<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 14, 1997
LORAL SPACE & COMMUNICATIONS LTD.
(Exact name of registrant as specified in its charter)
Islands of Bermuda 1-14180 13-3867424
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number
600 Third Avenue, New York, New York 10016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 697-1105
<PAGE> 2
Item 5. Other Events.
Credit Agreement
On November 14, 1997, Loral SpaceCom Corporation ("Loral SpaceCom")
and Space Systems/Loral, Inc. ("SS/L"), wholly owned subsidiaries of Loral Space
& Communications Ltd. ("Loral"), entered into an Amended and Restated Credit and
Participation Agreement, dated as of November 14, 1997 (the "Credit Agreement"),
among Loral SpaceCom, SS/L, the Banks parties thereto, Bank of America National
Trust and Savings Association, as Administrative Agent, and Istituto Bancario
San Paolo di Torino S.p.A, individually and as Italian Export Financing and
Arranger and as Selling Bank. The Credit Agreement provides for an $850 million
credit facility consisting of a $500 million revolving credit facility, a $275
million term loan and a $75 million letter of credit facility. The Credit
Agreement replaces SS/L's existing credit facility, is secured by the stock of
Loral SpaceCom and SS/L and contains various covenants including an interest
coverage ratio and debt to capitalization ratios.
The foregoing description of the Credit Agreement does not purport
to be complete and is qualified in its entirety by the terms and conditions of
the Credit Agreement, which is filed as Exhibit 10.1 and is incorporated herein
by reference.
SatMex Acquisition
In connection with the privatization by the Federal Government of
Mexico (the "Mexican Government") of its fixed satellite services business,
Loral and Telefonica Autrey, S.A. de C.V. ("Telefonica Autrey") have formed a
joint venture, Firmamento Mexicano, S. de R.L. de C.V. ("Holdings"), which is
the parent of Corporativo Satelites Mexicanos, S.A. de C.V. ("Acquisition
Sub"). On November 17, 1997, Acquisition Sub entered into a Stock Purchase
and Sale Agreement dated November 17, 1997 (the "SatMex Stock Purchase
Agreement") with the Mexican Government providing for the acquisition by
Acquisition Sub of 75% of the issued and outstanding capital stock of Satelites
Mexicanos, S.A. de C.V. ("SatMex") from the Mexican Government at a purchase
price of Ps. 5,366.4 million. On November 17, 1997, Acquisition Sub paid Ps.
1,609.9 million of the purchase price (the "First Installment") and will pay
the remaining balance, plus installment interest, at the final closing expected
to occur on or before December 31, 1997. The Mexican Government is retaining
25% of the issued and outstanding capital stock of SatMex in the form of
limited voting shares.
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SatMex, which is the company established for purposes of the
privatization and to which the Mexican Government contributed substantially all
of the assets of its fixed satellite services business, is the dominant provider
of domestic Mexican fixed satellite services, providing broadcasting and
telecommunications capacity to approximately 300 customers. SatMex owns and
operates three satellites, Solidaridad 1, Solidaridad 2 and Morelos II, which
are located in geostationary orbit at 109.2 degrees WL, 113.0 degrees WL and
116.8 degrees WL, respectively. SatMex also holds 20-year concession titles to
operate in these three orbital locations at their associated C- and Ku-band
frequencies. The concession titles are renewable, subject to certain conditions,
for an additional 20 years thereafter at no additional cost. In addition, SatMex
owns two satellite control centers and has entered into contracts for the
construction and scheduled 1998 launch of Morelos III, the replacement satellite
for Morelos II.
Loral and Telefonica Autrey hold 65% and 35%, respectively, of the
economic interests, and 49% and 51%, respectively, of the voting interests in
Holdings.
Approximately 72.7% of the First Installment was funded by
Acquisition Sub with cash equity contributed, pro rata based on their percentage
ownership, by Loral and Telefonica Autrey, with the balance funded by debt
guaranteed by Loral. Telefonica Autrey has agreed to indemnify Loral for 35% of
this guarantee.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 10.1 Amended and Restated Credit and Participation Agreement,
dated as of November 14, 1997, among Loral SpaceCom
Corporation, Space Systems/Loral, Inc., the Banks parties
thereto, Bank of America National Trust and Savings
Association, as Administrative Agent, and Istituto Bancario
San Paolo di Torino S.p.A, individually and as Italian
Export Financing and Arranger and as Selling Bank
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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)
Date: December 8, 1997 By: /s/ Eric J. Zahler
--------------------------------
Eric J. Zahler
Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
Exhibit 10.1 Amended and Restated Credit and Participation Agreement,
dated as of November 14, 1997, among Loral SpaceCom
Corporation, Space Systems/Loral, Inc., the Banks parties
thereto, Bank of America National Trust and Savings
Association, as Administrative Agent, and Istituto Bancario
San Paolo di Torino S.p.A, individually and as Italian
Export Financing and Arranger and as Selling Bank
</TABLE>
<PAGE> 1
Exhibit 10.1
AMENDED AND RESTATED CREDIT AND
PARTICIPATION AGREEMENT
among
LORAL SPACECOM CORPORATION,
SPACE SYSTEMS/LORAL, INC.,
THE BANKS PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent,
and
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.,
Individually and as Italian Export Financing Arranger and as Selling Bank
Dated as of November 14, 1997
Arranged by
BANCAMERICA ROBERTSON STEPHENS
<PAGE> 2
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms............................................... 2
1.2 Other Definitional Provisions............................... 19
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS AND ADDITIONAL LETTERS OF
CREDIT COMMITMENTS.......................................... 20
2.1 Commitments................................................. 20
2.2 Revolving Credit Notes...................................... 20
2.3 Procedure for Borrowing..................................... 21
SECTION 3. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS...................... 21
3.1 The Term Loans.............................................. 21
3.2 Procedure for Term Loan Borrowing........................... 21
3.3 Repayment of Term Loans; Evidence of Debt................... 22
SECTION 4. SYNDICATED LETTERS OF CREDIT AND PARTICIPATIONS
IN EXPORT LOAN................................................. 24
4.1 Issuance of Syndicated Letters of Credit.................... 24
4.2 Participating Interests in Syndicated Letters of Credit......24
4.3 Procedure for Opening Syndicated Letters of Credit.......... 24
4.4 Payments in Respect of Syndicated Letters of Credit......... 25
4.5 Syndicated Letter of Credit Fees............................ 26
4.6 Syndicated Letter of Credit Reserves........................ 26
4.7 Participating Interests in Export Loan...................... 27
4.8 Procedure for Drawdowns under Export Loan Agreement......... 28
4.9 Payments on Export Loan..................................... 28
4.10 Concerning the Export Loan Agreement....................... 29
4.11 Further Assurances......................................... 30
4.12 Obligations Absolute....................................... 30
4.13 Assignments................................................ 31
4.14 Participations............................................. 31
4.15 Determination of Dollar Equivalent......................... 31
SECTION 5. GENERAL PROVISIONS............................................. 31
5.1 Fees........................................................ 31
5.2 Voluntary Termination or Reduction of Commitments........... 32
5.3 Interest Rates and Payment Dates............................ 32
5.4 Computation of Interest and Fees............................ 32
5.5 Inability to Determine Interest Rate........................ 33
5.6 Pro Rata Treatment and Payments............................. 33
5.7 Illegality.................................................. 35
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Page
5.8 Requirements of Law......................................... 36
5.9 Taxes....................................................... 37
5.10 Indemnity.................................................. 39
5.11 Change in Lending Office................................... 39
5.12 Optional Prepayments....................................... 40
5.13 Mandatory Prepayments...................................... 40
5.14 Conversion and Continuation Options........................ 41
5.15 Minimum Amounts of Tranches................................ 42
SECTION 6. REPRESENTATIONS AND WARRANTIES................................. 42
6.1 Financial Condition......................................... 43
6.2 No Change................................................... 44
6.3 Corporate Existence; Compliance with Law.................... 44
6.4 Corporate Power; Authorization; Enforceable Obligations......44
6.5 No Legal Bar................................................ 44
6.6 No Material Litigation...................................... 45
6.7 No Default.................................................. 45
6.8 Ownership of Property; Liens................................ 45
6.9 Intellectual Property....................................... 45
6.10 Federal Regulations........................................ 45
6.11 Investment Company Act; Other Regulations.................. 46
6.12 Subsidiaries............................................... 46
6.13 Purpose of Loans........................................... 46
6.14 Environmental Matters...................................... 46
6.15 Solvency................................................... 47
6.16 Security Documents......................................... 47
6.17 Disclosure................................................. 47
SECTION 7. CONDITIONS PRECEDENT........................................... 47
7.1 Conditions to Effectiveness; Initial Extensions of Credit... 47
7.2 Conditions to Each Extension of Credit...................... 50
SECTION 8. AFFIRMATIVE COVENANTS.......................................... 51
8.1 Financial Statements........................................ 51
8.2 Certificates; Other Information............................. 52
8.3 Payment of Obligations...................................... 53
8.4 Conduct of Business and Maintenance of Existence............ 53
8.5 Maintenance of Property; Insurance.......................... 53
8.6 Inspection of Property; Books and Records;
Discussions; Independent Audits............................. 53
8.7 Notices..................................................... 54
8.8 Environmental Laws.......................................... 55
8.9 Additional Subsidiaries..................................... 55
SECTION 9. NEGATIVE COVENANTS............................................. 56
9.1 Financial Condition Covenants............................... 56
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Page
9.2 Limitation on Indebtedness.................................. 57
9.3 Limitation on Liens......................................... 58
9.4 Limitation on Guarantee Obligations......................... 60
9.5 Limitations on Fundamental Changes.......................... 60
9.6 Limitation on Sale of Assets................................ 61
9.7 Limitation on Dividends..................................... 61
9.8 Limitation on Investments, Loans and Advances............... 62
9.9 Transactions with Affiliates................................ 63
9.10 Restrictions on Intercompany Debt.......................... 63
9.11 Restrictions on Indebtedness to Parent or Loral............ 63
SECTION 10. EVENTS OF DEFAULT............................................. 63
SECTION 11. THE ADMINISTRATIVE AGENT...................................... 67
11.1 Appointment................................................ 67
11.2 Delegation of Duties....................................... 67
11.3 Exculpatory Provisions..................................... 67
11.4 Reliance by Administrative Agent........................... 67
11.5 Notice of Default.......................................... 68
11.6 Non-Reliance on Administrative Agent and Other Banks....... 68
11.7 Indemnification............................................ 69
11.8 Administrative Agent in Its Individual Capacity............ 69
11.9 Successor Administrative Agent............................. 69
11.10 Issuing Bank.............................................. 70
SECTION 12. MISCELLANEOUS................................................. 70
12.1 Amendments and Waivers..................................... 70
12.2 Notices.................................................... 71
12.3 No Waiver; Cumulative Remedies............................. 72
12.4 Survival of Representations and Warranties................. 72
12.5 Payment of Expenses and Taxes.............................. 72
12.6 Successors and Assigns; Participations; Purchasing
Banks...................................................... 73
12.7 Adjustments; Set-off....................................... 76
12.8 Confidentiality............................................ 77
12.9 Counterparts............................................... 77
12.10 Severability.............................................. 77
12.11 Integration............................................... 77
12.12 GOVERNING LAW............................................. 77
12.13 Submission To Jurisdiction; Waivers....................... 78
12.14 Acknowledgements.......................................... 78
12.15 WAIVERS OF JURY TRIAL..................................... 78
12.16 Compliance with Department of Defense Regulations......... 79
12.17 Consent to Amendment and Restatement...................... 80
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SCHEDULES
1.1A - Addresses for Notice; Commitments
1.1B - Export Loan Interest and Payment Dates
4.1 - Existing Letters of Credit
6.1 - Material Changes
6.6 - Litigation
6.8 - Indebtedness; Liens
6.9 - Intellectual Property
6.12 - Subsidiaries
6.14 - Environmental Matters
9.9 - Certain Agreements
EXHIBITS
A-1 - Revolving Credit Note
A-2 - Term Note
B - Commitment Transfer Supplement
C - L/C Participation Certificate
D - Opinion of Counsel
E - Form of Guarantee and Collateral Agreement
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AMENDED AND RESTATED CREDIT AND PARTICIPATION AGREEMENT, dated as of
November 14, 1997 among LORAL SPACECOM CORPORATION, a Delaware corporation (the
"Borrower"), SPACE SYSTEMS/LORAL, INC., a Delaware corporation ("SS/L" or the
"Existing Borrower"), the several banks (other than San Paolo) and other
financial institutions from time to time parties to this Agreement (the
"Banks"), ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. ("San Paolo"),
individually and as selling bank (in such capacity, the "Selling Bank"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("Bank of America"), as
administrative agent for the Banks hereunder (in such capacity, the
"Administrative Agent") and as Issuing Bank, THE CHASE MANHATTAN BANK, as
syndication agent for the Banks hereunder (in such capacity, the "Syndication
Agent") and NATIONSBANK OF TEXAS, N.A., as documentation agent for the Banks
hereunder (in such capacity, the "Documentation Agent").
W I T N E S S E T H :
WHEREAS, the Existing Borrower, the several banks and other
financial institutions parties thereto (each, an "Existing Bank"), San Paolo, as
Selling Bank, Bank of America, as Documentation Agent and as Issuing Bank, and
Barclays Bank PLC, as administrative agent for the banks thereunder, are parties
to a Revolving Credit and Participation Agreement dated as of December 23, 1994
(as amended, supplemented or modified to the Closing Date, the "Existing Credit
Agreement"); and
WHEREAS, the Existing Borrower and the Selling Bank are parties to a
Loan Agreement, dated September 30, 1994 (as amended, supplemented or otherwise
modified from time to time in accordance with the Existing Credit Agreement and
this Agreement, the "Export Loan Agreement); and
WHEREAS, the parties hereto wish to amend and restate the Existing
Credit Agreement to, inter alia, substitute the Borrower for the Existing
Borrower as borrower under this Agreement and substitute the Banks for the
Existing Banks as lenders under this Agreement, all as more fully set forth
herein; and
WHEREAS, the Borrower has requested the Banks to make term loans to
the Borrower in an aggregate principal amount not to exceed $275,000,000 at any
time outstanding and revolving credit loans to the Borrower in the aggregate
principal amount not to exceed $500,000,000 at any time outstanding (of which up
to $175,000,000 may be used for letters of credit), and to create a separate
$75,000,000 letter of credit facility (the "Additional Letters of Credit
Facility"); and
WHEREAS, the Borrower has requested the Banks to purchase, and the
Selling Bank to sell, hereunder, participations in the Export Loan Agreement
which shall be guaranteed by the Borrower and which borrowing thereunder shall
reduce the amounts available to the Borrower under this Agreement; and
WHEREAS, the Banks are willing to make such extensions of credit
(including purchasing participations in the Export Loan Agreement) and the
Selling Bank is willing to sell participations in the Export Loan Agreement, all
on and subject to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants
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2
herein contained, the Borrower, the Existing Borrower, the Banks, San
Paolo, the Selling Bank and the Administrative Agent hereby agree, effective as
of the Closing Date, to amend and restate the Existing Credit Agreement as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Additional Letters of Credit": Performance Letters of Credit
issued under the Additional Letters of Credit Commitment.
"Additional Letters of Credit Bank": each Bank having an amount
greater than zero set forth under the heading "Additional Letters of
Credit Commitment" opposite such Bank's name on Schedule 1.1A, as
amended or supplemented.
"Additional Letters of Credit Commitment": as to any Additional
Letters of Credit Bank, the obligation of such Bank to participate in
Additional Letters of Credit for the account of the Borrower hereunder in
an aggregate outstanding amount at any one time not to exceed the amount
set forth opposite such Bank's name under the heading "Additional Letters
of Credit Commitment" on Schedule 1.1A, as amended or supplemented.
"Additional Letters of Credit Commitment Percentage": as to any
Additional Letters of Credit Bank at any time, the percentage of the
aggregate Additional Letters of Credit Commitments then constituted by
such Bank's Additional Letters of Credit Commitment.
"Additional Letters of Credit Obligations": the obligations
(whether contingent or matured) of the Borrower to reimburse the
Issuing Bank for any payments made by the Issuing Bank under any
Additional Letter of Credit.
"Affiliate": with respect to any Person (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with such Person, or (b) any Person who is
a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes
of this definition, control of a Person shall mean the power, direct or
indirect, (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person, or (ii) to direct or
cause the direction of the management and policies of such Person whether
by contract or otherwise.
"Agreement": this Amended and Restated Revolving Credit and
Participation Agreement, as amended, supplemented or otherwise modified
from time to time.
"Alenia": Alenia Aeritalia & Selenia S.p.A., an Italian
corporation.
"Applicable Level": as of any day, Level 1, Level 2, Level 3, Level
4, Level 5,
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3
Level 6 or Level 7 below, whichever is applicable on such day, with each
new Level to take effect on the day following the delivery to the
Administrative Agent by the Borrower of the financial statements referred
to in subsections 8.1(a) or (b) and the related certificates of the chief
financial officer of the Borrower referred to in subsection 8.2 (or in the
case of annual financial statements, unaudited financial statements and
certificates otherwise complying with subsections 8.1(a) and 8.2 delivered
solely for purposes of determining the Applicable Level), indicating the
ratio of Consolidated EBITDA for the four consecutive fiscal quarters
ending on the last day of the period covered by such financial statements
to Consolidated Interest Expense as of the end of the period covered by
such financial statement:
<TABLE>
<CAPTION>
Ratio of Consolidated
EBITDA to Consolidated
Interest Expense
----------------
<S> <C>
Level 1 Less than or equal to 2.50 to 1.00
Level 2 Greater than 2.50 to 1.00 but less than or equal to 3.00
to 1.00
Level 3 Greater than 3.00 to 1.00 but less than or equal to 3.50
to 1.00
Level 4 Greater than 3.50 to 1.00 but less than or equal to 4.00
to 1.00
Level 5 Greater than 4.00 to 1.00 but less than or equal to 4.50
to 1.00
Level 6 Greater than 4.50 to 1.00 but less than or equal to 5.00
to 1.00
Level 7 Greater than 5.00 to 1.00
</TABLE>
provided, however, that, (x) in the event that the financial statements
required to be delivered pursuant to subsection 8.1(a) or 8.1(b) and the
related certificates of the chief financial officer of the Borrower
referred to in subsection 8.2(b) are not delivered when due, then during
the period from the date upon which such financial statements and
certificate were required to be delivered until the date upon which they
actually are delivered, the Applicable Level shall be Level 1, and (y)
from the Closing Date to and including March 31, 1998, the Applicable
Level shall be Level 2.
"Applicable Margin": with respect to each day per annum for the
relevant Type of Loan set forth below opposite the Applicable Level in
effect on such day:
<TABLE>
<CAPTION>
Applicable Applicable Applicable Applicable
Level Eurodollar Base Rate Non-Use
Margin Margin Margin
<S> <C> <C> <C>
Level 1 1.500% 0.500% 0.350%
Level 2 1.250% 0.25% 0.300%
Level 3 1.125% 0.125% 0.250%
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Level 4 1.000% 0.000% 0.250%
Level 5 0.750% 0.000% 0.200%
Level 6 0.550% 0.000% 0.150%
Level 7 0.400% 0.000% 0.150%
</TABLE>
"Approved Foreign Currencies": foreign currencies which are
freely convertible into Dollars and approved by the Issuing Bank in
writing.
"Available Additional Letters of Credit Commitment": as to any
Additional Letters of Credit Bank, at a particular time, an amount equal
to such Bank's Additional Letters of Credit Commitment Percentage of the
excess, if any, of (a) the aggregate Additional Letters of Credit
Commitments at such time over (b) the aggregate outstanding principal
amount of the Additional Letters of Credit Obligations at such time;
collectively, as to all the Banks, the "Available Additional Letters of
Credit Commitments".
"Available Revolving Credit Commitment": as to any Revolving Credit
Bank, at a particular time, an amount equal to such Bank's Revolving
Credit Commitment Percentage of the excess, if any, of (a) the aggregate
Revolving Credit Commitments at such time over (b) the aggregate
outstanding principal amount of the Revolving Credit Loans, Export
Participations and Revolving Credit Letters of Credit Obligations at such
time; collectively, as to all the Banks, the "Available Revolving Credit
Commitments".
"Base Rate": for any day, the higher of:
(a) the rate of interest publicly announced from time to time
by Bank of America in San Francisco, California, as its "reference
rate." It is a rate set by Bank of America based upon various
factors including Bank of America's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at,
above, or below such announced rate; or
(b) one-half percent per annum above the Federal Funds
Rate for such day.
Any change in the reference rate announced by Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Base Rate.
"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required
by law to close.
"Capital Expenditure": any payment made directly or indirectly
for the purpose of
<PAGE> 10
5
acquiring or constructing fixed assets, real property or equipment, which
in accordance with GAAP would be added to the fixed asset account of the
Person making such expenditure.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Capitalization": the sum of (i) Funded Debt and (ii)
Shareholders' Equity.
"Cash Advances from Parent": cash advances made from Parent to
Borrower or any of its Restricted Subsidiaries that are not evidenced
by a promissory note.
"Cash Equivalents": (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than 12 months from
the date of acquisition, (ii) time deposits, banker's acceptances and
certificates of deposit having maturities of not more than 12 months from
the date of acquisition of (x) any Bank or (y) any domestic or foreign
commercial bank having capital and surplus in excess of $500,000,000,
which has, or the holding company of which has, a commercial paper rating
meeting the requirements specified in clause (iv) below, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities
of the types described in clauses (i) and (ii) entered into with any bank
meeting the qualifications specified in clause (ii)(x) or (ii)(y) above,
(iv) commercial paper rated at least A-2 or the equivalent thereof by
Standard & Poor's Ratings Group ("S&P") or P-2 or the equivalent thereof
by Moody's Investors Service, Inc. ("Moody's") and in either case maturing
within 270 days after the date of acquisition, (v) senior corporate
obligations rated at least BBB or the equivalent thereof by S&P or Baa or
the equivalent thereof by Moody's and in either case maturing within 2
years of the date of acquisition and (vi) any money market fund registered
under the Investment Company Act of 1940, as amended, which invests solely
in underlying securities of the types described in clauses (i) through
(iv) above, provided that no more than 25% of the aggregate amount of Cash
Equivalents at any time may be rated lower than A-1 or P-1 or A- or A3, as
the case may be.
"Change in Control": the failure of Loral to own or to be able
to vote in its own discretion at any meeting of stockholders of the
Borrower, directly or indirectly, at least 51% of the issued and
outstanding shares of voting stock of the Borrower.
"ChinaSat Letter of Credit": the collective reference to all Letters
of Credit issued to support Contractual Obligations of the Borrower and
its Restricted Subsidiaries under the Contract for Chinasat 8 Ground
Service Equipment and the Contract for Chinasat 8 Program, each entered
into effective 21 March 1997 by and among China National Postal and
Telecommunications Appliances Corp., China Telecommunications Broadcast
Satellite Corporation and SS/L.
"Closing Date": the date on which the conditions precedent set
forth in subsection 7.1 shall be satisfied, provided the Closing Date
shall not occur if such conditions shall
<PAGE> 11
6
not have been satisfied on or before December 31, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time
to time.
"Commercial L/C": a commercial documentary Letter of Credit under
which the Issuing Bank agrees to make payments in Dollars or Approved
Foreign Currencies for the account of the Borrower, in respect of
obligations of the Borrower in connection with the purchase of goods in
the ordinary course of business.
"Commitment": as to any Bank or the Selling Bank, the reference
to its Additional Letters of Credit Commitment, Revolving Credit
Commitment, Term Loan Commitment and its Export Commitment.
"Commitment Percentage": as to any Bank at any time, the percentage
of the aggregate Commitments then constituted by such Bank's Commitments
or, if the Commitments have been terminated, the percentage of the
aggregate outstanding amount of all Extensions of Credit then constituted
by such Bank's outstanding Extensions of Credit. For purposes of this
definition, the aggregate outstanding amount of Extensions of Credit of
the Issuing Bank with respect to any Syndicated Letter of Credit shall be
the amount of the Issuing Bank's L/C Participating Interest in such
Syndicated Letter of Credit.
"Commitment Transfer Supplement": a commitment transfer
supplement substantially in the form of Exhibit B.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of
the Code.
"Consolidated EBITDA": for any period, the revenues minus associated
costs (excluding interest expense, income taxes, depreciation and
amortization) of the Borrower and its Subsidiaries from continuing
operations for such period, determined in each case in accordance with
GAAP on a consolidated basis. For the purposes of pricing (i.e.
determining the Applicable Level) and calculation of financial covenants
(i.e. subsections 9.1, 9.7, 9.8, 9.11), Consolidated EBITDA shall include
orbital income that would otherwise have been included in financial
statements of interest income prepared in accordance with GAAP.
"Consolidated Interest Expense": for any period, interest expense
(net of Interest Income) of the Borrower and its Subsidiaries for such
period plus, without duplication, all fees payable hereunder in respect of
Letters of Credit for such period, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "net income
or loss" (or any like caption) on a consolidated income statement of the
Borrower and its Subsidiaries for such
<PAGE> 12
7
period; provided that there shall be excluded from Consolidated Net Income
all items that would be classified under GAAP as "extraordinary gains or
losses" other than any such extraordinary gains or losses realized in
connection with an investment in a customer or Affiliate thereof for a
satellite contract.
"Consolidated Net Worth": at a particular date, all amounts
which would be included under shareholders' equity on a consolidated
balance sheet of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as at such date.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of
its property is bound.
"Default": any of the events specified in Section 10, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Determination Date": as defined in subsection 4.15.
"Dollar Equivalent": as of any Determination Date, the equivalent in
Dollars which the amount available to be drawn under any Syndicated Letter
of Credit issued in an Approved Foreign Currency or the amount of any
drawing thereunder would be converted into at such time at the relevant
Exchange Rate, as determined by the Administrative Agent pursuant to
subsection 4.15.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Environmental Laws": any and all Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
requirements of any Governmental Authority regulating, relating to or
imposing liability or standards of conduct concerning environmental
protection, including without limitation, Hazardous Materials, as now or
may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": for any Interest Period for each Eurodollar Loan
and the Export Loan and each Export Participation, an interest rate per
annum equal to the arithmetic average (rounded upward to the nearest whole
multiple of 1/100 of one percent per annum, if such average is not such a
multiple) of the rate per annum at which deposits in Dollars are offered
by the principal office of each of the Reference Banks in London to prime
banks in the London interbank market at 11:00 A.M. (London time) two
Working Days before the first day of such Interest Period in an amount
substantially equal to the amount of the Eurodollar Loan or Export
Participation of such Reference Bank to be
<PAGE> 13
8
outstanding during such Interest Period and for a period equal to such
Interest Period.
"Eurodollar Reserve Requirements": for any day as applied to a
Eurodollar Loan, the Export Loan or any Export Participation, the
aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements, if any, in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Event of Default": any of the events specified in Section 10,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": of a Person for any period, cash from
operating activities as determined in accordance with GAAP as disclosed
in the statement of cash flows less the sum of gross Capital
Expenditures and Investments, in each case, for such period.
"Exchange Rate": with respect to any Approved Foreign Currency, the
arithmetic mean of the spot exchange rates for the purchase of such
Approved Foreign Currency with Dollars as listed on the WRLD screen of
Reuters News Service, and if the Reuters spot exchange rates are
unavailable, the Telerate equivalent shall be used.
"Export Commitment": (a) as to any Bank, the obligation of such Bank
to participate in the Export Loan hereunder in an aggregate outstanding
amount at any one time not to exceed the amount set forth opposite such
Bank's name under the heading "Export Commitment" on Schedule 1.1A, or, if
the Export Commitments shall have been terminated, such Bank's outstanding
Export Participation and (b) as to the Selling Bank, the obligation of the
Selling Bank to make the Export Loan in an aggregate outstanding amount at
any one time not to exceed the lesser of (i) the excess of $139,299,148
(as such amount may be reduced in accordance with Section 3(c) of the
Export Loan Agreement) over the aggregate Export Commitments of the Banks
and (ii) the Selling Bank's Export Commitment set forth opposite its name
on Schedule 1.1A or, if the Export Commitments shall have been terminated,
the excess of the outstanding principal amount of the Export Loan over the
aggregate Export Participations.
"Export Commitment Percentage": as to any Bank or the Selling
Bank at any time, the percentage of the aggregate Export Commitments
then constituted by its Export Commitment.
"Export Commitment Period": the period from and including the
Closing Date to but not including the Export Maturity Date or such
earlier date on which the Export Commitments shall terminate as
provided herein.
"Export Credit Agency": an agency of any Governmental Authority
which extends, or provides support for, credit to assist the borrower
in financing exports or
<PAGE> 14
9
imports to or from the jurisdiction of such Governmental Authority.
"Export Loan": each "Loan" as made to SS/L under the Export Loan
Agreement.
"Export Loan Agreement": as defined in the recitals hereto.
"Export Maturity Date": June 30, 1998.
"Export Notes": the promissory notes issued by SS/L to San Paolo
pursuant to the Export Loan Agreement evidencing the obligation of SS/L
to repay each drawdown under the Export Loan Agreement.
"Export Participation": as defined in subsection 4.7.
"Export Termination Date": 23 months from the earlier of the average
date of final acceptance of satellite deliveries under the contract with
Alenia to which the Export Loan Agreement relates and June 30, 1998 but in
no event later than April 30, 2000.
"Exposure": as defined in subsection 12.7(a).
"Extension of Credit": the making of any Loan by any Bank, the
issuance of, or participation in, any Letter of Credit by the Issuing Bank
or any Bank and the making of, or participation in, any drawing under the
Export Loan Agreement by any Bank or the Selling Bank; the "aggregate
outstanding amount of all Extensions of Credit" means, at any time of
determination thereof, the sum of (a) the unpaid principal amount of all
Loans at such time, (b) the aggregate amount available to be drawn under
all Letters of Credit outstanding at such time (or, in the case of any
Syndicated Letter of Credit issued in an Approved Foreign Currency, the
Dollar Equivalent thereof), (c) the aggregate unreimbursed amount at such
time of all drawings under Letters of Credit and (d) the unpaid principal
amount of the Export Loan at such time.
"Federal Funds Rate": for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (ii) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Bank of America on such day on such
transactions as determined by the Administrative Agent.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.
"Funded Debt": of any person at any date (without duplication), (a)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of
<PAGE> 15
10
property or services (other than current trade liabilities incurred in the
ordinary course of business) which is evidenced by a note, bond, debenture
or similar instrument, but excluding interest rate hedging agreements and
foreign exchange hedging agreements incurred to protect such person
against interest rate fluctuations or foreign exchange rate fluctuations
and (b) the portion of Financing Leases that is included on such person's
balance sheet as Indebtedness. Funded Debt shall not include any
indebtedness relating to vendor financing.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement, substantially in the form of Exhibit E, to be
executed and delivered as of the Closing Date by the Borrower and each
of its domestic Restricted Subsidiaries, as the same may be amended,
supplemented or otherwise modified.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness (the "primary
obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business.
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous constituents, hazardous or toxic substances,
asbestos, petroleum products (including crude oil or any fraction
thereof), defined or regulated as such in or under any Environmental
Law.
"Indebtedness": of a Person at any date (without duplication), (a)
Funded Debt, (b) all liabilities secured by any consensual lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof (but only to the extent of
the value of such property), but excluding such
<PAGE> 16
11
liabilities arising as a result of progress payments, milestones, customer
advances or similar arrangements related to contracts incurred in the
ordinary course of business, (c) reimbursement obligations owing in
respect of letters of credit and bankers' acceptances that are not paid
within three Business Days of the date such obligations are incurred and
(d) the undrawn face amount of all stand-by letters of credit and bankers'
acceptances issued or created on behalf of such Person in connection with
obligations not reflected on the balance sheet of such Person, but
excluding letters of credit and bankers' acceptances issued or created in
connection with such Person's performance under contracts in the ordinary
course of business. Indebtedness shall not include any indebtedness
relating to vendor financing.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercompany Debt": as defined in subsection 6.13.
"Interest Income": as to a Person at any date, interest income
on investments in the normal course of business, excluding orbital
income which may be included in such Person's financial statements
prepared in accordance with GAAP.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
Business Day of each March, June, September and December to occur while
such Base Rate Loan is outstanding, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months (i) each day which is three months or a whole multiple
thereof, after the first day of such Interest Period and (ii) the last day
of such Interest Period and (d) as to the Export Loan and each Export
Participation, each date on which interest is payable on the Export Loan
pursuant to the Export Loan Agreement, which dates shall be set out on
Schedule 1.1B hereto.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative
Agent not less than three Working Days prior to the last day of the
then current Interest Period with respect thereto;
and with respect to each drawdown under the Export Loan Agreement, the
Interest Period for such drawdown as provided in Section 3 of the Export
Loan Agreement; provided that
<PAGE> 17
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all of the foregoing provisions relating to Interest Periods are subject
to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan or
the Export Loan would otherwise end on a day that is not a Working
Day, such Interest Period shall be extended to the next succeeding
Working Day unless the result of such extension would be to carry
such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Working Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or the Export Termination Date, as
the case may be, shall end on the Revolving Credit Termination Date
or the Export Termination Date, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan or the
Export Loan that begins on the last Working Day of a calendar month
shall end on the numerically corresponding day of a calendar month
unless the Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the
Interest Period is supposed to end, in which case such Interest
Period shall end on the last Working Day of such calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan or the Export
Loan during an Interest Period for such Loan.
"Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower
against fluctuations in interest rates.
"Investment": any advance, loan, extension of credit or capital
contribution to, or purchase of any stock, bonds, notes, debentures or
other securities of, or any assets constituting a business unit of, or
any other investment in, any Person or in any commodities futures or
other speculation.
"Issuing Bank": Bank of America National Trust and Savings
Association.
"L/C Application": as defined in subsection 4.1.
"L/C Obligations": the obligations (whether contingent or
matured) of the Borrower to reimburse the Issuing Bank for any
payments made by the Issuing Bank under any Syndicated Letter of
Credit.
"L/C Participating Interest": an undivided participating
interest in the face amount of each issued and outstanding
Syndicated Letter of Credit and the L/C Application relating
thereto.
"L/C Participation Certificate": a certificate in
substantially the form of
<PAGE> 18
13
Exhibit C.
"Letters of Credit": the collective reference to the
Syndicated Letters of Credit and the Individual Letters of
Credit; individually, a "Letter of Credit".
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Financing Lease having
substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing).
"Loan Documents": this Agreement, the Export Loan Agreement, the
Export Notes, the Notes, the Guarantee and Collateral Agreement and any
L/C Applications.
"Loan Party": the Borrower, the Parent and each Subsidiary of
the Borrower which is a party to a Loan Document.
"Loans": the collective reference to the Revolving Credit Loans
and the Term Loans. The defined term "Loans" does not include the
Export Loan or any Export Participation.
"Loral": Loral Space & Communications Ltd., a Bermuda company,
of which the Borrower is a wholly-owned indirect subsidiary.
"Majority Banks": at any time, any combination of the Selling
Bank or Banks whose Commitment Percentages aggregate more than 50%.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole which
effect has a material adverse effect on the ability of the Borrower to
perform its obligations under the Loan Documents, or (b) the validity or
enforceability of any of the Loan Documents or the rights or remedies of
the Administrative Agent, the Selling Bank or the Banks thereunder.
"Material Subsidiary": any Subsidiary of the Borrower which has
assets in excess of 5% of the consolidated assets of the Borrower and
its Subsidiaries as determined in accordance with GAAP.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Notes": the collective reference to Term Notes and Revolving
Credit Notes.
"Obligations": the unpaid principal of and interest on the Loans,
the Export Loan, all unpaid drawings under the Letters of Credit and all
interest thereon and all other obligations and liabilities of the Borrower
to the Administrative Agent, the Issuing Bank,
<PAGE> 19
14
the Selling Bank or the Banks, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred,
which may arise under, out of, or in connection with, any Loan Document,
or any other documents made, delivered or given in connection therewith,
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including without limitation, all
reasonable fees and disbursements of counsel to the Administrative Agent,
the Issuing Bank, the Selling Bank or any Bank) or otherwise.
"Parent": Loral Space & Communications Corporation, a Delaware
corporation.
"Participant": as defined in subsection 12.6(b).
"Participating Bank": with respect to any Syndicated
Letter of Credit, any Bank (other than the Issuing Bank of such
Syndicated Letter of Credit) with respect to its L/C
Participating Interest in such Letter of Credit.
"Payment Request": as defined in the Export Loan Agreement.
"Payment Sharing Notice": a written notice from any Bank
informing the Administrative Agent that an Event of Default has
occurred and is continuing and directing the Administrative Agent to
allocate payments thereafter received from the Borrower in accordance
with subsection 5.6(d).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Performance Letters of Credit": the ChinaSat Letter of Credit
and any other Letter of Credit issued to support performance of
Contractual Obligations not constituting Indebtedness of the Borrower
or its Restricted Subsidiaries.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Purchasing Banks": as defined in subsection 12.6(c).
"Reference Banks": Bank of America or, if required to obtain the
interest make-up agreement referred to in Section 4(1)(c) of the Export
Loan Agreement, Barclays Bank PLC-London, National Westminster Bank PLC
and Bankers Trust Co. London, in either case, as these banks appear on the
Reuter Service's Libo page.
"Register": as defined in subsection 12.6(d).
<PAGE> 20
15
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under Sections .13, .14, .16, .18, .19 or .20
of PBGC Reg. 2615.
"Required Banks": at any time, any combination of the Selling
Bank or Banks whose Commitment Percentages aggregate at least 51%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": with respect to any matter, each of the chief
executive officer, the president, the chief financial officer and any
other officer of the Borrower specifically designated pursuant to a
resolution of the Board of Directors or Executive Committee thereof of the
Borrower or, with respect to financial matters only, the chief financial
officer of the Borrower.
"Restricted Subsidiary": each of the Borrower's direct and
indirect 80% or more owned subsidiaries, but excluding any subsidiaries
representing less than 5% of the consolidated assets of the Borrower
and its subsidiaries.
"Revolving Credit Bank": each Bank having an amount greater than
zero set forth under the heading "Revolving Credit Commitment" opposite
such Bank's name on Schedule 1.1A, as amended or supplemented.
"Revolving Credit Commitment": as to any Revolving Credit Bank, the
obligation of such Bank to make Loans to, and to participate in Letters of
Credit for the account of, the Borrower hereunder in an aggregate
outstanding amount at any one time not to exceed the amount set forth
opposite such Bank's name under the heading "Revolving Credit Commitment"
on Schedule 1.1A, as amended or supplemented.
"Revolving Credit Commitment Percentage": as to any Revolving
Credit Bank at any time, the percentage of the aggregate Revolving
Credit Commitments then constituted by such Bank's Revolving Credit
Commitment.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to but not including the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Letters of Credit": any Syndicated Letter of
Credit issued
<PAGE> 21
16
under the Revolving Credit Commitments.
"Revolving Credit Letters of Credit Obligations": the
obligations (whether contingent or matured) of the Borrower to
reimburse the Issuing Bank for any payments made by the Issuing Bank
under any Letter of Credit issued under the Revolving Credit
Commitments.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 2.2.
"Revolving Credit Termination Date": November 14, 2002, or such
earlier date as the Revolving Credit Commitments shall terminate as
provided herein.
"Rolling Four Quarter Period": each consecutive period
consisting of four consecutive fiscal quarters of the Borrower.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and each other pledge agreement, security document or
similar agreement that may be delivered to the Administrative Agent as
collateral security for any or all of the Obligations, in each case as
amended, supplemented or otherwise modified from time to time.
"Selling Bank": as defined in the preamble hereto.
"Shareholders' Equity": shareholders equity as shown on a
balance sheet of the Borrower plus, so long as after giving effect
thereto Shareholders' Equity would exceed $700,000,000, Cash Advances
from Parent.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent" and "Solvency": with respect to any Person on a particular
date, that on such date, (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature, and (d)
such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's property
would constitute an unreasonably small capital.
"Special Purpose Holding Subsidiary": a Wholly-Owned Subsidiary
of the Borrower formed to hold an equity interest in one or more joint
ventures or other business related to the Borrower's current business
and engaging in no other business activities.
"SS/L": Space Systems/Loral, Inc., a Delaware corporation and a
Wholly-Owned
<PAGE> 22
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Subsidiary.
"Standby L/C": an irrevocable letter of credit under which the
Issuing Bank agrees to make payments in Dollars or Approved Foreign
Currencies for the account of the Borrower, in respect of obligations of
the Borrower incurred pursuant to contracts made or performances
undertaken or to be undertaken or like matters relating to contracts to
which the Borrower is or proposes to become a party in the ordinary course
of the Borrower's business, including, without limiting the foregoing, for
insurance purposes or in respect of advance payments or as bid or
performance bonds or for any other purpose for which a standby letter of
credit might customarily be issued.
"Subsidiary": as to any Person, a corporation, partnership or other
entity a majority of the equity ownership of which is owned, directly or
indirectly, by such Person or by one or more other Subsidiaries or by such
Person and one or more other Subsidiaries. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
"Syndicated Letters of Credit": the collective reference
to Commercial L/Cs, Standby L/Cs and Performance Letters of Credit issued
pursuant to subsection 4.1; individually, a "Syndicated Letter of Credit".
"Term Loan": as defined in subsection 3.1.
"Term Loan Bank": each Bank having an amount greater than zero
set forth under the heading "Term Loan Commitment" opposite such Bank's
name on Schedule 1.1A, as amended or supplemented.
"Term Loan Commitment": as to any Term Loan Bank at any time, its
obligation to make Term Loans to the Borrower in an aggregate amount not
to exceed the amount set forth opposite such Bank's name in Schedule 1.1A,
as amended or supplemented, under the heading "Term Loan Commitment".
"Term Loan Commitment Percentage": as to any Term Loan Bank at
any time, the percentage which such Term Loan Bank's Term Loan
Commitment then constitutes of the aggregate Term Loan Commitments of
all Term Loan Banks.
"Term Note": as defined in subsection 3.3(e).
"Tranche": the collective reference to Eurodollar Loans the
Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in subsection 12.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Wholly-Owned Subsidiary": any Subsidiary of the Borrower, the
stock of which
<PAGE> 23
18
is 100% owned, directly or indirectly, by the Borrower.
"Working Day": any Business Day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England and, in the case of the Export Loan, Milan, Italy.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP; provided, however, that if a
change in GAAP occurs after the date hereof which materially affects (either
favorably or adversely) the ability of the Borrower to comply with any covenant
contained in subsection 9.1, the Banks, the Selling Bank and the Borrower agree
to renegotiate in good faith the terms of such provision(s) for the purpose of
having the respective positions of the Banks, the Selling Bank and the Borrower
after the change in GAAP conform as nearly as possible to their respective
positions as of the date of this Credit Agreement.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS AND ADDITIONAL LETTERS OF
CREDIT COMMITMENTS
2.1 Commitments. (a) Subject to the terms and conditions hereof,
each Revolving Credit Bank severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrower and to participate in Syndicated
Letters of Credit from time to time during the Revolving Credit Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed the amount of such Bank's Revolving Credit Commitment. During the
Revolving Credit Commitment Period the Borrower may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof;
provided that, after giving effect to any Revolving Credit Loans, in no event
shall the aggregate outstanding amount of the Available Revolving Credit
Commitments be less than zero. The issuance of Additional Letters of Credit
under subsection 2.1(d) hereof shall not reduce the obligation of the Revolving
Credit Banks to participate in Revolving Credit Letters of Credit under this
subsection 2.1(a).
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans,
<PAGE> 24
19
(ii) Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.3 and 5.14; provided that no Loan shall be made as a Eurodollar Loan after the
day that is one month prior to the Revolving Credit Termination Date.
(c) The Revolving Credit Loans shall mature and shall be due and
payable on the Revolving Credit Termination Date.
(d) Subject to the terms and conditions hereof, each Additional
Letters of Credit Bank severally agrees to participate in Syndicated Letters of
Credit from time to time during the period ending November 14, 1999 in an
aggregate amount at any one time outstanding not to exceed the amount of such
Bank's Additional Letters of Credit Commitment; provided that, after giving
effect to such participations in any Additional Letters of Credit, in no event
shall the aggregate outstanding amount of all Additional Letters of Credit
Obligations exceed the aggregate amount of the Additional Letters of Credit
Commitments then in effect. The issuance of Revolving Credit Letters of Credit
under subsection 2.1(a) hereof shall not reduce the obligation of the Additional
Letter of Credit Banks to participate in Additional Letters of Credit under this
subsection 2.1(d).
2.2 Revolving Credit Notes. The Revolving Credit Loans made by each
Bank shall be evidenced by a promissory note executed and delivered by the
Borrower, substantially in the form of Exhibit A-1 with appropriate insertions
as to payee, date and principal amount (a "Revolving Credit Note"), payable to
the order of such Revolving Credit Bank and in a principal amount equal to the
lesser of (a) the amount of the initial Revolving Credit Commitment of such
Revolving Credit Bank and (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by such Revolving Credit Bank. Each Revolving Credit
Bank is hereby authorized to record the date, Type and amount of each Revolving
Credit Loan made by such Revolving Credit Bank, each continuation thereof, each
conversion of all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof and, in the case of Eurodollar
Loans, the length of each Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Revolving Credit Termination Date
and (z) provide for the payment of interest in accordance with subsection 5.3.
2.3 Procedure for Borrowing. The Borrower may borrow under the
Revolving Credit Commitments during the Revolving Credit Commitment Period on
any Working Day, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans, or on any Business Day, otherwise, provided
that the Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 11:00 A.M., New
York City time), (a) three Working Days prior to the requested Borrowing Date,
if all or any part of the requested Revolving Credit Loans are to be initially
Eurodollar Loans, or (b) on a Business Day for Base Rate Loans to made on that
day, specifying (i) the amount to be borrowed, (ii) the requested Borrowing
Date, (iii) whether the borrowing is to be of Eurodollar Loans, Base Rate Loans
or a combination thereof and (iv) if the borrowing is to be entirely or partly
of Eurodollar Loans, the lengths of the initial Interest Periods therefor. Each
borrowing of Eurodollar Loans under the Commitments shall be in an amount equal
to $5,000,000 or a whole multiple of $250,000 in excess thereof. Each borrowing
of Base Rate Loans under the
<PAGE> 25
20
Commitments shall be in an amount equal to $1,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Bank thereof. Each Bank will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in subsection 12.2 prior to 1:00 P.M., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent crediting the account of
the Borrower on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the Banks and in like funds as received
by the Administrative Agent.
SECTION 3. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
3.1 The Term Loans. Subject to the terms and conditions hereof, each
Term Loan Bank severally agrees to make a term loan (a "Term Loan") to the
Borrower on the Closing Date in an amount up to the amount of the Term Loan
Commitment of such Term Loan Bank. The Term Loans may be (a) Eurodollar Loans,
(b) Base Rate Loans, or (c) a combination thereof, as determined by the Borrower
and notified to the Administrative Agent in accordance with subsections 3.2 and
5.14.
3.2 Procedure for Term Loan Borrowing. The Borrower may borrow under
the Term Loan Commitments on the Closing Date, provided that the Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 11:00 A.M. (New York time) at least (a)
three Business Days prior to the requested Closing Date, if all or any part of
the requested Term Loans are to be initially Eurodollar Loans, or (b) one
Business Day prior to the requested Closing Date, otherwise), specifying in each
case (i) the amount to be borrowed, (ii) the requested Closing Date, (iii)
whether the borrowing is to be of Eurodollar Loans, Base Rate Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Type of Loan and the length of the initial
Interest Periods therefor. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Bank. Not later than 12:00
Noon (New York time) on the Closing Date each Term Loan Bank shall make an
amount equal to its Term Loan Commitment Percentage of the principal amount of
the Term Loans requested to be made on Closing Date available to the
Administrative Agent at its office specified in subsection 12.2 in U.S. Dollars
and in immediately available funds. The Administrative Agent shall on such date
credit the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the Term
Loan Banks and in like funds as received by the Administrative Agent.
3.3 Repayment of Term Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Term Loan Bank the then unpaid principal amount of the Term
Loans of such Term Loan Bank in twelve consecutive quarterly installments,
payable on the last Business Day of each March, June, September and December,
commencing on December 31, 1999 each of which installments shall be in an
aggregate amount for all Term Loan Banks equal to the respective amounts set
forth below:
<PAGE> 26
21
<TABLE>
<CAPTION>
Term Loan Quarterly Amount
Installment Date
<S> <C>
12/31/99 $18,750,000
3/31/00 $18,750,000
6/30/00 $18,750,000
9/30/00 $18,750,000
12/31/00 $25,000,000
3/31/01 $25,000,000
6/30/01 $25,000,000
9/30/01 $25,000,000
12/31/01 $25,000,000
3/31/02 $25,000,000
6/30/02 $25,000,000
9/30/02 $25,000,000
</TABLE>
(b) Each Term Loan Bank (and each Revolving Credit Bank and
Additional Letters of Credit Bank, as applicable) shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Term Loan Bank (and each Revolving Credit Bank and Additional
Letters of Credit Bank, as applicable) resulting from each Term Loan (or
Revolving Credit Loan or Export Loan or Additional Letters of Credit, as
applicable) such Term Loan Bank (and each Revolving Credit Bank and Additional
Letters of Credit Bank, as applicable) from time to time, including the amounts
of principal and interest payable and paid to such Term Loan Bank (and each
Revolving Credit Bank and Additional Letters of Credit Bank, as applicable) from
time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 12.6(d), and a subaccount therein for each Term Loan Bank (and each
Revolving Credit Bank and Additional Letters of Credit Bank, as applicable), in
which Register and/or subaccounts shall be recorded (i) the amount of each Term
Loan (or Revolving Credit Loan or Export Loan or Additional Letters of Credit,
as applicable) made hereunder, the Type thereof and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Term Loan Bank (and each
Revolving Credit Bank and Additional Letters of Credit Bank, as applicable)
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Bank's share thereof.
(d) The entries made in the Register and the accounts of each Term
Loan Bank (and each Revolving Credit Bank and Additional Letters of Credit Bank,
as applicable) maintained pursuant to subsection 3.3(b) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Term Loan Bank (and each Revolving Credit
<PAGE> 27
22
Bank and Additional Letters of Credit Bank, as applicable) or the Administrative
Agent to maintain the Register or any such account, or any error therein, shall
not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Term Loans (or Revolving Credit Loan or Export Loan or
Additional Letters of Credit, as applicable) made to the Borrower by such Term
Loan Bank (and each Revolving Credit Bank and Additional Letters of Credit Bank,
as applicable) in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Term Loan Bank, the Borrower will execute and deliver to such Term
Loan Bank a promissory note of the Borrower evidencing the Term Loan of such
Term Loan Bank, substantially in the form of Exhibit A-2 with appropriate
insertions as to date and principal amount (as amended, supplemented or
otherwise modified from time to time, a "Term Note").
SECTION 4. SYNDICATED LETTERS OF CREDIT AND
PARTICIPATIONS IN EXPORT LOAN
4.1 Issuance of Syndicated Letters of Credit. (a) The Borrower may
from time to time request the Issuing Bank to issue a Standby L/C, Performance
Letter of Credit or a Commercial L/C for the account of the Borrower by
delivering to the Issuing Bank, with a copy to the Administrative Agent at its
address specified in subsection 12.2, a letter of credit application in the
Issuing Bank's then customary form (an "L/C Application") completed to the
satisfaction of the Issuing Bank, and shall notify the Issuing Bank whether such
Syndicated Letter of Credit shall be issued under the Additional Letters of
Credit Commitments or under the Revolving Credit Commitments, together with the
proposed form of such Syndicated Letter of Credit (which shall comply with the
applicable requirements of paragraph (b) below) and such other certificates,
documents and other papers and information as the Issuing Bank may reasonably
request.
(b) Each Standby L/C, Performance Letter of Credit and Commercial
L/C issued hereunder shall, among other things, (i) be in such form requested by
the Borrower from the Issuing Bank as shall be acceptable to the Issuing Bank in
its sole reasonable discretion and (ii) in the case of each Standby L/C or
Performance Letter of Credit, have an expiry date occurring not later than the
fifth Business Day preceding the Revolving Credit Termination Date or November
14, 1999 in the case of Additional Letters of Credit and, in the case of each
Commercial L/C, have an expiry date occurring not later than the fifth Business
Day preceding the Revolving Credit Termination Date or November 14, 1999 in the
case of Additional Letters of Credit.
(c) Each letter of credit issued under the Existing Credit Agreement
outstanding on the Closing Date and listed on Schedule 4.1 shall be deemed a
Letter of Credit issued for the account of the Borrower under this Agreement
under the Revolving Credit Commitments or the Additional Letters of Credit
Commitments as indicated on Schedule 4.1.
(d) No Syndicated Letter of Credit shall be issued (i) under the
Revolving Credit Commitments if, after giving effect thereto, the Available
Revolving Credit Commitments would be less than zero or the aggregate Revolving
Credit Letter of Credit Obligations would exceed $175,000,000 or (ii) under the
Additional Letters of Credit Commitments if, after giving effect
<PAGE> 28
23
thereto, subsection 2.1(d) would be violated.
4.2 Participating Interests in Syndicated Letters of Credit. On the
date of the opening thereof (or in the case of subsection 4.2(d), the Closing
Date), the Issuing Bank agrees to allot and does allot, to itself and each other
Bank, and each Bank severally and irrevocably agrees to take and does take in
each Syndicated Letter of Credit and the related L/C Application, an L/C
Participating Interest in a percentage equal to such Bank's Revolving Credit
Commitment Percentage or Additional Letters of Credit Commitment Percentage, as
applicable.
4.3 Procedure for Opening Syndicated Letters of Credit. The Borrower
may from time to time request that the Issuing Bank issue a Syndicated Letter of
Credit by delivering concurrently to each of the Administrative Agent and the
Issuing Bank an L/C Application at least four (4) Business Days prior to the
proposed date of issuance. Upon receipt of any L/C Application and the
confirmation by the Administrative Agent that subsection 4.1 will not be
violated, the Issuing Bank will process such L/C Application, and the other
certificates, documents and other papers delivered to it in connection
therewith, in accordance with its customary procedures and, subject to the terms
and conditions hereof, promptly issue such Syndicated Letter of Credit; provided
that no such Syndicated Letter of Credit shall be issued if subsection 4.1 would
be violated thereby. The Issuing Bank shall furnish a copy of each Syndicated
Letter of Credit to the Borrower and the Administrative Agent promptly following
the issuance thereof. The Administrative Agent shall promptly furnish to the
Banks notice of the issuance of each such Syndicated Letter of Credit.
4.4 Payments in Respect of Syndicated Letters of Credit. (a) The
Borrower agrees forthwith upon demand by the Issuing Bank and otherwise in
accordance with the terms of the L/C Application executed by the Borrower
relating thereto, (i) to reimburse the Issuing Bank for any payment (or, in the
case of any Syndicated Letter of Credit issued in an Approved Foreign Currency,
the Dollar Equivalent thereof on the second Business Day after the drawing under
the Syndicated Letter of Credit) made by the Issuing Bank under any Syndicated
Letter of Credit issued for such Borrower's account and (ii) to pay interest on
any unreimbursed portion of any such payment (or, if applicable, the Dollar
Equivalent thereof on the second Business Day after the drawing under the
Syndicated Letter of Credit) from the date of such payment until reimbursement
in full thereof at a rate per annum equal to (A) prior to the date which is one
Business Day after the day on which the Issuing Bank demands reimbursement from
the Borrower for such payment, the rate of interest that would be in effect for
Base Rate Loans at such time and (B) on such date and thereafter, the rate of
interest that would be in effect for overdue Base Rate Loans at such time
pursuant to subsection 5.3(c).
(b) In the event that the Issuing Bank makes a payment under any
Syndicated Letter of Credit and is not reimbursed in full therefor forthwith
upon demand of the Issuing Bank, and otherwise in accordance with the terms of
the L/C Application relating to such Syndicated Letter of Credit, the Issuing
Bank will promptly notify each other Bank through the Administrative Agent.
Forthwith upon its receipt of any such notice, each other Bank will transfer to
the Issuing Bank, in immediately available funds, an amount equal to such other
Bank's Revolving Credit Commitment Percentage or Additional Letters of Credit
Commitment Percentage, as applicable, of the L/C Obligation arising from such
unreimbursed payment. Upon its receipt from such other Bank of such amount, the
Issuing Bank will complete, execute and deliver to such other Bank an L/C
Participation Certificate dated the date of such receipt and in
<PAGE> 29
24
such amount.
(c) Whenever, at any time after the Issuing Bank has made a payment
under any Syndicated Letter of Credit and has received from any other Bank such
other Bank's Revolving Credit Commitment Percentage or Additional Letters of
Credit Commitment Percentage, as applicable, of the L/C Obligation arising
therefrom, the Issuing Bank receives any reimbursement on account of such L/C
Obligation or any payment of interest on account thereof, the Issuing Bank will
distribute to such other Bank its pro rata share thereof in like funds as
received; provided, however, that in the event that the receipt by the Issuing
Bank of such reimbursement or such payment of interest (as the case may be) is
required to be returned, such other Bank will return to the Issuing Bank any
portion thereof previously distributed by the Issuing Bank to it in like funds
as such reimbursement or payment is required to be returned by the Issuing Bank.
4.5 Syndicated Letter of Credit Fees. (a) In lieu of any letter of
credit commissions and fees provided for in any L/C Application relating to
Syndicated Letters of Credit (other than amendment and negotiation fees), the
Borrower agrees to pay (i) to the Administrative Agent, for the account of the
Participating Banks and the Issuing Bank (with respect to its own L/C
Participating Interest in any Syndicated Letter of Credit issued by it), with
respect to each Syndicated Letter of Credit, a fee based on a rate per annum
equal to (x) for Letters of Credit (other than Performance Letters of Credit)
issued under the Revolving Credit Commitments, the Applicable Margin then in
effect for Eurodollar Loans, and (y) for Letters of Credit issued under the
Additional Letters of Credit Commitments and any Performance Letters of Credit,
50% of the Applicable Margin then in effect for Eurodollar Loans, in each case
calculated on the undrawn face amount thereof (or, in the case of any Syndicated
Letter of Credit issued in an Approved Foreign Currency, the Dollar Equivalent
thereof at the time of issuance) from time to time and (ii) to the
Administrative Agent for the account of the Issuing Bank in respect thereof, a
fee of 1/10 of 1% per annum based on the undrawn face amount thereof (or, in the
case of any Syndicated Letter of Credit issued in an Approved Foreign Currency,
the Dollar Equivalent thereof at the time of issuance) from time to time, each
such fee to be payable quarterly in arrears, on the last Business Day of March,
June, September and December.
(b) For purposes of any payment of fees required pursuant to this
subsection 4.5, the Administrative Agent agrees to provide to the Borrower a
statement of any such fees to be so paid by the Borrower; provided that the
failure by the Administrative Agent to provide the Borrower with any such
invoice shall not relieve the Borrower of its obligation to pay such fees.
4.6 Syndicated Letter of Credit Reserves. (a) If any change in any
law or regulation or in the interpretation or application thereof by any court
or other Governmental Authority charged with the administration thereof shall
either (i) impose, modify, deem or make applicable any reserve, special deposit,
assessment or similar requirement against Syndicated Letters of Credit issued by
the Issuing Bank or (ii) impose on the Issuing Bank any other condition
regarding this Agreement or any Syndicated Letter of Credit, and the result of
any event referred to in clause (i) or (ii) above shall be to increase the cost
to the Issuing Bank of issuing or maintaining any Syndicated Letter of Credit
(which increase in cost shall be the result of the Issuing Bank's reasonable
allocation of the aggregate of such cost increases resulting from such events),
then, upon demand by the Issuing Bank, the Borrower shall immediately pay to the
Issuing Bank, from time to time as specified by the Issuing Bank, additional
amounts which shall
<PAGE> 30
25
be sufficient to compensate the Issuing Bank for such increased cost, together
with interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the Base Rate plus the Applicable Margin
for Base Rate Loans at such time. A certificate, setting forth in reasonable
detail the calculation of the amounts involved, submitted by the Issuing Bank to
the Borrower concurrently with any such demand by the Issuing Bank, shall be
conclusive, absent manifest error, as to the amount thereof.
(b) In the event that any change in any law or regulation or in the
interpretation or application thereof by any court or other Governmental
Authority charged with the administration thereof shall at any time, in the
reasonable opinion of the Issuing Bank, require that any obligation under any
Syndicated Letter of Credit issued by the Issuing Bank be treated as an asset or
otherwise be included for purposes of calculating the appropriate amount of
capital to be maintained by the Issuing Bank or any corporation controlling the
Issuing Bank, and such change in law shall have the effect of reducing the rate
of return on the Issuing Bank's or such corporation's capital, as the case may
be, as a consequence of the Issuing Bank's obligations under such Syndicated
Letter of Credit to a level below that which the Issuing Bank or such
corporation, as the case may be, could have achieved but for such change (taking
into account the Issuing Bank's or such corporation's policies, as the case may
be, with respect to capital adequacy) by an amount deemed by the Issuing Bank to
be material, then from time to time following notice by the Issuing Bank to the
Borrower of such change, within 15 days after demand by the Issuing Bank, the
Borrower shall pay to the Issuing Bank such additional amount or amounts as will
compensate the Issuing Bank or such corporation, as the case may be, for such
reduction. If the Issuing Bank becomes entitled to claim any additional amounts
pursuant to this subsection 4.6(b), it shall promptly notify the Borrower of the
event by reason of which it has become so entitled. A certificate, in reasonable
detail setting forth the calculation of the amounts involved, submitted by the
Issuing Bank to the Borrower concurrently with any such demand by the Issuing
Bank, shall be conclusive, absent manifest error, as to the amount thereof.
(c) The Borrower agrees that the provisions of the foregoing
paragraphs (a) and (b) and the provisions of each L/C Application providing for
reimbursement or payment to the Issuing Bank in the event of the imposition,
modification or implementation of, or increase in, any reserve, special deposit,
assessment, capital adequacy or similar requirement in respect of the Syndicated
Letter of Credit relating thereto shall apply equally to each Participating Bank
in respect of its L/C Participating Interest in such Syndicated Letter of
Credit, as if the references in such paragraphs and provisions referred to,
where applicable, such Participating Bank or any corporation controlling such
Participating Bank.
4.7 Participating Interests in Export Loan. On the date of each
drawdown of a portion of the Export Loan in accordance with the Export Loan
Agreement, the Selling Bank agrees to allot and does allot, to itself and each
Bank, and each Bank severally and irrevocably agrees to take and does take in
such drawdown under the Export Loan and under the Export Notes, a participating
interest (an "Export Participation") in a percentage equal to such Bank's Export
Commitment Percentage. The Selling Bank hereby purchases all outstanding Export
Participations of each Existing Bank as of the date hereof and severally resells
such Export Participations to the Banks hereunder in a percentage equal to each
Bank's Export Commitment Percentage.
4.8 Procedure for Drawdowns under Export Loan Agreement.
Notwithstanding
<PAGE> 31
26
anything in the Export Loan Agreement to the contrary, if the Borrower desires
to have SS/L borrow under the Export Loan Agreement during the Export Commitment
Period, the Borrower shall give the Administrative Agent and the Selling Bank
irrevocable notice (which notice must be received by the Administrative Agent
and the Selling Bank prior to 11:00 A.M., New York City time) no less than seven
Working Days prior to the requested borrowing date specifying (i) the amount to
be borrowed and (ii) the requested borrowing date (which must be a Working Day)
and accompanied by the documentation required under Sections 4(2)(a), (b) and
(c) of the Export Loan Agreement for such drawdown (and the Selling Bank shall
have confirmed to the Administrative Agent in writing on the same day that such
documentation complies with the requirements of the Export Loan Agreement). Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
notify each Bank thereof no less than four Working Days prior to the requested
borrowing date. Each Bank will make the amount of its Export Commitment
Percentage of such drawdown under the Export Loan available to the
Administrative Agent for the benefit of SS/L at the office of the Administrative
Agent specified in subsection 12.2 prior to 10:00. a.m., New York City time, on
the borrowing date requested by the Borrower in funds immediately available to
the Administrative Agent. Such borrowing will then be made available to SS/L by
the Administrative Agent and SS/L shall remit such funds to the Selling Bank.
The Selling Bank will transfer such funds together with its Export Commitment
Percentage of such drawdown to the Italian Paying Agent (as defined in the
Export Loan Agreement) for application in accordance with the Export Loan
Agreement.
4.9 Payments on Export Loan. Notwithstanding anything in the Export
Loan Agreement or any Export Note to the contrary and as an inducement to the
Selling Bank and the Banks to enter into this Agreement and buy and sell their
Export Participations, the Borrower, SS/L and San Paolo agree that:
(a) on each Interest Payment Date in respect of the Export Loan,
SS/L will pay to the Administrative Agent for the account of the
Administrative Agent and the Banks and the Selling Bank to be applied in
accordance with the terms hereof interest on the outstanding principal
amount of the Export Loan from time to time for each Interest Payment
Period (as defined in the Export Loan Agreement) ending on such Interest
Payment Date at a rate per annum equal to the Eurodollar Rate for such
Interest Payment Period plus the Applicable Margin in effect from time to
time.
(b) if any payment of interest is not made pursuant to clause (a)
above or any payment of principal of the Export Loan is not made when due,
SS/L will pay on demand to the Administrative Agent for the account of the
Banks and the Selling Bank interest on such overdue interest or principal
at a rate per annum equal to the Base Rate plus 2% from the due date until
payment in full (as well after as before judgment).
(c) all payments of principal of the Export Loan, whether at stated
maturity, by acceleration or otherwise shall be made to the Administrative
Agent for the account of the Administrative Agent and the Banks and the
Selling Bank to be applied in accordance with the terms hereof.
(d) SS/L's obligation under this subsection 4.9 shall be in lieu of
any and all obligations to pay interest on and principal of the Export
Loan under the Export Loan Agreement and the Export Notes and payment
hereunder shall be deemed to be full
<PAGE> 32
27
satisfaction of SS/L's obligations to pay interest on and principal of the
Export Loan pursuant to the Export Loan Agreement and the Export Notes and
SS/L's obligation to pay interest and principal on the Export Loan shall
not be satisfied unless and until paid in accordance with the terms
hereof.
(e) if the Selling Bank shall receive any payment of principal of or
interest on the Export Loan from or on behalf of the Borrower or SS/L
(other than pursuant to subsection 5.6) it shall promptly turn such
payment over to the Administrative Agent for application in accordance
with the terms hereof.
4.10 Concerning the Export Loan Agreement. Notwithstanding
anything in the Export Loan Agreement or any Export Note to the contrary:
(a) to the extent not due earlier in accordance with the terms
hereof or the Export Loan Agreement, the entire outstanding principal
amount of the Export Loan shall be due and payable on the Export
Termination Date.
(b) the conditions precedent to each drawdown of the Export Loan in
Section 4 of the Export Loan Agreement shall be deemed satisfied if the
conditions precedent to such drawdown hereunder are satisfied.
(c) Section 8 (Representations and Warranties of the Borrower) of
the Export Loan Agreement shall, in lieu of the current provisions of such
Section, be deemed to be Section 6 (Representations and Warranties) of
this Agreement as amended, supplemented or otherwise modified from time to
time as if set forth in full therein with the related definitions.
(d) Section 10 (Undertakings and Affirmative Covenants) of the
Export Loan Agreement shall, in lieu of the current provisions of such
Section, be deemed to be Section 8 (Affirmative Covenants) of this
Agreement as amended, supplemented or otherwise modified from time to time
as if set forth in full therein with the related definitions.
(e) Section 11 (Undertakings and Negative Covenants) of the Export
Loan Agreement shall, in lieu of the current provisions of such Section,
be deemed to be Section 9 (Negative Covenants) of this Agreement as
amended, supplemented or otherwise modified from time to time as if set
forth in full therein with the related definitions.
(f) Section 12 (Events of Default) of the Export Loan Agreement
shall, in lieu of the current provisions of such Section, be deemed to be
Section 10 (Events of Default) of this Agreement as amended, supplemented
or otherwise modified from time to time as if set forth in full therein
with the related definitions.
(g) the Selling Bank shall not be obligated to make any portion of
any drawing of the Export Loan available to SS/L under the Export Loan
Agreement in excess of its Export Commitment Percentage of such drawing.
<PAGE> 33
28
(h) In the event of any inconsistency between the terms of this
Agreement and the Export Loan Agreement, the terms of this Agreement shall
control.
(i) To the extent they contain indemnity provisions, Section 3(b)
and the third paragraph of Section 6 of the Export Loan Agreement shall be
deemed, in lieu of the current provisions of such Sections, to be
subsection 5.10 of this Agreement as amended, supplemented or otherwise
modified from time to time as if set forth in full therein with the
related definitions.
4.11 Further Assurances. The Borrower hereby agrees from time to
time to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Bank more fully to effect the
purposes of this Agreement and the issuance of Syndicated Letters of Credit
hereunder.
4.12 Obligations Absolute. The payment obligations of the Borrower
under this Agreement and the other Loan Documents with respect to the Syndicated
Letters of Credit and Export Participations shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:
(a) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
any beneficiary, or any transferee, of any Syndicated Letter of Credit (or
any Persons for whom any such beneficiary or any such transferee may be
acting), the Issuing Bank in respect thereof, the Administrative Agent,
any Bank, the Selling Bank or any other Person, whether in connection with
this Agreement, the Loan Documents, the transactions contemplated herein,
or any unrelated transaction;
(b) any statement or any other document presented under any
Syndicated Letter of Credit or any Payment Request proving to be forged,
fraudulent or invalid or any statement therein being untrue or inaccurate
in any respect;
(c) payment by the Issuing Bank under any Syndicated Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Syndicated Letter of Credit or is
insufficient in any respect, except where such payment constitutes gross
negligence or wilful misconduct on the part of the Issuing Bank; or
(d) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except for any such circumstances or
happening constituting gross negligence or wilful misconduct on the part
of the Issuing Bank.
4.13 Assignments. No Participating Bank's participation in any
Syndicated Letter of Credit or any of its rights or duties hereunder shall be
subdivided, assigned or transferred (other than in connection with a transfer of
part or all of such Participating Bank's Commitment in accordance with
subsection 12.6(c)) without the prior written consent of the Issuing Bank. Such
consent may be given or withheld without the consent or agreement of any other
Participating Bank. Notwithstanding the foregoing, a Participating Bank may
subparticipate its L/C Participating Interest pursuant to subsection 12.6(b)
without obtaining the
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prior written consent of the Issuing Bank.
4.14 Participations. Each Bank's obligation to purchase
participating interests pursuant to subsections 4.2 and 4.7 shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against the Issuing Bank, the Borrower, the
Selling Bank or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of an Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement by
the Borrower or any other Bank; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
4.15 Determination of Dollar Equivalent. With respect to each Letter
of Credit issued and outstanding in an Approved Foreign Currency, on the date of
issuance of such Letter of Credit, and on any date deemed necessary by the
Administrative Agent (each, a "Determination Date") the Administrative Agent
shall determine, and promptly notify each Bank of, the Dollar Equivalent of the
undrawn amount and drawn amount of such Letter of Credit.
SECTION 5. GENERAL PROVISIONS
5.1 Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of the Banks a non-use fee, payable quarterly in arrears, on the
last Business Day of March, June, September and December, for the period from
the Closing Date to the later of (i) the Revolving Credit Termination Date and
(ii) the Export Maturity Date equal to (x) the Applicable Non-Use Margin then in
effect (as set forth in the definition of Applicable Margin) per annum on the
daily average difference between the aggregate Revolving Credit Commitments (or,
if the Revolving Credit Commitments have terminated, the aggregate Export
Commitments of the Banks) and the aggregate outstanding amount of all Extensions
of Credit of the Banks under the Revolving Credit Commitments, and (y) 50% of
the Applicable Non-Use Margin then in effect per annum on the daily average
difference between the aggregate Additional Letters of Credit Commitments and
the aggregate outstanding amount of all Additional Letters of Credit
Obligations.
(b) The Borrower agrees to pay to the Administrative Agent for its
own account the administrative fees on the dates and in the amounts set forth in
the letter agreement between Bank of America and the Borrower dated as of August
29, 1997.
(c) All fees paid under or in connection with this Agreement are
non-refundable.
5.2 Voluntary Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments or the
Additional Letters of Credit Commitments, as applicable, provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any payments or prepayments of the Loans made on the effective date thereof,
the aggregate amount of Extensions of Credit outstanding would exceed the
Commitments then in effect. Any such reduction shall be in an amount equal to
$1,000,000 or a whole multiple thereof and shall reduce permanently the
Commitments then in effect.
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5.3 Interest Rates and Payment Dates. (a) Each Eurodollar Loan and
each Export Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such Loan or Export Loan for such Interest Period plus the Applicable Margin
in effect from time to time.
(b) Each Base Rate Loan shall bear interest for each day outstanding
at a rate per annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan or
(ii) any interest payable thereon or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum which is (x) in the
case of overdue principal, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this subsection 5.3 plus 2% or (y) in
the case of overdue interest or other amounts, the rate described in paragraph
(b) of this subsection 5.3 plus 2%, in each case from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this
subsection 5.3 shall be payable on demand.
5.4 Computation of Interest and Fees. (a) Interest on Base Rate
Loans shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. Interest on Eurodollar Loans and the
Export Loan and fees shall be calculated on the basis of a 360-day year for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the Base
Rate or the Applicable Margin shall become effective as of the opening of
business on the day on which such change in the Base Rate is announced or such
change in the Applicable Margin becomes effective, as the case may be. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Banks of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Banks in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to subsection 5.3(a).
5.5 Inability to Determine Interest Rate. In the event that
prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Banks
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that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Banks (as
conclusively certified by such Banks) of making or maintaining their
affected Loans or Export Participations during such Interest Period, or
(c) the Administrative Agent shall have received notice from the
Majority Banks that they are unable or find it impracticable to obtain
funding with respect to any Eurodollar Loan or Export Participation
requested or to be continued for such Interest Period,
the Administrative Agent shall give telex, telecopy or telephonic notice thereof
to the Borrower, the Selling Bank and the Banks as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans or Export
Participations requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans or bear interest at the Base Rate, (y) any Base
Rate Loans that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be converted to or continued as Base Rate Loans
and (z) any outstanding Eurodollar Loans or Export Participations shall be
converted, on the first day of such Interest Period, to Base Rate Loans or shall
bear interest at the Base Rate. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Base Rate Loans to
Eurodollar Loans.
5.6 Pro Rata Treatment and Payments. (a) Each borrowing of Loans
from the Banks hereunder, each payment to the Banks on account of any of the
fees set forth in subsection 5.1(a) and any reduction of the Commitments of the
Banks shall be made pro rata according to the respective Commitment Percentages
of the Banks. Each funding of Export Participations and any reduction of the
Export Commitments shall be made pro rata according to the respective Export
Commitment Percentages of the Banks and the Selling Bank. Each payment
(including each prepayment) on account of principal of and interest on the Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Loans then held by the Banks. Each payment (including each prepayment) on
account of principal of and interest on the Export Loan shall be made pro rata
according to the respective outstanding principal amounts of the Export Loan and
Export Participations then held by the Banks and the Selling Bank. All payments
(including prepayments) to be made by the Borrower or SS/L hereunder and under
the Notes, whether on account of principal, interest, unpaid drawings under
Letters of Credit, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Bank(s),
the Selling Bank or Issuing Bank entitled thereto, at the Administrative Agent's
office specified in subsection 12.2, in Dollars and in immediately available
funds. The Administrative Agent shall distribute such payments to the Bank(s),
the Selling Bank and Issuing Bank entitled thereto promptly upon receipt in like
funds as received. If any payment hereunder (other than payments on any
Eurodollar Loans and the Export Loan) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension. If any payment on
a Eurodollar Loan or the Export Loan becomes due and payable on a day other than
a Working Day, the maturity thereof shall be extended to the next succeeding
Working Day which is a Business Day unless the result of such extension would be
to extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Working Day which is a Business Day.
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(b) Unless the Administrative Agent shall have been notified in
writing by any Bank prior to a borrowing date for Loans or a drawdown under the
Export Loan that such Bank will not make the amount that would constitute its
applicable Commitment Percentage of such borrowing or drawdown available to the
Administrative Agent, the Administrative Agent may assume that such Bank has
made such amount available to the Administrative Agent on such borrowing or
drawdown date, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is made available to the Administrative Agent on a date after such
borrowing or drawdown date, such Bank shall pay to the Administrative Agent on
demand an amount equal to the product of (i) the daily average Federal Funds
Rate during such period, times (ii) the amount of such Bank's applicable
Commitment Percentage of such borrowing or drawdown, times (iii) a fraction, the
numerator of which is the number of days that elapse from and including such
borrowing or drawdown date to the date on which such Bank's applicable
Commitment Percentage of such borrowing or drawdown shall have become
immediately available to the Administrative Agent and the denominator of which
is 360. A certificate of the Administrative Agent submitted to any Bank with
respect to any amounts owing under this subsection 4.6 shall be conclusive in
the absence of manifest error. If such Bank's applicable Commitment Percentage
of such borrowing is not in fact made available to the Administrative Agent by
such Bank within three Business Days of such borrowing or drawdown date, the
Administrative Agent shall be entitled to recover such amount with interest
thereon at the rate per annum applicable to Base Rate Loans hereunder, on
demand, from the Borrower and the applicable Loan or Export Participation shall
be reduced by the amount of such payment (exclusive of interest). If the
Borrower returns to the Administrative Agent any amount with interest thereon as
described in the immediately preceding sentence, such Bank shall indemnify the
Borrower for the difference, if any, between (i) the aggregate interest paid by
the Borrower to the Administrative Agent in accordance with the immediately
preceding sentence less (ii) if less, the aggregate interest which actually
accrued on such amount in accordance with the provisions hereof prior to its
return to the Administrative Agent.
(c) Whenever any payment received by the Administrative Agent under
this Agreement is insufficient to pay in full all amounts then due and payable
to the Administrative Agent, the Issuing Bank, the Selling Bank and the Banks
under this Agreement and the Notes, and the Administrative Agent has not
received a Payment Sharing Notice (or if the Administrative Agent has received a
Payment Sharing Notice but the Event of Default specified in such Payment
Sharing Notice has been cured or waived), such payment shall be distributed and
applied by the Administrative Agent, the Selling Bank and the Banks in the
following order: first, to the payment of fees and expenses due and payable to
the Administrative Agent under and in connection with this Agreement; second, to
the payment of all expenses due and payable under subsection 12.5, ratably among
the Banks and the Selling Bank in accordance with the aggregate amount of such
payments owed to each such Bank, the Issuing Bank and the Selling Bank; third,
to the payment of fees due and payable to the Issuing Bank; fourth, to the
payment of fees due and payable under subsection 5.1 ratably among the Banks and
the Selling Bank in accordance with their Commitment Percentages; fifth, to the
payment of interest then due and payable on account of the Loans and the other
Extensions of Credit, ratably among the Banks and the Selling Bank in accordance
with the aggregate amount of interest owed to each such Bank and the Selling
Bank; and sixth, to the payment of the principal amount of the Loans and the
other Extensions of Credit which is then due and payable, ratably among the
Banks and the
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Selling Bank in accordance with the aggregate principal amount owed to each such
Bank and the Selling Bank.
(d) After the Administrative Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the Administrative
Agent under this Agreement or any Note shall be distributed and applied by the
Administrative Agent and the Banks in the following order: first, to the payment
of all amounts described in clauses first through fourth of the foregoing
paragraph (c), in the order set forth therein; and second, to the payment of the
interest accrued on and the principal amount of all of the Notes and other
Extensions of Credit, regardless of whether any such amount is then due and
payable, ratably among the Banks and the Selling Bank in accordance with the
aggregate accrued interest plus the aggregate principal amount owed to such Bank
and the Selling Bank.
5.7 Illegality. Notwithstanding any other provision herein, if any
change in any Requirement of Law or in the interpretation or application thereof
shall make it unlawful for any Bank to make or maintain Eurodollar Loans or
participate in the Export Loan as contemplated by this Agreement, (a) the
commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar
Loans as such and convert Base Rate Loans to Eurodollar Loans or participate in
the Export Loan shall forthwith be canceled and (b) such Bank's outstanding
Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law, or its Export
Participation will bear interest at the Base Rate, as the case may be. If any
such conversion or prepayment of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Bank such amounts, if any, as may be required
pursuant to subsection 5.10.
5.8 Requirements of Law. (a) In the event that any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Bank with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Bank or the Selling Bank to any tax of any
kind whatsoever with respect to this Agreement, any Note or any Eurodollar
Loan or the Export Loan or any Export Participation made by it, or change
the basis of taxation of payments to such Bank or the Selling Bank in
respect thereof (except for taxes covered by subsection 5.9 and changes in
the rate of tax on the overall net income of such Bank or the Selling
Bank);
(ii) shall impose, modify or hold applicable any reserve (including
without limitation any Eurodollar Reserve Requirement), special deposit,
compulsory loan or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office
of such Bank or the Selling Bank which is not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank or
the Selling Bank, by
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34
an amount which such Bank or the Selling Bank deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or making or
participating in the Export Loan or to reduce any amount receivable hereunder in
respect thereof then, in any such case, the Borrower shall promptly pay such
Bank or the Selling Bank, upon its demand, any additional amounts necessary to
compensate such Bank or the Selling Bank for such increased cost or reduced
amount receivable. If any Bank or the Selling Bank becomes entitled to claim any
additional amounts pursuant to this subsection 5.8, it shall promptly notify the
Borrower, through the Administrative Agent, of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection 5.8 submitted by such Bank or the Selling Bank,
through the Administrative Agent, to the Borrower shall be conclusive in the
absence of manifest error and the amounts set forth therein shall be payable
quarterly on each Interest Payment Date for Base Rate Loans. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
(b) In the event that any Bank or the Selling Bank shall have
determined that any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Bank or
the Selling Bank or any corporation controlling such Bank or the Selling Bank
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof does or shall have the effect of reducing the rate of return on such
Bank's or the Selling Bank's or such corporation's capital as a consequence of
its obligations hereunder to a level below that which such Bank or the Selling
Bank or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or the Selling Bank's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Bank or the Selling Bank to be material, then from time to time, after
submission by such Bank or the Selling Bank to the Borrower (with a copy to the
Administrative Agent) of a written request therefore, the Borrower shall pay to
such Bank or the Selling Bank such additional amount or amounts as will
compensate such Bank or the Selling Bank for such reduction. Any notice to be
given by a Bank or the Selling Bank under this subsection 5.8(b) shall be
effective only if given within 120 days after such Bank or the Selling Bank
becomes aware or should have become aware of the events giving rise to such
notice.
5.9 Taxes. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding, in the case of the Administrative Agent, the
Issuing Bank, the Selling Bank and each Bank, net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent,
the Issuing Bank, the Selling Bank or such Bank, as the case may be, as a result
of a present, former or future connection between the jurisdiction of the
government or taxing authority imposing such tax and the Administrative Agent,
the Issuing Bank, the Selling Bank or such Bank (excluding a connection arising
solely from the Administrative Agent, the Issuing Bank, the Selling Bank or such
Bank having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Notes) or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld by the
Borrower from any amounts payable to the Administrative Agent, the Issuing Bank,
the Selling Bank or any
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Bank hereunder or under the Notes, the amounts so payable to the Administrative
Agent, the Issuing Bank, the Selling Bank or such Bank shall be increased to the
extent necessary to yield to the Administrative Agent, the Issuing Bank, the
Selling Bank or such Bank (after payment of all Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of the Issuing Bank, the Selling
Bank or such Bank, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Taxes when due to the appropriate taxing authority or fails to remit
to the Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent, the Issuing
Bank, the Selling Bank and the Banks for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent, the Issuing Bank,
the Selling Bank or any Bank as a result of any such failure. None of the Banks,
nor the Issuing Bank, nor the Selling Bank nor any transferee shall change its
office which makes or maintains Eurodollar Loans or Base Rate Loans or Export
Loans or Export Participations, if the effect of such action would cause,
immediately following such change or in the reasonably foreseeable future, any
amount to become payable by the Borrower under this subsection 5.9 unless such
Bank, transferor Bank, or the Selling Bank or transferee, as determined by it in
its sole discretion, could be disadvantaged in any financial, economic,
regulatory or other business way by the failure to make any such change. Solely
at the Borrower's expense, the Borrower shall be entitled to contest the payment
of any Taxes that the Borrower believes were not correctly or legally asserted
and the Administrative Agent, the Issuing Bank, the Selling Bank or any Bank
with respect to which such Taxes were imposed shall fully cooperate with the
Borrower in connection with such contest. If any Taxes constituting a
withholding tax shall be or become applicable, after the Closing Date, to
payments by the Borrower to the Selling Bank or any Bank, the Selling Bank or
such Bank, as the case may be, shall use its best efforts to make, fund and
maintain the Export Loan, its Export Participations and its Loans, as the case
may be, through another lending office of the Selling Bank or such Bank, as the
case may be, in another jurisdiction so as to reduce, to the fullest extent
possible, the Borrower's liability hereunder, if the making, funding or
maintenance of the Export Loan, the Export Participations and such Loans, as the
case may be, through such other office does not otherwise materially adversely
affect the Export Loan, the Export Participations or such Loans, as the case may
be, or the Selling Bank or such Bank, as the case may be. In the event that the
Borrower is required to pay the Selling Bank or any Bank any additional amount
pursuant to this subsection 5.9(a) and no change of lending office is made in
accordance with the preceding sentence, after the Borrower makes such payment,
the Selling Bank or such Bank, as the case may be, shall at the request and cost
of the Borrower transfer for a purchase price equal to the outstanding Loans and
Export Participation of such Bank, accrued and unpaid interest thereon and
accrued and unpaid fees owing to such Bank under subsection 5.1 hereof and in
accordance with the procedures set forth in subsection 12.6(c), its rights and
obligations under this Agreement and the Notes or the other Loan Documents to a
financial institution selected by the Borrower (and which agrees to such
transfer) with the approval of such transferor and the Administrative Agent (not
to be unreasonably withheld). If the Administrative Agent, the Issuing Bank, the
Selling Bank or any Bank receives a refund in respect of any Taxes for which the
Borrower has made payment hereunder, the Administrative Agent, the Issuing Bank,
the Selling Bank or such Bank (as the case may be) shall repay such refund
(together with any interest actually received thereon) to the Borrower, provided
that the Borrower, upon the request of the Administrative Agent, the Issuing
Bank, the Selling Bank or such Bank, agrees to return
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such refund (together with any penalties, interest or other charges) to the
Administrative Agent, the Issuing Bank, the Selling Bank or such Bank (as the
case may be) in the event that the Administrative Agent, the Issuing Bank, the
Selling Bank or such Bank is required to repay such refund. The agreements in
this subsection 5.9 shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder.
(b) The Selling Bank and each Bank that is not incorporated under
the laws of the United States of America or a state thereof agrees that it will
deliver to the Borrower and the Administrative Agent (i) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, as the case may be. The Selling Bank
and each such Bank also agrees to deliver to the Borrower and the Administrative
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or other manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, and such extensions or renewals
thereof as may reasonably be requested by the Borrower or the Administrative
Agent, unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent the Selling Bank or such Bank from duly
completing and delivering any such form with respect to it and the Selling Bank
or such Bank so advises the Borrower and the Administrative Agent, in which case
the Selling Bank or such Bank will deliver copies of any such forms as such Bank
is able to complete and deliver. The Selling Bank and each Bank shall certify
and represent and warrant to the Borrower (i) in the case of a Form 1001 or
4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. The Borrower shall not be required to pay any
increased amount on account of Taxes pursuant to subsection 5.9(a) to the
Administrative Agent, the Selling Bank or any Bank that fails to furnish any
form or statement that it is required to furnish in accordance with this
subsection 5.9(b) and, to the extent required by law, the Borrower shall be
entitled to deduct Taxes from the payments owed to the Selling Bank or such
Bank.
5.10 Indemnity. The Borrower agrees to indemnify the Selling Bank
and each Bank and to hold the Selling Bank and each Bank harmless from any loss
or expense which the Selling Bank or such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment when due of the principal
amount of or interest on any Eurodollar Loan or the Export Loan, (b) default by
the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans or the Export Loan after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (c)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (d) the
making of a prepayment of Eurodollar Loans or the Export Loan on a day which is
not the last day of an Interest Period with respect thereto, including, without
limitation, in each case, any such loss or expense arising from the reemployment
of funds (excluding loss of margin) obtained by it or from fees payable to
terminate the deposits from which such funds were obtained. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
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5.11 Change in Lending Office. Each Bank, the Selling Bank and the
Issuing Bank agrees that, in the event that, at any time, the provisions of
subsections 4.6, 5.7, 5.8 or 5.9, as the case may be, have become or are likely
to become applicable to it, it will change its office which makes or maintains
Eurodollar Loans or Base Rate Loans or issues or maintains Letters of Credit or
the Export Loan or Export Participations, as the case may be, to another of the
offices through which it or its Affiliates conducts business of the type in
which it is engaged hereunder, if by making such change it can avoid or mitigate
any cost or disadvantage to the Borrower arising out of the operation of such
provisions, so long as such Bank or the Selling Bank, as determined by it in its
sole reasonable discretion, is not disadvantaged in any financial, economic,
regulatory or other business way.
5.12 Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon at least three Business Days' irrevocable notice to the Administrative
Agent in the case of Eurodollar Loans and prior to 10:00 A.M. on any Business
Day in the case of Base Rate Loans, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall promptly
notify each Bank thereof. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with, in the case of Eurodollar Loans, accrued interest to such date on the
amount prepaid. Partial prepayments shall be in an aggregate principal amount of
$1,000,000 (or, in the case of Eurodollar Loans, $5,000,000) or a whole multiple
of $1,000,000 in excess thereof and may only be made if, after giving effect
thereto, subsection 5.15 is not contravened. All prepayments shall be
accompanied by the amounts notified by each Bank to the Administrative Agent as
due and owing to it under subsection 5.10 as a result of such prepayment.
5.13 Mandatory Prepayments. (a) If, during the Revolving Credit
Commitment Period, the aggregate outstanding amount of the Available Revolving
Credit Commitments is less than zero (including, without limitation, any such
occurrence resulting from the reductions in the Revolving Credit Commitments
pursuant to subsection 5.2 or this subsection 5.13), the Borrower shall pay or
prepay the Revolving Credit Loans or cause SS/L to prepay the Export Loan,
without premium or penalty, on such date in an aggregate amount equal to such
excess, together with interest thereon accrued to the date of such payment or
prepayment and any amounts payable pursuant to subsection 5.10 or, in the case
of the Export Loan, payments for the account of San Paolo required pursuant to
Section 3(b) of the Export Loan Agreement.
(b) The net cash proceeds of any issuance of indebtedness for borrowed
money other than (i) the Loans and the Export Loans and (ii) of the type
referred to in subsections 9.2(d) and 9.2(h) or cash pay, coupon bearing
preferred stock after the Closing Date issued by the Borrower or any of its
Restricted Subsidiaries to Persons other than to Affiliates of the Borrower
shall be used to prepay the Term Loans and reduce the Revolving Credit
Commitments in accordance with this subsection 5.13; provided that no
prepayments shall be required under this subsection 5.13(b) if the pro forma
Funded Debt to Consolidated EBITDA ratio (for the four consecutive fiscal
quarters ending on the last day of the period covered by the financial
statements most recently delivered pursuant to subsections 8.1(a) or (b)) of the
Borrower and its consolidated Subsidiaries is less than 3.00 to 1.00 after
giving effect to such issuance of indebtedness or
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38
preferred stock.
(c) The net after-tax cash proceeds of the sale or other disposition of
any property or assets of the Borrower or any of its Restricted Subsidiaries
required to prepay the Term Loans and reduce the Revolving Credit Commitments
pursuant to subsection 9.6(h) shall be used to prepay the Term Loans and reduce
the Revolving Credit Commitments in accordance with this subsection 5.13, in
each case no later than 365 Business Days after the date of receipt thereof,
unless such net after-tax cash proceeds have been reinvested in the business of
the Borrower and its Restricted Subsidiaries within such 365 Business Day
period.
(d) 50% of Excess Cash Flow, calculated annually at the end of each fiscal
year commencing on or after January 1, 1999 shall be used to prepay the Term
Loans and reduce the Revolving Credit Commitments in accordance with this
subsection 5.13 within 90 days after the end or each such fiscal year; provided
that such prepayment shall not be required under this subsection 5.13(d) if the
pro forma Funded Debt to Consolidated EBITDA ratio (for the fiscal year then
ended) of the Borrower and its consolidated Subsidiaries is less than 3.00 to
1.00, as of the last day of such fiscal year.
(e) The net proceeds for any second consecutive launch failure of any
satellite financed and scheduled to be owned and operated by the Borrower and
the insurance proceeds from any in-orbit failure of any satellite shall be used
to prepay the Term Loans and the Revolving Credit Commitments in accordance with
this subsection 5.13; provided that such prepayment shall not be required under
this subsection 5.13(e) if the pro forma Funded Debt to Consolidated EBITDA
ratio (for the four consecutive fiscal quarters ending on the last day of the
period covered by the financial statements most recently delivered pursuant to
subsections 8.1(a) or (b)) of the Borrower and its consolidated Subsidiaries is
less than 3.00 to 1.00.
(f) Mandatory prepayments made pursuant to subsections 5.13(b), (c), (d)
and (e) shall be applied first, to the Term Loans pro rata to the remaining
installments on the Term Loans, and second, to the permanent reduction of the
Revolving Credit Commitments (and to the repayment of the Revolving Credit Loans
only as required in the next sentence). Payments made under this subsection 5.13
shall be applied first to Base Rate Loans, then to the Eurodollar Loans with an
Interest Period ending on such date and then to other Eurodollar Loans. If,
after giving effect to the foregoing prepayments, the aggregate outstanding
amount of all Extensions of Credit under the Revolving Credit Commitments still
exceeds the aggregate amount of the Revolving Credit Commitments, then the
Borrower shall cash collateralize the Letters of Credit, in an aggregate amount
equal to such excess. All prepayments shall be accompanied by the amounts
notified by each Bank to the Administrative Agent as due and owing to it under
subsection 5.10 as a result of such prepayment.
5.14 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans, and/or to
convert Base Rate Loans to Eurodollar Loans by giving the Administrative Agent
at least three Business Days' prior irrevocable notice of such election,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Bank thereof. All or any part of
outstanding Eurodollar Loans and Base Rate Loans may be
<PAGE> 44
39
converted as provided herein, provided that (i) no Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the
Administrative Agent or the Required Banks have determined that such a
conversion is not appropriate, (ii) any such conversion may only be made if,
after giving effect thereto, subsection 5.15 or the proviso to subsection 2.1(a)
shall not have been contravened and (iii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Revolving Credit
Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection 1.1,
of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Banks have determined that such a continuation is not appropriate, (ii)
if, after giving effect thereto, subsection 5.15 or the proviso to subsection
2.1(a) would be contravened or (iii) after the date that is one month prior to
the Revolving Credit Termination Date; provided, further, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period.
(c) Any notice given by Borrower under this subsection 5.14 shall be
deemed given on any Business Day if received on or prior to 11:00 a.m. New York
City time on such date and otherwise on the next succeeding Business Day after
receipt.
5.15 Minimum Amounts of Tranches. All conversions and continuations
of Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Banks, the Issuing Bank, the Selling Bank and the
Administrative Agent to enter into this Agreement and the Banks and the Issuing
Bank to make their Extensions of Credit hereunder the Borrower hereby represents
and warrants to the Administrative Agent, the Issuing Bank, the Selling Bank,
and each Bank that:
6.1 Financial Condition. (a) The balance sheet of Loral as at
December 31, 1996 and the related statements of income and of cash flows for the
nine months ended on such date, audited by Deloitte & Touche LLP, copies of
which have heretofore been furnished to the Selling Bank and each Bank that
requested the same, are complete and correct in all material respects and
present fairly the financial condition of Loral as at such date, and the results
of its operations and its cash flows for the nine months then ended. The
unaudited balance sheet of the Borrower as at June 30, 1997 and the related
unaudited statement of income for the three month period ended on such date,
certified by a Responsible Officer, copies of which have heretofore been
furnished to the Selling Bank and each Bank that requested the same, are
complete and correct in all material respects and present fairly the financial
condition of the Borrower as at
<PAGE> 45
40
such date, and the results of its operations for the three month period then
ended (subject to normal year-end audit adjustments). All such financial
statements, including any related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein and, with respect to any unaudited
statements, except the notes with respect thereto). Except as disclosed in
Schedule 6.1, the Borrower did not have, at the date of the most recent balance
sheet referred to above, any material Guarantee Obligation, material contingent
liability or material liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in any notes thereto. During the period from June
30, 1997 to and including the date hereof there has been no sale, transfer or
other disposition by the Borrower of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any Capital Stock of any other Person) material in relation to the
financial condition of the Borrower at June 30, 1997.
(b) The Borrower has furnished to the Selling Bank and each Bank
projections of the financial position and results of operations of the Borrower
as at the end of and for each of the fiscal years of the Borrower through
December 31, 2002. The projections and pro forma financial information contained
in such materials are based upon good faith estimates and assumptions believed
by the Borrower to be reasonable at the time made, it being recognized by the
Administrative Agent, the Selling Bank and the Banks that such projections as to
future events are inherently subject to significant economic and competitive
uncertainties beyond the control of the Borrower, that actual results of
operations during the periods covered by such projections may vary materially
and adversely from the projected results of operations contained in such
projections and that there cannot be any assurance that the projected results of
operations contained in such projections will be realized. No fact is known to
the Borrower (other than general economic conditions, which conditions are
commonly known and affect business generally) which has, or which would in the
future, in the reasonable judgment of the Borrower, have a Material Adverse
Effect that has not been set forth in the financial statements referred to in
this subsection 6.1 or disclosed herein or in the Schedules hereto.
6.2 No Change. Except as disclosed in Schedule 6.1, (a) since June
30, 1997 there has been no development or event, that has had or could
reasonably be expected to have a Material Adverse Effect and (b) since June 30,
1997, no dividends or other distributions have been declared, paid or made upon
the Capital Stock of the Borrower nor has any of the Capital Stock of the
Borrower been redeemed, retired, purchased or otherwise acquired for value by
the Borrower or any of its Subsidiaries, except as permitted by this Agreement.
6.3 Corporate Existence; Compliance with Law. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except where failure to so qualify could not
reasonably be expected to have a Material Adverse Effect, and (d) is in
<PAGE> 46
41
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power and authority, and the legal right, to execute,
deliver and perform the Loan Documents and the Borrower has the corporate power
and authority, and the legal right, to issue, deliver and perform the Notes and
the Export Notes and to borrow hereunder and under the Export Loan Agreement,
and all necessary corporate action has been taken by the Borrower to authorize
the borrowings on the terms and conditions of this Agreement and the Export Loan
Agreement and the Notes and the Export Notes and the execution, delivery and
performance of the Loan Documents. No consent or authorization of, filing with
or other act by or in respect of, any Governmental Authority or any other Person
(other than the Selling Bank or the Banks) is required in connection with the
consummation of the transactions contemplated hereby, the borrowings hereunder
and under the Export Loan Agreement or with the execution, delivery,
performance, validity or enforceability of any of the Loan Documents other than
those that have been obtained or made and are in full force and effect and other
than consents, authorizations, orders, notifications, filings or registrations,
individually or in the aggregate, the failure of which to obtain or make could
not reasonably be expected to have a Material Adverse Effect. This Agreement and
the Export Loan Agreement have been, and the Notes and the Export Notes and the
L/C Applications will be, duly executed and delivered on behalf of the Borrower.
This Agreement and the Export Loan Agreement each constitutes, and each Note,
Export Note and L/C Application, when executed and delivered will constitute, a
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.5 No Legal Bar. The execution, delivery and performance of the
Loan Documents, the consummation of the transactions contemplated hereby and
thereby, the borrowings hereunder and under the Export Loan Agreement and the
use of the proceeds thereof will not violate any Requirement of Law applicable
to, or Contractual Obligation of, the Borrower or of any of its Subsidiaries and
will not result in, or require, the creation or imposition of any Lien on any of
its or their respective properties or revenues pursuant to any such Requirement
of Law or Contractual Obligation.
6.6 No Material Litigation. Except as set forth on Schedule 6.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to this
Agreement, the Notes, any other Loan Document or any of the transactions
contemplated hereby or thereby, or (b) which has or could reasonably be expected
to have a Material Adverse Effect.
6.7 No Default. Neither the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
6.8 Ownership of Property; Liens. Except as disclosed in Schedule
6.8, each of
<PAGE> 47
42
the Borrower and its Subsidiaries has good record and marketable title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to all its other property, and none of such property is subject to any
Lien except as permitted by subsection 9.3.
6.9 Intellectual Property. Except as set forth on Schedule 6.9, the
Borrower and each of its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, technology, know-how and processes necessary
for the conduct of its business as currently conducted except for those which
the failure to own or license could not reasonably be expected to have a
Material Adverse Effect (the "Intellectual Property"). Except as disclosed in
Schedule 6.9, no claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim, except for any such claim
which could not reasonably be expected to have a Material Adverse Effect. The
use of such Intellectual Property by the Borrower and its Subsidiaries does not
infringe the rights of any Person, except for such claims and infringements
that, in the aggregate, do not have a Material Adverse Effect.
6.10 Federal Regulations. No part of the proceeds of any Loans or
the Export Loan will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by the Selling Bank, any
Bank or the Administrative Agent, the Borrower will furnish to the
Administrative Agent, the Selling Bank and each Bank a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U.
6.11 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
6.12 Subsidiaries. The Borrower has no Subsidiaries other than (a)
any Special Purpose Holding Subsidiary, (b) any Subsidiary acquired as permitted
by subsection 9.8(h), (c) existing Subsidiaries as set forth in Schedule 6.12
and (d) any Subsidiary which is either (i) not a Restricted Subsidiary or (ii)
which is a Guarantor pursuant to the Guarantee and Collateral Agreement.
6.13 Purpose of Loans. The proceeds of the Term Loans and a portion
of the Revolving Credit Facility shall be used by the Borrower on the Closing
Date as follows: (a) to refinance and retire certain existing indebtedness of
the Existing Borrower (including the Existing Credit Agreement) and to pay the
fees and expenses in connection therewith, (b) to refinance and retire
intercompany debt between the Parent and the Borrower (other than at least
$200,000,000 of such intercompany indebtedness owed to the Parent which is
unsecured and having terms and conditions satisfactory to the Administrative
Agent (the "Intercompany Debt"), and (c) to refinance and retire existing third
party indebtedness of the Borrower. Thereafter, the Revolving Credit Facility
shall be used to provide for working capital requirements and for general
corporate purposes, including acquisitions. The proceeds of the Export Loan
shall be
<PAGE> 48
43
used by SS/L to finance the purchase of satellites and satellite components from
Alenia which are in the aggregate of at least 80% Italian origin.
6.14 Environmental Matters. Except as disclosed in Schedule 6.14,
each of the representations and warranties set forth in paragraphs (a) through
(e) of this subsection is true and correct with respect to each parcel of real
property owned or operated (within the meaning of any applicable Environmental
Law) by the Borrower and its Subsidiaries (the "Properties"), except to the
extent that the facts and circumstances giving rise to any such failure to be so
true and correct could not reasonably be expected to have a Material Adverse
Effect:
(a) The Properties do not contain, and have not previously
contained, in, on, or under, including, without limitation, the soil and
groundwater thereunder, any Hazardous Materials in concentrations which
violate Environmental Laws.
(b) The Properties and all operations and facilities at the
Properties are in compliance with all Environmental Laws, and there is no
Hazardous Materials contamination or violation of any Environmental Law,
which could interfere with the continued operation of any of the
Properties or impair the fair saleable value of any thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received
any complaint, notice of violation, alleged violation, investigation or
advisory action or of potential liability or of potential responsibility
regarding environmental protection matters or permit compliance with
regard to the Properties, nor is the Borrower aware that any Governmental
Authority is contemplating delivering to the Borrower or any of its
Subsidiaries any such notice.
(d) Hazardous Materials have not been generated, treated, stored,
disposed of, in, on or under any of the Properties, nor have any Hazardous
Materials been transferred from the Properties to any other location, in
violation of any Environmental Law.
(e) There are no governmental or administrative actions or judicial
proceedings pending or, to Borrower's knowledge, contemplated under any
Environmental Laws to which the Borrower or any of its Subsidiaries is or,
to Borrower's knowledge, will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements, outstanding under any Environmental Law with
respect to any of the Properties.
6.15 Solvency. The Borrower is, individually and together with
its Subsidiaries, Solvent.
6.16 Security Documents. The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Banks, a legal, valid and enforceable security interest in the Collateral
described, and as defined, therein and proceeds thereof, and, after taking the
actions described in Schedule 3 thereto, the Guarantee and Collateral Agreement
shall at all times constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Borrower and its Subsidiaries in such
Collateral and the
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44
proceeds thereof, as security for the Secured Obligations (as defined in the
Guarantee and Collateral Agreement), in each case prior and superior in right to
any other Person, other than with respect to Liens expressly permitted by
subsection 9.3.
6.17 Disclosure. No representation or warranty made by the Borrower
in this Agreement, any other Loan Document or in any financial statement,
report, certificate or any other document furnished in connection herewith or
therewith contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein or therein not misleading.
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Effectiveness; Initial Extensions of Credit. The
effectiveness of this Agreement and the agreement of the Selling Bank and of
each Bank to make its initial Extension of Credit is subject to the
satisfaction, immediately prior to or concurrently with such effectiveness and
the making of such Extension of Credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received for
each Bank: (i) a certified copy of the Export Loan Agreement, (ii) this
Agreement, (iii) the Guarantee and Collateral Agreement and (iv) a
Revolving Credit Note or Term Loan Note for each requesting Revolving
Credit Bank and Term Loan Bank, each executed and delivered by a duly
authorized officer of the Borrower and the other parties thereto and, in
the case of this Agreement, by the Administrative Agent and the Banks.
(b) Corporate Proceedings of the Borrower. The Administrative Agent
shall have received, with a counterpart for each Bank, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of the Borrower
authorizing the execution, delivery and performance of the Loan Documents,
certified by the Secretary or an Assistant Secretary of the Borrower as of
the Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded
and shall be in form and substance reasonably satisfactory to the
Administrative Agent.
(c) Borrower Corporate Documents. The Administrative Agent shall
have received, with a counterpart for each Bank, true and complete copies
of the certificate of incorporation and by-laws of the Borrower, certified
as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of the Borrower.
(d) Borrower Incumbency Certificates. The Administrative Agent shall
have received, with a copy for each Bank, a certificate of the Borrower,
dated the Closing Date, as to the incumbency and signatures of the
officers of the Borrower executing any Loan Document, which certificate
shall be reasonably satisfactory in form and substance to the
Administrative Agent and shall be executed by the President or Vice
President and the Secretary or any Assistant Secretary of the Borrower.
(e) Corporate Proceedings of Subsidiaries. The Administrative Agent
shall have
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45
received, with a counterpart for each Bank, a copy of the resolutions, in
form and substance satisfactory to the Administrative Agent, of the Board
of Directors of each Subsidiary of the Borrower which is a party to a Loan
Document authorizing (i) the execution, delivery and performance of the
Loan Documents to which it is a party and (ii) the granting by it of the
Liens created pursuant to the Security Documents to which it is a party,
certified by the Secretary or an Assistant Secretary of each such
Subsidiary as of the Closing Date, which certificate shall be in form and
substance satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded.
(f) Subsidiary Incumbency Certificates. The Administrative Agent
shall have received, with a counterpart for each Bank, a certificate of
each Subsidiary of the Borrower which is a Loan Party, dated the Closing
Date, as to the incumbency and signature of the officers of such
Subsidiaries executing any Loan Document, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of each such
Subsidiary.
(g) Subsidiary Corporate Documents. The Administrative Agent shall
have received, with a counterpart for each Bank, true and complete copies
of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of such Loan Party.
(h) Financial Statements. The Administrative Agent shall have
received:
(i) Loral Form 10-K for the nine months ended December 31,
1996, as filed with the Securities and Exchange Commission, which
includes audited financial statements of Loral and the Existing
Borrower as of December 31, 1996 and March 31, 1996 and for the nine
months ended December 31, 1996 and for the years ended March 31,
1996 and March 31, 1995.
(ii) Loral Form 8-K/A, dated March 14, 1997, as filed with the
Securities and Exchange Commission, which includes audited financial
statements of Skynet Satellite Services (a business unit of AT&T) as
of December 31, 1996, 1995 and 1994.
(iii) Loral Form 10-Q for the quarterly periods ended March
31, 1997 and June 30, 1997 which includes the consolidated financial
statements of Loral and its subsidiaries.
(iv) unaudited consolidated financial statements of the
Borrower and the consolidated subsidiaries for and at June 30, 1997.
(i) No Violation. The consummation of the transactions contemplated
hereby shall not contravene, violate or conflict with, nor involve the
Administrative Agent, the Selling Bank, any Bank or the Issuing Bank in
any violation of, any Requirement of Law.
(j) Consents, Licenses and Approvals. The Administrative Agent shall
have
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46
received, with a copy for the Selling Bank and each Bank, a certificate of
a Responsible Officer of the Borrower (i) attaching copies of all
consents, authorizations and filings required by subsection 6.4, if any,
and (ii) stating that except for such consents, licenses and filings as
are attached, no such consents, licenses and filings are required, and
each such consent, authorization and filing, if any, shall be in form and
substance reasonably satisfactory to the Administrative Agent.
(k) Fees. The Administrative Agent shall have received the fees to
be received on the Closing Date referred to in subsection 5.1.
(l) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each relevant jurisdiction with respect
to the Borrower and its Restricted Subsidiaries, which shall reveal no
liens on any assets of the Borrower or its Restricted Subsidiaries except
for liens permitted under the Loan Documents or liens to be discharged on
or prior to the Closing Date pursuant to documentation satisfactory to the
Administrative Agent.
(m) Transponder Leasing. The Administrative Agent shall have
received copies of the forms of leasing agreements in respect of the
leasing by the Borrower from Loral of transponders on the Telstar 6 and
Telstar 7 satellites.
(n) Insurance. The terms, conditions and amounts of insurance
coverage of the Borrower and the Subsidiaries, including orbital and
launch insurance, shall be in effect when applicable, and substantially as
previously described to the Administrative Agent by the Borrower.
(o) Ratio of Funded Debt to Capitalization. The Administrative Agent
shall have received evidence that the ratio of Funded Debt to
Capitalization shall not exceed 0.65 to 1.00 as of the Closing Date.
(p) Marketing Survey. The Administrative Agent shall have received a
marketing survey as to the actual supply and demand for satellite services
prepared by an independent consultant satisfactory to the Administrative
Agent.
(q) Approval of Intercompany Debt. The Administrative Agent shall
have received a certified copy of the instruments evidencing the
Intercompany Debt and shall be satisfied with the terms and conditions of
the Intercompany Debt and all prepayments of Intercompany Debt on the
Closing Date shall have been applied to the installments of such
Intercompany Debt in the direct order of maturity.
(r) Repayment of Existing Credit Agreement. SS/L shall have paid (or
made arrangements satisfactory to the Administrative Agent to pay) in full
all loans, accrued interest and fees, and expenses and indemnities owing
to the Existing Banks under the Existing Credit Agreement.
(s) Legal Opinions. The Administrative Agent shall have received,
with a counterpart for the Selling Bank and each Bank, the executed legal
opinion of Willkie Farr & Gallagher, counsel to the Borrower,
substantially in the form of Exhibit D. Such
<PAGE> 52
47
legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.
7.2 Conditions to Each Extension of Credit. The agreement of the
Selling Bank and of each Bank to make any Extension of Credit or of the Issuing
Bank to issue any Syndicated Letter of Credit on any date (including, without
limitation, the Closing Date) is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of such date as if
made on and as of such date, except where such representations and
warranties expressly relate to an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier
date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Extensions of
Credit requested to be made on such date.
(c) Export Loan Agreement. If such Extension of Credit is a drawdown
under the Export Loan Agreement, the Selling Bank shall have received (and
the Administrative Agent shall have received a copy of) a Payment Request
and the documentation required under Sections 4(2)(a), (b) and (c),
respectively, of the Export Loan Agreement (and the Selling Bank shall
have confirmed to the Administrative Agent in writing that such
documentation complies with the requirements of the Export Loan
Agreement).
The acceptance by the Borrower of any Loan, any drawing under the
Export Loan or any Syndicated Letter of Credit shall constitute a representation
and warranty by the Borrower as of the date of such effectiveness or Loan or
Letter of Credit, as the case may be, that the conditions contained in this
subsection 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any Commitments remain
in effect, any Loan or the Export Loan remains outstanding and unpaid or any
Letter of Credit remains outstanding or any other amount is owing to the Selling
Bank, any Bank, the Issuing Bank or the Administrative Agent hereunder, the
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
8.1 Financial Statements. Furnish to the Administrative Agent,
the Selling Bank and each Bank:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related consolidated statements of operations and
of cash flows for such year, setting forth in each case, in comparative
form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by
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48
Deloitte & Touche LLP or other independent certified public accountants of
nationally recognized standing not unacceptable to the Required Banks; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of operations and of
cash flows of the Borrower and its consolidated Subsidiaries for such
quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case, in comparative form the figures for
the previous year, certified by a Responsible Officer as being to the best
of his knowledge fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Borrower and its
consolidated Subsidiaries referred to in subsection 8.1(a) or 5.1(a), as
the case may be (subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein and, with respect to any unaudited statements, except the
notes with respect thereto).
8.2 Certificates; Other Information. Furnish to the Selling
Bank and each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 8.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate and (ii) a calculation certified by a Responsible Officer of
Excess Cash Flow for the prior fiscal year;
(b) concurrently with the delivery of the financial statements
referred to in subsections 8.1(a) and 8.1(b), a certificate of a
Responsible Officer (x) stating that, to the best of such Officer's
knowledge, the Borrower and each of its Subsidiaries during such period
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in the Loan Documents to which it is
a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (y) showing
calculations in respect of subsection 9.1;
(c) within five days after the same are sent, copies of all
financial statements and material reports which Loral sends to its
stockholders, and within five days after the same are filed, copies of all
financial statements and reports which Loral or the Parent may make to, or
file with, the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(d) concurrently with the delivery of the financial statements
referred to in subsection 8.1(a) and (b), any discussion or analysis of
the results reflected in such financial statements prepared by management
of the Borrower; and
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49
(e) promptly, such additional financial and other information as any
Bank may from time to time reasonably request, subject to restrictions of
any Governmental Authority with respect to classified information.
8.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be, and except where the
failure to so pay is due to a good faith error or omission; provided that this
covenant shall not require the Borrower to pay any Indebtedness or Guarantee
Obligation if such failure to pay would not result in an Event of Default under
Section 10(f).
8.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 9.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect;
provided that this covenant shall not require the Borrower to pay any
Indebtedness or Guarantee Obligation if such failure to pay would not result in
an Event of Default under Section 10(f).
8.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition, normal wear and
tear excepted; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability, product liability and
business interruption) as are usually carried by the companies engaged in the
same or a similar business in the same general area, and if reasonably requested
by the Required Banks any additional property and/or liability insurance; and
furnish to each Bank, upon written request, full information as to the insurance
carried. Until such time as the ratio of (x) Funded Debt of the Borrower and its
consolidated Subsidiaries on the last day of any fiscal quarter to (y)
Consolidated EBITDA for any such fiscal quarter is less than 3.00 to 1.00 as of
the last day of two consecutive fiscal quarters, the Borrower and its
Subsidiaries shall maintain in-orbit insurance on each satellite equal in value
to at least the original cost less accumulated depreciation of each such
satellite in orbit. The Borrower and its Subsidiaries may implement programs of
self insurance for comprehensive general liability in the ordinary course of
business and in accordance with industry standards for a company of similar size
so long as the Administrative Agent and the Required Banks deem, in their sole
discretion, that such program is adequately capitalized.
8.6 Inspection of Property; Books and Records; Discussions;
Independent Audits. Keep proper books of records and account in which full, true
and correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and, subject to any restrictions imposed by any Governmental
Authority with respect to classified information and to contractual
confidentiality restrictions with customers, permit representatives of the
Selling Bank or of any Bank to visit
<PAGE> 55
50
and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired and to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
8.7 Notices. Promptly give notice to the Administrative Agent,
the Selling Bank and each Bank, of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, would have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of
its Subsidiaries in which the amount involved is more than 5% of the
Consolidated Net Worth of the Borrower at any time and not covered by
insurance (other than normal deductibles) or in which injunctive or
similar relief which could reasonably be expected to have a Material
Adverse Effect is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence or expected occurrence of any Reportable Event with respect
to any Plan, or any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the Borrower
or any Commonly Controlled Entity or any Multiemployer Plan with respect
to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan; and
(e) a development or event in the business, operations, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole which could reasonably be expected to have a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower or any of its Subsidiaries proposes to take
with respect thereto.
8.8 Environmental Laws.
(a) Comply with, and use best efforts to insure compliance by all
tenants and subtenants, if any, with, all Environmental Laws and obtain
and comply with and maintain, and use best efforts to insure that all
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by Environmental
Laws except to the extent that failure to do so could not have a Material
Adverse Effect;
<PAGE> 56
51
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws applicable to it and comply with all lawful orders and
directives of all Governmental Authorities within the time permitted by
law respecting Environmental Laws, except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency
of such proceedings could not have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent and
the Banks, and their respective employees, agents, officers and directors,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known
or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of or noncompliance with any Environmental Laws
applicable to the real property owned or operated (within the meaning of
any applicable Environmental Law) by the Borrower or any of its
Subsidiaries, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise
out of the gross negligence or willful misconduct of the party seeking
indemnification therefor.
8.9 Additional Subsidiaries. (a) With respect to any Person that,
subsequent to the Closing Date, becomes a Restricted Subsidiary (other than any
Subsidiary organized under a jurisdiction outside the United States), promptly
upon the request of the Administrative Agent: (i) execute and deliver to the
Administrative Agent, for the benefit of the Banks, any amendment or supplement
to the Guarantee and Collateral Agreement as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Banks, a Lien on the Capital Stock of such Subsidiary which is owned by the
Borrower or any of its Restricted Subsidiaries, (ii) deliver to the
Administrative Agent any certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the Borrower or such Restricted Subsidiary, as the case may be, (iii)
cause such new Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement pursuant to an Assumption Agreement in the form of Annex 1 thereto,
and (B) to take all actions necessary or advisable to cause the Liens created by
the Guarantee and Collateral Agreement to be duly perfected in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the
Administrative Agent and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(b) With respect to any Person that, subsequent to the Closing Date,
becomes a Restricted Subsidiary organized outside of the United States and
directly owned by the Borrower or a domestic Restricted Subsidiary, promptly
upon the request of the Administrative Agent: (i) execute and deliver to the
Administrative Agent a supplement to the Guarantee and Collateral or a pledge
agreement, as the Administrative Agent shall deem necessary or advisable to
grant to the Administrative Agent, for the benefit of the Banks, a Lien on the
Capital Stock of such foreign Subsidiary which is owned by the Borrower or any
of its domestic Restricted Subsidiaries (provided that in no event shall more
than 65% of the voting Capital Stock of any
<PAGE> 57
52
such foreign Subsidiary be required to be so pledged), (ii) deliver to the
Administrative Agent any certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the Borrower or such domestic Restricted Subsidiary, as the case may
be, and take or cause to be taken all such other actions under the law of the
jurisdiction of organization of such foreign Subsidiary as may be necessary or
advisable to perfect such Lien on such Capital Stock and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately preceding,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
SECTION 9. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any Commitments remain
in effect, any Loan or the Export Loan remains outstanding and unpaid or any
Letter of Credit remains outstanding or any other amount is owing to the Selling
Bank, any Bank, the Issuing Bank or the Administrative Agent hereunder, the
Borrower shall not, and (except with respect to subsections 9.1 and 9.7) shall
not permit any of its Subsidiaries or Subsidiaries controlled by the Borrower
(as applicable) to, directly or indirectly:
9.1 Financial Condition Covenants. (a) Interest Coverage.
Permit the ratio of (x) Consolidated EBITDA for any period of four
consecutive fiscal quarters (the "Test Period") ending on a fiscal quarter
during any period set forth below to (y) Consolidated Interest Expense for
such Test Period to be less than the ratio set forth opposite the last date
of such Test Period below:
Test Period Ending Ratio
------------------ -----
12/31/97-6/30/98 2.00 to 1.00
9/30/98 2.25 to 1.00
12/31/98 2.50 to 1.00
3/31/99 2.75 to 1.00
6/30/99 3.00 to 1.00
9/30/99 3.25 to 1.00
12/31/99 3.25 to 1.00
3/31/00 3.50 to 1.00
6/30/00 3.75 to 1.00
9/30/00 and thereafter 4.00 to 1.00
(b) Senior Third Party Debt to Capitalization. Permit the ratio of
(x) Funded Debt (other than the Intercompany Debt) on the last day of any fiscal
quarter to (y) Capitalization on the last day of such fiscal quarter to exceed
for any fiscal quarter ended on or prior to September 30, 1999, 0.55 to 1.00;
and for any fiscal quarter ended at any time thereafter, 0.50 to 1.00.
(c) Funded Debt to Capitalization. Permit the ratio of (x) Funded
Debt on the last day of any fiscal quarter to (y) Capitalization on the last day
of such fiscal quarter to exceed for any fiscal quarter ended on or prior to
September 30, 1999, 0.65 to 1.00; and for any fiscal
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53
quarter ended at any time thereafter, 0.60 to 1.00.
9.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness of Subsidiaries which the Borrower controls, except:
(a) Indebtedness in respect of the Loans, the Export Loan, the
Notes, the Export Notes, the Letters of Credit and other obligations under
this Agreement and the Export Loan Agreement;
(b) Indebtedness of any Restricted Subsidiary to the Borrower or
any other Subsidiary;
(c) Indebtedness outstanding on the Closing Date and listed on
Schedule 6.8 and extensions, renewals and refinancings thereof so long as
the amount of such Indebtedness is not thereby increased (except by an
amount necessary to pay the fees and expenses, including prepayment costs,
incurred in connection with the refinancing);
(d) Indebtedness comprised of liens permitted by subsection 9.3;
(e) Indebtedness in respect of Interest Rate Agreements and foreign
exchange hedging agreements incurred to protect the Borrower and its
Subsidiaries against interest rate fluctuations or foreign exchange rate
fluctuations;
(f) Indebtedness of the type described in clause (b) of the
definition of "Indebtedness" arising as a result of progress payments,
milestones, advances or similar arrangements made pursuant to government
contracts or other Contractual Obligations;
(g) Indebtedness incurred under any arrangement with any Person
providing for the leasing by any Subsidiary of real or personal property
which has been sold or is to be transferred by such Subsidiary to such
Person or to any other Person to whom funds have been or are to be
advanced by such Person on the security of such property or rental
obligations of such Subsidiary;
(h) Indebtedness incurred after the Closing Date not to exceed in
the aggregate 15% of the Consolidated Net Worth of the Borrower at the
time of occurrence for industrial revenue bonds, for Financing Lease
obligations and for the deferred purchase price of newly acquired property
of the Borrower and its Subsidiaries, incurred to finance the acquisition
of fixed or capital assets and the intangibles associated with such assets
within 180 days of the acquisition or construction of such fixed or
capital assets; and
(i) An amount equal to 5% of the assets of the Borrower and its
Subsidiaries may be used for additional Indebtedness not included in
clauses (a)-(h) above; provided that to the extent such Indebtedness is
incurred by Subsidiaries which are not Restricted Subsidiaries, such
Indebtedness shall be non-recourse to the Borrower or any Restricted
Subsidiary of the Borrower.
9.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its or its Restricted Subsidiaries' property, assets or
revenues, whether now owned or
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54
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) (i) Liens in existence on the Closing Date listed on Schedule
6.8, securing Indebtedness permitted by subsection 9.2(c), and (ii) Liens
securing Indebtedness of the Borrower outstanding on the Closing Date and
listed on Schedule 6.8 and extensions, renewals, and refinancings thereof
so long as the amount of such Indebtedness is not thereby increased
(except by an amount necessary to pay the fees and expenses, including
prepayment costs, incurred in connection with the refinancing), provided
in each case, that no such Lien is spread to cover any additional property
after the Closing Date;
(g) Liens securing Indebtedness of the Borrower and, to the extent
permitted by subsection 9.2(h), of its Subsidiaries, incurred to finance
or refinance the acquisition, construction or improvement of fixed or
capital assets and the intangibles associated with such assets, provided
that (i) such Liens shall be created within 180 days of the acquisition or
construction of such fixed or capital assets or intangibles and accounts
associated with such assets, (ii) such Liens do not at any time encumber
any property other than the property financed by such Indebtedness, (iii)
the amount of Indebtedness secured thereby is not increased except in
connection with further improvements and additions to such assets and (iv)
the principal amount of Indebtedness secured by any such Lien shall not at
the time of incurrence exceed 100% of the fair value (as determined in
good faith by the board of directors of the Borrower) of such property,
intangibles and accounts at the time it was acquired or constructed;
(h) Liens in favor of the Administrative Agent, for the ratable
benefit of the Banks and the Selling Bank;
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55
(i) Liens on materials and work-in-progress in favor of customers of
the Borrower and its Subsidiaries for amounts paid to the Borrower or any
of its Subsidiaries as progress payments, milestones, advances or similar
arrangements under Contractual Obligations entered into by the Borrower or
such Subsidiary with respect to such materials or work-in-progress;
(j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(k) (i) Liens securing Indebtedness of Subsidiaries permitted by
subsection 9.2(g), and (ii) Liens securing Indebtedness of the Borrower
incurred under any arrangement with any Person providing for the leasing
by the Borrower of real or personal property which has been sold or is to
be transferred by the Borrower to such Person or to any other Person to
whom funds have been or are to be advanced by such Person on the security
of such property or rental obligations of the Borrower; and
(l) Judgment liens in an aggregate amount at any one time
outstanding not in excess of 5% of Consolidated Net Worth at such time;
(m) Liens on property in existence at the time of acquisition of
such property by the Borrower or any Subsidiary in an aggregate amount at
any one time outstanding not in excess of 10% of Consolidated Net Worth at
such time; provided that no such Lien is spread to cover any additional
property and the amount secured thereby is not increased; and
(n) other Liens on assets of the Borrower and its Subsidiaries
incurred in the ordinary course of business which Liens do not attach to
any property or assets of the Borrower and its Subsidiaries that either
singly or in the aggregate are material to the conduct of the business of
the Borrower and its Subsidiaries.
9.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation of the Borrower or Subsidiaries
which the Borrower controls except:
(a) the Letters of Credit;
(b) guarantees made in the ordinary course of its business by
the Borrower of Indebtedness permitted by subsection 9.2;
(c) stand-by letters of credit with expiry dates beyond the
Revolving Credit Termination Date which would have been issued as a
Stand-By L/C or Performance Letter of Credit under the Revolving Credit
Commitment but for their expiry dates (the "Substitute Letters of
Credit");
(d) guarantees made by, or letters of credit or surety bonds issued
for the account of the Borrower or any Subsidiary, in each case in the
ordinary course of its business and supporting the obligations of any
Wholly-Owned Subsidiaries, which obligations are otherwise permitted under
this Agreement;
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56
(e) Guarantee Obligations in respect of Indebtedness so long as the
aggregate amount of such Guarantee Obligations does not, at any time,
exceed 5% of the Consolidated Net Worth of the Borrower at the time of the
incurrence of the Guarantee Obligations; and
(f) Guarantee Obligations in respect of any Indebtedness of the
Borrower or any Subsidiary if such Indebtedness is otherwise permitted
hereunder.
9.5 Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or the Capital Stock of any Subsidiary (other than a Special Purpose
Holding Subsidiary which is not a Material Subsidiary), or make any material
change in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more
Wholly-Owned Subsidiaries (provided that the Wholly-Owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation(s)); and
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any domestic Restricted Subsidiary of the Borrower.
9.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, except:
(a) property (including inventory) disposed of in the ordinary
course of business;
(b) obsolete, replaced, worn out or discontinued property
(including inventory);
(c) equipment which is replaced with other equipment of comparable
value and quality within 90 days before or after such sale or disposition;
(d) the sale or discount without recourse of accounts receivable in
the ordinary course of business in connection with the compromise or
collection thereof;
(e) as permitted by subsection 9.5;
(f) the sale, transfer or other disposition of cash and/or Cash
Equivalents in exchange for a comparable amount of cash and/or Cash
Equivalents;
(g) to the extent that the Borrower and its Restricted Subsidiaries
have not funded the costs of the construction or acquisition of the
portion thereof to be sold (as certified by the Borrower to the
Administrative Agent in detail reasonably satisfactory to it), the
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57
sale and leaseback of the transponders for the Telstar 6,7,8 and 9
satellites; or
(h) other sales of assets, provided that if the aggregate net
after-tax cash proceeds from such assets exceeds $40,000,000 in any
consecutive 12 month period, then the Term Loans and Revolving Credit
Commitments are permanently reduced by an amount equal to the aggregate
net after-tax cash proceeds of such sales in excess of $40,000,000
received by the Borrower and its Subsidiaries, in accordance with
subsection 5.13(c).
9.7 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in equity securities of the Borrower not redeemable at
the option of the holder and not entitled to any mandatory repurchase, dividend
or distribution) on, or make any payment on account of, or set apart assets for
a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower (including Cash Advances from Parent) or any warrants or options to
purchase any such Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary; provided that,
so long as no Default or Event of Default has occurred and is continuing or
would result from the making of such dividend, the Borrower may make a dividend
if (a) the sum of (i) such dividend plus (ii) the dividends made from the
Closing Date through any date of determination, shall not exceed an amount equal
to 50% of cumulative Consolidated Net Income, and (b) the ratio of Funded Debt
to Consolidated EBITDA of the Borrower and its consolidated Subsidiaries is less
than 3.00 to 1.00 at the end of the fiscal quarter prior to the date of the
declaration of such dividend; and provided further that the Borrower may pay a
dividend to Parent up to $70,000,000 of Cash Advances from Parent as long as
after such dividend to Parent, Shareholders' Equity shall total at least
$700,000,000.
9.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in, any Person or in any
commodities futures or other such speculations, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business in an aggregate amount for
the Borrower and its Subsidiaries not to exceed $5,000,000 at any one time
outstanding;
(d) investments by the Borrower in its Restricted Subsidiaries and
investments by Subsidiaries in the Borrower and in Restricted Subsidiaries
except that the Borrower may not create or acquire any new Subsidiaries
(other than Special Purpose Holding Subsidiaries or in accordance with the
provisions of subsections (h) or (i) below) without the prior written
consent of the Required Banks;
(e) Capital Expenditures;
(f) advances to (i) subcontractors in respect of projects for which
the Borrower
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has received advances from third parties in an amount not to exceed such
third party advances (ii) subcontractors in an amount not to exceed at any
time outstanding $25,000,000 and (iii) providers of launch vehicles in the
ordinary course of business;
(g) investments in Special Purpose Holding Subsidiaries or in
businesses related to the Borrower's current line of business which do not
exceed $5,000,000 in the aggregate as to the Borrower and its
Subsidiaries;
(h) acquisitions of other Persons engaged in businesses related to
the Borrower's current business; provided that (i) such acquisition has
been agreed to by the Board of Directors of the acquired Person prior to
the initiation of the acquisition transaction and (ii) that after giving
effect thereto, (x) no Default or event of Default shall have occurred and
be continuing and (y) the Borrower is in compliance on a pro forma basis
with the covenants in subsection 9.1 at, and for the period ending on, the
date of the financial statements most recently delivered pursuant to
subsection 8.1 as if such acquisition had occurred on the first day of the
four quarter period ending on such date (as certified by the Borrower to
the Administrative Agent in detail reasonably satisfactory to it); and
(i) other investments; provided that the aggregate amount of all
such investments under this subsection 9.8(i) may not exceed 10% of the
Borrower's Consolidated Net Worth at the end the fiscal quarter of the
Borrower next preceding any such investment.
9.9 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate except (a) for transactions
which are otherwise permitted under this Agreement and which are in the ordinary
course of the Borrower's or a Subsidiary's business and which are upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than it
would obtain in a hypothetical comparable arm's length transaction with a Person
not an Affiliate and (b) for transactions which are profitable to the Borrower
and (c) that the Borrower may perform the agreements in effect on the Closing
Date listed on Schedule 9.9.
9.10 Restrictions on Intercompany Debt. Make any prepayments,
redemptions or purchases or consent to any assignment of the Intercompany Debt
unless, as at the end of each of the two preceding fiscal quarters, the ratio of
pro forma Funded Debt to Consolidated EBITDA for each fiscal quarter of the
Borrower and the consolidated Subsidiaries is less than 3.00 to 1.00 after
giving effect thereto.
9.11 Restrictions on Indebtedness to Parent or Loral. Incur any
Indebtedness to Parent or Loral unless the same is not mandatorily repayable or
repayable until one year and a day following repayment and termination of the
Credit Facilities and is subordinated to the Credit Facilities on a basis
satisfactory to the Administrative Agent.
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SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or the
Export Loan or the amount of any drawing under a Letter of Credit when
due; or the Borrower shall fail to pay any interest on any Loan or the
Export Loan or on the unpaid amount of any drawing under any Letter of
Credit, or the Borrower shall fail to pay any other amount payable
hereunder, within five days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement or the Export Loan
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) The Borrower (or any Subsidiary) shall default in the observance
or performance of any agreement contained in subsection 9.1, 9.5, 9.6, 9.7
or 9.11; or
(d) The Borrower (or any Subsidiary) shall default in the observance
or performance of any agreement contained in subsection 9.2, 9.3, 9.4,
9.8, 9.9 or 9.10, and such default shall continue unremedied for a period
of five days; or
(e) The Borrower (or any Subsidiary) shall default in the observance
or performance of any other agreement contained in this Agreement (other
than as provided in paragraphs (a) through (d) of this Section), and such
default shall continue unremedied for a period of 30 days; or
(f) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans or the Export Loan or in respect of Letters of Credit) in an
aggregate outstanding principal amount of $15,000,000 or more or in the
payment of any Guarantee Obligation in an amount of $15,000,000 or more,
beyond the period of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Guarantee Obligation in an aggregate amount in excess of $15,000,000 or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; or
(g) (i) The Borrower or any of its Material Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of
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debtors, seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or the Borrower or any of its Material Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Material Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any of its Material Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower
or any of its Material Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Material Subsidiaries shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Required Banks, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) the Borrower or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Banks is likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or Reorganization
of, a Multiemployer Plan or (vi) any other event or condition shall occur
or exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such events
or conditions, if any, could subject the Borrower or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or financial or
other condition of the Borrower and its Subsidiaries taken as a whole; or
(i) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of more than 5% of the
Consolidated Net Worth of the Borrower at any time and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(j) If at any time the Borrower or any of its Subsidiaries shall
become liable (whether, directly, indirectly, by indemnity or contribution
or otherwise) for (w)
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61
environmental removal or remediation expenses, (x) costs of response with
respect to any Environmental Law, (y) damages for injury to, destruction
of or loss of natural resources, or (z) assessed environmental fines,
penalties or other such charges which, as to (w), (x), (y) and (z) above
in the aggregate, are in excess of $15,000,000 above such amounts which
are covered by insurance; or
(k) Any Change in Control shall occur; or
(l) (i) The Lien created by the Guarantee and Collateral Agreement
shall cease to be enforceable and of the same effect and priority
purported to be created thereby or (ii) the Guarantees created by the
Guarantee and Collateral Agreement shall cease to be enforceable or any
Guarantor shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above automatically (i) the Commitments
shall immediately terminate and the Loans hereunder and the Export Loan (with
accrued interest thereon) and all other amounts owing under this Agreement, the
Export Loan Agreement, the Export Notes and the Notes shall immediately become
due and payable and (ii) all obligations of the Borrower in respect of the
Letters of Credit (including the obligation described below to deposit cash
collateral to cover any undrawn amounts), although contingent and unmatured,
shall become immediately due and payable and the obligations of the Issuing Bank
to issue Syndicated Letters of Credit shall immediately terminate, and (B) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Banks, the
Administrative Agent may, or upon the request of the Required Banks, the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith and the obligations of the Issuing Bank to issue
Syndicated Letters of Credit to be terminated, whereupon the Commitments and the
obligations of the Issuing Bank shall immediately terminate; and (ii) with the
consent of the Required Banks, the Administrative Agent may, or upon the request
of the Required Banks, the Administrative Agent shall, by notice of default to
the Borrower, (A) declare the Loans and the Export Loan (with accrued interest
thereon) and all other amounts owing under this Agreement, the Export Loan
Agreement, the Export Notes and the Notes to be due and payable forthwith,
whereupon the same shall immediately become due and payable and (B) declare all
or a portion of the obligations of the Borrower in respect of the Letters of
Credit (including the obligation described below to deposit cash collateral to
cover any undrawn amounts), although contingent and unmatured, to be due and
payable forthwith, whereupon the same shall immediately become due and payable
and/or demand that the Borrower discharge any or all of the obligations
supported by the Letters of Credit by paying or prepaying any amount due or to
become due in respect of such obligations. All payments under this Section 10 on
account of undrawn Letters of Credit shall be made by the Borrower directly to a
cash collateral account established by the Administrative Agent for such purpose
for application to the Borrower's reimbursement obligations with respect to
Letters of Credit as drafts are presented under the Letters of Credit, with the
balance, if any, to be applied to the Borrower's Obligations under this
Agreement and the Notes as the Administrative Agent shall determine with the
approval of the Required Banks. Amounts held in such cash collateral account
shall be invested in Cash Equivalents until any such time as they shall be
applied by the Administrative Agent as aforesaid. The amount of such cash
collateral required shall be recomputed on each Determination Date. After all
such Letters of Credit shall have expired or been fully drawn upon and all other
Obligations shall have been paid in full, the balance, if any, in such cash
collateral
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account shall be returned to the Borrower. Except as expressly provided above in
this Section 10, presentment, demand, protest and all other notices of any kind
are hereby expressly waived.
SECTION 11. THE ADMINISTRATIVE AGENT
11.1 Appointment. Each Bank and the Selling Bank hereby irrevocably
designates and appoints Bank of America as the Administrative Agent of such Bank
under this Agreement and the other Loan Documents, and each such Bank
irrevocably authorizes Bank of America, as the Administrative Agent for such
Bank, to take such action on its behalf under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
11.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
11.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Banks for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or the Notes or any
other Loan Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower.
11.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent
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may deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate or it shall first be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the Notes and
the other Loan Documents in accordance with a request of the Required Banks, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Banks and all future holders of the Notes.
11.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Bank or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
promptly give notice thereof to the Banks. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Banks.
11.6 Non-Reliance on Administrative Agent and Other Banks. Each Bank
and the Selling Bank expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Bank or the Selling Bank. Each Bank and the
Selling Bank represents to the Administrative Agent that it has, independently
and without reliance upon the Administrative Agent or the Selling Bank or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans and enter into this
Agreement. Each Bank and the Selling Bank also represents that it will,
independently and without reliance upon the Administrative Agent or the Selling
Bank or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Banks and the Selling
Bank by the Administrative Agent hereunder, the Administrative Agent shall not
have any duty or responsibility to provide any Bank or the Selling Bank with any
credit or other information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness of the
Borrower which may come into the possession of the Administrative Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
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11.7 Indemnification. The Banks and the Selling Bank agree to
indemnify the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to the respective amounts of their original
Commitments, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that neither the Selling Bank nor
any Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Notes and all other amounts payable hereunder.
11.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to its Loans made or renewed by it and any
Note issued to it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Bank and may
exercise the same as though it were not the Administrative Agent, and the terms
"Bank" and "Banks" shall include the Administrative Agent in its individual
capacity.
11.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Banks. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Banks shall appoint from among
the Banks a successor agent for the Banks and the Selling Bank, which successor
agent shall, if no Default or Event of Default has occurred and is continuing or
if such appointment could cause the Borrower's Facility Security Clearance to be
invalidated, be approved by the Borrower (such approval not to be unreasonably
withheld), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term "Administrative Agent"
shall mean such successor agent effective upon its appointment, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Loan Documents. If the retiring
Administrative Agent is also the Issuing Bank hereunder and the successor
Administrative Agent so requests in writing, the retiring Administrative Agent
shall resign as the Issuing Bank, effective for all Syndicated Letters of Credit
issued on or after the date the successor Administrative Agent becomes the
"Administrative Agent" hereunder. In the event of a material breach by the
Administrative Agent of its duties hereunder, the Administrative Agent may be
removed by the Required Banks for cause and the provisions of this subsection
11.9 shall apply to the appointment of a successor Administrative Agent.
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11.10 Issuing Bank. Each Bank and the Selling Bank hereby
acknowledges that the provisions of this Section 11 shall apply to the Issuing
Bank, in its capacity as such in the same manner as such provisions are
expressly stated to apply to the Administrative Agent.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. All requests for any amendment,
supplement or other modification of any provision of this Agreement or any other
Loan Document shall be made by the Borrower to the Administrative Agent. The
Administrative Agent will manage the voting and execution process in connection
with any such amendment, supplement or other modification. Neither this
Agreement, any Note, any other Loan Document, nor any terms hereof or thereof
may be amended, supplemented or modified except in accordance with the
provisions of this subsection. With the written consent of the Required Banks
and the written acknowledgement of the Administrative Agent and the Borrower
may, from time to time, enter into written amendments, supplements or
modifications hereto and to the Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement or the Notes or the other
Loan Documents or changing in any manner the rights of the Banks, the Selling
Bank or of the Borrower hereunder or thereunder or waiving, on such terms and
conditions as the Administrative Agent may specify in such instrument, any of
the requirements of this Agreement or the Notes or the other Loan Documents or
any Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (a) reduce
the amount or extend the maturity of any Note or Export Note or any installment
of principal thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any fee or extend the time of payment thereof
payable to the Selling Bank or to any Bank hereunder, increase the amount of the
Selling Bank's or any Bank's Commitments, in each case without the consent of
the Selling Bank or Bank affected thereby, as the case may be, or (b) amend,
modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Banks or Majority Banks, or consent to
the assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, in each case without the
written consent of the Selling Bank and all the Banks, or (c) amend, modify or
waive any provision of Section 11 without the written consent of the then
Administrative Agent and the Issuing Bank or (d) amend, modify or waive any
provision of Section 4 pertaining to Letters of Credit without the written
consent of the Issuing Bank or pertaining to the Export Loan Agreement and the
Export Participations without the written consent of the Selling Bank. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Selling Bank and the Banks and shall be binding upon the Borrower,
the Banks, the Issuing Bank, the Selling Bank, the Administrative Agent, and all
future holders of the Notes and the Export Notes. In the case of any waiver, the
Borrower, the Banks, the Selling Bank and the Administrative Agent shall be
restored to their former position and rights hereunder and under the outstanding
Notes and any other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless
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otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, or, in the
case of telegraphic notice, when delivered to the telegraph company, or, in the
case of telex notice, when sent, answerback received, addressed as follows in
the case of the Borrower, the Selling Bank and the Administrative Agent, and as
set forth in Schedule 1.1A in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Borrower: Loral SpaceCom Corporation
600 Third Avenue
New York, New York 10016
Attention: Nicholas C. Moren
Telephone: (212) 697-1105
Telecopy: (212) 867-5248
The Administrative Agent: Bank of America National
Trust and Savings Association
Agency Management Services
1850 Gateway Boulevard
Concord, California 94520
Attention: Ando Perlas
Telecopy: (510) 675-8500
The Selling Bank: Istituto Bancario San Paolo Di Torino SpA
245 Park Avenue
New York, New York 10167
Attention: Wendell Jones
Telecopy: (212) 599-5303
provided that any notice, request or demand to or upon the Administrative Agent
pursuant to subsections 2.3, 3.2, 4.3, 4.7, or 5.15 shall not be effective until
received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent, the Selling Bank
or any Bank, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or
<PAGE> 72
67
reimburse the Administrative Agent, the Selling Bank and the Issuing Bank for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the Notes and the other Loan Documents, and
any other documents prepared in connection herewith or therewith, the
preparation and execution of any Syndicated Letters of Credit, and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel (including
those of outside counsel and, without duplication, allocated costs of in-house
counsel to the extent such counsel performs services that would otherwise be
performed by outside counsel) to the Administrative Agent, the Selling Bank or
the Issuing Bank, (b) to pay or reimburse the Selling Bank, each Bank, the
Issuing Bank and the Administrative Agent for all its reasonable out-of-pocket
costs and expenses incurred in connection with the enforcement or preservation
of any rights under or arising out of this Agreement, the Notes, the other Loan
Documents and any such other documents, or incurred with respect to any
challenge to any Letter of Credit, including, without limitation, reasonable
fees and disbursements of counsel (including those of outside counsel and,
without duplication, allocated costs of in-house counsel to the extent such
counsel performs services that would otherwise be performed by outside counsel)
to the Administrative Agent, the Issuing Bank, the Selling Bank, and to the
several Banks, and (c) to pay, indemnify, and hold each Bank, the Issuing Bank,
the Selling Bank and the Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any (other
than taxes excluded from the definition of "Taxes" in subsection 5.9), which may
be payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Agreement, the Notes, the Letters of Credit, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Bank, the Issuing Bank, the Selling Bank and the Administrative Agent harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever incurred in connection with, or arising out of,
defending, prosecuting or complying with any proceeding, action or investigation
arising out of, or relating to the execution, delivery, enforcement, performance
and administration of this Agreement, the Notes, the Letters of Credit, the
other Loan Documents and any such other documents (all the foregoing,
collectively, the "indemnified liabilities"), provided, that the Borrower shall
have no obligation hereunder to the Administrative Agent, the Issuing Bank, the
Selling Bank or any Bank with respect to indemnified liabilities arising from
the gross negligence or willful misconduct of the Administrative Agent, the
Issuing Bank, the Selling Bank or any such Bank. The agreements in this
subsection shall survive repayment of the Obligations and all other amounts
payable hereunder.
12.6 Successors and Assigns; Participations; Purchasing Banks.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Issuing Bank, the Selling Bank, the Banks, the Administrative
Agent, all future holders of the Notes and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its
respective rights or obligations under this Agreement without the prior written
consent of each Bank. Neither the Selling Bank nor any Bank may participate,
assign or sell any of its rights or obligations hereunder except as provided in
this subsection 12.6 or in subsection 4.2.
<PAGE> 73
68
(b) Any Bank or the Selling Bank may, in the ordinary course of its
commercial lending business and in accordance with applicable law and subject to
subsection 12.16, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Syndicated Letter of Credit participated in by such
Bank, any Commitment of such Bank or any other interest of such Bank hereunder
and under the other Loan Documents. In the event of any such sale by a Bank or
the Selling Bank of participating interests to a Participant, such Bank's or the
Selling Bank's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Bank or the Selling Bank shall remain
solely responsible for the performance thereof, such Bank or the Selling Bank
shall remain the holder of any such Note for all purposes under this Agreement
and the other Loan Documents, and the Borrower, the Issuing Bank, the Selling
Bank, and the Administrative Agent shall continue to deal solely and directly
with such Bank or the Selling Bank in connection with such Bank's or the Selling
Bank's rights and obligations under this Agreement and the other Loan Documents.
The Borrower agrees that if amounts outstanding under this Agreement and the
Notes or the other Loan Documents are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note or the
other Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Bank or the Selling Bank under this
Agreement or any Note or any other Loan Document, provided that such Participant
shall only be entitled to such right of setoff if it shall have agreed in the
agreement pursuant to which it shall have acquired its participating interest to
share with the Banks and the Selling Bank the proceeds thereof as provided in
subsection 12.7. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 5.7, 5.8, 5.9, 5.10 and 12.5 with
respect to its participation in the Commitments and the Loans and Export Loan
outstanding from time to time; provided, that no Participant shall be entitled
to receive any greater amount pursuant to such subsections than the transferor
Bank or the Selling Bank would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Bank or the Selling
Bank to such Participant had no such transfer occurred and that the Participants
shall assume their respective shares of any obligations imposed on the
transferor Bank or the Selling Bank under such subsections. Each Bank and the
Selling Bank agrees that the participation agreement pursuant to which any
Participant acquires its participating interest (or any other document) may
afford voting rights to such Participant, or any right to instruct such Bank or
the Selling Bank with respect to voting hereunder, only with respect to matters
requiring the consent of all of the Banks and the Selling Bank hereunder.
(c) Any Bank and the Selling Bank may, in the ordinary course of its
commercial lending business and in accordance with applicable law, at any time
sell to any Bank or the Selling Bank or any Affiliate thereof or, to one or more
additional banks or financial institutions ("Purchasing Banks") all or any part
of its rights and obligations under this Agreement and the Notes or the other
Loan Documents pursuant to a Commitment Transfer Supplement, executed by such
Purchasing Bank, such transferor Bank or the Selling Bank (and, in the case of a
Purchasing Bank that is not then a Bank or the Selling Bank or an Affiliate
thereof, consented to by the Borrower, SS/L and the Administrative Agent (such
consents not to be unreasonably withheld) and the Issuing Bank) and delivered to
the Administrative Agent for its acceptance and recording in the Register (as
defined below); provided that (A) each such sale pursuant to this subsection
12.6(c) shall be in an amount of $10,000,000 or more ($5,000,000 in the case of
a sale
<PAGE> 74
69
to any Bank or the Selling Bank) and (B) in the event of a sale of less than all
of such rights and obligations, such Bank after any such sale shall retain a
Commitment and/or Loans and/or L/C Participating Interests aggregating at least
$10,000,000. Upon such execution, delivery, acceptance and recording, from and
after the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, (x) the Purchasing Bank thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Bank hereunder with a Commitment as set forth
therein, and (y) the transferor Bank or the Selling Bank thereunder shall, to
the extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of a transferor Bank's rights
and obligations under this Agreement, such transferor Bank shall cease to be a
party hereto). Such Commitment Transfer Supplement shall be deemed to amend this
Agreement (including Schedule 1.1A) to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
transferor Bank under this Agreement and the Notes. On or prior to the Transfer
Effective Date determined pursuant to such Commitment Transfer Supplement, the
Borrower at its own expense, shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note a new Note to the order of such
Purchasing Bank in an amount equal to the Commitment assumed by it pursuant to
such Commitment Transfer Supplement and, if the transferor Bank has retained a
Commitment hereunder, a new Note to the order of the transferor Bank in an
amount equal to the Commitment retained by it hereunder. Such new Notes shall be
dated the Closing Date and shall otherwise be in the form of the Notes replaced
thereby. The Notes surrendered by the transferor Bank shall be returned by the
Administrative Agent to the relevant Borrower marked "canceled".
(d) The Administrative Agent shall maintain at its address referred
to in subsection 12.2 a copy of each Commitment Transfer Supplement delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Banks and the Selling Bank and the Commitments of, principal
amount of the Loans or Export Loan owing to, and the amount of the Export
Participation and the participating interest in L/C Participating Interests of,
each Bank and the Selling Bank from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent, the Issuing Bank, the Selling Bank and the Banks may treat
each Person whose name is recorded in the Register as the owner of the Loan
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the Issuing Bank, the Selling Bank or
any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
a transferor Bank or the Selling Bank and Purchasing Bank (and, in the case of a
Purchasing Bank that is not then a Bank or the Selling Bank or an Affiliate
thereof, by the Borrower, the Issuing Bank and the Administrative Agent)
together with payment to the Administrative Agent of a registration and
processing fee of $2,500, the Administrative Agent shall (i) promptly accept
such Commitment Transfer Supplement and (ii) on the Transfer Effective Date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks, the
Issuing Bank, the Selling Bank and the Borrower.
(f) The Borrower authorizes each Bank and the Selling Bank to
disclose to any
<PAGE> 75
70
Participant or Purchasing Bank (each, a "Transferee") and any prospective
Transferee any and all financial information in such Bank's and the Selling
Bank's possession concerning the Borrower and its Affiliates which has been
delivered to such Bank or the Selling Bank by or on behalf of the Borrower
pursuant to this Agreement or which has been delivered to such Bank or the
Selling Bank by or on behalf of the Borrower in connection with such Bank's or
the Selling Bank's credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement.
(g) If, pursuant to this subsection, any interest in this Agreement
or any Note or any other Loan Document is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the transferor Bank or the Selling Bank, as the case may be,
shall cause such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Bank or the Selling Bank, as the
case may be (for the benefit of the transferor Bank or the Selling Bank, as the
case may be, the Administrative Agent, the Issuing Bank and the Borrower), that
under applicable law and treaties no taxes will be required to be withheld by
the Administrative Agent, the Issuing Bank, the Borrower or the transferor Bank
or the Selling Bank, as the case may be, with respect to any payments to be made
to such Transferee in respect of the Loans or the Letters of Credit or any other
amount payable hereunder, (ii) to furnish to the transferor Bank or the Selling
Bank, as the case may be (and, in the case of any Purchasing Bank registered in
the Register, the Administrative Agent, the Issuing Bank and the Borrower),
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Transferee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder), together with
U.S. Internal Revenue Form W-8 or W-9, or any successor form, and (iii) to agree
(for the benefit of the transferor Bank or the Selling Bank, as the case may be,
the Administrative Agent, the Issuing Bank and the Borrower) to provide the
transferor Bank (and, in the case of any Purchasing Bank registered in the
Register, the Administrative Agent, the Issuing Bank and the Borrower) a new
Form 4224 or Form 1001, together with U.S. Internal Revenue Form W-8 or W-9, or
any successor form, upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S. laws
and regulations and amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S. laws and regulations
with regard to such withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from transferring any of
its rights hereunder for purposes of pledging or assigning any Note to any
Federal Reserve Bank in accordance with applicable law.
<PAGE> 76
71
12.7 Adjustments; Set-off.
(a) If any Bank or the Selling Bank (a "benefitted Bank") shall at
any time receive any payment of all or part of its Loans or of all or part of
its L/C Participating Interest in any Syndicated Letter of Credit or all or part
of its interest in the Export Loan (as to each Bank and the Selling Bank, its
"Exposure"), or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 10(g), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Bank or the Selling Bank, if any, in respect of such other Bank's or the Selling
Bank's Exposure or interest thereon, such benefitted Bank shall purchase for
cash from the other Banks and the Selling Bank such portion of each such other
Bank's or the Selling Bank's Exposure, or shall provide such other Banks or the
Selling Bank with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Bank to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Banks and
the Selling Bank; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Borrower agrees that each
Bank or the Selling Bank so purchasing a portion of another Bank's or the
Selling Bank's Exposure may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Bank or the Selling Bank were the direct holder of such portion.
(b) In addition to any rights and remedies of the Banks and the
Selling Bank provided by law, each Bank and the Selling Bank shall have the
right, without prior notice to the Borrower, any such notice being expressly
waived by each Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder or under the Notes or
under any other Loan Document (whether at the stated maturity, by acceleration
or otherwise) to set-off and appropriate and apply against such amount any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Bank or the Selling Bank or any
banking affiliate thereof to or for the credit or the account of the Borrower,
and each such affiliate is hereby irrevocably authorized to permit such setoff
and application. Each Bank and the Selling Bank agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Bank or the Selling Bank, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
12.8 Confidentiality. The Banks and the Selling Bank shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such in writing by the Borrower in accordance with
its customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices but in any event may
make disclosure reasonably required by a bona fide prospective Transferee in
connection with the contemplated transfer of any Note or participation therein
or any other interest in the Loan Documents or as required or requested by any
Governmental Authority or representative thereof pursuant to legal process.
12.9 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts
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72
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower, the Selling Bank and the Administrative Agent.
12.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.11 Integration. This Agreement and the other Loan Documents
represents the agreement of the Borrower, the Administrative Agent, the Selling
Bank and the Banks with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent, the Selling Bank or any Bank relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
12.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
12.13 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents, or for
recognition and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsection 12.2 or at such other
address of which the Administrative Agent shall have been notified
pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
<PAGE> 78
73
12.14 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes and the other Loan Documents;
(b) none of the Administrative Agent, the Issuing Bank, any Bank nor
the Selling Bank has any fiduciary relationship to the Borrower, and the
relationship between the Administrative Agent, the Issuing Bank, the
Selling Bank and the Banks, on one hand, and the Borrower, on the other
hand, is solely that of debtor and creditor; and
(c) no joint venture exists among the Administrative Agent, the
Issuing Bank, the Selling Bank and the Banks or any of them or among the
Borrower and the Banks.
12.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT,
THE ISSUING BANK, THE SELLING BANK AND THE BANKS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
12.16 Compliance with Department of Defense Regulations. (a) The
Administrative Agent shall provide the Borrower with respect to each potential
Bank the following information: name, address, amount of Commitments (in dollar
amount and as percentage of total), and country of domicile of ultimate
beneficial owner. Administrative Agent shall maintain a list of all Banks and
provide the Borrower with notice of any changes thereto; and in the case of any
potential Participants, Administrative Agent shall provide the Borrower with
respect to each potential Participant the following information: amount of
participation (in dollar amount and as percentage of total) and country of
domicile of ultimate beneficial owner.
(b) Borrower shall have the right to consent to each Bank or any
potential Bank that is foreign owned or foreign controlled (as defined by
Department of Defense regulations) and such consent shall be withheld only if
the nationality of such Bank is sufficient in the Borrower's reasonable judgment
to cause the Borrower's Facility Security Clearance to be invalidated.
(c) The Administrative Agent shall provide each potential Bank and
the Selling Bank written notice of the following conditions of participation or
assignment:
(i) The Borrower will not under any circumstances be obligated or
required to release, disclose or otherwise make available any classified
information to any Bank or the Selling Bank.
(ii) The rights and claims of each Bank and the Selling Bank against
the Borrower will be limited to those set forth in and arising out of the
various Loan Documents.
(iii) Neither the Selling Bank nor any Bank will exert influence or
control over the business or the operations of the Borrower except as
established by the various Loan
<PAGE> 79
74
Documents; provided, however, that each Bank and the Selling Bank shall be
entitled to administer, consent to, waive and otherwise exercise the
rights provided to them under the various Loan Documents such as, without
limitation, requiring the Borrower to maintain property insurance, pay
taxes, comply with applicable laws, furnish financial statements and
reports, provide notice of litigation and defaults, refrain from incurring
other Indebtedness or Liens, disposing of assets or merging or
consolidating with other business entities.
(iv) Neither the Selling Bank nor any Bank may assign its rights or
interest to any foreign owned or foreign controlled bank without the
consent of the Borrower as under (b) above and unless such bank agrees
prior to becoming a party to the Loan Documents to be bound by the above
conditions.
(d) All Banks and the Selling Bank will also be notified of
Borrower's obligations to the Department of Defense including: (i) notifying the
Department of Defense of any acceleration of any Loans or other Obligations or
the commencement by the Administrative Agent of any action to enforce the
various Loan Documents, and (ii) providing annual certification of the
continuing effectiveness of its security arrangements.
(e) All Banks and the Selling Bank shall be notified that the
clearance held by the Borrower is subject to revocation if these conditions are
not met and maintained and that such revocation would result in material harm to
its business.
12.17 Consent to Amendment and Restatement. By executing this
Agreement, each Bank which is an Existing Bank consents and agrees to this
amendment and restatement of the Existing Credit Agreement and the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
LORAL SPACECOM CORPORATION
By: /s/ Nicholas C. Moren
---------------------
Title: Vice President and Treasurer
SPACE SYSTEMS/LORAL, INC.
By: /s/ Nicholas C. Moren
---------------------
Title: Vice President and Treasurer
<PAGE> 80
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Administrative Agent and as a Bank
By: /s/ Steve A. Aronowitz
----------------------
Title: Managing Director
----------------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Issuing Bank
By: /s/ Steve A. Aronowitz
----------------------
Title: Managing Director
----------------------------------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, S.P.A.,
as Selling Bank and in its individual
capacity
By: /s/ [illegible]
----
Title:
By: /s/ [illegible]
----
Title:
THE CHASE MANHATTAN BANK
By:/s/ Richard C. Smith
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Pamela S. Kurtzman
Title: Vice President
<PAGE> 81
THE BANK OF NEW YORK
By: /s/ Ken Sneider
Title: Vice President
BARCLAYS BANK PLC
-----------------------------------------
By: /s/ John Diammore
-----------------------------------------
Title: Director
CREDIT LYONNAIS
By: /s/ Stephen C. Levi
Title: Vice President
----------------------------------------
----------------------------------------
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
----------------------------------------
By: /s/ Sheryl L Paynter
Title: Associate
By: /s/ Robert Wood
----------------------------------------
Title: Director
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ John V. Velton
Title: Joint General Manager
<PAGE> 82
MELLON BANK N.A.
----------------------------------------
By: /s/ [illegible]
Title: Vice President
THE SANWA BANK, LIMITED,
NEW YORK BRANCH
----------------------------------------
By: /s/ [illegible]
Title: Vice President
SOCIETE GENERALE
By: /s/ [illegible]
Title: Vice President
----------------------------------------
THE SUMITOMO BANK LIMITED
By: /s/ Kazuyoshi Igawa
Title: Joint General Manager
----------------------------------------
BANK OF MONTREAL
By: /s/ W.T. Calder
Title: Director
----------------------------------------
<PAGE> 83
THE BANK OF NOVA SCOTIA
By: /s/ Alan Edwards
Title: Authorized Signatory
BANQUE NATIONALE DE PARIS
----------------------------------------
By: /s/ Sophie Revillard Kaufman
----------------------------------------
Title: Vice President
By: /s/ Richard L. Sted
Title: Senior Vice President
BANQUE PARIBAS
----------------------------------------
By: /s/ Matthew C. Bishop
Title: Associate
By: /s/ Lynee A. Lueders
Title: Director
----------------------------------------
BAYERISCHE LANDESBANK
GIROZENTRALE CAYMAN ISLANDS
BRANCH
----------------------------------------
By: /s/ Peter Oberman
Title: Senior Vice President
By: /s/ Martha Asma
----------------------------------------
Title: Vice President
<PAGE> 84
CIBC INC.
----------------------------------------
By: /s/ S. Stuk
Title: Executive Director,
CIBC Oppenheimer Corp., as Agent
----------------------------------------
CITIBANK, N.A.
By: /s/ [illegible]
Title: Attorney-In-Fact
----------------------------------------
FUJI BANK, LIMITED
----------------------------------------
By: /s/ Raymond Ventura
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
----------------------------------------
By: /s/ Shuichi Tajima
Title: Deputy General Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION
----------------------------------------
By: /s/ [illegible]
Title: Senior Vice President
<PAGE> 85
NATIONAL CITY BANK
----------------------------------------
By: /s/ Renold D. Thompson, Jr.
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
----------------------------------------
By: /s/ Steffen W. Crowther
Title: Vice President
THE TOKAI BANK, LIMITED (THE)
NEW YORK BRANCH
By: /s/ [illegible]
Title: Assistant General Manager
THE TOYO TRUST & BANKING CO., LTD.
----------------------------------------
By: /s/ [illegible]
Title: Vice President
----------------------------------------
YASUDA TRUST AND BANKING COMPANY,
LIMITED
By: /s/ Ron Laudenschlager
Title: Senior Vice President
<PAGE> 86
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
Stated Principal Amount: $_______ New York, New York
Lender: ________________ November ___, 1997
FOR VALUE RECEIVED, the undersigned, LORAL SPACECOM CORPORATION, a _______
corporation (the "Company"), hereby unconditionally promises to pay to the order
of the Lender shown above (the "Lender") at the office of BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, located at [_____________], in lawful
money of the United States of America and in immediately available funds, on the
Revolving Credit Termination Date the principal amount of (a) the Stated
Principal Amount shown above, or, if less, (b) the aggregate unpaid principal
amount of all Revolving Credit Loans made by the Lender to the Company pursuant
to subsection 2.1 of the Credit Agreement, as hereinafter defined. The Company
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in subsections 5.3 and 5.14 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Company in respect of such Revolving
Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Amended and Restated Credit and Participation Agreement dated as of November
___, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Company, Space Systems/Loral, Inc., the Lender,
the other banks and financial institutions from time to time parties thereto,
Bank of America National Trust and Savings Association, as Administrative Agent
and Istituto Bancario San Paolo di Torino S.P.A., as Selling Bank, (b) is
subject to the provisions of the Credit Agreement and (c) is subject to optional
and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
<PAGE> 87
2
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
LORAL SPACECOM CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
<PAGE> 88
Schedule A
to Revolving Credit Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Amount Amount of Base Rate
Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance
Date Amount of Base Rate Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans Notation Made By
Loans
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Amount Amount of Base Rate
Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance
Date Amount of Base Rate Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans Notation Made By
Loans
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
</TABLE>
<PAGE> 90
Schedule B
to Revolving Credit Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Period and Amount of Principal of Amount of Eurodollar
Amount of Amount Converted Eurodollar Rate with Eurodollar Loans Loans Converted to
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------
Unpaid Principal
Balance of Eurodollar Notation
Date Loans Made By
<S> <C> <C>
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Interest Period and Amount of Principal of Amount of Eurodollar
Amount of Amount Converted Eurodollar Rate with Eurodollar Loans Loans Converted to
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------
Unpaid Principal
Balance of Eurodollar Notation
Loans Made By
<S> <C>
- -------------------------------
- -------------------------------
</TABLE>
<PAGE> 92
EXHIBIT A-2
FORM OF TERM NOTE
Stated Principal Amount $ New York, New York
Lender: ____________________ November ___, 1997
FOR VALUE RECEIVED, the undersigned, LORAL SPACECOM CORPORATION, a
[____________] corporation (the "Company"), hereby unconditionally promises to
pay to the order of the Lender shown above (the "Lender") at the office of BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, located at
[__________________], in lawful money of the United States of America and in
immediately available funds, the principal amount of the Stated Principal Amount
shown above, or, if less, the unpaid principal amount of the Term Loan made by
the Lender pursuant to subsection 3.1 of the Credit Agreement, as hereinafter
defined. The principal amount shall be paid in the amounts and on the dates
specified in subsection 3.3 of such Credit Agreement. The Company further agrees
to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in
subsections 5.3 and 5.4 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of the Term
Loan and the date and amount of each payment or prepayment of principal with
respect thereto, each conversion of all or a portion thereof to another Type,
each continuation of all or a portion thereof as the same Type and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto.
Each such endorsement shall constitute prima facie evidence of the accuracy of
the information endorsed. The failure to make any such endorsement shall not
affect the obligations of the Company in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the Amended and
Restated Credit and Participation Agreement dated as of November , 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Company, Space Systems/Loral, Inc., the Lender, the other
banks and financial institutions from time to time parties thereto, Bank of
America National Trust and Savings Association, as administrative agent and
Istituto Bancario San Paolo di Torino S.P.A., as Selling Bank, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
This Note is secured and guaranteed as provided in the Loan Documents. Reference
is hereby made to the Loan Documents for a description of the properties and
assets in which a security interest has been granted, the nature and extent of
the security and the guarantees, the terms and conditions upon which the
security interests and each guarantee were granted and the rights of the holder
of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and
<PAGE> 93
2
payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
LORAL SPACECOM CORPORATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
<PAGE> 94
Schedule A
to Term Loan Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Amount Amount of Base Rate
Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance
Date Amount of Base Rate Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans
Loans
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------
Date Notation Made By
<S> <C> <C>
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Amount Amount of Base Rate
Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance
Date Amount of Base Rate Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans
Loans
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ----------------
Notation Made By
<S> <C>
- ----------------
================
</TABLE>
<PAGE> 96
Schedule B
to Term Loan Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Interest Period and Amount of Principal of Amount of Eurodollar
Amount of Amount Converted Eurodollar Rate with Eurodollar Loans Loans Converted to
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------
Unpaid Principal
Balance of Eurodollar Notation
Date Loans Made By
<S> <S> <C>
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
</TABLE>
<PAGE> 97
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Interest Period and Amount of Principal of Amount of Eurodollar
Amount of Amount Converted Eurodollar Rate with Eurodollar Loans Loans Converted to
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------
Unpaid Principal
Balance of Eurodollar Notation
Loans Made By
<S> <C>
- ---------------------------------
- ---------------------------------
</TABLE>
<PAGE> 98
EXHIBIT B TO
AMENDED AND RESTATED CREDIT
AND PARTICIPATION AGREEMENT
FORM OF COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT dated as of the date set forth in
Item 1 of Schedule I hereto among the Transferor Bank set forth in Item 2 of
Schedule I hereto (the "Transfer Bank"), each Purchasing Bank set forth in Item
3 of Schedule I hereto (each, a "Purchasing Bank"), and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS CORPORATION, as agent for the Banks and the Selling Bank under
the Credit Agreement described below (in such capacity, the "Administrative
Agent").
W I T N E S E T H:
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with subsection 12.6 of the Amended and Restated Credit
and Participation Agreement dated as of November __, 1997 among Loral SpaceCom
Corporation (the "Borrower"), Space Systems/Loral, Inc., the Transferor Bank and
the other financial institutions parties thereto (collectively, the "Banks";
individually, a "Bank"), the Selling Bank named therein, Bank of America
National Trust and Savings Association, as Administrative Agent (as amended,
supplemented or modified from time to time in accordance with the terms thereof,
the "Credit Agreement"; terms defined therein being used herein as therein
defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank party to
the Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1 Upon receipt by the Administrative Agent of a counterpart of this
Commitment Transfer Supplement to each of which is attached a fully completed
Schedule I and Schedule II, and each of which has been executed by the
Transferor Bank, each Purchasing Bank and any other Person required by the
Credit Agreement to execute this Commitment Transfer Supplement, the
Administrative Agent will transmit (a) to the Borrower, the Transferor Bank and
each Purchasing Bank a Transfer Effective Notice, substantially in the form of
Schedule III to this Commitment Transfer Supplement (a "Transfer Effective
Notice") and (b) to the Borrower, an executed copy of this Commitment Transfer
Supplement. Such Transfer Effective Notice shall set forth, inter alia, the date
on which the transfer effected by this Commitment Transfer Supplement shall
become effective (the "Transfer Effective Date"), which date shall unless
otherwise agreed be the fifth Business Day following the date of such Transfer
Effective Notice. From and after the Transfer Effective Date, each Purchasing
Bank shall be a Bank party to the Credit Agreement for all purposes thereof.
2. At or before 12:00 Noon, local time of the Transferor Bank on the
Transfer
<PAGE> 99
2
Effective Date, each Purchasing Bank shall pay to the Transferor Bank, in
immediately available funds, an amount equal to the purchase price, as agreed
between the Transferor Bank and such Purchasing Bank (the "Purchase Price"), of
the portion being purchased by such Purchasing Bank (such Purchasing Bank's
"Purchased Percentage") of the presently outstanding Loans, L/C Participating
Interest and other amounts owing to the Transferor Bank under the Credit
Agreement and the Notes and other Loan Documents. Effective upon receipt by the
Transferor Bank of the Purchase Price from a Purchasing Bank, the Transferor
Bank hereby irrevocably sells, assigns and transfers to such Purchasing Bank,
without recourse, representation or warranty (except to the extent set forth in
paragraph 8 hereof), and each Purchasing Bank hereby irrevocably purchases,
takes and assumes from the Transferor Bank, such Purchasing Banks's Purchased
Percentage of the Commitments and the presently outstanding Loans, L/C
Participating Interests and other amounts owing to the Transferor Bank under the
Credit Agreement and the Notes and other Loan Documents together with all
instruments, documents and collateral security pertaining thereto.
3. The Transferor Bank has made arrangements with each Purchasing
Bank with respect to (i) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor Bank to such Purchasing Bank of any fees
heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date and (ii) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.
4. (a) All principal payments that would otherwise be payable from
and after the Transfer Effective Date to or for the account of the Transferor
Bank pursuant to the Credit Agreement and the Notes and other Loan Documents
shall, instead, be payable to or for the account of the Transferor Bank and the
Purchasing Banks, as the case may be, in accordance with their respective
interests as reflected in this Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue
for the account of the Transferor Bank from and after the Transfer Effective
Date pursuant to the Credit Agreement and the Notes and other Loan Documents
shall, instead, accrue for the account of, and be payable to, the Transferor
Bank and the Purchasing Banks, as the case may be, in accordance with their
respective interests as reflected in this Commitment Transfer Supplement. In the
event that any amount of interest, fees or other amounts accruing prior to the
Transfer Effective Date was included in the Purchase Price paid by any
Purchasing Bank, the Transferor Bank and each Purchasing Bank will make
appropriate arrangements for payment by the Transferor Bank to such Purchasing
Bank of such amount upon receipt thereof from the Borrower(s).
5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Administrative Agent its Note. On or prior to the Transfer
Effective Date, the Borrower will deliver to the Administrative Agent the Notes
for each Purchasing Bank and the Transferor Bank in each case in principal
amounts reflecting, in accordance with the Credit Agreement, its Revolving
Credit Commitment (as adjusted pursuant to this Commitment Transfer Supplement).
As provided in subsection 12.6 of the Credit Agreement, each such new Note shall
be dated the Closing Date. Promptly after the Transfer Effective Date, the
Administrative Agent will send to each of the Transferor Bank and the Purchasing
Banks its new Notes and will send to the Borrower the superseded Note of the
Transferor Bank, marked "Canceled".
<PAGE> 100
3
6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
party to the Credit Agreement) conformed copies of all documents delivered to
such Transferor Bank on the Closing Date in satisfaction of the conditions
precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time on the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Administrative Agent, the Issuing Bank, the Selling Bank and the
Banks as follows: (i) other than the representation and warranty that it is the
legal and beneficial owner of the interests being assigned hereby free and clear
of any adverse claim, the Transferor Bank makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, the Notes, the Letters of Credit, any other Loan
Document or any other instrument or document furnished pursuant thereto; (ii)
the Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any or its obligations under the
Credit Agreement, the Notes, any other Loan Document or any other instrument or
document furnished pursuant thereto; (iii) each Purchasing Bank confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in subsection 6.1 (if requested by such
Purchasing Banks), the financial statements delivered pursuant to subsection 8.1
(if requested by such Purchasing Banks), if any, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Commitment Transfer Supplement; (iv) each Purchasing
Bank will, independently and without reliance upon the Administrative Agent, the
Issuing Bank, the Transferor Bank, the Selling Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (v) each Purchasing Bank appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement as are delegated to such Persons, as the
case may be, by the terms thereof, together with such powers as are reasonably
incidental thereto, all in accordance with Section 11 of the Credit Agreement;
and (vi) each Purchasing Bank agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
and the other Loan Documents are required to be performed by it as a Bank.
9. Each party hereto represents and warrants to and agrees with the
Administrative Agent that it is aware of and will comply with the provision of
subsection 12.6(g) of the Credit Agreement.
10. Schedule II hereto sets forth the revised Commitments and
Commitment Percentages, of the Transferor Bank and each Purchasing Bank as well
as administrative information with respect to each Purchasing Bank.
<PAGE> 101
4
11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
<PAGE> 102
SCHEDULE I TO
COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Item 1 Date of Commitment [Insert date of Commitment
Transfer Supplement: Transfer Supplement]
Item 2 Transferor Bank: [Insert name of Transferor
Bank];
Item 3 Purchasing Bank[s]: [Insert name[s] of
Purchasing Bank[s]]
Item 4 Signatures of Parties
to Commitment Transfer
Supplement:
_______________________________, as
Transferor Bank
By____________________________________
Title:
________________________________, as
Purchasing Bank
By____________________________________
Title:
________________________________, as
Purchasing Bank
By____________________________________
Title:
<PAGE> 103
2
CONSENTED TO AND ACKNOWLEDGED:
LORAL SPACECOM CORPORATION
By _______________
Title:
SPACE SYSTEMS/LORAL, INC.
By _______________
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent and Issuing Bank
By _______________
Title:
[Consents required only when
Purchasing Bank is not already
a Bank or Affiliate thereof]
<PAGE> 104
SCHEDULE II TO
COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor Bank] Revised Revolving Credit Commitment: $_______
Revised Revolving Credit
Commitment Percentage:
Revised Additional Letters of $_______
Credit Commitment:
Revised Additional Letters
of Credit Commitment Percentage: _______%
Revised Term Loan Commitment: $_______
Revised Term Loan Commitment
Percentage: _______%
Revised Export Commitment: $_______
Revised Export Commitment Percentage: _______%
[Name of Purchasing Bank] New Revolving Credit Commitment: $_______
New Revolving Credit
Commitment Percentage: _______%
New Additional Letters of
Credit Commitment: $_______
New Additional Letters of
Credit Commitment Percentage: _______%
New Term Loan Commitment: $_______
New Term Loan Commitment
Percentage: _______%
New Export Commitment: $_______
<PAGE> 105
2
New Export Commitment Percentage: _______%
Address for Notices:
________________________________
________________________________
________________________________
Attention:______________________
Telecopier:_____________________
<PAGE> 106
SCHEDULE III TO
COMMITMENT
TRANSFER
SUPPLEMENT
FORM OF TRANSFER EFFECTIVE NOTICE
To: Loral SpaceCom Corporation
[Name of Transferor Bank]
[Name of each Purchasing Bank]
The undersigned, as Administrative Agent under the Amended and
Restated Credit and Participation Agreement dated as of November __, 1997 among
Loral SpaceCom Corporation (the "Borrower"), Space Systems/Loral, Inc., the
Banks parties thereto, the Selling Bank and the Administrative Agent,
acknowledges receipt of five executed counterparts of a completed Commitment
Transfer Supplement, as described in Schedule I hereto. [Note: Attach copy of
Schedule I from Commitment Transfer Supplement.]
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be , 19__ [Insert fifth
business day following date of Transfer Effective Notice or other date agreed to
by parties].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver to the Administrative Agent on or before the
Transfer Effective Date its Note.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the Transfer
Effective Date the following Notes, each dated ____________________ [Insert
Effective Date]:
[Describe each new Note for Transferor Bank and Purchasing Bank as
to principal amount and payee.]
4. Pursuant to such Commitment Transfer Supplement, each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or before
12:00 Noon on the Transfer Effective Date in immediately available funds.
Very truly yours,
Date:_________________ BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By__________________________
Title:
<PAGE> 107
EXHIBIT C TO
AMENDED AND RESTATED CREDIT
AND PARTICIPATION AGREEMENT
FORM OF L/C PARTICIPATION CERTIFICATE
_________, 19__
[Name of Bank]
___________________________
___________________________
Dear Sirs:
Pursuant to subsection 4.4(b) of the Amended and Restated Credit and
Participation Agreement dated as of November ___, 1997 (as the same may from
time to time be amended, supplemented, or otherwise modified, the "Credit
Agreement"; terms defined in the Credit Agreement being used herein with their
respective defined meanings) among Loral SpaceCom Corporation, Space
Systems/Loral, Inc., the Banks parties thereto, the Selling Bank named therein
and Bank of America National Trust and Savings Association, as Administrative
Agent, the undersigned hereby acknowledges receipt from you on the date hereof
of a L/C Participating Interest in the amount of ____________________ DOLLARS
($__________) in the following Letter of Credit and the L/C Application relating
thereto:
Very truly yours,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as
Issuing Bank
By:________________________________________
Title:
<PAGE> 108
EXHIBIT D TO
AMENDED AND RESTATED CREDIT
AND PARTICIPATION AGREEMENT
[Form of Opinion of Willkie Farr & Gallagher]
November __, 1997
The Banks, the Selling Bank and
the Administrative Agent
Referred to Below
Gentlemen:
We have acted as counsel to Loral Space & Communications
Corporation, a Delaware corporation (the "Parent"), Loral SpaceCom Corporation,
a Delaware corporation (the "Borrower") and Space Systems/Loral, Inc. ("SS/L"),
in connection with the preparation, authorization, execution and delivery of,
and the consummation of the transactions contemplated by, the following
documents (collectively, the "Material Agreements"):
(a) the Amended and Restated Credit and Participation Agreement,
dated as of November 14, 1997 (the "Credit Agreement"), among
the Borrower, SS/L, the banks and other financial institutions
parties thereto from time to time (collectively, the "Banks"),
Istituto Bancario San Paolo di Torino SpA ("San Paolo") as
selling bank (in such capacity, the "Selling Bank") and Bank
of America National Trust and Savings Association, as
administrative agent for the Banks (in such capacity, the
"Administrative Agent");
(b) the Notes of the Borrower delivered to the Banks under the
Credit Agreement, each dated the date hereof; and
(c) the Guarantee and Collateral Agreement, dated as of November
14, 1997 (the "Guarantee and Collateral Agreement"), made by
the Parent, the Borrower and SS/L.
This opinion is delivered to you pursuant to subsection 7.1(s) of
the Credit Agreement. Terms defined in the Credit Agreement and not otherwise
defined herein shall have the same meanings ascribed to such terms in the Credit
Agreement.
In so acting, we have made such examinations of law and have
examined certificates of public officials and originals or copies, certified or
otherwise identified to our satisfaction, of the Material Agreements and such
corporate records, agreements, documents and
<PAGE> 109
The Banks, the Selling Bank and
the Administrative Agent
November __, 1997
Page 2
other instruments, and such certificates of officers of the Borrower, and the
Subsidiaries, as applicable, and have made such inquiries of such officers as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In all such examinations, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such documents.
In rendering the opinions set forth below, we have relied, to the
extent we deem such reliance proper, upon certificates, representations and
warranties of officers of the Borrower with respect to the accuracy of factual
matters which were not independently established.
<PAGE> 110
A. Based upon the foregoing and subject to the qualifications and
exceptions set forth in paragraph B hereof, we are of the opinion that:
1. Each of the Parent, the Borrower and SS/L (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged and (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification.
2. Each of the Parent, the Borrower and SS/L has the corporate power
and authority to make, deliver and perform each Material Agreement to which it
is a party. The Borrower has the corporate power and authority to borrow under
the Credit Agreement and the Notes. SS/L has the corporate power and authority
to borrow under the Export Loan Agreement, the Export Notes and the
Applications.
3. Each of the Parent, the Borrower and SS/L has taken all necessary
corporate action to authorize the execution, delivery and performance of each
Material Agreement to which it is a party. The Borrower has taken all necessary
corporate action to authorize the extensions of credit on the terms and
conditions of the Credit Agreement and the Notes. SS/L has taken all necessary
corporate action to authorize the extensions of credit on the terms and
conditions of the Export Loan Agreement, the Export Notes and the Applications.
4. Subject to the qualifications set forth in this paragraph and
paragraph B hereof (based upon our review of those laws, rules and regulations
which, in our experience, are normally applicable to transactions of the type
provided for in the Material Agreements and those court or administrative
judgments, orders or decrees, the existence of which has been specifically
disclosed to us by the Parent, the Borrower or SS/L), no consent or
authorization of, filing with or other act by or in respect of, any Governmental
Authority is required in connection with the consummation by the Parent, the
Borrower or SS/L of the transactions contemplated by the Material Agreements,
the borrowings under the Credit Agreement, the Notes, the Export Loan Agreement,
the Export Notes and the Applications or granting of the security interests
under the Material Agreements or with the execution, delivery, performance or
enforceability by or against the Parent, the Borrower or SS/L of the Material
Agreements other than (a) those that have been obtained and are in full force
and effect and referenced on the certificate dated the date hereof and delivered
by the Parent, the Borrower or SS/L pursuant to subsection 7.1(j) of the Credit
Agreement, and (b) consents, authorizations, orders, notifications, filings or
registrations individually or in the aggregate the failure of which to obtain or
make could not be reasonably expected to have a Material Adverse Effect. We
express no opinion, however, as to any such consent, authorization, filing or
act (i) the existence or absence of which does not have any material adverse
effect on you and does not deprive you of any material benefit under the Loan
Documents or (ii) which can be readily cured or obtained without significant
delay or expense to you, without loss to you of any material benefit under the
Loan Documents and without any material adverse effect on you during the period
in which such consent, authorization, filing or act was not obtained or
effected.
5. The Parent, the Borrower and SS/L have duly executed and
delivered each Material Agreement to which it is a party. The Credit Agreement
and each other Material Agreement (subject to the following provisions)
constitutes a legal, valid and binding obligation of the Parent, the Borrower
and SS/L to the extent each is a party thereto, enforceable against the
<PAGE> 111
2
Parent, the Borrower and SS/L, as the case may be, in accordance with its terms,
except as provided in paragraph B hereof; provided, however, that the exception
provided in paragraph B(3) shall not apply to this Opinion 5.
6. Subject to the qualifications set forth in this paragraph (based
upon our review of those laws, rules and regulations which, in our experience,
are normally applicable to transactions of the type provided for in the Material
Agreements and those court or administrative judgments, orders or decrees, the
existence of which has been specifically disclosed to us by the Borrower), the
execution, delivery and performance by the Parent, the Borrower and SS/L of the
Material Agreements, the extensions of credit under the Credit Agreement, the
Notes, the Export Loan Agreement, the Export Notes and the Applications and the
use of the proceeds thereof as contemplated by the Credit Agreement or granting
of the security interests under the Material Agreements, the performance of the
Parent, the Borrower and SS/L under the Guarantee and Collateral Agreement and
the consummation by the Parent, the Borrower and SS/L of the other transactions
contemplated thereby will not violate the certificate of incorporation, bylaws
or other organizational documents of the Parent, the Borrower or SS/L, any law,
rule or regulation of the State of New York or the United States of America or
the General Corporation Law of the State of Delaware or any judgment, decree or
order known to us of any court or governmental or regulatory authority (each of
which is an "Order of Law") and will not result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any such
Order of Law. We express no opinion, however, as to any law, rule or regulation
(i) the existence or absence of which does not have any material adverse effect
on you and does not deprive you of any material benefit under the Loan
Documents, (ii) which violation or Lien created pursuant thereto can be readily
cured without significant delay or expense to you, without loss to you of any
material benefit under the Loan Documents and without any material adverse
effect on you during the period of such violation or Lien, or (iii) any
violation of which results from your status or facts relating specifically to
you.
7. To our knowledge, except as disclosed in Schedule 6.6 to the
Credit Agreement, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or threatened by or against the
Parent, the Borrower or SS/L or against any of their properties or revenues (a)
with respect to the Material Agreements or any of the transactions contemplated
thereby, or (b) which, by itself or taken together with other such litigation,
would, if adversely determined, we have been advised by officers of the Parent,
the Borrower and SS/L, have a Material Adverse Effect.
8. None of the Parent, the Borrower nor SS/L is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
9. The Guarantee and Collateral Agreement creates in favor of the
Administrative Agent a security interest under the New York UCC in the shares of
stock of the Issuers identified on Schedule 2 to the Guarantee and Collateral
Agreement under the heading "Pledged Securities". With respect to any Pledged
Shares which may constitute "certificated securities" as defined in Section
8-102(A)(4) of the New York UCC (the "New York Certificated Securities"), upon
the delivery of certificates representing the New York Certificated Securities
to the Administrative Agent in the State of New York the security interest of
the Administrative Agent in such New York Certificated Securities will be
perfected, and, assuming that the
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3
Administrative Agent acquires its interest in the New York Certificated
Securities in good faith and without notice of any adverse claims and that each
New York Certificated Security is either in bearer form or in registered form,
issued or indorsed in the name of the Administrative Agent or in blank, the
Administrative Agent will acquire its security interest in the New York
Certificated Securities free of adverse claims.
B. The opinions expressed herein are, however, subject to the
following:
1. We are members of the Bar of the State of New York and do not
purport to be experts in the laws of jurisdictions other than the State of New
York, the General Corporation Law of the State of Delaware and the Federal laws
of the United States of America, to the extent that the same may apply to or
govern the transactions contemplated by the Material Agreements.
2. The opinions set forth in Paragraph A, insofar as they relate to
the enforceability of any Material Agreement, are subject to applicable
bankruptcy, insolvency, reorganization, moratorium, Federal and state fraudulent
conveyance and similar laws affecting or limiting the enforcement or creditors'
rights generally and to equitable principles affecting the availability of
equitable relief (regardless of whether enforcement is considered in a
proceeding in equity or at law), including principles of commercial
reasonableness or conscionability and an implied covenant of good faith and fair
dealing. Such principles of equity are of general application, and in applying
such principles, a court, among other things, might not allow a creditor to
accelerate the maturity of a debt, or to realize upon any security for the
payment of such debt upon the occurrence of a default deemed immaterial, or
might decline to order any of the Loan Parties to perform covenants. Such
principles applied by a court might include a requirement that a creditor act
with reasonableness and good faith. Such requirement might be applied, for
example, to any provision of the Material Agreements purporting to authorize
conclusive determinations by any Bank or the Administrative Agent. Insofar as
provisions contained in the Material Agreements provide for indemnification, the
enforcement thereof may be limited by public policy considerations.
3. We have made no independent investigations except as specifically
set forth herein.
4. We express no opinion as to the Material Agreements insofar as
they (i) provide that any entity or person purchasing a participation from any
Bank or the Selling Bank pursuant thereto may exercise set-off or similar rights
with respect to such participation or (ii) authorize any Bank or the Selling
Bank or the Administrative Agent to set off and apply any deposits at any time
held, and any other indebtedness at any time owing, by any Bank or the Selling
Bank or Administrative Agent to or for the account of the Borrower.
5. We express no opinion as to the effect of the law of any
jurisdiction other than the State of New York wherein any Bank or the Selling
Bank or the Administrative Agent (or any assignee of any of the rights and/or
obligations of any Bank or the Selling Bank or the Administrative Agent under
the Loan Documents) may be located or wherein enforcement of the Loan Documents
may be sought which limits the rates of interest legally chargeable or
collectible.
6. We express no opinion as to (i) whether a Federal or state court
outside of the
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4
State of New York would give effect to the choice of New York law provided for
in the Material Agreements, (ii) sections in any of the Material Agreements
insofar as such sections relate to the waiver of trial by jury, (iii) the waiver
of defenses and the waiver of objection to venue set forth in the Material
Agreements with respect to proceedings in the courts specified therein, (iv) the
enforceability of any provision providing for the rate of interest payable after
a judgment or (v) sections in any of the Material Agreements insofar as such
sections relate to the subject matter jurisdiction of the courts specified
therein to adjudicate any controversy related to such Material Agreements.
7. We have assumed that all parties other than the Parent, the
Borrower and SS/L have duly authorized, executed and delivered the Material
Agreements to which they are a party.
8. We have assumed that you, as well as all other parties other than
the Parent, the Borrower and SS/L, have all requisite power and authority and
have taken all necessary action to consummate the transactions contemplated by
the Material Agreements.
9. This opinion has been issued solely for the benefit of the
Administrative Agent, the Selling Bank and the Banks and no one else has the
right to rely upon it. We further advise you that we are not assuming any
obligation to notify the Administrative Agent, the Selling Bank or any Bank of
any changes in this opinion as a result of any facts or changes in law that may
come to our attention in the future which may cause a change in this opinion.
Very truly yours,
<PAGE> 114
EXHIBIT E TO
AMENDED AND RESTATED CREDIT AND
PARTICIPATION AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT
made by
LORAL SPACE & COMMUNICATIONS CORPORATION,
LORAL SPACECOM CORPORATION
and certain of its Subsidiaries
in favor of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
Dated as of November 14, 1997
<PAGE> 115
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS.................................................. 2
1.1 Definitions.................................................. 2
SECTION 2. GUARANTEES..................................................... 4
2.1 Guarantee of Borrower Obligations............................ 4
2.2 Guarantee by Borrower of SS/L Obligations.................... 5
2.3 Right of Contribution........................................ 5
2.4 No Subrogation............................................... 5
2.5 Amendments, etc. with respect to the Borrower Obligations.... 6
2.6 Guarantee Absolute and Unconditional......................... 6
2.7 Reinstatement................................................ 7
2.8 Payments..................................................... 7
SECTION 3. GRANT OF SECURITY INTEREST..................................... 8
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 8
4.1 Representations in Credit Agreement; Parent Representations.. 8
4.2 Title; No Other Liens........................................ 9
4.3 Perfected First Priority Liens............................... 10
4.4 Chief Executive Office....................................... 10
4.5 Pledged Securities........................................... 10
SECTION 5. COVENANTS...................................................... 10
5.1 Covenants in Credit Agreement................................ 10
5.2 Delivery of Instruments and Chattel Paper.................... 10
5.3 Payment of Obligations....................................... 11
5.4 Maintenance of Perfected Security Interest; Further
Documentation................................................ 11
5.5 Changes in Locations, Name, etc.............................. 11
5.6 Notices...................................................... 11
5.7 Pledged Securities........................................... 12
SECTION 6. REMEDIAL PROVISIONS............................................ 13
6.1 Pledged Securities........................................... 13
6.2 Proceeds to be Turned Over To Administrative Agent........... 14
6.3 Application of Proceeds...................................... 14
6.4 Code and Other Remedies...................................... 14
6.5 Registration Rights.......................................... 15
6.6 Waiver; Deficiency........................................... 16
SECTION 7. THE ADMINISTRATIVE AGENT....................................... 16
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.. 16
7.2 Duty of Administrative Agent................................. 17
7.3 Execution of Financing Statements............................ 18
7.4 Authority of Administrative Agent............................ 18
<PAGE> 116
Page
SECTION 8. MISCELLANEOUS.................................................. 18
8.1 Amendments in Writing........................................ 18
8.2 Notices...................................................... 18
8.3 No Waiver by Course of Conduct; Cumulative Remedies.......... 18
8.4 Enforcement Expenses; Indemnification........................ 19
8.5 Successors and Assigns....................................... 19
8.6 Set-Off...................................................... 19
8.7 Counterparts................................................. 20
8.8 Severability................................................. 20
8.9 Section Headings............................................. 20
8.10 Integration................................................. 20
8.11 GOVERNING LAW............................................... 20
8.12 Submission To Jurisdiction; Waivers......................... 20
8.13 Acknowledgements............................................ 21
8.14 WAIVER OF JURY TRIAL........................................ 21
8.15 Additional Grantors......................................... 21
8.16 Releases.................................................... 21
<PAGE> 117
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of November 14, 1997,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Banks") from time to time parties to the Amended and Restated
Credit and Participation Agreement, dated as of November 14, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among LORAL SPACECOM CORPORATION (the "Borrower"), SPACE SYSTEMS/LORAL, INC.
("SS/L"), INSTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A. ("San Paolo"), the Banks
and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Banks have severally
agreed to make extensions of credit to the Borrower and SS/L upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Banks
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Banks;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Banks to enter into the Credit Agreement and to
induce the Banks to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Banks, as follows:
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2
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Chattel Paper, Instruments and Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans, Export Participations and L/C
Obligations and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then applicable
rate provided in the Credit Agreement after the maturity of the Loans,
Export Participations and L/C Obligations and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) to the Administrative Agent or any Bank (or, in the case of
any Hedge Agreement referred to below, any Affiliate of any Bank), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any Hedge Agreement entered into by the
Borrower with any Bank (or any Affiliate of any Bank) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Banks that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.2.
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Banks that are required to
be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).
"Guarantors": the collective reference to each Grantor other than
the Borrower.
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3
"Hedge Agreements": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or
currency exchange rates or the exchange of nominal interest obligations,
either generally or under specific contingencies.
"Issuers": the collective reference to each issuer of a Pledged
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Pledged Securities": the Investment Property constituting the
shares of Capital Stock listed on Schedule 2, together with (except as
limited by Section 4.5(a)) any other shares, stock certificates, options
or rights of any nature whatsoever in respect of the Capital Stock of any
Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
"SS/L Obligations": the collective reference to the unpaid principal
of and interest on the Export Loans and Export Participations and all
other obligations and liabilities of SS/L (including, without limitation,
interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Export Loans and Export Participations
and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to SS/L, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Administrative Agent or any
Bank, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of,
or in connection with, the Credit Agreement or the Export Loan Agreement
or any other document made, delivered or given in connection therewith, in
each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Banks that are required to be paid by SS/L
pursuant to the terms of any of the foregoing agreements).
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to
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4
both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEES
2.1 Guarantee of Borrower Obligations. (a) Each of the Guarantors
hereby, jointly and severally, unconditionally and irrevocably, guarantees to
the Administrative Agent, for the ratable benefit of the Banks and their
respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) The Parent shall have no liability for the payment of any
Obligations, and in any action or suit to collect any Obligations the
Administrative Agent and the Banks shall not seek any in personam judgment
against the Parent or any judgment for a deficiency but shall look solely to the
security interests hereunder and the collateral described herein for payment of
the Obligations of the Parent. Nothing contained in this Section 2.1 shall be
construed to impair the validity of the Obligations or of this Agreement or to
impair in any way the right of the Administrative Agent and the Banks to
exercise their rights and remedies under the Credit Agreement, the Notes, this
Agreement or any other Loan Document in accordance with their respective terms.
(c) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.3).
(d) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2.1 or
affecting the rights and remedies of the Administrative Agent or any Bank
hereunder.
(e) The guarantee contained in this Section 2.1 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2.1 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(f) No payment made by any of the Guarantors, any other guarantor or
any other Person or received or collected by the Administrative Agent or any
Bank from any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment
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5
(other than any payment made by such Guarantor in respect of the Borrower
Obligations or any payment received or collected from such Guarantor in respect
of the Borrower Obligations), remain liable for the Borrower Obligations up to
the maximum liability of such Guarantor hereunder until the Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the Commitments
are terminated.
2.2 Guarantee by Borrower of SS/L Obligations. (a) The Borrower
hereby unconditionally and irrevocably guarantees to the Administrative Agent,
for the ratable benefit of the Banks and their respective successors, endorsees,
transferees and assigns, the SS/L Obligations.
(b) No payment made by the Borrower, any of the Guarantors other
than SS/L, any other guarantor or any other Person or received or collected by
the Administrative Agent or any Bank from the Borrower, any of the Guarantors
other than SS/L, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the SS/L Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of the
Borrower hereunder which shall, notwithstanding any such payment (other than any
payment made by the Borrower in respect of the SS/L Obligations or any payment
received or collected from the Borrower in respect of the SS/L Obligations),
remain liable for the SS/L Obligations.
2.3 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Subsidiary Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Subsidiary Guarantor shall be entitled
to seek and receive contribution from and against any other Guarantor hereunder
which has not paid its proportionate share of such payment. Each Subsidiary
Guarantor's right of contribution shall be subject to the terms and conditions
of Section 2.4. The provisions of this Section 2.3 shall in no respect limit the
obligations and liabilities of any Guarantor to the Administrative Agent and the
Banks, and each Guarantor shall remain liable to the Administrative Agent and
the Banks for the full amount guaranteed by such Guarantor hereunder.
2.4 No Subrogation. Notwithstanding any payment made by any
Guarantor or the Borrower hereunder or any set-off or application of funds of
any Guarantor or the Borrower by the Administrative Agent or any Bank, neither
any Guarantor nor the Borrower shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any Bank against the Borrower, SS/L or any
other Guarantor or any collateral security or guarantee or right of offset held
by the Administrative Agent or any Bank for the payment of the Borrower
Obligations or the SS/L Obligations, nor shall any Guarantor or the Borrower
seek or be entitled to seek any contribution or reimbursement from the Borrower,
SS/L or any other Guarantor in respect of payments made by such Guarantor or the
Borrower, as the case may be, hereunder, until all amounts owing to the
Administrative Agent and the Banks by the Borrower on account of the Borrower
Obligations and the SS/L Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated. If any amount shall be paid
to any Guarantor or the Borrower, as the case may be, on account of such
subrogation rights at any time when all of the Borrower Obligations or the SS/L
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor or the Borrower, as the case may be in trust for the Administrative
Agent and the Banks, segregated from other funds of such Guarantor or the
Borrower, as the case may be, and shall, forthwith upon receipt by such
Guarantor or the Borrower, as the case may be, be turned over to the
Administrative Agent in the exact form
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received by such Guarantor or the Borrower, as the case may be (duly indorsed by
such Guarantor or the Borrower, as the case may be, to the Administrative Agent,
if required), to be applied against the Borrower Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine.
2.5 Amendments, etc. with respect to the Borrower Obligations and
the SS/L Obligations. Each Guarantor and the Borrower shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor or the Borrower and without notice to or further assent by any
Guarantor or the Borrower, any demand for payment of any of the Borrower
Obligations or the SS/L Obligations made by the Administrative Agent or any Bank
may be rescinded by the Administrative Agent or such Bank and any of the
Borrower Obligations or the SS/L Obligations continued, and the Borrower
Obligations or the SS/L Obligations, or the liability of any other Person upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Bank, and the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or, pursuant to
the respective terms of the Credit Agreement and the other Loan Documents, the
Required Banks or all Banks, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Bank for the payment of the Borrower
Obligations or the SS/L Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Administrative Agent nor any Bank shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Borrower Obligations or the SS/L Obligations or for the
guarantees contained in this Section 2 or any property subject thereto.
2.6 Guarantee Absolute and Unconditional. Each Guarantor and the
Borrower waives any and all notice of the creation, renewal, extension or
accrual of any of the Borrower Obligations and the SS/L Obligations and notice
of or proof of reliance by the Administrative Agent or any Bank upon its
guarantee contained in this Section 2 or acceptance of its guarantee contained
in this Section 2; the Borrower Obligations and the SS/L Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantees
contained in this Section 2; and all dealings by and among the Borrower, SS/L
and any of the Guarantors, on the one hand, and the Administrative Agent and the
Banks, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantees contained in this Section 2.
Each Guarantor and the Borrower waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Borrower or any
of the Guarantors with respect to the Borrower Obligations and the SS/L
Obligations. Each Guarantor and the Borrower understands and agrees that its
guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Bank, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower, SS/L or any other Person
against the Administrative Agent or any Bank, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or such
Guarantor) which constitutes, or might be
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construed to constitute, an equitable or legal discharge of the Borrower or SS/L
for the Borrower Obligations or the SS/L Obligations, or of such Guarantor under
its guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against the Borrower or any Guarantor, the Administrative
Agent or any Bank may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, SS/L, any other Guarantor or any other Person or against any
collateral security or guarantee for the Borrower Obligations or the SS/L
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Bank to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, SS/L, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, SS/L, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve the Borrower or any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Bank against the Borrower or
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
2.7 Reinstatement. The guarantees contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations or the SS/L
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower, SS/L or any Guarantor, or upon or
as a result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower, SS/L or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
2.8 Payments. Each Guarantor and the Borrower hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at
1850 Gateway Boulevard, Concord, California 94520.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Banks, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Investment Property constituting Pledged Securities;
(b) all books and records pertaining to the Collateral; and
(c) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with
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respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Banks to enter into the
Credit Agreement and to induce the Banks to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Administrative Agent and each Bank that:
4.1 Representations in Credit Agreement; Parent Representations. (a)
In the case of each Guarantor, the representations and warranties set forth in
Section 6 of the Credit Agreement as they relate to such Guarantor or to the
Loan Documents to which such Guarantor is a party, each of which is hereby
incorporated herein by reference, are true and correct, and the Administrative
Agent and each Bank shall be entitled to rely on each of them as if they were
fully set forth herein, provided that each reference in each such representation
and warranty to the Borrower's knowledge shall, for the purposes of this Section
4.1(a), be deemed to be a reference to such Guarantor's knowledge.
(b) In the case of the Parent:
(i) the Parent (w) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization, (x) has the corporate power and authority, and the
legal right, to own and operate its property, to lease the property
it operates as lessee and to conduct the business in which it is
currently engaged, (y) is duly qualified as a foreign corporation
and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification except to the extent that the
failure to so qualify would not reasonably be expected to have a
Material Adverse Effect and (z) is in compliance with all
Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(ii) The Parent has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to
which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan
Documents to which it is a party. No consent or authorization of,
filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection
with the execution, delivery, performance, validity or
enforceability of the Loan Documents to which the Parent is a party
except for filings of financing statements in connection with the
security interests under the New York UCC. This Agreement has been,
and each other Loan Document to which it is a party will be, duly
executed and delivered on behalf of the Parent. This Agreement
constitutes, and each other Loan Document to which it is a party
when executed and delivered will constitute, a legal, valid and
binding obligation of the Parent enforceable against the Parent in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general
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9
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.
(iii) The execution, delivery and performance of the Loan
Documents to which the Parent is a party will not violate any
Requirement of Law or Contractual Obligation of the Parent or of any
of its Subsidiaries and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to this Agreement).
(iv) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Parent, threatened by or against the Parent or any
of its Subsidiaries or against any of its or their respective
properties or revenues (x) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (y)
which could reasonably be expected to have a Material Adverse
Effect.
4.2 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Banks pursuant to
this Agreement, such Grantor owns each item of the Collateral free and clear of
any and all Liens or claims of others. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Banks, pursuant to this
Agreement or as are permitted by the Credit Agreement.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Banks, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
4.5 Pledged Securities. (a) The shares of Pledged Securities pledged
by such Grantor hereunder constitute all the issued and outstanding shares of
all classes of the Capital Stock of each Issuer owned by such Grantor; provided
that in the case of any Issuer which is organized under the laws of a
jurisdiction outside the United States, such shares constitute no more than 65%
of the issued and outstanding share of any class of voting Capital Stock.
(b) All the shares of the Pledged Securities have been duly and
validly issued and are fully paid and nonassessable.
(c) Such Grantor is the record and beneficial owner of, and has good
and
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marketable title to, the Pledged Securities pledged by it hereunder, free of any
and all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Banks that, from and after the date of this Agreement until the Obligations
shall have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor,
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is caused by the failure to take such action
or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
5.3 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind against or with respect to the Collateral, except that no
such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.4 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever, but Grantors shall be entitled to
assume that the Administrative Agent retains possession of all Investment
Property delivered to it in certificated form.
(b) Such Grantor will furnish to the Administrative Agent and the
Banks from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of
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obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(a) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(b) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.6 Notices. Such Grantor will advise the Administrative Agent and
the Banks promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.7 Pledged Securities. (a) If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of the Pledged Securities, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the Banks, hold the same in trust for the
Administrative Agent and the Banks and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent
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to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in respect
of the Pledged Securities shall be received by such Grantor, such Grantor shall,
until such money or property is paid or delivered to the Administrative Agent,
hold such money or property in trust for the Banks, segregated from other funds
of such Grantor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer to
a Person other than a Grantor, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Pledged
Securities or Proceeds thereof (except pursuant to a transaction not prohibited
by the Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Pledged Securities
or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.7(a) with respect to the Pledged Securities issued by it and (iii) the terms
of Sections 6.1(c) and 6.5 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.1(c) or 6.5 with
respect to the Pledged Securities issued by it.
SECTION 6. REMEDIAL PROVISIONS
6.1 Pledged Securities. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.1(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Securities in each
case paid in the normal course of business of the relevant Issuer and consistent
with past practice, to the extent permitted in the Credit Agreement, and to
exercise all voting and corporate rights with respect to the Pledged Securities;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which would impair the Collateral or which would result in
any violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Securities at any meeting of shareholders of the relevant
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Issuer or Issuers or otherwise and (y) any and all rights of conversion,
exchange and subscription and any other rights, privileges or options pertaining
to such Pledged Securities as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.
6.2 Proceeds to be Turned Over To Administrative Agent. If an Event
of Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Administrative Agent and the Banks, segregated from
other funds of such Grantor, and shall, forthwith upon receipt by such Grantor,
be turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Banks) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 0.
6.3 Application of Proceeds. If an Event of Default shall have
occurred and be continuing, at any time at the Administrative Agent's election,
the Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the
Administrative Agent to the Borrower or to whomsoever may be lawfully entitled
to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.4 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Banks, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a
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secured party under the New York UCC or any other applicable law. Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Administrative Agent or any Bank or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Administrative Agent or any Bank shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each Grantor further agrees, at the Administrative Agent's
request, to assemble the Collateral and make it available to the Administrative
Agent at places which the Administrative Agent shall reasonably select, whether
at such Grantor's premises or elsewhere. The Administrative Agent shall apply
the net proceeds of any action taken by it pursuant to this Section 6.4, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Administrative Agent
and the Banks hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Bank arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
6.5 Registration Rights. (a) Each Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Securities for the period of time necessary
to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if such
Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged
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Securities pursuant to this Section 6.5 valid and binding and in compliance with
any and all other applicable Requirements of Law. Each Grantor further agrees
that a breach of any of the covenants contained in this Section 6.5 will cause
irreparable injury to the Administrative Agent and the Banks, that the
Administrative Agent and the Banks have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
this Section 6.5 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement; provided that
notwithstanding anything herein to the contrary, no Grantor shall be required to
assist in the registration of Pledged Securities under applicable securities
laws.
6.6 Waiver; Deficiency. Each Grantor, to the extent permitted by
applicable law, waives and agrees not to assert any rights or privileges which
it may acquire under Section 9-112 of the New York UCC. Each Grantor (other than
the Parent) shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay its Obligations
and the fees and disbursements of any attorneys employed by the Administrative
Agent or any Bank to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due with
respect to any Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate
by the Administrative Agent for the purpose of collecting any and all such
moneys due with respect to any Collateral whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in Section
6.4 or 6.5, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iv) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask
<PAGE> 132
16
or demand for, collect, and receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (3) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral; (4) defend
any suit, action or proceeding brought against such Grantor with respect
to any Collateral; (5) settle, compromise or adjust any such suit, action
or proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate; and (6)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Banks' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Base Rate Loans under the Credit Agreement, from the
date of payment by the Administrative Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Administrative Agent
on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Bank nor any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Administrative Agent and the Banks hereunder are solely to protect the
Administrative Agent's and the Banks' interests in the Collateral and shall not
impose any duty upon the Administrative Agent or any Bank to exercise any such
powers. The Administrative Agent and the Banks shall
<PAGE> 133
17
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Banks, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Banks with full and
valid authority so to act or refrain from acting, and no Grantor shall be under
any obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with subsection 12.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 12.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Bank shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Bank, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Bank of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Bank would otherwise have
on any future occasion. The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
<PAGE> 134
18
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
to pay or reimburse each Bank and the Administrative Agent for all its costs and
expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel (including
those of outside counsel and, without duplication, allocated costs of in-house
counsel to the extent such counsel performs services that would otherwise be
performed by outside counsel) to each Bank and of counsel to the Administrative
Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Banks harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Banks harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to subsection 12.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Banks and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Bank at any time and from time to time while an
Event of Default shall have occurred and be continuing, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Bank to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Bank may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Bank hereunder and claims of every nature and description of the Administrative
Agent or such Bank against such Grantor, in any currency, whether arising
hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
the Administrative Agent or such Bank may elect, whether or not the
Administrative Agent or any Bank has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent and each Bank shall notify such Grantor promptly of any
such set-off and the application made by the Administrative Agent or such Bank
of the proceeds thereof, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the
<PAGE> 135
19
Administrative Agent and each Bank under this Section 8.6 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such Bank may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the Banks
with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Bank relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in
<PAGE> 136
20
any other manner permitted by law or shall limit the right to sue in any
other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Bank has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Banks, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Banks or among the Grantors and the Banks.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans, the L/C Obligations
and the other Obligations shall have been paid in full, the Commitments have
been terminated and no Letters of Credit shall be outstanding, the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Administrative Agent
shall deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock
<PAGE> 137
21
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Credit Agreement; provided that the Borrower
shall have delivered to the Administrative Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Subsidiary Guarantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by the Borrower stating
that such transaction is in compliance with the Credit Agreement and the other
Loan Documents.
(c) If the ratio of (x) Funded Debt of the Borrower and its
Subsidiaries on the last day of any fiscal quarter to (y) Consolidated EBITDA
for any such fiscal quarter shall be less than 3.00 to 1.00 and shall remain
less than 3.00 to 1.00 for two consecutive fiscal quarters, upon the request of
the Borrower the security interests in the Collateral (but not the guarantees
under Section 2 hereof) created herein shall be terminated and released and the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
<PAGE> 138
22
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
LORAL SPACE & COMMUNICATIONS
CORPORATION
By:
Title:
_______________________________________
LORAL SPACECOM CORPORATION
By:
Title:
_______________________________________
SPACE SYSTEMS/LORAL, INC.
By:
Title:
_______________________________________
By:
Title:
_______________________________________
<PAGE> 139
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
Loral Space & Communications Corporation
600 Third Avenue
New York, New York
Attention: Nicholas Moren
Telephone: (212) 697-1105
Telecopy: (212) 867-5248
Loral SpaceCom Corporation
600 Third Avenue
New York, New York
Attention: Nicholas Moren
Telephone: (212) 697-1105
Telecopy: (212) 867-5248
Space Systems/Loral, Inc.
600 Third Avenue
New York, New York
Attention: Nicholas Moren
Telephone: (212) 697-1105
Telecopy: (212) 867-5248
<PAGE> 140
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
<TABLE>
<CAPTION>
Issuer Class of Stock Stock Certificate No. No. of
Shares
<S> <C> <C> <C>
Loral SpaceCom Corporation Common 1 100
Space Systems/Loral, Inc. Common 28 4,000
</TABLE>
<PAGE> 141
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
New York: Office of the Secretary of State
New York County Clerk
California: Office of the Secretary of State
Delaware: Office of the Secretary of State
Actions with respect to Pledged Securities
Possession of Certificates, delivered in bearer form or in
registered form, issued or indorsed in blank, with the
Administrative Agent acquiring its interest in the
Certificates in good faith and without notice of adverse
claims.
<PAGE> 142
Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
<TABLE>
<CAPTION>
Grantor Chief Executive Jurisdiction of
Office Organization
<S> <C> <C>
Loral Space & Communications 600 Third Avenue Delaware
Corporation New York, NY 10016
Loral SpaceCom Corporation 600 Third Avenue Delaware
New York, NY 10016
Space Systems/Loral, Inc. 600 Third Avenue Delaware
New York, NY 10016
</TABLE>
<PAGE> 143
ACKNOWLEDGEMENT AND CONSENT*
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of November 14, 1997 (the "Agreement"), made by
the Grantors parties thereto for the benefit of Bank of America National Trust
and Savings Association, as Administrative Agent. The undersigned agrees for the
benefit of the Administrative Agent and the Banks as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.7(a) of
the Agreement.
3. The terms of Sections 6.1(a) and 6.5 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.1(a) or 6.5 of the Agreement.
[NAME OF ISSUER]
By _________________________________________
Title ______________________________________
Address for Notices:
____________________________________________
____________________________________________
_______________________________________
Fax:
- --------
* This consent is necessary only with respect to any Issuer which is not
also a Grantor. This consent may be modified or eliminated with respect to any
Issuer that is not controlled by a Grantor. If a consent is required, its
execution and delivery should be included among the conditions to the initial
borrowing specified in the Credit Agreement.
<PAGE> 144
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of THE BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative agent (in such capacity, the "Administrative
Agent") for the banks and other financial institutions (the "Banks") parties to
the Credit Agreement referred to below. All capitalized terms not defined herein
shall have the meaning ascribed to them in such Credit Agreement.
W I T N E S E T H :
WHEREAS, LORAL SPACECOM CORPORATION (the "Borrower"), SPACE
SYSTEMS/LORAL, INC., the Banks and the Administrative Agent have entered into an
Amended and Restated Credit and Participation Agreement, dated as of November
14, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement, dated as of November 14, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Banks;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 8.15
of the Guarantee and Collateral Agreement, hereby (a) grants to the
Administrative Agent, for the ratable benefit of the Banks, a security interest
in the Collateral (as defined in the Guarantee and Collateral Agreement), (b)
becomes a party to the Guarantee and Collateral Agreement as a Grantor
thereunder with the same force and effect as if originally named therein as a
Grantor and (c) without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules ____________** to the Guarantee and Collateral
- ---------------------
** Refer to each Schedule which needs to be supplemented.
<PAGE> 145
Page
Agreement. The Additional Grantor hereby represents and warrants that each of
the representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:________________________________
Name:
Title:
-ii-
