% of the SS/L Shares that would be outstanding
following such Direct Exchanges or Indirect Exchanges, each such Strategic
Participant shall, at its election, either (i) withhold from its Direct Exchange
or Indirect Exchange, as the case may be, the portion of its then Remaining
Loral Securities having a value equivalent to such Strategic Participant's pro
rata share of the value of the SS/L Shares that would cause the Strategic
Participants to exceed 49% ownership of SS/L Shares (such pro rata share the
"Prorated Excess Value"), or (ii) receive, in lieu of the SS/L Shares that would
be issued for Remaining Loral Securities having the Prorated Excess Value,
shares of non-voting stock of SS/L equivalent in value to the Prorated Excess
Value.
(f) Immediately upon the closing of transactions contemplated by
exercise of Exchange Options pursuant to Section 5.4, (i) the Strategic
Participants participating in the Exchange, Loral Entities, Loral Permitted
Transferees that hold any SS/L Shares, any successor or Transferee of any Loral
Entity or Loral Permitted Transferee of SS/L Shares following the Change of
Control of SS/L, and SS/L shall thereupon become parties to the Restated
Stockholders Agreement, which would control, to the exclusion of any other
agreements or arrangements not therein contemplated, the governance of SS/L,
(ii) each such Strategic Participant shall accept the rights and assume the
obligations of Strategic Participants under the Restated Stockholders Agreement
subject to Section 5.4(g) below, (iii) in the event of a Loral Change of
Control, the Loral Entities or their respective successors, as the case may be,
or in the event of a Change of Control Transfer the Transferee of the Change of
Control Transfer shall succeed to the rights and assume the obligations of the
Loral Entities under the Restated Stockholders Agreement, and (iv) any Affiliate
of such successor or Transferee that conducts activities within SS/L's "Scope of
Business" as defined in the Restated Stockholders Agreement shall be substituted
for Lockheed Martin for purposes of the rights of the Strategic Participants
under the Restated Stockholders Agreement.
(g) A Strategic Participant that reacquires SS/L Shares pursuant to
exercise of an Exchange Option shall have the rights and obligations of such
Strategic Participant under the Restated Stockholders Agreement even if the SS/L
Shares acquired by such Strategic Participant represent less than the minimum
percentage ownership of SS/L Shares required to maintain Strategic Participant
rights under the Restated Stockholders Agreement, provided that if a Strategic
Participant's percentage ownership of SS/L Shares at the time it reacquires SS/L
Shares is less than such minimum percentage ownership level, the Strategic
Participant thereafter shall lose the rights and obligations of a Strategic
Participant under the Restated Stockholders Agreement if upon subsequently
Transferring any of its SS/L Shares such Strategic Participant's percentage
ownership of SS/L Shares falls below such minimum percentage ownership level.
(h) The closing date (the "Exchange Closing Date") shall occur,
unless the parties thereto shall otherwise agree, on the tenth (10) Business Day
after the later of (i) the date
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the last Exchange Notice is given by a Strategic Participant, (ii) if any
exercise of an Exchange Option is conditioned on consummation of the Loral
Change of Control or Change of Control Transfer, the date of such consummation,
(iii) if any Indirect Exchanges are elected by Loral, the date the applicable
Strategic Participants complete sales of Remaining Loral Securities pursuant to
Section 5.4(d), and (iv) the expiration of all regulatory holding periods
(including waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended) and the obtaining of all governmental approvals, if
any, applicable to such exchange (including, with respect to Aerospatiale, MOD
Approval). The closing shall be held at 10:00 a.m., local time on the Exchange
Closing Date at the principal office of Loral, or at such other time or place as
the parties to such transaction mutually agree.
(i) On the Exchange Closing Date, (i) for purposes of a Direct
Exchange, the Strategic Participants shall deliver certificates representing the
Remaining Loral Securities appropriately endorsed and representing the stock or
obligations being sold, free and clear of any lien, claim or encumbrance, (ii)
Loral and Holdings or their respective successors shall deliver certificates
representing their respective SS/L Shares being exchanged appropriately endorsed
and representing the stock or obligation being sold, free and clear of any lien,
claim or encumbrance, and (iii) the parties shall deliver such other documents
including, without limitation, executed stock powers and evidence of ownership
and authority, as the other parties may reasonably request. Any Net Proceeds
payable to Loral by a Strategic Participant or other payable amounts shall be
paid by wire transfer of immediately available U.S. funds (or such other
currency as the parties thereto may agree) no later than 2:00 p.m. on the
Exchange Closing Date.
(j) Loral and each of the Loral Entities shall cause the completion
of any Direct Exchanges or Indirect Exchanges pursuant to this Section 5.4 to be
conditions precedent to any Change of Control Transfer or consummation of the
portion of any Loral Change of Control that affects SS/L.
ARTICLE VI
ADDITIONAL RIGHTS AND OBLIGATIONS OF THE PARTIES
Section 6.1 Regulatory Compliance.(a) The parties hereto and DoD
have entered into the Security Control Agreement, providing, inter alia, for
certain measures to negate foreign ownership, control or influence ("FOCI") over
SS/L, as provided in Section 2-205(a) of the Industrial Security Regulations.
(b) If (i) a change of law requires SS/L or any Strategic
Participant to adopt any measures (X) in addition to those contemplated by the
Security Control Agreement, (Y) that have a material adverse effect on (aa) the
business or operations of such Strategic Participant or (bb) the rights of such
Strategic Participant under this Agreement and (Z) to which such Strategic
Participant objects in writing within ninety (90) days of receipt of notice from
SS/L specifying the measures to be adopted (such Strategic Participant an
"Affected SP"), and (ii) within ninety (90) days after receipt by the Affected
SP of such notice from SS/L, the Affected SP sells its then
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Remaining Loral Securities in the principal market where such Remaining Loral
Securities are traded, and to the extent Remaining Loral Securities cannot be
sold on the market without registration under the U.S. Securities Act of 1933,
as amended and Securities Laws, the Affected SP exercises its right to require
Loral to register the sale of any then Remaining Loral Securities pursuant to
the Securities Laws and then sells such Remaining Loral Securities promptly
after the effectiveness of such registration, then, promptly following any such
sale, Loral shall pay such Affected SP any Reimbursement Amount that may be due.
Section 6.2 U.S. Government Contracts; National Security Matters.
(a) For so long as Holdings continues to own a majority of the voting Common
Stock of SS/L, the Holdings Nominees shall constitute a majority of the SS/L
Board of Directors and shall have the authority to approve, on behalf of the
SS/L Board of Directors, in the name and on behalf of SS/L, all matters
affecting the operations and conduct of the business of SS/L, except as
expressly set forth in Section 3.2. All Holdings Nominees shall be citizens of
the United States.
(b) Without limitation of the foregoing Section 6.2(a), the Holdings
Nominees shall have sole responsibility, on behalf of the SS/L Board of
Directors of SS/L, for supervision, implementation and execution in the name and
on behalf of SS/L of the following matters, notwithstanding anything to the
contrary contained in Section 3.2 or in other provisions of this Agreement:
(i) the performance of work involving Classified
Information (as defined below) by SS/L under all contracts and
agreements;
(ii) the conduct of any research programs by SS/L to the
extent that any Classified Information is utilized or produced
therefrom;
(iii) the implementation of all resolutions by the SS/L
Board of Directors required by the Security Control Agreement; and
(iv) all other United States national security policy matters
and matters affecting the safeguarding of Classified Information and
technical data under United States export control laws.
For the purposes of this Section 6.2(b), "Classified
Information" shall mean information or material that is (i) owned by, produced
by or for, or under the control of the United States Government, (ii) determined
under Executive Order 12356 or other relevant orders to require protection
against unauthorized disclosure and (iii) so designated.
Section 6.3 Performance of SS/L Obligations. (a) Loral shall cause
SS/L to perform SS/L's obligations under this Agreement and under the
Operational Agreement. Each of Loral and SS/L hereby represents and warrants
that SS/L has adopted a written policy currently in effect, regarding "SS/L
Policy on Alliance With European Partners" (the "Alliance Policy"), a complete
and accurate copy of which has been delivered to each of the Strategic
Participants on the date of "Closing" under the Exchange Agreement. SS/L
covenants to implement and enforce, and each of the Loral Entities agrees to
cause SS/L to implement and
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enforce, the Alliance Policy in a reasonable fashion. The Alliance Policy and
its effectiveness shall not be modified without the written consent of the
Strategic Participants.
(b) SS/L covenants that it will act, and each of the Loral Entities
agrees to cause SS/L to act, in accordance with its Charter Documents. Loral and
Holdings shall vote all of their respective SS/L Shares at any regular or
special meeting of stockholders of SS/L or in any written consent executed in
lieu of such a meeting of stockholders, and shall take all action necessary, to
ensure (i) that the Charter Documents of SS/L do not, at any time, conflict with
the provisions of this Agreement and (ii) that, unless an amendment is approved
by the SS/L Board of Directors, the Charter Documents of SS/L continue to be in
effect in the form attached hereto as Schedules 7.1(a)(i) and 7.1(a)(ii).
Section 6.4 Confidentiality. Notwithstanding anything to the
contrary contained in this Agreement, any written information regarding the
bidding or pricing of work and other competitive matters, or any other
proprietary information, relating to SS/L or a Strategic Participant will be
disclosed hereunder only to those employees of any party hereto having a need to
know such information for purposes of performing their duties under and engaging
in activities contemplated by this Agreement and the Operational Agreement,
including performance of their duties as members of the Management Liaison
Committee or Research and Development Committee contemplated by the Operational
Agreement, and such information shall not be used for any other purpose. All
such information shall be returned to the applicable party by each of the other
parties hereto (or destroyed with no copies retained) upon termination of this
Agreement with respect to (i) all parties hereto or (ii) a Strategic Participant
in accordance with Section 8.1, and no party shall make any use whatsoever of
such information after it shall have ceased to be a party hereto.
Section 6.5 Government Approval of Information Access. SS/L shall
use its reasonable best efforts to apply for and obtain in a timely manner all
government consents, approvals, licenses or other authorizations that may be
required (i) in order for employees or other representatives of any party hereto
that is a non-US Person to have access to all non-classified information in the
possession of SS/L and its Subsidiaries that such employees or representatives
require in order to perform their duties as directors of SS/L or members of the
Management Liaison Committee or Research and Development Committee as
contemplated in the Operational Agreement or (ii) in order that a Transfer of
SS/L Shares to a Qualified Third Party may be made in accordance with the terms
and conditions of this Agreement.
Section 6.6 Merger of SS/L. If SS/L is merged into or consolidated
with Loral or any of its Affiliates, Loral shall cause the by-laws of the
surviving or resulting entity to be amended so that the rights of the Strategic
Participants hereunder with respect to SS/L are maintained with respect to such
surviving or resulting entity.
Section 6.7 New Ventures. Loral shall cause each of the Strategic
Participants to be provided a meaningful opportunity to participate in all new
business ventures created or materially developed by SS/L and controlled by
Loral or a Loral Affiliate. Loral shall provide each Strategic Participant
relevant information regarding such opportunity, and will cause the
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Strategic Participants to be offered the same rights and benefits that are
offered to comparable investors that invest in the first round of financing for
such ventures.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.1 Loral, Holdings and SS/L. (a) Each of the Loral Entities
and SS/L hereby represents and warrants to each of the Strategic Participants as
of the date of this Agreement as follows:
(i) Schedule 7.1(a)(i) is a complete and accurate copy of
the Certificate of Incorporation of SS/L in effect as of the date
hereof;
(ii) Schedule 7.1(a)(ii) is a complete and accurate copy
of the By-laws of SS/L in effect as of the date hereof;
(iii) the list of individuals serving as members of the SS/L
Board of Directors and individuals serving as officers of SS/L contained
in Schedule 7.1(a)(iii) is complete, accurate and current as of the date
hereof; and
(iv) the list of stockholders of SS/L and the corresponding
number and kind of shares of SS/L stock held by each such stockholder
contained in Schedule 7.1(a)(iv) is complete, accurate and current as of
the date hereof.
(b) Each of the Loral Entities hereby represents, warrants and
covenants to each of the Strategic Participants that: (i) the respective rights
of the Strategic Participants hereunder with respect to SS/L (including but not
limited to rights relating to the governance of SS/L set forth in Article III)
are exclusive, and (ii) no third party has been or shall be afforded any such
rights or similar rights without the written consent of each of the Strategic
Participants.
ARTICLE VIII
TERMINATION
Section 8.1 Termination (a) This Agreement shall terminate (i) upon
mutual agreement by the parties hereto; (ii) with respect to any Strategic
Participant, after such Strategic Participant shall have sold or otherwise
disposed of, or shall have agreed to sell or otherwise dispose of, to a third
party other than a Permitted Transferee of such Strategic Participant (except as
expressly permitted herein) Loral Exchange Agreement Securities having an
aggregate Nominal Value of greater than $17,200,000; (iii) with respect to any
Strategic Participant, upon termination of the Operational Agreement with
respect to such Strategic Participant, whether pursuant to its terms or
otherwise; (iv) upon the effectiveness of the Restated Stockholders Agreement
following a Direct Exchange or an Indirect Exchange, in
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accordance with Section 5.4(f); or (v) if the Strategic Participants do not (A)
purchase the Outstanding SS/L Shares as provided in Section 5.3(e) or (B)
exercise the rights in Section 5.4(b), upon the closing of the Loral Change of
Control or the Loral Change of Control Transfer. Hypothetical examples
illustrating the intended operation of clause (ii) of this Section 8.1(a) are
contained in Exhibit M to the Exchange Agreement, a complete and accurate copy
of which exhibit has been delivered to Finmeccanica on or prior to the date
hereof.
(b) Each Strategic Participant shall notify the other parties hereto
in writing of any sale of, or agreement to sell, any Loral Exchange Agreement
Securities no later than two (2) days following such sale or agreement.
(c) Sections 6.4 and 9.1 shall survive any termination of this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Arbitration. (a) Any claim or controversy arising
between any of the Loral Entities or SS/L, on the one hand, and the Strategic
Participants, on the other hand, under this Agreement shall be finally decided
by arbitration. Any party hereto may invoke arbitration under this Section 9.1
by notice to others and the filing of such notice with the International Chamber
of Commerce (the "ICC"), Geneva, Switzerland. Any party shall have the right
within thirty (30) days after receiving notice under this Agreement from any
other party (or from joinder of a new party to the arbitration) to be joined as
a party in any arbitration initiated hereunder between the other parties hereto
or to join as a party in the arbitration one or more other parties hereto. Any
party joined in arbitration shall have the right within thirty (30) days from
such joinder to join in its turn any other party hereto not yet a party to the
arbitration. All joinders shall be effected by notice given to all parties in
accordance with this Agreement.
(b) Arbitration shall be held in Geneva, Switzerland under the
auspices of the ICC pursuant to the Commercial Arbitration Rules of the ICC and
before one arbitrator selected by the ICC; provided that any party to the
arbitration may require that the arbitration be held before three arbitrators
selected by the ICC.
(c) Each party shall submit its case in writing to the arbitrators
within one (1) month of the selection of the arbitration panel. The language of
the arbitration shall be English. The arbitrators are empowered to determine
questions both of fact and of law, but shall to the maximum extent possible
construe this Agreement strictly in accordance with its terms and conditions and
the purposes and intents evinced thereby. Any applicable statute of limitations
shall be a defense against any claim, dispute or other matter in any arbitration
hereunder. The scope and method of discovery shall be determined by the
arbitrators. Whether a hearing shall be held or additional evidence accepted,
and the rules governing any such hearing, shall be in the sole discretion of the
arbitrators, subject to the ICC rules as they construe them. All decisions of
the arbitrators shall be by majority vote. The arbitrators shall make their
decision in writing at the earliest convenient date. The costs of arbitration,
including the fees of the arbitrators, shall
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be in the discretion of the arbitrators, who may direct to and by whom and in
what manner these costs or any part thereof shall be paid.
(d) To the maximum extent permitted by law, the decision of the
arbitration tribunal shall be final and binding on the parties to this Agreement
and not subject to appeal. If a party against whom the arbitration tribunal
renders an award fails to abide by such award, the other party may bring an
action to enforce the same in a court of competent jurisdiction.
Section 9.2 No Inconsistent Agreements. Each of SS/L and the Loral
Entities shall not, and shall not permit any of their respective Subsidiaries or
Affiliates to, (i) enter into any agreement with respect to its securities or
take any action which is inconsistent with the rights granted to the Strategic
Participants in this Agreement, or (ii) make any change, amendment, alteration
or modification to its corporate charter or bylaws (except, in the case of SS/L,
changes permitted by this Agreement) or enter into any other agreement, which
would adversely affect the rights of a Strategic Participant under this
Agreement or the Operational Agreement. Each of SS/L and the Loral Entities
represents and warrants to each Strategic Participant that it has not, and their
respective Subsidiaries and Affiliates have not, prior to the date hereof
entered into any such agreement or taken any such action.
Section 9.3 LSC Corp. and Holdings and SS/L Agreements. Loral shall
cause LSC Corp., Holdings and any Permitted Transferee of Loral that holds SS/L
Shares duly to perform their respective obligations under this Agreement.
Section 9.4 Recapitalization, Exchanges, etc. In the event that any
capital stock or other securities are issued in respect of, in exchange for, or
in substitution of, any SS/L Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the SS/L Shares or any other change in capital
structure of SS/L, appropriate adjustments shall be made with respect to the
relevant provisions of this Agreement so as to fairly and equitably preserve, as
far as practicable, the original rights and obligations of the parties hereto
under this Agreement and the term "SS/L Shares," as used herein, shall be deemed
to include shares of such capital stock or other securities, as appropriate.
Section 9.5 Successors and Assigns. (a) This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns; provided that (i) neither this
Agreement nor any rights or obligations hereunder may be transferred or assigned
by SS/L or any of the Loral Entities without the written consent of the
Strategic Participants and (ii) the rights and obligations of a Strategic
Participant under this Agreement may be assigned only to a Permitted Transferee
of such Strategic Participant or as otherwise expressly permitted herein. No
third party shall acquire the rights of a Strategic Participant hereunder unless
such third party shall also become a party to, and agrees to be bound by, this
Agreement, and the Operational Agreement with the prior written consent of the
other parties thereto.
(b) Notwithstanding Sections 8.1(a) and 9.5(a) above, if (i) two (2)
or more Strategic Participants should transfer to another entity ownership of
their business operations
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involving the design, development, manufacture, sale and launch of Space Systems
and the operation thereof to the extent such operation occurs in connection with
launch services and before turnover of a Space System to a customer, or should
combine such operations, and (ii) such other entity or the surviving or combined
entity, as the case may be,: (Y) is owned or controlled, directly or indirectly,
by Aerospatiale, Alcatel Alsthom, Alcatel NV or Finmeccanica, and (Z) directly
or indirectly holds all the then Remaining Loral Securities previously held by
the constituent Strategic Participants, then such other entity or surviving or
combined entity, as the case may be, shall continue to have all the rights, and
be subject to all the obligations, of each of the constituent Strategic
Participants as if such transfer of ownership or combination of operations had
not occurred.
(c) Promptly following any Change of Control (other than as may be
described in Section 9.5(b) or Section 9.5(d)) or any agreement for such Change
of Control, over a Strategic Participant (or a Permitted Transferee of such
Strategic Participant's rights hereunder), such Strategic Participant (or such
Permitted Transferee) shall provide notice to the other parties hereto
containing the information required in a Change of Control Notice. This
Agreement shall terminate with respect to that Strategic Participant (or its
Permitted Transferee) following such Change of Control if any two (2) of Loral
and the unaffected Strategic Participants believe that the Person which gains
Control over that Strategic Participant (or its Permitted Transferee) and the
other parties hereto have significant competing interests.
(d) Notwithstanding anything to the contrary herein, a Person that
Controls a Strategic Participant may transfer the ownership or assets (including
the Remaining Loral Securities) of such Strategic Participant to or among
companies that such Person Controls without such Strategic Participant losing
any of its rights and obligations hereunder as a Strategic Participant.
Section 9.6 No Waivers; Amendments. (a) No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended, modified or supplemented
other than by a written instrument signed by each party hereto except that the
consent of a party hereto shall not be required if the rights or obligations of
such party hereunder are not adversely affected by such amendment, modification
or supplement.
(c) Any provision of this Agreement may be waived if, but only if,
such waiver is in writing and is signed by the party against whom the
enforcement of such waiver is sought.
Section 9.7 Notices. All notices, demands, requests, consents or
approvals (collectively, "Notices") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally served or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or
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delivered by a private courier service of international standing and recognition
with charges prepaid, or transmitted by hand delivery, telegram, telex or
facsimile, addressed as set forth below, or such other address as such party
shall have specified most recently by written notice. Notice shall be deemed
given or delivered on the date of service or transmission if personally served
or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given or delivered on the third business day
following the date mailed or on the next business day following delivery of such
notice to a reputable overnight courier service.
To Aerospatiale: Aerospatiale SNI
59, Route de Verneuil BP 96
78133 Les Mureaux Cedex
France
Attn.: M. Michel Delaye
Mme. Claude Dubreuil, Esq.
Fax: 011-331-34-74-95-33
011-331-34-74-95-33
and
Aerospatiale SNI
c/o Management Liaison Committee
Space Systems/Loral, Inc.
3825 Fabian Way
M.S.E 49
Palo Alto, CA 94303-4697
Attn. M. Gerard Barkats
Fax: (415) 842-7389
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 13th Street, N.W.
Washington, D.C. 20004-1109
Attn: Mark E. Mazo, Esq.
Fax: 202/637-5910
31
<PAGE> 32
To Alcatel: Alcatel Espace
5, rue Noel Pons
92737 Nanterre Cedex
France
Attn.: M. Pierre de Bayser
Arlette Lefeuvre, Esq.
Fax: 011-331-46-52-64-60
with a copy (which shall not constitute notice) to:
Alcatel Telecom
33, Rue Emeriau
75015 Paris Cedex
France
Attn.: Marc Jany, Esq.
Fax: 011-331-40-58-59-31
and
Hogan & Hartson L.L.P.
Columbia Square
555 13th Street, N.W.
Washington, D.C. 20004-1109
Attn.: Mark E. Mazo, Esq.
Fax: 202/637-5910
To Finmeccanica: Finmeccanica S.p.A.
Via Saccomuro, 24
00131 Roma
Italy
Attn.: Alfredo Beolchini
Stefania Barbieri, Esq.
Fax: 011-39-6-4368-4196
and
Finmeccanica
c/o Management Liaison Committee
Space Systems/Loral, Inc.
3825 Fabian Way
M.S.E 49
Palo Alto, CA 94303-4697
Attn.: Luciano Saccani
Fax: (408) 863-0604
32
<PAGE> 33
with a copy (which shall not constitute notice) to:
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
Attn.: Christopher Wells, Esq.
Fax: (212) 626-4120
To Loral, LSC Corp.,
Holdings,
or SS/L: Loral Space & Communications Ltd.
600 Third Avenue
New York, New York 10016
Attn.: Mr. Michael B. Targoff
President and Chief Operating Officer
Fax: 212/682-9805
with a copy (which shall not constitute notice) to:
Loral Space & Communications Ltd.
600 Third Avenue
New York, NY 10016
Attn: Eric Zahler, Esq.
Avi Katz, Esq.
Fax: 212/338-5350
and
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn.: Bruce Kraus, Esq.
Fax: 212/821-8111
Section 9.8 Inspection. So long as this Agreement shall be in
effect, this Agreement and any amendments hereto shall be made available for
inspection at the principal office of SS/L by any party hereto and by the
cognizant security authorities of DoD.
Section 9.9 Governing Law. The corporate law of the State of
Delaware shall govern all issues concerning the rights and obligations of SS/L,
on the one hand, and the other parties hereto, on the other hand. All other
matters concerning the interpretation and construction of this Agreement shall
be governed by, interpreted under, and construed in
33
<PAGE> 34
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed within the State of New York.
Section 9.10 Section Headings. The section headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
Section 9.11 Entire Agreement. This Agreement, together with the
Exchange Agreement and the agreements and amendments executed as conditions to
closing under the Exchange Agreement constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior
agreements and understandings, written or oral, relating to the subject matter
hereof (including without limitation the Term Sheet dated 21 February 1997,
among Loral, SS/L, Aerospatiale and Alcatel and the Term Sheet dated 20 February
1997, between Loral, SS/L and Finmeccanica).
Section 9.12 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
Section 9.13 Several Liability of Strategic Participants. The
obligations of the Strategic Participants hereunder are several and not joint,
and nothing in this Agreement shall be construed to impose on any Strategic
Participant any liability for any action or failure to act of any other
Strategic Participant.
Section 9.14 Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
Section 9.15 Required Approvals. If approval of this Agreement or
any of the transactions contemplated hereby shall be required by any
governmental or supra-governmental agency or instrumentality or is considered to
be necessary or advisable to all the parties hereto, all parties hereto shall
use their best efforts to obtain such approval. If any required approval is not
obtained or it becomes clear that such approval will not be granted, any party
shall immediately give the other parties hereto notice and the parties hereto
shall promptly meet and negotiate in good faith to modify their respective
obligations as necessary.
Section 9.16 Consistency. (a) In the event of a conflict between
this Agreement and the Certificate of Incorporation or By-laws of SS/L, the
terms and provisions of this Agreement shall govern.
(b) In the event of a conflict between this Agreement and the
Security Control Agreement, the terms and provisions of the Security Control
Agreement shall govern.
34
<PAGE> 35
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Michael B. Targoff
---------------------------------------
Title: President and Chief Operating
Officer
LORAL SPACE & COMMUNICATIONS CORPORATION
By: /s/ Michael B. Targoff
---------------------------------------
Title: President
LORAL SPACECOM CORPORATION
By: /s/ Michael B. Targoff
---------------------------------------
Title: President
SPACE SYSTEMS/LORAL, INC.
By: /s/ Michael B. Targoff
---------------------------------------
Title: Senior Executive Vice President
AEROSPATIALE SNI
By: /s/ Michel Delaye
---------------------------------------
Title: Le Directeur, Aerospatiale
Espace & Defense
ALCATEL ESPACE
By: /s/ Jean Claude Husson
---------------------------------------
Title: President and CEO
35
<PAGE> 36
FINMECCANICA S.p.A.
By: /s/Giuseppe Viriglio
---------------------------------------
Title: Head, Space Division
36
<PAGE> 1
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of June 23, 1997 (this
"Agreement") among LORAL SPACE & COMMUNICATIONS LTD., a Bermuda company (the
"Company"), AEROSPATIALE SNI, a societe nationale industrielle organized under
the laws of France ("Aerospatiale"), and ALCATEL ESPACE, a societe anonyme
organized under the laws of France ("Alcatel" and, together with Aerospatiale,
the "Strategic Participants").
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms shall have the
meanings ascribed to them below:
"Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purpose of this definition "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person whether through the ownership of voting securities, by
contract or otherwise.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means each day other than Saturdays, Sundays and days
when commercial banks are authorized to be closed for business in New York, New
York.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company transferred to the Strategic Participants pursuant to the Exchange
Agreement, dated as of June 18, 1997, by and among the Company and the Strategic
Participants.
"Company" has the meaning set forth in the preamble of this
Agreement.
"Demand Offering" has the meaning set forth in Section 2.1(c).
"Excess Amount" means the number of Registrable Securities requested
by an SP Holder or SP Holders to be sold pursuant to Section 2.1(c) or 2.2 which
the managing Underwriter or Underwriters determines exceeds the largest number
of Registrable Securities which can successfully be sold in an orderly manner in
such offering within a price range acceptable to the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 2
"Holder" means each of the Strategic Participants for so long as it
owns any Registrable Securities, and such of its respective successors or
assigns who acquire Registrable Securities, directly or indirectly, from the
Strategic Participants, in each case for so long as such successors or assigns
own any Registrable Securities.
"Market Price" means with respect to any Registrable Security on any
date, (i) the last reported sale price of the Registrable Security on the
principal national securities exchange on which the class of Registrable
Securities is listed or admitted to trading or, if no such reported sale takes
place on any such day, the average of the closing bid and asked prices thereon,
as reported in The Wall Street Journal, or (ii) if such Registrable Security is
not listed or admitted to trading on a national securities exchange, the last
reported sales price on the NASDAQ National Market System or, if no such
reported sale takes place on any such day, the average of the closing bid and
asked prices thereon, as reported in The Wall Street Journal, or (iii) if such
Registrable Security is not quoted on such National Market System nor listed or
admitted to trading on a national exchange, then the average of the closing bid
and asked prices, as reported by The Wall Street Journal for the
over-the-counter market, or (iv) if there is no public market for such
Registrable Security, the fair market value of a share of such Registrable
Security as determined by a nationally recognized investment bank ("SP
Investment Bank") selected by one or both Strategic Participants, as applicable,
and a nationally recognized investment bank selected by the Company or, if such
investment banks are not able to agree, by a third nationally recognized
investment bank selected jointly by the SP Investment Bank and the investment
bank selected by the Company. All fees and expenses of such investment banks
(including the SP Investment Bank) shall be paid by the Company.
"Other Holder Notice" shall have the meaning set forth in Section
2.1(c).
"Person" means an individual or a corporation partnership, limited
liability company, trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Piggy-Back Offering" has the meaning set forth in Section 2.2.
"Registrable Security" means any share of Common Stock issued and
delivered to the Strategic Participants pursuant to the Exchange Agreement,
dated as of June 18, 1997, among the Company and the Strategic Participants,
until (i) it has been disposed of pursuant to the Shelf Registration Statement,
(ii) it is sold under circumstances in which all of the applicable conditions of
Rule 144 (or any similar provisions then in force) under the Securities Act are
met or it may be sold pursuant to Rule 144(k) or (iii) it has been otherwise
transferred, the Company has delivered a new certificate or other evidence of
ownership for it not bearing the legend required pursuant to this Agreement and
it may be resold without subsequent registration under the Securities Act.
"Requisite Share Number" means a number of Registrable Securities
equal, in the case of Aerospatiale, to not less than 2,925,000 shares of Common
Stock and, in the case of Alcatel, to not less than 3,150,000 shares of Common
Stock (as adjusted from time to time to
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<PAGE> 3
reflect stock splits, stock dividends, recapitalizations and similar
transactions), or such lesser number as constitutes all shares of Common Stock
then held by SP Holders in the aggregate.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Shelf Registration" means the registration effected pursuant to
the Shelf Registration Statement.
"Shelf Registration Statement" means the registration statement of
the Company, on Form S-3, filed with the Commission on May 5, 1997 with respect
to the Registrable Securities and other Loral securities (Registration No.
333-26517), and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SP Holders" means the specific Strategic Participant that is
requesting a Demand Offering, together with each of such Strategic Participant's
Transferees, and, as applicable, any of the other Strategic Participant and its
Transferees that decide pursuant to Section 2.1(c) to participate in such Demand
Offering.
"Strategic Participants" shall have the meaning set forth in the
preamble of this Agreement.
"Trading Day" means with respect to any securities exchange or
securities market, each Monday, Tuesday, Wednesday, Thursday and Friday other
than any day on which securities are not traded on the applicable securities
exchange or in the applicable securities market.
"Transferee" means each of a Strategic Participant's successors or
assigns who acquire Registrable Securities, directly or indirectly, from such
Strategic Participant, in each case for so long as such successors or assigns
own any Registrable Securities.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"Withdrawal Election" means a Withdrawal Election as defined in
Section 2.3.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. (a) Shelf Registration. The Company shall use its
reasonable best efforts to keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be usable by
Holders until the earlier of (i) the date as of which the Registrable Securities
shall not constitute restricted securities under Rule 144(k) of the Securities
Act or (ii) the date as of which all the Registrable Securities covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such
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<PAGE> 4
case, such period being called the "Shelf Registration Period"). The Company
shall be deemed not to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if, among other
things, it voluntarily takes any action that would result in Holders of
Registrable Securities covered thereby not to be able to offer and sell such
Registrable Securities during that period, unless such action is (A) required by
applicable law or (B) pursuant to Section 2.1(b) hereof, and in either case, so
long as the Company promptly thereafter complies with the requirements of
Section 3.1(e) hereof, if applicable.
(b) The Company may suspend the use of the Prospectus for a period
not to exceed fifteen (15) days (or such longer period as is reasonably
necessary under the circumstances) in any three (3) month period for valid
business reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, public filings
with the Commission, pending corporate developments and similar events.
(c) Demand for Underwritten Offering. At any time on or after the
date hereof, if a Strategic Participant so requests, the offering of Registrable
Securities pursuant to the Shelf Registration shall be in the form of an
underwritten offering ("Demand Offering"), provided that such Strategic
Participant (or any Transferee to whom such Strategic Participant has
transferred its right to request a Demand Offering), makes such request in
writing on behalf of SP Holders owning, individually or in the aggregate, at
least the Requisite Share Number and provided further that each Strategic
Participant and its Transferees may request a Demand Offering no more than once
in the aggregate. Such written request will specify the number of shares of
Registrable Securities proposed to be sold. The Company shall give written
notice of such request for a Demand Offering within 10 days after the receipt
thereof to all other Strategic Participants and their Transferees. Within 20
days after receipt of such notice by any Strategic Participant and its
Transferees, any of such Holders may request in writing that Registrable
Securities be included in the Demand Offering and the Company shall include in
the Demand Offering the Registrable Securities of any such Holder requested to
be so included. Each such request by such other Holders (each, an "Other Holder
Notice") shall specify the number of shares of Registrable Securities proposed
to be sold. Notwithstanding anything to the contrary herein, unless the
Strategic Participant making the request for a Demand Offering shall consent in
writing, no other party, including the Company, shall be permitted to offer
securities under any such Demand Offering, provided that such consent may not be
unreasonably withheld. In connection with a Demand Offering, a nationally
recognized underwriter selected by the Company and reasonably acceptable to the
Strategic Participant requesting the Demand Offering shall act as the
book-running managing Underwriter and the Company may select one or more
nationally recognized firms of investment bankers to act as co-manager or
managers, if any.
(d) Notice of Demand Offering. Upon receipt of a written request for
a Demand Offering in accordance with Section 2.1(c) and receipt of any Other
Holder Notices, the Company shall be entitled to deliver a notice (a "Purchase
Notice") to the SP Holders requesting inclusion of Registrable Securities in the
Demand Offering within 10 days of the date by which all Other Holder Notices
must have been delivered indicating that the Company intends to purchase all or
some portion of the Registrable Securities to be included in the Demand
Offering. The Purchase Notice shall set forth the number of shares of
Registrable Securities to be
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<PAGE> 5
purchased; provided that, if the Company elects to purchase less than all of the
Registrable Securities to be included in the Demand Offering, the SP Holders
shall be entitled to retain, and not to sell to the Company pursuant to this
Section 2.1(d), a number of such Registrable Securities equal to the Requisite
Share Number. The delivery of the Purchase Notice shall constitute a binding
contract among the Company and the SP Holders seeking to include Registrable
Securities in the Demand Offering to consummate the purchase and sale
transaction contemplated by the Purchase Notice on the terms set forth in this
Section 2.1(d).
(i) The per share purchase price for any such purchase
shall be the Market Price for the Registrable Securities on the
Trading Day immediately preceding the delivery of the written
request for the Demand Offering less the underwriting fees,
discounts and commissions (together, the "Underwriting Spread") that
would have been applicable to such Registrable Securities, taking
into account the contemplated manner of distribution, had such
Registrable Securities been included in the Demand Offering.
(ii) The closing shall be held at 10:00 A.M., local
time, on the earlier of (A) the closing of the Demand Offering and
(B) third Business Day after a determination not to proceed with the
Demand Offering, at the principal office of the Company, or at such
other time or place as the parties mutually agree.
(iii) On the closing date, each selling SP Holder shall
deliver (i) certificates representing the shares being sold, free
and clear of any lien, claim or encumbrance, and (ii) such other
documents, including evidence of ownership and authority, as the
Company may reasonably request. The purchase price shall be paid by
wire transfer of immediately available funds no later than 2:00 P.M.
on the closing date.
SECTION 2.2. Piggy-Back Offering. If at any time the Company, for
its own account or for the account of any of its securityholders, proposes to
offer the Company's Common Stock, par value $.01 per share, in the form of an
underwritten offering (other than with respect to a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by the Commission)
or a registration statement filed in connection with an exchange offer or
offering of securities solely to the Company's existing securityholders), then
the Company shall give written notice of such proposed underwritten offering to
Holders as soon as practicable (but in no event later than the anticipated
filing date), and such notice shall offer such Holders the opportunity to
include in such underwritten offering such number of shares of Registrable
Securities as each such Holder may request (which request shall specify the
number of shares of Registrable Securities intended to be disposed of by such
Holder) (a "Piggy-Back Offering"). The Company shall use its reasonable best
efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Offering to be included on the same terms and
conditions as any similar securities of the Company included therein to permit
the sale or other disposition of such Registrable Securities in accordance with
the intended method of distribution thereof. Notwithstanding the foregoing,
Holders shall not be entitled to a Piggy-
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<PAGE> 6
Back Offering in connection with any underwritten offering granted by the
Company to a third party pursuant to a contractual obligation if the agreement
between such third party and the Company providing for such underwritten
offering prohibits the Company from granting to other Persons the right to
"piggy-back" on to such underwritten offering; provided that in such event, the
Company shall provide Holders notice of such prohibition prior to the
anticipated filing date of such registration so as to permit Holders to seek
permission from such third party to include Registrable Securities in such
underwritten offering.
SECTION 2.3. Reduction of Offering. Notwithstanding anything
contained herein, if the managing Underwriter or Underwriters of an offering
described in Section 2.1(c) or 2.2 deliver a written opinion to the Holders of
the Registrable Securities requesting inclusion in such offering that (i) the
size of the offering that the Holders, the Company and/or such other Persons
intend to make or (ii) the kind of securities that the Holders, the Company
and/or any other Persons intend to include in such offering is such that the
success of the offering would be materially and adversely affected by inclusion
of the Registrable Securities requested to be included, then (A) if the size of
the offering is the basis of such Underwriter's or Underwriters' opinion, the
Company shall not include an amount of Registrable Securities requested to be
included in such offering by all Holders equal to the Excess Amount (such
reduction in connection with a Demand Offering to be allocated, first, pro rata
among Holders requesting inclusion of Registrable Securities in the Demand
Offering pursuant to Other Holder Notices, according to the number of
Registrable Securities requested by such Holders for inclusion, and then, and
only to the extent any portion of the Excess Amount remains unallocated, pro
rata among the remaining Holders requesting inclusion of Registrable Securities
in the Demand Offering); provided that, in the case of a Piggy-Back Offering, if
securities are being offered for the account of other Persons as well as the
Company, then with respect to the Registrable Securities intended to be offered
by Holders, the proportion by which the amount of such class of securities
intended to be offered by Holders is reduced shall not exceed the proportion by
which the amount of such class of securities intended to be offered by such
other Persons is reduced (it being understood that such reduction may be all of
such class of securities); and (B) if the combination of securities to be
offered is the basis of such Underwriter's or Underwriters' opinion, (x) the
Registrable Securities to be included in such offering shall be reduced as
described in clause (A) above (subject to the proviso in clause (A)) or, (y) if
the actions described in clause (B)(x) would, in the judgment of the managing
Underwriter or Underwriters, be insufficient to substantially eliminate the
adverse effect that inclusion of the Registrable Securities requested to be
included would have on such offering, such Registrable Securities will be
excluded from such offering.
If, as a result of the proration provisions of this Section 2.3, any
Holder shall not be entitled to include all Registrable Securities in a Demand
Offering or Piggy-Back Offering that such Holder has requested to be included,
such Holder may elect to withdraw his request to include Registrable Securities
in such offering (a "Withdrawal Election"); provided, however, that a Withdrawal
Election shall be irrevocable and, after making a Withdrawal Election, a Holder
shall no longer have any right to include Registrable Securities in the offering
as to which such Withdrawal Election was made.
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ARTICLE III
DEMAND OFFERING PROCEDURES
SECTION 3.1. In connection with any Demand Offering and any
amendment or supplement to the Shelf Registration Statement relating thereto,
the following provisions shall apply:
(a) The Company shall, prior to filing any amendment or
supplement to the Shelf Registration Statement or Prospectus, furnish to each
Holder, one counsel representing all Holders, and each Underwriter, if any, of
the Securities covered by such Shelf Registration Statement, Prospectus or
amendment or supplement thereto, a copy of such amendment or supplement thereto,
and shall use its reasonable best efforts to reflect in each such amendment or
supplement, when so filed with the Commission, such comments as such Holders may
reasonably propose. The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference). The Company shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within the coverage of the
Shelf Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request.
(b) The Company shall ensure that (i) the Shelf Registration
Statement, and any amendment thereto, and any Prospectus forming part thereof
and any amendment or supplement thereto, complies in all material respects with
the Securities Act, (ii) the Shelf Registration Statement and any amendment
thereto does not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Prospectus forming part of the
Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) The Company shall use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of the Shelf
Registration Statement at the earliest possible time.
(d) The Company will promptly notify each Holder of
Registrable Securities covered by the Shelf Registration Statement of any stop
order issued or threatened by the Commission and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered.
(e) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the
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<PAGE> 8
United States as any Holder reasonably (in light of such Holder's intended plan
of distribution) request and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
in the United States as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition of the Registrable Securities owned by such Holder; provided that
the Company will not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
(f) The Company will immediately notify each Holder of such
Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and promptly make available to each Holder
any such supplement or amendment.
(g) The Company will enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities (the Holders may, at their
option, require that any or all of the representations, warranties and covenants
of the Company to or for the benefit of such Underwriters also be made to and
for the benefit of such Holders).
(h) The Chairman of the Board of Directors of the Company, the
Chief Executive Officer of the Company and other members of the management of
the Company will cooperate fully in any offering of Registrable Securities
hereunder, including, without limitation, participation in meetings with
potential investors and preparation of all materials for such investors.
(i) The Company will deliver promptly to each Holder of such
Registrable Securities and each Underwriter, if any, subject to restrictions
imposed by the United States federal government or any agency or instrumentality
thereof, copies of all correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the Shelf Registration Statement and
make available for inspection by any Holder of such Registrable Securities, any
Underwriter participating in any disposition pursuant to such Shelf Registration
Statement and any attorney, accountant or other professional retained by any
such Holder or Underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), subject to restrictions imposed by any
governmental authority governing access to classified information, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection
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with the Shelf Registration Statement. Records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
the Shelf Registration Statement or (ii) the disclosure or release of such
Records is requested or required pursuant to oral questions, interrogatories,
requests for information or documents or a subpoena or other order from a court
of competent jurisdiction or other process; provided that prior to any
disclosure or release pursuant to clause (ii), the Inspectors shall provide the
Company with prompt notice of any such request or requirement so that the
Company may seek an appropriate protective order or waive such Inspectors'
obligation not to disclose such Records; and provided, further, that if failing
the entry of a protective order or the waiver by the Company permitting the
disclosure or release of such Records, the Inspectors, upon advice of counsel,
are compelled to disclose such Records, the Inspectors may disclose that portion
of the Records which counsel has advised the Inspectors that the Inspectors are
compelled to disclose. Each Holder of such Registrable Securities agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Holder after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
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 is made generally available to the public. Each Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
(j) The Company will furnish to each Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Holder or
Underwriter, 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, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Holders of Registrable Securities included in such offering or the managing
Underwriter therefor reasonably requests.
(k) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings statement
covering a period of 12 months, beginning within three months after the
effective date of the Shelf Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(l) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each national securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange.
(m) The Company shall have appointed a transfer agent and
registrar for all Registrable Securities by the date hereof.
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<PAGE> 10
The Company may require each Holder of Registrable Securities to
promptly furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as the Company may from time to time
reasonably request and such other information as may be legally required in
connection with the Shelf Registration.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3.1(f) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Shelf Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3.1(f)
hereof, and, if so directed by the Company, such Holder will deliver to the
Company all copies, other than permanent file copies then in such Holder's
possession, of the most recent Prospectus at the time of receipt of such notice.
SECTION 3.2. Registration Expenses. In connection with the Shelf
Registration pursuant to Section 2.1(a) hereof, and any registration statement
filed pursuant to Sections 2.1(c) or 2.2 hereof, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), (iii) printing expenses, (iv) the Company's
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities, (vi) fees and disbursements of counsel for the Company and fees and
expenses for 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 requested pursuant to Section 3.1(j) hereof), (vii) the fees and
expenses of any special experts retained by the Company in connection with such
registration, and (viii) reasonable fees and expenses of one counsel (who shall
be reasonably acceptable to the Company) for the Holders. The Company shall have
no obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, or any out-of-pocket
expenses of the Holders (or the agents who manage their accounts).
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder of Registrable Securities, its officers,
directors and agents, and each Person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any loss, claim, damage or liability and any action in
respect thereof to which such Holder, its officers, directors and agents, and
any such controlling Person may become subject under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the Company
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<PAGE> 11
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or arises out of, or is based upon, any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse each Holder, its
officers, directors and agents, and each such controlling Person for any legal
and other expenses reasonably incurred by that Holder, its officers, directors
and agents, or any such controlling person in investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action.
The Company also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Holders provided in this Section 4.1.
SECTION 4.2. Indemnification by Holders of Registrable Securities.
Each Holder agrees, severally but not jointly, to indemnify and hold harmless
the Company, its officers, directors and agents and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Holder, but only with reference to information related
to such Holder furnished in writing by such Holder or on such Holder's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its officers, directors or agents or any such controlling
Person, in respect of which indemnity may be sought against such Holder, such
Holder shall have the rights and duties given to the Company, and the Company or
its officers, directors or agents or such controlling Person shall have the
rights and duties given to such Holder, by the preceding paragraph. Each Holder
also agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Company provided in this Section 4.2.
SECTION 4.3. Conduct of Indemnification Proceedings. Promptly after
receipt by any person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the person against whom such indemnity may be
sought (an "Indemnifying Party") notify the Indemnifying Party in writing of the
claim or the commencement of such action provided that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
an Indemnified Party otherwise than under Section 4.1 or 4.2 and except to the
extent of any actual prejudice resulting therefrom. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
have the right to employ separate counsel to represent
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<PAGE> 12
the Indemnified Party and its controlling Persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
such Indemnified Party representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding.
SECTION 4.4. Contribution. If the indemnification provided for in
this Article 4 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Company and
the Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Holders on the one hand and the Underwriters on the other from
the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Company and the
Holders on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and each Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
each Holder in connection with such statements or omissions, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Holders on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
the Holders on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Holders
or by the Underwriters. The relative fault of the Company on the one hand and of
each Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the
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<PAGE> 13
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and no Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such Holder were offered to the public (less
underwriting discounts and commissions) exceeds the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Each Holder's obligations to
contribute pursuant to this Section 4.4 are several in proportion to the
proceeds of the offering received by such Holder bears to the total proceeds of
the offering received by all the Holders and not joint.
ARTICLE V
CERTAIN AGREEMENTS
SECTION 5.1. Participation in Underwritten Registrations. No Holder
may participate in any underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
Registration Rights; provided that (i) any Holder participating in such
registration will not be required to make any representations or warranties
except those which relate solely to such Holder and its intended method of
distribution and (ii) the liability of each such Holder to any Underwriter under
such underwriting agreement will be limited to liability arising from
misstatements or omissions regarding such Holder and its intended method of
distribution and any such liability shall not exceed an amount equal to the
amount of net proceeds such Holder derives from such registration. The Company
shall take all reasonable steps to ensure that the shares of Registrable
Securities sold in any underwritten public offering shall be widely
disseminated.
SECTION 5.2. Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 or Rule 144A under the
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<PAGE> 14
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 5.3. Holdback Agreements. To the extent not inconsistent
with applicable law, each Holder of Registrable Securities agrees not to effect
any sale or distribution of the issue being registered or of a similar security
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 or Rule
144A under the Securities Act, during the l4 days prior to, and during the
90-day period beginning on, the effective date of the registration statement
filed by the Company (except as part of such registration) if, and to the
extent, requested by the managing Underwriter or Underwriters in the case of any
underwritten public offering.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Legends. (a) Subject to Section 6.1(b), each
certificate evidencing Common Stock that is issued to any Holder shall bear a
legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND
SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
(b) If any Common Stock shall be transferred pursuant to an
effective registration statement or Rule 144 (or any similar rule then in
effect) under the Securities Act, or if in the opinion of the Company the Common
Stock shall otherwise not be subject to any restrictions on transfer under the
Securities Act, the Company shall, upon the written request of any Holder, issue
to such Holder a new certificate evidencing such Common Stock without the legend
set forth above endorsed thereon.
SECTION 6.2. Remedies. The Company and the Strategic Participants
acknowledge and agree that in the event of any breach of this Agreement by any
one of them, the Company or the appropriate Strategic Participants, as the case
may be, would be irreparably harmed and could not be made whole by monetary
damages. The Company and the Strategic Participants accordingly agree (i) to
waive the defense in any action for specific performance that a remedy at law
would be adequate, and (ii) that the Company and the Strategic Participants, in
addition to any other remedy to which they may be entitled at law or in equity,
shall be entitled to compel specific performance of this Agreement in any action
instituted in the United States District Court for the Southern District of New
York, or, in the event said Court would not have jurisdiction for such action,
in any court of the United States or any state thereof having subject matter
jurisdiction for such action. The Company and the Strategic Participants consent
to non-
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<PAGE> 15
exclusive personal jurisdiction in any such action brought in the United
States District Court of the Southern District of New York, or any such other
court.
SECTION 6.3. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, and their respective
successors and assigns; provided that neither this Agreement nor any rights or
obligations hereunder may be transferred or assigned by the Company.
SECTION 6.4. No Waivers; Amendments. (a) No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended, modified or
supplemented other than by a written instrument signed by each party hereto.
(c) Any provision of this Agreement may be waived if, but only
if, such waiver is in writing and is signed by the party against whom the
enforcement of such waiver is sought.
SECTION 6.5. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address or telecopier number
set forth below, or such other address or telecopier number as such party may
hereinafter specify for the purpose to the party giving such notice. Each such
notice, request or other communication shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate answerback, if applicable, is received or (ii)
if given by any other means, when delivered at the address specified in this
Section 6.5.
Notices to the Company shall be addressed to Loral Space &
Communications Ltd., 600 Third Avenue, New York, New York 10016, Attention: Eric
J. Zahler, Vice President, General Counsel and Secretary (telecopier no. (212)
682-9805) with a copy thereof to Willkie Farr & Gallagher, One Citicorp Center,
153 East 53rd Street, New York, New York 10022-4669, Attention: Bruce Kraus,
Esq. (telecopier no. (212) 821-8111); notices to Aerospatiale shall be addressed
to Aerospatiale SNI, 59, Route de Verneuil BP 96, 78133 Les Mureaux Cedex,
France, Attention: Michel Delaye (telecopier no. 011-331-34-74-95-33), with a
copy thereof (which shall not constitute notice) to Aerospatiale SNI, c/o
Management Liaison Committee, Space Systems/Loral, Inc., 3825 Fabian Way, M.S.E.
49, Palo Alto, CA 94303-4697, Attention: Gerard Barkats (telecopier no. (415)
842-7389), and with a copy thereof (which shall not constitute notice) to Hogan
& Hartson L.L.P., Columbia Square, 555 13th Street, N.W., Washington, D.C.
20004-1109, Attention: Mark E. Mazo, Esq. (telecopier no. (202) 637-5910); and
notices to Alcatel shall be addressed to Alcatel Espace, 5, rue Noel Pons, 92737
Nanterre Cedex, France, Attention: Pierre de Bayser (telecopier no.
011-331-46-52-64-60), with a copy thereof (which shall not constitute notice) to
Alcatel N.V. 33, Rue Emeriau, 75015 Paris Cedex, France,
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<PAGE> 16
Attention: Marc Jany, Esq. (telecopier no. 011-331-40-58-59-31, and with a copy
thereof (which shall not constitute notice) to Hogan & Hartson L.L.P., as
detailed above.
SECTION 6.6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 6.7. Section Headings. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
SECTION 6.8. Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, written or oral, relating to the subject
matter hereof.
SECTION 6.9. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
SECTION 6.10. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Michael B. Targoff
--------------------------------------------
Name: Michael B. Targoff
Title: President and Chief Operating Officer
AEROSPATIALE SNI
By: /s/ Michel Delaye
--------------------------------------------
Name: Michel Delaye
Title: Le Directeur, Aerospatial Espace &
Defense
ALCATEL ESPACE
By: /s/ Jean Claude Husson
--------------------------------------------
Name: Jean Claude Husson
Title: President and CEO
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<PAGE> 1
EXHIBIT 10.4
LORAL SPACE & COMMUNICATIONS LTD.
$400,000,000
6% Convertible Preferred Equivalent Obligations
due 2006
REGISTRATION RIGHTS AGREEMENT
New York, New York
March 31, 1997
Finmeccanica S.p.A.
Piazza Monte Grappa 4
00195 Rome
ITALY
Aerospatiale Societe
Nationale Industrielle
100 BD Du Midi
Cannes La Bocca Cedex
FRANCE
Alcatel Espace
11 Avenue Dubonnet
924047 Courbevoie Cedex
FRANCE
and such other Initial Purchasers
who execute this Agreement
Dear Sirs:
Loral Space & Communications Ltd., a Bermuda company (the
"Company"), proposes to issue and sell to Finmeccanica S.p.A. ("Finmeccanica"),
Alcatel Espace ("Alcatel"), Aerospatiale Societe Nationale Industrielle
("Aerospatiale") and such other initial purchasers as the Company shall
designate from time to time (the "Initial Purchasers"), up to $400,000,000
aggregate principal amount of its 6% Convertible Preferred Equivalent
Obligations due 2006 (the "CPEOs"). The CPEOs will be convertible into shares of
Common Stock, $.01 par value per share, of the Company (the "Common Stock") at
the conversion price set forth therein and, upon receipt of shareholder
approval, be mandatorily exchangeable for shares of the Company's 6% Series C
Convertible Redeemable Preferred Stock, par value
<PAGE> 2
2
$.01 per share (the "Preferred Shares"), having an aggregate liquidation
preference equal to the aggregate principal amount of the CPEOs outstanding at
the time of such exchange. For purposes of this Agreement, the term "Securities"
shall refer to the CPEOs until and unless shareholder approval shall have been
secured for the issuance of the Preferred Shares, in which case, upon the
issuance of the Preferred Shares in exchange for the CPEOs, the term
"Securities" shall refer to such Preferred Shares.
The CPEOs will be issued and sold to Finmeccanica upon the
terms set forth in the Transaction Agreement dated as of March 20, 1997, between
the Company and Finmeccanica, and to such other Initial Purchasers upon the
terms set forth in such other agreements as may be entered into from time to
time between the Company and each of the Initial Purchasers (collectively the
"Purchase Agreements"), each of which constituting a separate agreement
enforceable by the parties thereto independently of the terms of any other
Purchase Agreement. In satisfaction of a condition to the obligations of each
Initial Purchaser under any Purchase Agreement to which it is a party, the
Company agrees with each Initial Purchaser (i) for the benefit of each Initial
Purchaser and (ii) for the benefit of any subsequent holders of the Securities
or the shares of Common Stock issuable upon conversion of the Securities
(including any Initial Purchaser) from time to time until such time as such
Securities shall no longer constitute restricted securities pursuant to Rule
144(k) of the Securities Act (as defined herein) or all such Securities and
shares of Common Stock issued upon conversion of such Securities have been sold
pursuant to the Shelf Registration Statement (as defined below) (each of the
foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as from time to time
amended, and the rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to
<PAGE> 3
3
the foregoing.
"Commission" means the Securities and Exchange Commission.
"CPEOs" has the meaning set forth in the preamble hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
from time to time amended, and the rules and regulations of the Commission
promulgated thereunder.
"Holder" has the meaning set forth in the preamble hereto.
"Incorporated Document" means filings made by the Company with
the Commission pursuant to Section 13, 14 or 15 of the Exchange Act.
"Indenture" means the indenture, dated as of February 1, 1997,
relating to the CPEOs between the Company and The Bank of New York, as trustee,
as the same may be amended from time to time in accordance with the terms
thereof.
"Majority Holders" means the Holders of a majority of the
aggregate principal amount or liquidation preference, as the case may be, of
Securities registered under a Shelf Registration Statement; provided, however,
that Holders of Common Stock issued upon conversion of Securities shall be
deemed to be Holders of the aggregate principal amount or liquidation
preference, as the case may be, of Securities from which such Common Stock was
converted.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering of the securities covered by the Shelf Registration Statement.
"Preferred Shares" has the meaning set forth in the preamble
hereto.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Securities or Common Stock issuable upon conversion thereof
covered by such Shelf Registration Statement, and all amendments and supplements
to the Prospectus, including post-effective amendments.
<PAGE> 4
4
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration Period" has the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 2 hereof which
covers some or all of the Securities and the Common Stock issuable upon
conversion thereof, as applicable, on an appropriate form under Rule 415 under
the Act or any similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" means the trustee with respect to the Securities
under the Indenture.
"underwriter" means any underwriter of Securities or Common
Stock issuable upon conversion thereof in connection with an offering thereof
under a Shelf Registration Statement.
2. Shelf Registration; Suspension of Use of Prospectus.
(a) The Company shall prepare and, not later than May 5, 1997,
shall file with the Commission and shall use its reasonable best efforts to
cause to be declared effective under the Act thereafter, but no later than July
4, 1997, a Shelf Registration Statement relating to the offer and sale of the
Securities and the shares of Common Stock issuable upon conversion thereof by
the Holders from time to time in accordance with the methods of distribution
elected by such Holders and set forth in such Shelf Registration Statement. In
furtherance of the foregoing, it is hereby acknowledged and agreed that upon the
issuance of the Preferred Shares upon mandatory exchange as provided in the
Indenture or upon sale pursuant to a Purchase Agreement, the Company shall take
such steps as may be appropriate to ensure that any then current Shelf
Registration Statement is amended, or a new Shelf Registration Statement is
filed and promptly declared effective in accordance with the time limits in the
first sentence of this Section 2(a), such that the Preferred Shares may be
offered and sold by the Holders thereof from time to time to the same extent as
the CPEOs immediately prior to such mandatory exchange. The sole and exclusive
remedy available to the Holders in the event that a Shelf Registration Statement
is not filed or declared
<PAGE> 5
5
effective within the time periods specified in this Section 2(a) is the
collection of additional interest or dividends, as the case may be, in
accordance with the terms of the Securities.
(b) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders until such date as of
which neither the Securities nor the shares of Common Stock issuable upon
conversion thereof shall constitute restricted securities under Rule 144(k) of
the Securities Act or until all the Securities and the shares of Common Stock
issuable upon conversion thereof covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement (in any such case,
such period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of securities covered thereby not
to be able to offer and sell such securities during that period, unless such
action is (i) required by applicable law or (ii) pursuant to Section 2(c)
hereof, and, in either case, so long as the Company promptly thereafter complies
with the requirements of Section 3(i) hereof, if applicable.
(c) The Company may suspend the use of the Prospectus for a
period not to exceed 15 days (or such longer period as is reasonably necessary
under the circumstances) in any three month period for valid business reasons
(not including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, public filings with the Commission,
pending corporate developments and similar events.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of any Shelf
Registration Statement, and each amendment thereof and each amendment
or supplement, if any, to the Prospectus included therein and shall use
its best efforts to reflect in each such document, when so filed with
the Commission, such comments as the Initial Purchasers reasonably may
propose; provided, however, that the Company shall be required only to
furnish an Incorporated Document to any Initial Purchaser as promptly
as practicable following its filing with the Commission.
<PAGE> 6
6
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto complies in all
material respects with the Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(c) (1) The Company shall advise the Initial Purchasers and
the Holders and, if requested by any such Initial Purchaser or any such
Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise the Initial Purchasers and the
Holders (and, if requested by any such Initial Purchaser or any such
Holder, confirm such advice in writing):
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included in any Shelf
Registration Statement for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
and
(iii) of the suspension of the use of the Prospectus
pursuant to Section 2(c) hereof or of
<PAGE> 7
7
the happening of any event that requires the making of any
changes in the Shelf Registration Statement or the Prospectus
so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading
(which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes
have been made); provided that such notice shall not be
required to specify the nature of the event giving rise to the
notice requirement hereunder.
(d) The Company shall use its reasonable best efforts to
obtain the withdrawal of any order suspending the effectiveness of any
Shelf Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale
of the securities covered by the Prospectus or any amendment or
supplement thereto.
(g) Prior to any offering of securities pursuant to any Shelf
Registration Statement, the Company shall register or qualify or
cooperate with the Holders of securities included therein and their
respective counsel in connection with the registration or qualification
of such securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in
writing and do any and all other acts or things reasonably necessary or
advisable to enable the offer
<PAGE> 8
8
and sale in such jurisdictions of the securities covered by such Shelf
Registration Statement; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action which would subject
it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders of Securities
or the shares of Common Stock issued upon conversion thereof to
facilitate the timely preparation and delivery of certificates
representing Securities or the Common Stock issued upon conversion
thereof to be sold pursuant to any Shelf Registration Statement free of
any restrictive legends and in such denominations and registered in
such names as Holders may request prior to sales of securities pursuant
to such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall, if required pursuant to the Act
or paragraph (c)(2)(iii) above, as promptly as practicable prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(j) Not later than the effective date of any Shelf
Registration Statement hereunder, the Company shall provide a CUSIP
number for the Securities registered under such Shelf Registration
Statement, and provide the Trustee or transfer agent, as the case may
be, with printed certificates for such Securities, in a form eligible
for deposit with The Depository Trust Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders as soon as practicable
after the effective date of the applicable Shelf Registration Statement
an earnings statement satisfying the provisions of Section 11(a) of the
Act.
(1) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act in a timely
<PAGE> 9
9
manner.
(m) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such securities as the Company may from time to time reasonably require
for inclusion in such Shelf Registration Statement. Any Holder who
fails to provide such information shall not be entitled to use the
Prospectus.
(n) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters,
if any, and Majority Holders reasonably agree should be included
therein and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(o) The Company shall enter into such agreements (including
underwriting agreements) and take all other appropriate actions in
order to expedite or facilitate the registration or the disposition of
the Securities or the shares of Common Stock issuable upon conversion
thereof, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 5 (or such
other provisions and procedures acceptable to the Majority Holders and
the Managing Underwriters, if any), with respect to all parties to be
indemnified pursuant to Section 5 by Holders of Securities or the
Common Stock issuable upon conversion thereof to the Company, it being
understood that all underwriting discounts and commissions, and all
other underwriting fees, associated with such agreement in connection
with such offering of the Securities and shares of Common Stock
issuable upon conversion thereof shall, except as otherwise expressly
agreed herein (including those expenses covered by Section 4), be for
the account of the Holders or the underwriters.
(p) The Company shall (i) make reasonably available for
inspection by any Managing Underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by the majority in principal amount
or liquidation preference, as the case may be, of Holders of securities
to be registered thereunder or
<PAGE> 10
10
by any such Managing Underwriter, all relevant financial and other
records, pertinent corporate documents and properties of the Company
and its subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
any such Managing Underwriter, attorney, accountant or agent in
connection with such Shelf Registration Statement as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information
shall be kept confidential by any such Managing Underwriter, attorney,
accountant or agent, unless disclosure thereof is made in connection
with a court proceeding or required by law, or such information has
become available (not in violation of this agreement) to the public
generally or through a third party without an accompanying obligation
of confidentiality; (iii) make such representations and warranties to
the Holders of securities registered thereunder and the underwriters,
if any, in form, substance and scope as are customarily made by issuers
to underwriters in primary underwritten offerings; (iv) obtain opinions
of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by Holders
representing a majority by principal amount or number of shares, as the
case may be, of the securities covered by such Shelf Registration
Statement and by such Managing Underwriters; (v) obtain "cold comfort"
letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, use its reasonable best
efforts to retain any other independent certified public accountants of
any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data are, or are
required to be, included in the Shelf Registration Statement),
addressed to each selling Holder of securities registered thereunder
and the underwriters, if any, in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection
with primary underwritten offerings; and (vi) deliver such documents
and certificates as may be reasonably requested by the Majority Holders
and the Managing Underwriters, if any, including those to evidence
compliance with Section 3(i) and with any customary conditions
contained in the
<PAGE> 11
11
underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 3(p) shall be performed at (A) the effectiveness of such
Shelf Registration Statement and each post-effective amendment thereto
and (B) each closing under any underwriting or similar agreement as and
to the extent required thereunder.
4. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of the Company's obligations under
Sections 2 and 3 hereof and shall reimburse the Holders for the reasonable and
duly documented fees and disbursements of (i) counsel designated by the Majority
Holders to act as counsel for the Holders in connection therewith so long as
such counsel is the same counsel as designated by the Majority Holders under the
Registration Statement, dated as of November 6, 1996, among the Company and the
Purchasers named therein or (ii) in the absence of such selection of counsel by
either of the Majority Holders or the Majority Holders under the Registration
Statement dated as of November 6, 1996, referred to in clause (i), one firm
designated by the underwriters to act as counsel for the Holders in connection
therewith. It is understood, however, that except as provided in this Section,
the Holders shall pay all their own costs and expenses, including stock transfer
taxes due upon resale by them of any of the securities covered by a Shelf
Registration Statement and any advertising expenses incurred in connection with
any offers and sales they make.
5. Indemnification and Contribution. (a) In connection with
any Shelf Registration Statement, the Company agrees to indemnify and hold
harmless each Holder of securities covered thereby (including each Initial
Purchaser), the directors, officers, employees and agents of each such Holder
and each person who controls any such Holder within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such
<PAGE> 12
12
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that (i) the Company will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such Holder or underwriter or Managing Underwriter specifically
for inclusion therein, (ii) the Company shall not be liable to any indemnified
party under this indemnity agreement with respect to any Shelf Registration
Statement or Prospectus to the extent that any such loss, claim, damage or
liability of such indemnified party results solely from an untrue statement of a
material fact contained in, or the omission of a material fact from, the Shelf
Registration Statement or Prospectus which untrue statement or omission was
corrected in an amended or supplemented Shelf Registration Statement or
Prospectus, if the person alleging such loss, claim, damage or liability was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the amended or supplemented Shelf Registration Statement or Prospectus if the
Company had previously furnished copies thereof to such indemnified party and if
such delivery of a prospectus is finally judicially determined to be required by
the Act and was not so made and (iii) the Company will not be liable to any
indemnified party under this indemnity agreement with respect to any Shelf
Registration Statement or Prospectus to the extent that any such loss, claim,
damage or liability of such indemnified party results (a) from the use of a
Shelf Registration Statement during a period when a stop order has been issued
in respect thereof or any proceedings for that purpose have been initiated or
(b) from the use of the Prospectus during a period when the use of the
Prospectus has been suspended in accordance with Section 3(c)(2)(iii) hereof,
provided, in each case, that Holders received prior notice of such stop order,
initiation of proceedings or suspension. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses,
as provided in Section 5(d), of any underwriters of Securities or the shares of
Common Stock issued upon conversion thereof registered under a Shelf
Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 5(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
hereof.
<PAGE> 13
13
(b) Each Holder of securities covered by a Shelf Registration
Statement (including each Initial Purchaser) severally agrees to indemnify and
hold harmless (i) the Company, (ii) each of its directors, (iii) each of its
officers who signs such Shelf Registration Statement and (iv) each person who
controls the Company within the meaning of either the Act or the Exchange Act to
the same extent as the foregoing indemnity from the Company to each such Holder,
but only with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 5, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
<PAGE> 14
14
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, which consent
shall not be unreasonably withheld, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the issuance and sale of any
Securities contemplated in any Purchase Agreement and the Shelf Registration
Statement which resulted in such Losses; provided, however, that in no case
shall any Initial Purchaser be responsible, in the aggregate, for any amount in
excess of the purchase price applicable to such Securities, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the securities purchased by such underwriter under
the Shelf Registration Statement which resulted in such Losses. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net value of the interest in Space Systems/Loral, Inc. it received in
exchange for the
<PAGE> 15
15
Securities (before deducting expenses). Benefits received by the Holders
(including the Initial Purchasers) shall be deemed to be equal to the value such
Holders realize by receiving Securities or the shares of Common Stock issuable
upon conversion thereof registered under the Act. Benefits received by any
underwriter shall be deemed to be equal to the total underwriting discounts and
commissions, as set forth on the cover page of the Prospectus forming a part of
the Shelf Registration Statement which resulted in such Losses. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Shelf
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons referred
to in Section 5 hereof, and will survive the sale by a Holder of securities
covered by a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders herein or otherwise
conflicts with the provisions hereof.
(b) Additional Initial Purchasers. This Agreement shall become
effective upon its execution by the Company and Finmeccanica. The
parties hereto
<PAGE> 16
16
acknowledge and agree that any Initial Purchaser, in addition to
Finmeccanica, who enters into a Purchase Agreement with the Company and
executes a counterpart to this Agreement after the date hereof shall
become a party to and a Holder under this Agreement and be bound by its
terms and be able to enforce its rights as a Holder hereunder. Each
such counterpart to this Agreement shall become effective with respect
to such Initial Purchaser upon its execution by such Initial Purchaser,
and it shall not require the signature or the consent of any other
person who at the time is a party hereto.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of the Holders of at least a
majority of the then outstanding aggregate principal amount or
liquidation preference, as the case may be, of Securities or the shares
of Common Stock issued upon conversion thereof; provided that, with
respect to any matter that directly or indirectly affects the rights of
any Initial Purchaser hereunder, the Company shall obtain the written
consent of such Initial Purchaser or Initial Purchasers against which
such amendment, qualification, supplement, waiver or consent is to be
effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof
with respect to a matter that relates exclusively to the rights of
Holders whose securities are being sold pursuant to a Shelf
Registration Statement and that does not directly or indirectly affect
the rights of other Holders may be given by the Majority Holders,
determined on the basis of securities being sold rather than registered
under such Shelf Registration Statement.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier, or air courier guaranteeing overnight
delivery:
(1) if to a Holder other than any Initial Purchaser,
at the most current address given by such holder to the
Company in accordance with the provisions of this Section
6(c), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under
the Indenture;
<PAGE> 17
17
(2) if to any Initial Purchaser, initially at the
addresses set forth in Schedule I attached hereto:
(3) if to the Company, initially at its address set
forth below:
Loral Space & Communications Ltd.
600 Third Avenue
New York, NY l00l6
All such notices and communications shall be deemed to have
been duly given when received.
Any Initial Purchaser or the Company by notice to the other
may designate additional or different addresses for subsequent notices
or communications.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including, without the need for an express assignment or
any consent by the Company thereto, subsequent Holders of Securities or
the shares of Common Stock issuable upon conversion thereof. The
Company hereby agrees to extend the benefits of this Agreement to any
Holder of Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(f) Counterparts. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(g) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(h) Governing Law. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof
shall not be in any way
<PAGE> 18
18
impaired or affected thereby, it being intended that all of the rights
and privileges of the parties shall be enforceable to the fullest
extent permitted by law.
(j) Securities Held by the Company, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount or
liquidation preference, as the case may be, of Securities or the shares
of Common Stock issued upon conversion thereof is required hereunder,
Securities or the shares of Common Stock issued upon conversion thereof
held by the Company or its Affiliates (other than subsequent Holders of
Securities or the shares of Common Stock issued upon conversion thereof
if such subsequent Holders are deemed to be Affiliates solely by reason
of their holdings of such Securities or shares of Common Stock issued
upon conversion thereof) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage.
<PAGE> 19
19
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
LORAL SPACE & COMMUNICATIONS LTD.,
by
/s/ Eric J. Zahler
------------------
Name: Eric J. Zahler
Title: Vice President &
Secretary
Accepted in New York, New York
March 31, 1997
FINMECCANICA S.p.A.
by
/s/ Christopher M. Wells
------------------------
Name: Christopher M. Wells
Title: Attorney-in-Fact
<PAGE> 20
20
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
LORAL SPACE & COMMUNICATIONS LTD.,
by
/s/ Michael B. Targoff
----------------------
Name: Michael B. Targoff
Title: President & COO
Accepted in New York, New York
June 23, 1997
AEROSPATIALE SNI
by /s/ Michel Delaye
-----------------
Name: Michel Delaye
Title: Le Directeur, Aerospatiale
Espace & Defense
<PAGE> 21
21
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
LORAL SPACE & COMMUNICATIONS LTD.,
by
/s/ Michael B. Targoff
----------------------
Name: Michael B. Targoff
Title: President & COO
Accepted in New York, New York
June 23, 1997
ALCATEL ESPACE
by /s/ Jean Claude Husson
----------------------
Name: Jean Claude Husson
Title: President and CEO
<PAGE> 22
SCHEDULE I
Finmeccanica S.p.A.
Piazza Monte Grappa 4
00195 Rome
ITALY
Aerospatiale Societe
Nationale Industrielle
100 BD Du Midi
Cannes La Bocca Cedex
FRANCE
Alcatel Espace
11 Avenue Dubonnet
924047 Courbevoie Cedex
FRANCE
<PAGE> 1
EXHIBIT 10.5
[EXECUTION COPY]
TRANSACTION AGREEMENT
between
LORAL SPACE & COMMUNICATIONS LTD.
and
ALENIA INC.
Dated as of March 20, 1997
<PAGE> 2
TRANSACTION AGREEMENT
TRANSACTION AGREEMENT dated as of March 20, 1997 (this
"Agreement") between LORAL SPACE & COMMUNICATIONS LTD., a company organized
under the laws of Bermuda ("Loral"), and ALENIA INC., a corporation organized
under the laws of the State of Delaware ("Alenia").
W I T N E S S E T H :
WHEREAS, pursuant to the Amended and Restated Agreement of
Limited Partnership of Loral/QUALCOMM Satellite Services, L.P. ("LQSS") dated as
of March 23, 1994 (the "Partnership Agreement"), Alenia (as successor by merger
to Alenia Spazio USA, Inc.) is a limited partner in LQSS owning 1,800,000
partnership interests (the "Partnership Interests");
WHEREAS, Loral and Alenia have agreed that Alenia will
transfer to Loral such number of the Partnership Interests as set forth in this
Agreement in exchange for $80 million;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. THE TRANSACTION
1.1. Transaction. At the Closing described in Section 1.3
below, Alenia agrees to transfer to Loral such number of Partnership Interests
(the "Transferred Partnership Interests") that when multiplied by the
Transaction Price per Partnership Interest will equal $80 million, and, in
exchange therefor, Loral agrees to transfer to Alenia $80 million in cash (the
"Purchase Price").
1.2. Certain Definitions. The following terms shall have the
following meanings for purposes of this Agreement:
"Adjustment Amount" shall mean the difference obtained by
subtracting (i) the average of the GTL Stock Price on each of the three trading
days after the GTL Rights Record Date from (ii) the average of the GTL Stock
Price on each of the two trading days prior to the GTL Rights Record Date and on
the GTL Rights Record Date.
<PAGE> 3
"GTL" shall mean Globalstar Telecommunications Limited, a
Bermuda company.
"GTL Common Stock" shall mean the common stock of GTL, par
value $1.00 per share.
"GTL Rights Offering" shall mean the distribution to the
public shareholders of the GTL Common Stock of subscription rights to purchase
one share of GTL Common Stock at a subscription price of $26.50 per share for
each 8.84042 shares held.
"GTL Rights Record Date" shall mean March 24, 1997, which is
the record date established by GTL for the GTL Rights Offering.
"GTL Stock Price" shall mean, with respect to any trading day,
the average of the high and low sales price for GTL Common Stock on such day on
the NASDAQ National Market.
"Transaction Price" per Partnership Interest shall mean 86% of
the difference between (A) $62.50 and (B) the Adjustment Amount.
1.3. Closing. The closing ("Closing") of the transaction
contemplated by Section 1.1 (the "Transaction") shall occur at the offices of
Loral, 600 Third Avenue, New York, New York 10016 or such other place upon which
the parties may agree on such date as Loral shall elect, but in no event later
than April 15, 1997, or upon such other date after April 15, 1997 on which the
parties may agree (the "Closing Date"). Loral shall notify Alenia in writing of
the Closing Date at least three business days prior thereto. At the Closing, (a)
Loral shall deliver to Alenia, the Purchase Price by wire transfer of
immediately available funds to the account of Alenia designated by Alenia's
written instructions delivered at least two full business days prior to the
Closing Date, and (b) Alenia shall deliver to Loral any outstanding certificates
representing the Transferred Partnership Interests, duly endorsed in blank for
transfer or accompanied by appropriate transfer powers duly executed in blank
and Schedule A to the Partnership Agreement shall be amended to reflect the
Transaction.
2. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Loral. Loral represents
and warrants to Alenia as follows:
-2-
<PAGE> 4
2.1.1. Organization. Loral is a company duly organized and
validly existing under the laws of the Islands of Bermuda and has all requisite
corporate power and authority to own its properties and assets and to conduct
its business as now conducted.
2.1.2. Authorization and Validity of Agreement. Loral has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Loral's obligations hereunder have been duly authorized by the Board of
Directors of Loral, and no other corporate proceedings on the part of Loral are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by Loral and is the legal, valid and binding obligation
of Loral.
2.1.3. No Conflict or Violation. The execution, delivery and
performance by Loral of this Agreement do not and will not violate or conflict
with any provision of the charter documents or bye-laws of Loral, and do not and
will not violate any provision of any agreement or instrument to which Loral is
a party or by which it is bound, or any order, judgment or decree of any court
or other governmental or regulatory authority to which Loral is subject. Loral
has given notice to the other partners of LQSS on behalf of Alenia as required
by Section 10.03 of the Partnership Agreement in connection with the Transaction
and the Transaction does not violate Section 10.03 of the Partnership Agreement.
2.1.4. Consent of LQSS General Partner. Loral/QUALCOMM
Partnership, L.P., as the general partner of LQSS, has consented to the
Transaction and to the admittance of Loral as a substituted limited partner in
LQSS upon completion of the Transaction.
2.1.5. GTL Rights Record Date. Loral has caused GTL to file a
Registration Statement on Form S-3 with the Securities and Exchange Commission
with respect to the GTL Rights Offering. The staff of the Securities and
Exchange Commission has informed Loral and GTL that it has no further comments
with respect to such registration statement, and GTL has set March 24, 1997 as
the GTL Rights Record Date.
2.2. Representations and Warranties of Alenia. Alenia
represents and warrants to Loral as follows:
-3-
<PAGE> 5
2.2.1. Organization. Alenia is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted.
2.2.2. Authorization and Validity of Agreement. Alenia has the
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement and the performance of Alenia's
obligations hereunder have been duly authorized by the Board of Directors of
Alenia, and no other corporate or other proceedings on the part of Alenia are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by Alenia and is the legal, valid and binding obligation
of Alenia.
2.2.3. No Conflict or Violation. The execution, delivery and
performance by Alenia of this Agreement do not and will not violate or conflict
with any provision of the charter documents or by-laws of Alenia, and do not and
will not violate any provision of any agreement or instrument to which Alenia is
a party or by which it is bound, or any order, judgment or decree of any court
or other governmental or regulatory authority to which Alenia is subject.
2.2.4. Title to Transferred Partnership Interests. Alenia
holds good and valid title to the Transferred Partnership Interests, which
interests are owned by Alenia free and clear of any lien or other right or
claim, and when such interests are acquired by Loral in accordance with the
terms of this Agreement, Loral will acquire good and valid title to such
interests free of any lien or other right or claim.
3. CONDITIONS TO CLOSING
3.1. Conditions to the Closing.
3.1.1. Conditions to Obligations of Alenia. The obligations of
Alenia to consummate the Transaction are subject to the satisfaction or waiver,
at or prior to the Closing Date, of the following conditions:
(a) the representations and warranties of Loral contained
herein shall be true and correct in all
-4-
<PAGE> 6
material respects on and as of the Closing Date as if made on and as of
such date;
(b) Loral shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed
or complied with by it on or prior to the Closing Date; and
(c) Alenia shall have received a certificate signed by an
executive officer of Loral to the effect that the conditions set forth
in paragraphs (a) and (b) above have been satisfied.
3.1.2. Conditions to Obligations of Loral. The obligation of
Loral to consummate the Transaction are subject to the satisfaction or waiver,
at or prior to the Closing Date, of the following conditions:
(a) the representations and warranties of Alenia contained
herein shall be true and correct in all material respects on and as of
the Closing Date as if made on and as of such date;
(b) Alenia shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed
or complied with by it on or prior to the Closing Date; and
(c) Loral shall have received a certificate signed by and
executive officer of Alenia to the effect that the conditions set forth
in paragraphs (a) and (b) above have been satisfied.
3.1.3. Conditions to Obligations of Loral and Alenia. The
obligations of Loral and Alenia to consummate the Transaction are subject to the
satisfaction or waiver, at or prior to the Closing Date, of the following
conditions:
(a) all consents, waivers, authorizations and approvals of any
governmental or regulatory authority required in connection with the
execution, delivery and performance of this Agreement shall have been
duly obtained and in full force and effect; and
(b) the Transactions shall not be prohibited by any applicable
law, court order or governmental regulation.
-5-
<PAGE> 7
4. MISCELLANEOUS
4.1. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
4.2. No Waivers; Amendments.
4.2.1. No failure or delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
4.2.2. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
each party hereto.
4.3. Survival of Provisions. The representations and
warranties, covenants and agreements contained in this Agreement shall survive
and remain in full force and effect, regardless of any investigation made by or
on behalf of Alenia, or by or on behalf of Loral, and shall survive delivery of
the Transferred Partnership Interests.
5.4. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and supersedes any and
all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
5.5. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
5.6. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
5.7. Press Releases and Public Announcements. Prior to the
Closing, press releases and public announcements or disclosures relating to the
transactions
-6-
<PAGE> 8
contemplated hereby shall be made only if mutually agreed upon by
the parties hereto, except to the extent required by law or by stock exchange
regulation, provided that any such required disclosure will, to the extent
practicable, be subject to consultation among the parties.
5.9. Expenses. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all the fees, costs and
expenses that are incurred by it in connection with the transactions
contemplated hereby, including, without limitation, attorneys' fees and fees of
financial advisors and investment bankers engaged by such party.
-7-
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric J. Zahler
------------------------------
Name: Eric J. Zahler
Title: Vice President
ALENIA INC.
By: /s/ Alberto de Benedictis
------------------------------
Name: Alberto de Benedictis
Title: Attorney-in-Fact
-8-
<PAGE> 1
EXHIBIT 10.6
PURCHASE AND SALE AGREEMENT
between
LORAL SPACE & COMMUNICATIONS LTD.
and
ALCATEL SPACECOM
----------------------------------------
Dated as of June 19, 1997
----------------------------------------
<PAGE> 2
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of June 19, 1997 (the
"Agreement"), between LORAL SPACE & COMMUNICATIONS LTD., a company organized
under the laws of Bermuda ("Loral"), and ALCATEL SPACECOM, a societe par action
simplifee organized under the laws of France ("Alcatel").
W I T N E S S E T H :
WHEREAS, on the date hereof, Alcatel is a limited partner of,
and the owner of 720,000 partnership interests (the "Partnership Interests") in,
Loral/QUALCOMM Satellite Services, L.P., a Delaware limited partnership
("LQSS"), pursuant to that certain Amended and Restated Agreement of Limited
Partnership of LQSS, dated as of March 23, 1994 (the "Partnership Agreement");
and
WHEREAS, the parties hereto desire for Alcatel to exchange its
Partnership Interests for cash and securities from Loral, as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE
1.1. Purchase and Sale.
1.1.1. At the Closing described in Section 1.2. below, Alcatel
shall sell, transfer and assign, and Loral shall purchase and acquire, the
720,000 Partnership Interests held by Alcatel (the "LQSS Interests") in exchange
for (i) $17,487,360 in cash (the "Cash Consideration") and (ii) 1,255,684 shares
of Loral Common Stock, par value $.01 per share (such shares the "LSC Shares").
1.2. Closing.
1.2.1. Time and Place of Closing. The closing ("Closing") of
the transactions contemplated by Section 1.1. (the "Purchase and Sale") shall
take place at the law offices of Willkie Farr & Gallagher, One Citicorp Center,
153 East 53rd Street, New York, New York 10022 or such other place upon which
the parties hereto may agree and shall occur (the "Closing Date") upon execution
and delivery of this Agreement by the parties hereto.
<PAGE> 3
1.2.2. Deliveries at Closing. At the Closing,
(a) Loral is delivering to Alcatel (i) the Cash
Consideration by wire transfer of immediately available funds to the account
designated by Alcatel's written instructions delivered at least two (2) full
business days prior to the Closing Date and (ii) share certificates for the LSC
Shares, registered in the name of Alcatel;
(b) Alcatel is delivering to Loral, and Loral is
executing, the Assignment of Partnership Interests in the form attached hereto
as Exhibit A; and
(c) The parties hereto are acknowledging the delivery
to Alcatel of the item required by Section 3.1.1.
1.2.3. Stock Transfer Taxes. Loral will bear all United States
stock transfer taxes, direct or indirect, attributable to the share transfers in
the Purchase and Sale.
2. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Loral. Loral represents
and warrants to Alcatel as follows:
2.1.1. Organization; Capitalization. Loral is a company duly
organized, validly existing and in good standing under the laws of the Islands
of Bermuda and has all requisite corporate power and authority to own its
properties and assets and to conduct its business as now conducted. The
authorized capital stock of Loral consists of (a) 750,000,000 shares of Common
Stock, par value $.01 per share ("LSC Common Stock"), of which 191,162,455
shares are issued and outstanding and, without giving effect to the transactions
contemplated hereby, 97,553,912 additional shares are reserved for issuance upon
the exercise or conversion of outstanding options, warrants or convertible
securities; (b) 150,000,000 shares of Series A Non-Voting Convertible Preferred
Stock, par value $.01 per share, of which 45,896,977 shares are outstanding and
none of which have been reserved for issuance; (c) 750,000 shares of Series B
Preferred Stock, par value $.01 per share, no shares of which are outstanding,
and 250,000 shares of which have been reserved for issuance upon the exercise of
outstanding rights; and (d) 20,000,000 shares of 6% Series C Convertible
Redeemable Preferred Shares, par value $.01 per share, of which 13,845,774
shares are outstanding and none of which are reserved for issuance.
2.1.2. Authorization and Validity of Agreement. Loral has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Loral's obligations hereunder have been, or will have been on the Closing Date,
duly authorized by the Board of Directors of Loral, and no other corporate
proceedings on the part of Loral are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Loral and is
the legal, valid and binding obligation of Loral.
2.1.3. No Conflict or Violation. The execution, delivery and
performance by Loral of this Agreement do not and will not violate or conflict
with any provision of the charter
2
<PAGE> 4
documents or bye-laws of Loral, and do not and will not violate any provision of
any agreement or instrument to which Loral is a party or by which it is bound,
or any order, judgment or decree of any court or other governmental or
regulatory authority to which Loral is subject.
2.1.4. Validity of Securities. The LSC Shares have been, or
will have been as of the Closing Date, duly authorized for issuance and sale to
Alcatel pursuant to this Agreement, and when duly executed and delivered against
payment therefor as provided herein, will be validly issued, fully paid and
non-assessable; the stock certificates evidencing the LSC Shares will be in due
and proper form and comply with all applicable legal requirements; the issuance
of the LSC Shares will not be subject to any call, preemptive or other similar
rights.
2.1.5. Compliance with Partnership Agreement. (i) Loral has,
or will have on the Closing Date, furnished the "General Partner" (as defined in
the Partnership Agreement) with an agreement, in form reasonably satisfactory to
the General Partner, to be bound by the Partnership Agreement and such other
documents or instruments as may be required by the General Partner pursuant to
Section 11.01(a) of the Partnership Agreement in order to effect Loral's
admission as a "Limited Partner" (as defined in the Partnership Agreement); (ii)
the General Partner has consented to the (A) transfer of the LQSS Interests
contemplated hereunder, as required by Section 10.03(a) of the Partnership
Agreement, and (B) admission of Loral as a substituted Limited Partner in LQSS
upon consummation of the Purchase and Sale in satisfaction of Section 11.01(b)
of the Partnership Agreement; and (iii) all other requirements for the transfer
of the LQSS Interests pursuant to the Partnership Agreement contemplated
hereunder have been met or otherwise waived.
2.1.6. Registration and Resale of LSC Shares. The LSC Shares
have been duly registered under the U.S. Securities Act of 1933, as amended
("Securities Act") (pursuant to Securities Act Registration Number 333-26517, on
Form S-3, the "Registration Statement"), and applicable state securities laws
(collectively the "Securities Laws") and admitted for trading on the New York
Stock Exchange. Other than restrictions imposed by the Securities Laws, the LSC
Shares are not subject to any legal or contractual restrictions on resale.
2.2. Representations and Warranties of Alcatel. Alcatel
represents and warrants to Loral as follows:
2.2.1. Organization. Alcatel is a societe par action simplifee
duly organized, validly existing and in good standing under the laws of the
Republic of France, and has all requisite corporate power and authority to own
its properties and assets and to conduct its business as now conducted.
2.2.2. Authorization and Validity of Agreement. Alcatel has
the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
performance of Alcatel's obligations hereunder have been duly authorized by the
appropriate governing body of Alcatel, and no other corporate proceedings on the
part of Alcatel are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by Alcatel and is the legal,
valid and binding obligation of Alcatel.
3
<PAGE> 5
2.2.3. No Conflict or Violation. The execution, delivery and
performance by Alcatel of this Agreement do not and will not violate or conflict
with any provision of the charter documents or by-laws (or corresponding
instruments under the laws of France) of Alcatel, and do not and will not
violate any provision of any agreement or instrument to which Alcatel is a party
or by which it is bound, or any order, judgment or decree of any court or other
governmental or regulatory authority to which Alcatel is subject.
2.2.4. Title to LQSS Interests. Alcatel is the lawful owner of
the LQSS Interests. Alcatel has good, valid and marketable title, free and clear
of all liens, pledges, security interests, and encumbrances, to the LQSS
Interests, with full right and lawful authority to sell and transfer such
interests to Loral pursuant to this Agreement. Upon payment for the LQSS
Interests to be purchased by Loral, Loral will acquire good, valid, and
marketable title thereto, free and clear of all liens, pledges, security
interests, and encumbrances except as set forth in the Partnership Agreement.
2.2.5. No Brokers or Agents. Alcatel has not retained the
services of any broker or agent in connection with the Purchase and Sale.
3. ACKNOWLEDGMENT
3.1. Acknowledgment. The parties hereto acknowledge that
Alcatel has received an opinion, dated the Closing Date, from Appleby, Spurling
& Kempe as to due formation of Loral and the legality of the LSC Shares issued
to Alcatel hereunder.
4. BLOCK TRADE UNDERTAKING
4.1. Definitions. The following terms shall have the meanings
ascribed to them below:
4.1.1. "Excess Amount" means the number of LSC Shares
requested by a Holder or Holders to be sold pursuant to Section 4.3. which the
managing Underwriter or Underwriters determines exceeds the largest number of
LSC Shares which can successfully sold in an orderly manner in such offering
within the price range acceptable to Loral.
4.1.2. "Holders" means each of Alcatel for so long as it owns
any LSC Shares, and such of its successors and assigns who acquire LSC Shares,
directly or indirectly, from Alcatel, in each case for so long as such
successors or assigns own any LSC Shares.
4.1.3. "Majority Holders" means the Holders of a majority of
the LSC Shares.
4.1.4. "Person" means an individual or a corporation,
partnership, limited liability company, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
4
<PAGE> 6
4.1.5. "Underwriter" means a securities dealer who purchases
any Loral securities as principal in an underwritten offering and not as part of
such dealer's market-making activities.
4.2. Block Trade Undertaking
4.2.1. Broker-dealers. Upon request from the Majority Holders,
Loral shall use its reasonable best efforts to assist the Majority Holders in
identifying registered broker-dealers (each, a "Broker") ready, willing and able
to effectuate a sale of all or a portion of the LSC Shares on terms acceptable
to the Majority Holders in a manner consistent with customary practice (other
than pursuant to an underwritten public offering) as contemplated under the
heading "Plan of Distribution" in the Registration Statement, including, but not
limited to, a block sale of all or a portion of the LSC Shares.
4.2.2. Preferred Sales Method. The Majority Holders and Loral
acknowledge and agree that their preferred manner of execution of the sale of
LSC Shares pursuant to Section 4.2. would be by means of a trade not requiring
any additional agreements, indemnification, or securities filings on the part of
Loral, so long as the terms of the transaction are otherwise satisfactory to the
Majority Holders. In the event, however, that no Broker recommended by Loral is
prepared to effectuate the sale on terms satisfactory to the Majority Holders
without (i) an agreement providing for indemnification, representations and
warranties or covenants (an "Indemnity Agreement") or (ii) requiring Loral to
incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement information relating to the transaction with the Broker,
then Loral shall enter into such Indemnity Agreement and incorporate in a
prospectus supplement or post-effective amendment to the Registration Statement
such information as is reasonably determined to be included therein by such
Broker and the Majority Holders, and make all required filings of the same.
4.3. Piggy-Back Offering. If at any time Loral, for its own
account or for the account of any of its securityholders, proposes to offer
Loral's Common Stock, par value $.01 per share, in the form of a primary or
secondary underwritten offering (other than with respect to a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission) or a registration statement filed in connection with an exchange
offer or offering of securities solely to Loral's existing securityholders),
then Loral shall give written notice of such proposed underwritten offering to
Holders as soon as practicable (but in no event later than the anticipated
filing date of such offering), and such notice shall offer such Holders the
opportunity to include in such underwritten offering such number of LSC Shares
as each such Holder may request (which request shall specify the number of LSC
Shares intended to be disposed of by such Holder) (a "Piggy-Back Offering").
Loral shall use its reasonable best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the LSC Shares
requested to be included in a Piggy-Back Offering to be included on the same
terms and conditions as any similar securities of Loral included therein to
permit the sale or other disposition of such LSC Shares in accordance with the
intended method of distribution thereof. Notwithstanding the foregoing, Holders
shall not be entitled to a Piggy-Back Offering in connection with any
underwritten offering granted by Loral to a third party pursuant to a
5
<PAGE> 7
contractual obligation if the agreement between such third party and Loral
providing for such underwritten offering prohibits Loral from granting to other
Persons the right to "piggy-back" on to such underwritten offering; provided
that in such event, Loral shall provide Holders notice of such prohibition prior
to the anticipated filing date of such registration so as to permit Holders to
seek permission from such third party to include LSC Shares in such underwritten
offering.
4.4. Reduction of Offering. Notwithstanding anything contained
herein, if the managing Underwriter or Underwriters of an offering described in
Section 4.3. deliver a written opinion to the Holders of the LSC Shares
requesting inclusion in such offering that (i) the size of the offering that the
Holders, Loral and/or such other Persons intend to make or (ii) the kind of
securities that the Holders, Loral and/or any other Persons intend to include in
such offering is such that the success of the offering would be materially and
adversely affected by inclusion of the LSC Shares requested to be included, then
(A) if the size of the offering is the basis of such Underwriter's or
Underwriters' opinion, Loral shall not include an amount of LSC Shares requested
to be included in such offering by all Holders equal to the Excess Amount (such
reduction to be allocated pro rata among the Holders requesting inclusion of LSC
Shares in the Piggy-Back Offering); provided that if securities are being
offered for the account of other Persons as well as Loral, then with respect to
the LSC Shares intended to be offered by Holders, the proportion by which the
amount of such class of securities intended to be offered by Holders is reduced
shall not exceed the proportion by which the amount of such class of securities
intended to be offered by such other Persons is reduced (it being understood
that such reduction may be all of such class of securities); and (B) if the
combination of securities to be offered is the basis of such Underwriter's or
Underwriters' opinion, (x) the LSC Shares to be included in such offering shall
be reduced as described in clause (A) above (subject to the proviso in clause
(A)) or, (y) if the actions described in clause (B)(x) would, in the judgment of
the managing Underwriter or Underwriters, be insufficient to substantially
eliminate the adverse effect that inclusion of the LSC Shares requested to be
included would have on such offering, such LSC Shares will be excluded from such
offering.
If, as a result of the proration provisions of this Section
4.4., any Holder shall not be entitled to include all LSC Shares in a Piggy-Back
Offering that such Holder has requested to be included, such Holder may elect to
withdraw his request to include LSC Shares in such offering (a "Withdrawal
Election"); provided, however, that a Withdrawal Election shall be irrevocable
and, after making a Withdrawal Election, a Holder shall no longer have any right
to include LSC Shares in the offering as to which such Withdrawal Election was
made.
4.5. Registration Statement. Loral covenants that it shall use
its reasonable best efforts to maintain the Registration Statement continuously
effective under the Securities Act until the earlier of the (a) date that the
LSC Shares shall no longer constitute restricted securities pursuant to Rule
144(k) of the Securities Act or (b) the date that all the LSC Shares shall have
been sold pursuant to such Registration Statement.
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5. MISCELLANEOUS
5.1. Additional Actions and Documents. Each of the parties
hereto hereby agrees to take or cause to be taken such further actions, to
execute, deliver, and file or cause to be executed, delivered and filed such
further documents and instruments, and to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement, whether before or after the
Closing Date.
5.2. LSC Shares. The LSC Shares to be issued pursuant to this
Agreement shall be separate from any LSC Common Stock acquired by Alcatel Espace
in connection with the sale of its interest in Space Systems/Loral, Inc., a
Delaware corporation, and shall not be included in any ownership calculations of
LSC Common Stock pursuant to any agreement that Alcatel Espace may enter in
connection with such sale.
5.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the doctrine of conflicts of laws.
5.4. No Waivers; Amendments.
5.4.1. No failure or delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
5.4.2. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
each party hereto.
5.5. Survival of Provisions. The representations and
warranties, covenants and agreements contained in this Agreement shall survive
and remain in full force and effect, regardless of any investigation made by or
on behalf of Alcatel, or by or on behalf of Loral, and shall survive delivery of
the Cash Consideration, LSC Shares, and the LQSS Interests.
5.6. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and supersedes any and
all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
5.7. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
5.8. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
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5.9. Press Releases and Public Announcements. Any press
releases and public announcements or disclosures relating to the transactions
contemplated hereby shall be made only if mutually agreed upon by the parties
hereto, except to the extent a party has been advised in writing by counsel
(with a copy provided to the other party) that failure to disclose would violate
applicable law or stock exchange regulation, provided that any such required
disclosure will, to the extent practicable, be subject to prior consultation
among the parties.
5.10. Expenses. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all the fees, costs and
expenses that are incurred by it in connection with the transactions
contemplated hereby, including, without limitation, attorneys' fees and fees of
financial advisors and investment bankers engaged by such party.
5.11. Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by hand delivery (including delivery
by courier), telegram, telex, or facsimile transmission, addressed as follows:
To Alcatel: Alcatel Spacecom
5, rue Noel Pons
92737 Nanterre Cedex
France
Attn.: Lionel Fleury
President
Arlette Lefeuvre, Esq.
Fax: 011-331-46-52-64-60
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 13th Street, N.W.
Washington, D.C. 20004-1109
Attn.: Mark E. Mazo, Esq.
Fax: 202/637-5910
To Loral: Loral Space & Communications Ltd.
600 Third Avenue
New York, New York 10016
Attn.: Michael B. Targoff
President and Chief
Operating Officer
Fax: 212/682-9805
with a copy (which shall not constitute notice) to:
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Loral Space & Communications Ltd.
600 Third Avenue
New York, New York 10016
Attn.: Eric Zahler, Esq.
Avi Katz, Esq.
Fax: 212/338-5350
and
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn.: Bruce Kraus, Esq.
Fax: 212/821-8111
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IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement as of the date first set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Michael B. Targoff
----------------------
Name: Michael B. Targoff
Title: President and Chief
Operating Officer
ALCATEL SPACECOM
By: /s/ Lionel Fleury
-----------------
Name: Lionel Fleury
Title: President
10
