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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 18, 1999
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)
c/o Loral SpaceCom Corporation
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
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Item 5. Other Events.
On August 18, 1999, Loral Asia Pacific Satellite (HK) Limited ("Loral
Orion HK"), a subsidiary of Loral Orion, Inc. ("Loral Orion"), and APT Satellite
Company Limited ("APT") entered into a definitive agreement (the "Agreement") to
obtain all transponder capacity on the Apstar IIR satellite (other than with
respect to one C-band transponder retained by APT) from APT via the lease
through the end of life of the satellite. Apstar IIR, which was manufactured by
Space Systems/Loral, Inc., was launched in October 1997 and has an expected
mission life of 15 years. Loral Orion HK will have full use of 27 C-band and 16
Ku-band transponders aboard Apstar IIR for the remaining life of the satellite.
Located at 76.5 degrees East, Apstar IIR covers a region that includes Asia,
Europe, Africa and Australia. Its coverage region includes over 75% of the
world's population. Under the Agreement, Loral Orion HK will also have the
option to lease from APT replacement satellites upon the end of life of Apstar
IIR.
Pursuant to the Agreement, Loral Orion HK agreed to pay to APT
$298,077,922 in cash, which will be paid out over a four year period as follows:
$78,441,558 on the closing date, $12,501,623 per quarter thereafter for sixteen
quarters and $19,610,396 on the date the sixteenth quarterly installment is
made. Insurance proceeds from the Orion 3 failure will be used to fund a portion
of such payments. Loral Space & Communications Ltd. has also agreed to guarantee
(the "Guarantee") Loral Orion HK's obligations under the Agreement.
Consummation of the transaction is subject to, among other things,
receipt of approval from the Office of Telecommunication Authority of Hong Kong.
A copy of the Agreement and the Guarantee is filed as Exhibit 10.1 and Exhibit
10.2 hereto, respectively, and incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 10.1 Lease Agreement, dated as of August 18, 1999, by and between
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Loral Asia Pacific Satellite (HK) Limited and APT Satellite Company Limited
Exhibit 10.2 Guarantee of Loral Space & Communications Ltd. dated August 18,
1999
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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: August 23, 1999 By: /s/ Eric J. Zahler
Eric J. Zahler
Senior Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit Description
Exhibit 10.1 Lease Agreement, dated as of August 18, 1999, by and between
Loral Asia Pacific Satellite (HK) Limited and APT Satellite
Company Limited
Exhibit 10.2 Guarantee of Loral Space & Communications Ltd. dated August
18, 1999
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Exhibit 10.1
EXECUTION COPY
DATED August 18, 1999
LEASE AGREEMENT
by and between
LORAL ASIA PACIFIC SATELLITE (HK) LIMITED
and
APT SATELLITE COMPANY LIMITED
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TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.................................1
ARTICLE II APSTAR IIR ASSETS...................................7
Section 2.1. Lease of Satellite..................................7
Section 2.2. Assignment..........................................7
Section 2.3. License of Intangible Property......................8
Section 2.4. Certain Interpretations.............................8
ARTICLE III LEASE PRICE.........................................8
Section 3.1. Lease Price.........................................8
Section 3.2. Lease Price Set Off.................................8
ARTICLE IV ASSUMPTION OF ASSUMED LIABILITIES...................8
Section 4.1. Assumption of Assumed Liabilities...................8
Section 4.2. Excluded Liabilities................................9
Section 4.3. SS/L Incentive Payments............................10
ARTICLE V CLOSING............................................10
Section 5.1. Closing............................................10
Section 5.2. Closing Deliveries of APT..........................10
Section 5.3. Closing Deliveries of Loral........................10
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF APT..............11
Section 6.1. Due Organization...................................11
Section 6.2. Authority..........................................11
Section 6.3. Title to Assets; Liens and Encumbrances............11
Section 6.4. Orbital Slot; Coordination.........................11
Section 6.5. Intellectual Property..............................12
Section 6.6. Contracts..........................................12
Section 6.7. Customer Contracts.................................13
Section 6.8. Regulatory Requirements in PRC and Other
Related Jurisdictions............................13
Section 6.9. Noncontravention...................................13
Section 6.10. Governmental Proceedings; Litigation...............13
Section 6.11. Consent............................................14
Section 6.12. Compliance With Applicable Laws; Licenses..........14
Section 6.13. OFTA Matters.......................................15
Section 6.14. Taxes..............................................15
Section 6.15. Insurance..........................................16
Section 6.16. Condition of Satellite.............................16
Section 6.17. U.S. Revenues......................................16
Section 6.18. ArmSections Length Transactions....................17
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF LORAL............17
Section 7.1. Organization and Standing..........................17
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Section 7.2. Authority Relative to this Agreement...............17
Section 7.3. Noncontravention...................................17
Section 7.4. Governmental Proceeding; Litigations...............18
ARTICLE VIII COVENANTS...................................................18
Section 8.1. Conduct of Apstar IIR Business of APT. ............18
Section 8.2. No Solicitation....................................18
Section 8.3. Representations and Warranties.....................19
Section 8.4. Access to Information..............................19
Section 8.5. Notification of Certain Matters....................19
Section 8.6. Public Announcements...............................19
ARTICLE IX POST-CLOSING COVENANTS.............................20
Section 9.1. Coordination.......................................20
Section 9.2. Orbital Slot.......................................20
Section 9.3. LMI................................................20
Section 9.4. Insurance..........................................21
Section 9.5. Regulatory Matters.................................21
Section 9.6. Name of Satellite..................................21
Section 9.7. Arrangements re Orbital Slot and Satellite.........21
Section 9.8. Non-Competition....................................21
Section 9.9. Option to Lease Replacement Satellite..............22
Section 9.10. Replacement Satellite..............................22
Section 9.11. Additional Satellites..............................22
Section 9.12. Billing and Customer Management Systems............22
Section 9.13. Expenses...........................................22
Section 9.14. Novation of Customer Contracts.....................23
Section 9.15. Audit Rights.......................................23
Section 9.16. TT+C...............................................23
Section 9.17. Tax Matters........................................23
Section 9.18. Year 2000..........................................24
ARTICLE X CONDITIONS TO THE CLOSING..........................25
Section 10.1. Conditions to Obligations of Loral.................25
Section 10.2. Conditions to Obligations of APT...................27
ARTICLE XI REMEDIES FOR BREACH OF THIS AGREEMENT..............27
Section 11.1. Survival...........................................27
Section 11.2. Indemnification Provision for Benefit of the APT...28
Section 11.3. Indemnification Provisions for Benefit of Loral....28
Section 11.4. Notification; Rights of Parties to Settle or
Defend...........................................28
Section 11.5. Remedy.............................................29
ARTICLE XII TERMINATION........................................29
Section 12.1. Termination........................................29
Section 12.2. Effect of Termination..............................30
Section 12.3. Failure to Pay Lease Price.........................30
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Section 12.4. Interest...........................................30
ARTICLE XIII MISCELLANEOUS......................................31
Section 13.1. Entire Agreement...................................31
Section 13.2. Benefit of Parties; Assignment.....................31
Section 13.3 Notices............................................31
Section 13.4. Governing Law......................................32
Section 13.5. Dispute Resolution.................................32
Section 13.6. Set-off............................................32
Section 13.7. Severability.......................................33
Section 13.8. Pronouns...........................................33
Section 13.9. Headings...........................................33
Section 13.10. Expenses...........................................33
Section 13.11. Counterparts.......................................33
SCHEDULES
Schedule 6.3 Liens
Schedule 6.4(a) Orbital Slot Commitments
Schedule 6.4(b)(i) Material Restrictions on the Satellite
Schedule 6.4(b)(ii) Material Coordination Agreements and Summary Record
Documents
Schedule 6.4(b)(iii) Coordination Countries and Operators and Coordination
Status
Schedule 6.6(a) Contracts
Schedule 6.7 Repatriation Restrictions
Schedule 6.9 Noncontravention
Schedule 6.10 Litigation
Schedule 6.11 Consent
Schedule 6.12(b) Licenses
Schedule 6.15 Insurance
Schedule 6.16 Condition of the Satellite
EXHIBITS
Exhibit A Marketing Agreement
Exhibit B Services Agreement
Exhibit C APT Satellite Holdings Ltd. Guarantee
Exhibit D Loral Space & Communications Ltd. Guarantee
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LEASE AGREEMENT
LEASE AGREEMENT (the "Agreement") dated as of August 18, 1999 by and
between Loral Asia Pacific Satellite (HK) Limited, a Hong Kong company
("Loral"), and APT Satellite Company Limited, a Hong Kong company ("APT").
W I T N E S S E T H:
WHEREAS, APT desires to lease to Loral, and Loral desires to lease from
APT, the Leased Assets and, in connection therewith, to assign to Loral certain
other assets, in each case free and clear of all Liens, all pursuant to the
terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter contained, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):
"Action" means any action, suit or proceeding at law or in equity,
arbitration, inquiry, investigation or governmental, administrative, regulatory
or other proceeding by or before any Governmental Entity.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For purposes of the immediately preceding sentence, the term
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Lease Agreement, as the same may be amended,
modified or supplemented from time to time in accordance with its terms.
"Apstar IIR Assets" shall have the meaning set forth in Section 2.4.
"Apstar IIR Business" means the business of operating the Satellite and
leasing transponder capacity on the Satellite, other than the Excluded
Transponder.
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"APT" shall have the meaning set forth in the preamble to this
Agreement.
"APT Holdings" means APT Satellite Holdings Limited, a Bermuda company.
"Assumed Liabilities" shall have the meaning set forth in Section 4.1.
"Business Day" means any day on which commercial banks are not
authorized or required to close in New York City and Hong Kong.
"CGW Transponder(s)" means the transponder(s) on the Satellite which
APT or its Affiliates are Contracted to deliver, transfer or lease to China
Great Wall or its Affiliates in consideration of certain launch services
rendered by China Great Wall.
"China Great Wall" means China Great Wall Industry Corporation.
"Claims Notice" shall have the meaning set forth in Section 11.4.
"Closing" shall have the meaning set forth in Section 5.1.
"Closing Date" shall have the meaning set forth in Section 5.1.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commercial Risks" means (i) any loss or termination of any Customer
Contracts resulting in any loss of sales or profit arising from the APSTAR IIR
Business or (ii) any loss of market or business opportunities in respect of the
APSTAR IIR Business.
"Consents" means consents, waivers, approvals, allowances, novations,
authorizations, permits, filings, orders, registrations and notifications.
"Contracts" means all contracts, agreements, indentures, licenses,
leases, commitments, plans, arrangements, sales orders and purchase orders of
every kind, whether written or oral. "Contracted" shall have its correlative
meaning.
"Customer Contracts" shall have the meaning set forth in Section 2.2.
"Damages" means losses, liabilities, obligations, penalties, costs,
damages, claims and expenses (including reasonable costs of investigation and
attorneys' fees and disbursements).
"Dollar" or "$" means U.S. dollar.
"End of Life" means the date on which the life of a satellite is
permanently terminated.
"Excluded Liabilities" shall have the meaning set forth in Section 4.2.
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"Excluded Transponder" shall mean the C-band transponder on the
Satellite designated as 10A, which has been leased for the life of the
Satellite.
"Existing Customers" means the Persons party to the Existing Customer
Contracts.
"Existing Customer Contracts" means all Customer Contracts entered into
by APT or its Affiliates on or prior to the date hereof in connection with the
Apstar IIR Business.
"Existing Satellite" shall have the meaning set forth in Section 9.10.
"GAAP" means the generally accepted accounting principles of Hong Kong,
consistently applied.
"Governmental Entity" means any federal, state or local government or
any court, arbitral tribunal, administrative or regulatory agency or commission
or other governmental authority or agency, domestic, foreign or international.
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, including the rules and regulations promulgated thereunder.
"Indemnified Party" shall have the meaning set forth in Section 11.4.
"Indemnitor" shall have the meaning set forth in Section 11.4.
"Intellectual Property" means the intangible assets or rights to use
intangible properties which are related to, applicable to the Satellite or the
Apstar IIR Business and which consist of the following categories: (i) all
trademarks, service marks, trade names, logos, business and product names and
slogans, worldwide, and registrations and applications for registration thereof;
(ii) all copyrights in copyrightable works, and all other rights of authorship,
worldwide, and all applications, registrations and renewals in connection
therewith; (iii) all relevant business and technical information (including
ideas, research and development, know-how, formulas, technology, compositions,
technical data, engineering and other designs, drawings, engineering notebooks,
industrial models, software and specifications); (iv) all copies and tangible
embodiments of any or all of the foregoing (in whatever form or medium,
including electronic media); and (v) all licenses, priorities or rights of use
of certain resources.
"ITU" means the International Telecommunications Union.
"Knowledge" means actual knowledge after reasonable inquiry and
investigation.
"Laws" means all laws, statutes, constitutions, treaties, rules,
regulations, ordinances, codes, judgments, rulings, orders, writs, decrees,
stipulations, injunctions, restraining orders and binding determinations of all
Governmental Entities.
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"Lease Price" shall have the meaning set forth in Section 3.1.
"Leased Assets" shall have the meaning set forth in Section 2.1.
"Leases" means all leases, subleases and other similar arrangements
with respect to real or personal property, including, in each case, all
amendments, modifications and supplements thereto and waivers and consents
thereunder.
"Liability" means any and all debts, liabilities, obligations and
commitments, whether known or unknown, asserted or unasserted, fixed, absolute
or contingent, matured or unmatured, accrued or unaccrued, liquidated or
unliquidated, due or to become due, whenever or however arising (including
whether arising out of any Contract or Lease or tort based on negligence, strict
liability or otherwise) and whether or not the same would be required by GAAP or
U.S. GAAP to be reflected as a liability in financial statements or disclosed in
the notes thereto.
"Licenses" means all licenses, permits, authorizations, consents,
certificates, registrations, variances, exemptions, waivers, franchises and
other approvals from any Governmental Entity.
"Aliens" means, with respect to any property or assets, any mortgage,
deed of trust, pledge, hypothecation, assignment, security interest, lien,
charge, easement, encumbrance, preference, priority or other security agreement
or preferential arrangement of any kind or nature with respect to such property
or assets (including any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Loral" shall have the meaning set forth in the preamble to this
Agreement.
"Marketing Agreement" means the Marketing Services Agreement
substantially in the form attached as Exhibit A.
"Master Lease Agreement" means the Master Lease Agreement between APT
and APT Satellite Enterprise Limited, dated as of January 1, 1998.
"Material Adverse Change" means any event, change or development which
has had or could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, results of
operations, assets or liabilities of the Apstar IIR Business or the Apstar IIR
Assets.
"Material Adverse Effect" means a material adverse effect on, or any
effect that results in a material adverse change in, (a) the business, condition
(financial or otherwise), operations, prospects, results of operations, assets
or liabilities Related to the Apstar IIR Business or of the Apstar IIR Assets or
(b) the ability of APT to perform its obligations under the Transaction
Documents.
"MII" means the Ministry of Information Industries of the PRC.
"OFTA" means the Office of Telecommunication Authority of Hong Kong.
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"OFTA Licenses" means the OFTA Outer Space Ordinance License and the
OFTA Telecommunication License.
"OFTA Outer Space Ordinance License" means the license dated October
13, 1997 issued by OFTA under the Outer Space Ordinance of Hong Kong for the
launching and operation of the Satellite in the Orbital Slot and any renewal or
replacement therefor.
"OFTA Telecommunication License" means the license dated October 13,
1997 issued by OFTA under the Telecommunication Ordinance of Hong Kong for the
earth station related to the Satellite located at Tai Po, New Territories, Hong
Kong and any renewal or replacement therefor.
"Orbital Slot" means the orbital slot at 76.5 degrees east longitude
and all frequencies with respect thereto filed for thereunder under the filing
"Apstar IV" submitted to the ITU.
"Ordinary Course of Business" means the ordinary course of business of
APT with respect to the Apstar IIR Business consistent with past custom and
practice (including with respect to quantity and frequency).
"Person" means any individual, partnership, joint venture, trust,
corporation, limited liability entity, unincorporated organization or other
entity (including a Governmental Entity).
"PRC" means the People's Republic of China, excluding, for purposes of
this Agreement only, Hong Kong, Macau and Taiwan.
"Quarterly Payments" shall have the meaning set forth in Section 3.1.
"Related Assets" shall have the meaning set forth in Section 2.2.
"Related to the Apstar IIR Business" means related primarily to, used
primarily in, arising primarily from, or held primarily for use in, the Apstar
IIR Business, or otherwise necessary for the operation of the Apstar IIR
Business.
"Replacement Lease Price" means (i) the remaining amount of the Lease
Price, if any, then payable to APT under this Agreement (which shall be paid in
accordance with the payment schedule set forth herein), (ii) the amount of any
payments made by APT towards the construction, launch and launch insurance of
the replacement satellite, (iii) the reasonable incremental cost incurred by APT
in connection with (x) maintaining and coordinating the Orbital Slot during the
lease term of the replacement satellite, including without limitation, license
fees paid to OFTA or Governmental Entities in connection therewith and (y)
design efforts, if any, related to the replacement satellite and (iv) an amount
equal to 3% of the aggregate cost of the construction, launch and launch
insurance of the replacement satellite.
"Satellite" means the satellite designated as Apstar IIR and which was
launched into the Orbital Slot in October 1997.
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"Services Agreement" means the Satellite Services Agreement
substantially in the form attached as Exhibit B.
"Subsidiary" of a specified Person means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons performing
similar functions are directly or indirectly owned by such Person.
"Summary Record Documents" means the official minutes generated at each
bilateral coordination meeting related to the satellite and the Orbital Slot
memorializing the status and outcome of coordination efforts.
"Survival Date" shall have the meaning set forth in Section 11.1.
"Taxes" means all taxes, charges, duties, fees, levies or other
assessments, including income, excise, property, sales, use, gross receipts,
recording, insurance, value added, profits, license, withholding, payroll,
employment, net worth, capital gains, transfer, stamp, social security,
environmental, occupation, franchise taxes, any transferee or secondary
liability in respect of any tax (whether imposed by law, contractual agreement
or otherwise) and any liability of any tax as a result of being a member of any
affiliated, consolidated, combined or unitary or similar group, imposed by any
Governmental Entity, and including any interest, penalties and additions
attributable thereto and any Liability in respect of any of the foregoing
amounts as a transferee or as an indemnitor, guarantor or surety or in a similar
capacity under any Contract, arrangement, agreement, understanding or commitment
(whether oral or written).
"Technical Risks" mean any or all loss, defects, damages, malfunctions
or failures of any part or of the whole Satellite (other than the Excluded
Transponder), which may be caused by internal technical problem or external
causes, resulting in a partial or total loss of the Satellite's functions,
operation or communication capacity.
"Third Party Liability Risk" means the liability or damages for bodily
injury and/or property damage caused by the operation of the Satellite (other
than the Excluded Transponder) or the Satellite itself (other than the Excluded
Transponder), including liability arising under the Convention On International
Liability For Damage Caused by Space Objects (TIAS 7762) and the Outer Space
Ordinance of Hong Kong (other than liability or damages for which APT provides
indemnification pursuant to the Services Agreement).
"Transaction Documents" means this Agreement, the Marketing Agreement
and the Services Agreement.
"TT+C" means telemetry, tracking and command.
"U.S. GAAP" means United States generally accepted accounting
principles.
"Useful Life" means the period of time during which a satellite is
operating in accordance with its design specifications.
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ARTICLE II
APSTAR IIR ASSETS
Section 2.1. Lease of Satellite. Subject to the terms and conditions
set forth herein, and in reliance upon the representations and warranties
contained herein, at the Closing, APT shall lease exclusively to Loral, or, at
Loral's option, an Affiliate of Loral, free and clear of all Liens, the
Satellite (other than the Excluded Transponder) at the Orbital Slot until the
End of Life of the Satellite (the "Leased Assets").
Section 2.2. Assignment. Subject to the terms and conditions set forth
herein, including without limitation Section 9.14, and in reliance upon the
representations and warranties contained herein, at the Closing, APT shall
assign, convey and deliver to Loral, or, at Loral's option, an Affiliate of
Loral, the following assets (collectively, the "Related Assets"):
(a) all Contracts with third parties for the provision of transponder
capacity on the Satellite other than the Contracts related to the Excluded
Transponder (the "Customer Contracts");
(b) all rights under construction contracts and any other related
contracts relating to the Satellite, including without limitation all warranties
thereunder;
(c) all deposits and prepayments under Leases and Contracts Related to
the Apstar IIR Business;
(d) all accounts receivable Related to the Apstar IIR Business for
periods following the Closing Date;
(e) copies of all books and records Related to the Apstar IIR
Business, including without limitation, the following:
(i) all documents relating to the coordination of the
Satellite or the Orbital Slot, including all correspondence to or from the ITU
or the MII;
(ii) all customer files;
(iii) all technical manuals or drawings regarding or relating
to the Satellite as specified by Loral;
(iv) all documents relating to ground communication equipment
of the Satellite as specified by Loral.
(f) all other assets Related to the Apstar IIR Business and not subject
to the provisions of Section 2.1 above or 2.3 below.
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Section 2.3. License of Intangible Property. APT hereby licenses to
Loral, or, at Loral's option, an Affiliate of Loral, effective as of the Closing
Date, on a royalty-free basis, until the End of Life of the Satellite the
Intellectual Property which are related to or required for the conduct of the
APSTAR IIR Business.
Section 2.4. Certain Interpretations. The assets, properties and rights
of APT to be leased by Loral or assigned, licensed or delivered to Loral
pursuant to this Agreement, including the Leased Assets and the Related Assets
are herein collectively referred to as the "Apstar IIR Assets." The term "Apstar
IIR Assets" will include all additions and replacements to any of the items
described above from the date of this Agreement through the Closing Date.
ARTICLE III
LEASE PRICE
Section 3.1. Lease Price. Subject to the terms and conditions set forth
herein, in consideration for the lease of the Leased Assets and the assignment,
license and delivery of the Related Assets, Loral will deliver to APT the
following consideration (the "Lease Price") by wire transfer of immediately
available funds to a bank account designated by APT less any amount payable by
APT to Loral pursuant to Section 3.2:
(a) eighty million Dollars ($80,000,000) at the Closing Date;
(b) twelve million seven hundred and fifty thousand Dollars
($12,750,000) payable at the end of each quarter for 16 consecutive quarters
commencing on the last day of the third month immediately following the Closing
Date (the "Quarterly Payments"); and
(c) twenty million Dollars ($20,000,000) on the payment date of the
16th Quarterly Payment referred to in Section 3.1(b) above.
Section 3.2. Lease Price Set Off. The Lease Price stated in Section 3.1
above shall be reduced by US$5,922,078.00 (calculated with reference to the
total bandwidth of the Satellite) in consideration for the Excluded Transponder.
The said consideration for the Excluded Transponder shall be set off against the
Lease Price payable by Loral to APT and spread over on a proportional basis over
the overall payment schedule set forth in Section 3.1.
ARTICLE IV
ASSUMPTION OF ASSUMED LIABILITIES
Section 4.1. Assumption of Assumed Liabilities. Subject to the terms
and conditions set forth herein, and in reliance upon the representations and
warranties contained herein, at the Closing, in consideration for the lease of
the Leased Assets and the assignment,
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license and delivery of the Related Assets to Loral, Loral agrees to assume and
undertakes to pay, perform and discharge, in accordance with the terms thereof,
only the following Liabilities (the "Assumed Liabilities"):
(a) all contractual obligations (other than obligations relating to
Excluded Liabilities) of APT incurred in the Ordinary Course of Business arising
under the Customer Contracts other than any Liabilities (i) which relate to any
of the Customer Contracts as to which APT or its Affiliate is in default on the
Closing Date (or would be in default on the Closing Date, assuming the giving of
any applicable notices and the lapse of any applicable waiting periods), it
being intended that the portion of any Liabilities under such Customer Contract
as to which APT is not in default shall not be excluded hereby, (ii) which are
due and payable on or before the Closing Date or (iii) which constitute Excluded
Liabilities;
(b) all Liabilities Related to the Apstar IIR Business to the extent
arising from Loral's actions from and after the Closing Date;
(c) all contractual obligations relating to the Satellite arising after
the Closing Date under coordination agreements identified on Schedule
6.4(b)(ii);
(d) all Commercial Risks, Technical Risks and Third Party Liability
Risks arising after the Closing Date (other than Excluded Liabilities);
(e) subject to the provisions of Section 4.3, the obligation to make
performance incentive payments (the "SS/L Incentive Payments") to Space
Systems/Loral, Inc. pursuant to Section 11.6 of the Satellite Procurement
Agreement dated as of June 1995 between APT and Space Systems/Loral, Inc.; and
(f) liabilities for which Loral or any of its Affiliates are made
responsible pursuant to this Agreement.
Loral will assume no Liabilities whatsoever other than those identified
in clauses (a) through (f) of this Section 4.1.
Section 4.2. Excluded Liabilities. APT will remain liable for and pay,
perform and discharge when due, all Liabilities other than the Assumed
Liabilities (collectively, the "Excluded Liabilities"), including without
limitation, the following:
(a) all Liabilities based upon, arising out of, relating to or
otherwise in connection with the Excluded Transponder, the launch services
contract with China Great Wall or the Master Lease Agreement.
(b) all Liabilities arising from or relating to the employment or
termination of employment of any person Related to the Apstar IIR Business,
including any Liabilities arising from or relating to any employment or
consulting agreements and any other employee compensation or benefit plans or
arrangements;
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(c) all Liabilities based upon, arising out of, relating to or
otherwise in connection with any events, actions, occurrences, omissions,
circumstances or conditions occurring or existing on or prior to the Closing
Date, including without limitation, any actual or threatened future Action, and
without regard to whether such Liability is Related to the Apstar IIR Business
or related to the Apstar IIR Assets;
(d) all Liabilities for any income, sales, use, transfer, stamp and
other Taxes arising as a result of, in connection with, or are directly
attributable to, the consummation of the transactions contemplated hereby;
(e) all Liabilities for any Taxes of APT and its Affiliates;
(f) all Liabilities for Taxes that are directly or indirectly
attributable to or otherwise relate to the Apstar IIR Assets or the Assumed
Liabilities for periods (or portions thereof) up to and including the Closing
Date; and
(g) Liabilities for which the APT or any of its Affiliates are made
responsible pursuant to this Agreement.
Section 4.3. SS/L Incentive Payments. In the event that at the time the
SS/L Incentive Payments are made by Loral pursuant to Section 4.1(e) of this
Agreement and Space Systems/Loral, Inc. is not wholly owned, whether directly or
indirectly, by Loral Space & Communications Ltd., APT shall, within five
Business Days from the date Loral provides notice to APT that it has made the
Incentive Payment, reimburse Loral for the amount of such Incentive Payment.
ARTICLE V
CLOSING
Section 5.1. Closing. The closing of the lease, assignment and delivery
of the Apstar IIR Assets (the "Closing") will take place at the offices of APT
Satellite Company Limited at Room 3111-3112, 31/F, One Pacific Place, 88
Queensway, Hong Kong, two weeks following the date of this Agreement provided
that prior thereto, the conditions set forth in Section 10 shall have been
satisfied or waived or at such other place, date and time as APT and Loral may
agree. The date of the Closing is referred to herein as the "Closing Date."
Section 5.2. Closing Deliveries of APT. At the Closing, APT will
deliver to Loral (i) an officer's certificate as set forth in Section 10.1(a)
and (b) of this Agreement and (ii) all other documents and assets required to be
delivered by APT to Loral at the Closing pursuant to this Agreement.
Section 5.3. Closing Deliveries of Loral. At the Closing, Loral will
deliver to APT (i) the Lease Price pursuant to Section 3.1(a) (less the offset
amount described in Section 3.2) and (ii) an officer's certificate as set forth
in Section 10.2(a) and (b) of this Agreement and all
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other documents required to be delivered by Loral to APT at the Closing pursuant
to this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF APT
APT, as of the date hereof and as of the Closing Date, hereby
represents and warrants to Loral as follows:
Section 6.1. Due Organization. APT is a company with limited liability
duly organized, validly existing and in good standing under the laws of Hong
Kong and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would not have or constitute a Material Adverse
Effect. APT is duly qualified to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct or nature of its
business as it relates to the Apstar IIR Business or the ownership, leasing or
holding of the Apstar IIR Assets by it makes such qualification necessary,
except where the failure to be so qualified would not have, individually or in
the aggregate, a Material Adverse Effect.
Section 6.2. Authority. APT has all requisite corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents and to perform all of its obligations hereunder and thereunder. The
execution and delivery by APT of this Agreement and the other Transaction
Documents and the performance by APT of its obligations hereunder and thereunder
have been duly authorized by all necessary and proper corporate action. This
Agreement has been duly executed and delivered by APT and constitutes a legal,
valid and binding obligation of APT, enforceable against APT in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors' rights and
subject, as to enforceability, to general principles of equity (regardless
whether enforcement is sought in a proceeding in equity or at law). Each other
document (including the other Transaction Documents) to be delivered by APT
pursuant to this Agreement will be duly executed and delivered by APT and, when
so executed and delivered, will constitute the legal, valid and binding
obligation of APT, enforceable against APT in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights and subject, as to
enforceability, to general principles of equity (regardless whether enforcement
is sought in a proceeding in equity or at law).
Section 6.3. Title to Assets; Liens and Encumbrances. APT is the owner
of, and has good and marketable title to, all of the Apstar IIR Assets, free and
clear of all Liens except for the Liens set forth on Schedule 6.3 hereto which
shall have been terminated as of the Closing Date.
Section 6.4. Orbital Slot; Coordination.
(a) APT has the legal right under all applicable Laws, including
without limitation
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the Laws of the PRC and Hong Kong and the regulations and recommendations of the
ITU (i) to use the Orbital Slot exclusively, subject to the conditions specified
thereunder, and (ii) to lease the Satellite to Loral as contemplated by this
Agreement. Schedule 6.4(a) sets forth all material agreements or commitments
relating to the Orbital Slot, true and complete copies of which were previously
examined by Loral.
(b) APT has taken all actions required of APT to date to coordinate the
Satellite in the Orbital Slot. Schedule 6.4(b)(i) sets forth all material
restrictions on the Satellite resulting from coordination activities as of the
date hereof. Schedule 6.4(b)(ii) sets forth all material agreements or
commitments relating to coordination proceedings for the Orbital Slot and all
Summary Record Documents, true and complete copies of which were previously
examined by Loral. Schedule 6.4(b)(iii) lists all the countries and operators
with which the operator of the Satellite has been or will be required to enter
into coordination discussions and the status of those discussions.
Section 6.5. Intellectual Property. APT owns or possesses all right,
title and interest in and to, or a valid and enforceable license or other right
to use all of the Intellectual Property, and all of the right, benefits, and
privileges associated therewith, that is material to the conduct of the Apstar
IIR Business as currently conducted (and as conducted as of the Closing Date).
APT has not infringed, misappropriated or otherwise violated any Intellectual
Property of any other Person.
Section 6.6. Contracts.
(a) Schedule 6.6(a) sets forth all Contracts (and all amendments,
modifications and supplements thereto and all side letters to which APT or any
of its Affiliates is a party affecting the obligations of any party thereunder)
to which APT or any of its Affiliates is a party or by which any of their
properties or assets are bound that relate to the Apstar IIR Assets or the
Apstar IIR Business, including without limitation, the following: (i) Contracts
relating to the lease or purchase of transponders (other than the Contract
relating to the Excluded Transponder); (ii) Contracts relating to the
coordination of the Orbital Slot; (iii) Contracts relating to the Orbital Slot;
and (iv) Contracts with any Governmental Entity. Loral has previously examined
copies of the Contracts set forth on Schedule 6.6(a) hereto.
(b) Each of the Contracts is valid and enforceable in accordance with
its terms, and there is no default or alleged default under any Contract so
listed either by APT or, to the Knowledge of APT, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by APT or, to the Knowledge of APT,
any other party.
(c) No party to any Contract has given notice to APT of, or made a
claim against APT with respect to, any breach or default thereunder, in any such
case in which such breach or default would, individually or in the aggregate,
have a Material Adverse Effect.
(d) Other than the Contract relating to the Excluded Transponder and
the Master Lease Agreement, there are no Contracts for the purchase, or option
to purchase, or the lease for all or substantially all of the life, of a
transponder on the Satellite.
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Section 6.7. Customer Contracts. Schedule 6.6(a) sets forth all the
Customer Contracts. All the Customer Contracts are billed and payable in
Dollars. Except as set forth on Schedule 6.7, APT has neither Knowledge of nor
experienced any regulatory restrictions on the repatriation of payments under
the Customer Contracts, including without limitation, rental payments under the
transponder lease agreements. None of such customers has canceled or
substantially reduced service or have given notice that it intends to cancel or
substantially reduce service, except cancellations in the Ordinary Course of
Business that are not material in number or amount of revenue affected. The
Existing Customer Contracts are in full force and effect and represent aggregate
annual revenues of at least $16 million Dollars utilizing no more than 11
transponders (based on 36-MHz transponder equivalents in the case of C-band and
54 MHz transponder equivalents in the case of Ku-band).
Section 6.8. Regulatory Requirements in PRC and Other Related
Jurisdictions. No Consent from a Governmental Entity or other Person is
currently required for a satellite operator to lease or sub-lease transponder
capacity to Persons wishing to provide satellite-based service in the PRC or any
other jurisdiction in which the Apstar IIR Business is currently conducted. To
the best Knowledge of APT, no Consent from a Governmental Entity or other Person
is expected to be required in the future for a satellite operator to lease or
sub-lease transponder capacity to Persons wishing to provide satellite-based
service in the PRC or any other jurisdiction in which the Apstar IIR Business is
currently conducted.
Section 6.9. Noncontravention. The execution and delivery by APT of
this Agreement and the other documents (including the other Transaction
Documents) to be delivered by APT pursuant to this Agreement, the performance by
APT of its obligations to be performed hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby will not, (i)
contravene or conflict with the articles of association, by-laws or other
organizational documents of APT; (ii) contravene or conflict with or constitute
a violation of any provision of any Laws or License to which APT or any of its
properties or assets is subject; or (iii) except as set forth on Schedule 6.9,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, cause APT to make an offer to purchase under, create in any
party the right to accelerate, terminate, modify or cancel, require any notice
or give rise to a loss of any benefit under, any of the Apstar IIR Assets or any
Contract, Lease, Lien or other arrangement to which APT is a party or by which
it is bound or to which any of the Apstar IIR Assets is subject or result in the
creation or imposition of any Liens on any of the Apstar IIR Assets.
Section 6.10. Governmental Proceedings; Litigation. There is not in
effect any judgment, ruling, order, writ, decree, stipulation or injunction by
or with any Governmental Entity to which APT or any of its Affiliates is party
or by which APT or any of its Affiliates or any properties or assets of any of
the foregoing is bound, and which relates to or affects the Apstar IIR Business,
the Apstar IIR Assets, the Assumed Liabilities, this Agreement or the
transactions contemplated hereby, and (ii) none of APT or any of its Affiliates
is party to, engaged in or, to the Knowledge of APT, threatened with any Action
which relates to or affects the Apstar IIR Business, the Apstar IIR Assets, the
Assumed Liabilities, this Agreement or the transactions contemplated hereby,
and, to the Knowledge of APT, no event has occurred and no condition exists
which could reasonably be expected to result in any such
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Action. None of APT or any of its Affiliates is in default under or with respect
to any judgment, ruling, order, writ, decree, stipulation or injunction of the
type described in Section 6.10.
Section 6.11. Consent. The execution and delivery by APT of this
Agreement and each instrument of transfer or other document (including the other
Transaction Documents) to be delivered pursuant to this Agreement, the
consummation of the transactions contemplated hereby and thereby, and the
performance by APT of its obligations to be performed hereunder and thereunder,
do not require any Consent of any Governmental Entity (including the MII) or any
third party other than the Consents set forth on Schedule 6.11.
Section 6.12. Compliance With Applicable Laws; Licenses.
(a) (i) APT has complied in all material respects, and the Apstar IIR
Assets and the Assumed Liabilities are in compliance in all material respects,
with all Laws, (ii) no claims or complaints from any Governmental Entities or
other Persons have been asserted or received in writing by APT or its Affiliates
during the past three years, or by oral notice since December 31, 1998, related
to or affecting the Apstar IIR Business, the Apstar IIR Assets or the Assumed
Liabilities and, to the best Knowledge of APT, no claims or complaints are
threatened, alleging that any of APT or its Affiliates is in material violation
of any Laws or Licenses applicable to the Apstar IIR Assets or the Assumed
Liabilities, and (iii) none of APT or its Affiliates has received written notice
from any Governmental Entity of any proceedings to take all or any part of the
Apstar IIR Assets or other properties of APT (whether leased or owned) related
to or affecting the Apstar IIR Business, the Apstar IIR Assets or the Assumed
Liabilities by condemnation or right of eminent domain and, to the Knowledge of
APT, no such proceedings are threatened, except, in each such case, for such
noncompliance, claims, complaints or proceedings which would not have,
individually or in the aggregate, a Material Adverse Effect. Neither APT nor any
of its Affiliates has taken any action that would constitute a violation or
breach of Section 78dd-2 of Title 15 of the United Sates Code.
(b) APT presently holds all the Licenses that are necessary or
appropriate for its current operation of its Apstar IIR Business and the Apstar
IIR Assets; and no notice of violation of any such Licenses or any applicable
Laws with respect to the Apstar IIR Business or the Apstar IIR Assets has been
received. Schedule 6.12(b) sets forth all Licenses held by APT required for the
operation of the Apstar IIR Business and the Apstar IIR Assets. No application,
action or proceeding is pending for the renewal or modification of the Licenses,
and no application, complaint, action or proceeding is pending or, to the
Knowledge of APT, threatened, that may result in the revocation, modification,
non-renewal, imposition of conditions or suspension of the Licenses or the
imposition of any administrative or judicial sanction with respect to APT as a
result of the transactions contemplated by this Agreement or otherwise. There
has not been any failure of APT to comply (whether or not known by or disclosed
to the Governmental Entities or any other Person) in all material respects with
all Laws applicable to the Apstar IIR Business, and with the terms and
conditions of the Licenses, including without limitation, any due diligence
obligations or reporting requirements associated with the Licenses.
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Section 6.13. OFTA Matters.
(a) The OFTA Licenses are valid and in full force and effect; APT
controls and has always controlled the OFTA Licenses and the systems authorized
thereunder; APT has timely performed all obligations required to date under the
OFTA Licenses; APT has timely submitted all filings and reports required
thereunder.
(b) APT has delivered to Loral true, correct and complete copies of the
OFTA Licenses. APT has delivered to Loral true, correct and complete copies of
all material correspondence from the OFTA to APT relating to the OFTA Licenses
and all material correspondence, submissions and/or other filings from APT to
OFTA relating thereto sent to or received by APT. No application, action or
proceeding is pending for the renewal or modification of the OFTA Licenses, and
no application, complaint, action or proceeding is pending or, to the Knowledge
of APT, threatened, that may result in the revocation, modification,
non-renewal, imposition of conditions or suspension of the OFTA Licenses or the
imposition of any administrative or judicial sanction with respect to APT as a
result of the transactions contemplated by this Agreement or otherwise. There
has not been any failure of APT to comply (whether or not known by or disclosed
to the OFTA or any other Person) in all material respects with all Laws
applicable to the Apstar IIR Business, and with the terms and conditions of the
OFTA Licenses, including without limitation, any due diligence obligations or
reporting requirements associated with the OFTA Licenses.
(c) Except as set forth on Schedule 6.11, no consent, approval,
authorization, order or waiver of, or filing with, OFTA is required under the
applicable Laws to be obtained or made by APT in connection with the
transactions contemplated by this Agreement, except such as may already have
been obtained and made.
Section 6.14. Taxes.
(a) All local and foreign Tax returns required to be filed by or on
behalf of APT have been timely filed or requests for extensions have been timely
filed and any such extensions have been granted and have not expired and each
such tax return was complete and correct in all material respects. All Taxes
with respect to taxable periods covered by such tax returns that are due have
been paid in full and to the extent the liabilities for such Taxes are not due,
adequate reserves have been established in accordance with GAAP.
(b) All Taxes due with respect to any completed and settled audit,
examination or deficiency litigation with any taxing authority for which such
APT is or might otherwise be liable have been paid in full (or will be paid in
full by the Closing Date).
(c) There is no audit, examination, deficiency or refund litigation
pending and no taxing authority has given written notice of the commencement of
any audit, examination or deficiency litigation with respect to any Taxes.
(d) No Liens for Taxes exist with respect to any of the Apstar IIR
Assets.
(e) No claim has been made by any tax authority in a jurisdiction where
APT does
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not file Tax returns that it is or may be subject to taxation by that
jurisdiction.
(f) APT has withheld all Taxes required to have been withheld under all
applicable statutes and regulations in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party, and such withholdings have either been paid to the appropriate
governmental agencies as and when due in accordance with Laws or set aside in
accounts for such purpose.
(g) No issues have been raised with a representative or employee of APT
or its Affiliates (and are currently pending) by the U. S. Internal Revenue
Service, the Inland Revenue Department of Hong Kong or any other taxing
authority in connection with any of the Tax returns referred to in Section
6.14(a) or otherwise that could affect the Tax reporting in respect of the
Apstar IIR subsequent to the Closing Date.
(h) APT is not party to any agreement (e.g., a tax sharing agreement),
written or oral, providing for the payment of Taxes or Tax losses, entitlements
to refunds or similar Tax matters. APT has not assumed, and will not become
liable for, any Taxes of any Person, as transferee or successor by contract, by
operation of law, or otherwise.
(i) Except with respect to customers located in the PRC, all amounts
payable under the Customer Contracts are payable free and clear of any Taxes
that are in the nature of withholding Taxes.
(j) All Taxes that are in the nature of consumption Taxes (e.g., sales,
use, value added) and which are applicable to amounts payable under the Customer
Contracts have been properly invoiced, collected and timely remitted to the
appropriate Governmental Entity.
(k) No real or personal property tax applies to any of the Apstar IIR
Assets.
Section 6.15. Insurance. Schedule 6.15 sets forth a complete list of
insurance policies which APT maintains with respect to the Satellite. All such
policies are in full force and effect and shall remain in full force and effect
through the Closing Date; all premiums with respect thereto covering all periods
up to and including the date hereof have been paid (and covering all periods up
to and including the Closing Date will be paid prior to the Closing Date); and
no notice of cancellation or termination has been received with respect to any
such policy.
Section 6.16. Condition of Satellite. The Satellite is in good
operating condition and usable in the Ordinary Course of Business with an
expected remaining Useful Life of approximately 14 years. The Satellite has to
date not experienced any anomalies in its operation. To the best Knowledge of
APT, there are no facts, circumstances or conditions existing which could
reasonably be expected to result in such anomalies. Schedule 6.16 sets forth a
list of all health and status reports on the Satellite, true and complete copies
of which were previously provided to Loral.
Section 6.17. U.S. Revenues. The gross revenue of APT and its
Affiliates for the fiscal year ended December 31, 1998 attributable to its sales
or leases to U.S. persons (as
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defined in the HSR Act) generated from the Apstar IIR Business was less than $25
million.
Section 6.18. Arm's Length Transactions. None of APT and its Affiliates
has entered into any transaction Related to the Apstar IIR Business or related
to the Apstar IIR Assets, including, without limitation, any such transaction
providing for the extension of credit, the leasing or purchase or sale of
property, the rendering or receipt of services, unless such transactions are on
an arm's length basis.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF LORAL
Loral, as of the date hereof and the Closing Date, hereby represents
and warrants to APT as follows:
Section 7.1. Organization and Standing. Loral is a company duly
organized, validly existing and in good standing under the laws of Hong Kong and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority would neither have a material adverse effect on Loral's
financial condition, business or results of operation nor materially impair or
delay the ability of Loral to consummate the transactions contemplated hereby.
Section 7.2. Authority Relative to this Agreement. Loral has all
corporate power and authority to execute and deliver this Agreement and to
perform all of its obligations hereunder. The execution and delivery by Loral of
this Agreement and the performance by Loral of its obligations hereunder have
been duly authorized by all necessary and proper corporate action. This
Agreement has been duly executed and delivered by Loral and constitutes the
legal, valid and binding obligation of Loral, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting creditors'
rights and subject, as to enforceability, to general principles of equity
(regardless whether enforcement is sought in a proceeding in equity or at law).
Section 7.3. Noncontravention. The execution and delivery by Loral of
this Agreement, the performance by Loral of its obligations to be performed
hereunder and the consummation of the transactions contemplated hereby will not
(i) contravene or conflict with the memorandum of association or bye-laws of
Loral; (ii) contravene or conflict with or constitute a violation of any
provision of any Laws or License to which Loral or any of its properties or
assets is subject; or (iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, cause Loral to make an offer to
purchase under, create in any party the right to accelerate, terminate, modify
or cancel, require any notice or give rise to a loss of any benefit under, any
Contract, Lease, Lien or other arrangement to which Loral is a party or by which
it is bound or to which any of its properties or assets is subject or result in
the creation or imposition of any Liens on any assets of Loral, other than any
loss of benefit, Lien or any other such event which would not have a material
adverse effect on Loral's
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financial condition, business or results of operation or adversely affect the
ability of Loral to consummate the transactions contemplated hereby.
Section 7.4. Governmental Proceeding; Litigations. There is not in
effect any judgment, ruling, order, writ, decree, stipulation or injunction by
or with any Governmental Entity to which Loral or any of its Affiliates is party
or by which Loral or any of its Affiliates or any properties or assets of any of
the foregoing is bound, and which relates to or affects, the Assumed
Liabilities, this Agreement or the transactions contemplated hereby, and none of
Loral or any of its Affiliates is party to, engaged in or, to the Knowledge of
Loral, threatened with any Action which relates to or affects the Assumed
Liabilities, this Agreement or the transactions contemplated hereby, and, to the
Knowledge of Loral, no event has occurred and no condition exists which could
reasonably be expected to result in any such Action. None of Loral or any of its
Affiliates is in default under or with respect to any judgment, ruling, order,
writ, decree, stipulation or injunction of the type described in Section 7.4.
ARTICLE VIII
COVENANTS
Section 8.1. Conduct of Apstar IIR Business of APT. Except as
contemplated by this Agreement, during the period from the date hereof to the
Closing Date, APT will conduct the Apstar IIR Business in the Ordinary Course of
Business and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement and its
relationships with customers, potential customers, suppliers and others having
business dealings with it relating to the Apstar IIR Business to the end that
goodwill and ongoing businesses shall be unimpaired at the Closing Date. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the Closing Date, APT shall not, without
the prior written consent of Loral:
(a) modify in any material respect (including waive any material terms
or conditions of) any Contract or enter into any Contract which, if in effect on
the date hereof, would have been required to be disclosed on Schedule 6.6(a),
including without limitation any Contract relating to the coordination of the
Orbital Slot, provided that APT may continue to enter into transponder lease
agreements upon terms acceptable to Loral, as notified to APT in writing by
Loral; or
(b) sell, lease or dispose of any of the Apstar IIR Assets, grant any
party other than Loral the right to use the Orbital Slot, or grant any rights
with respect hereto, provided that APT may continue to enter into transponder
lease agreements upon terms acceptable to Loral, as notified to APT in writing
by Loral.
Section 8.2. No Solicitation. Except for the transactions contemplated
by this Agreement until the Closing Date, APT and its Affiliates shall not, nor
shall APT or its Affiliates authorize or permit any officer, director or
employee of, or any investment banker, attorney, accountant, or other
representative retained by, APT or such Affiliates to, directly or indirectly,
solicit, initiate, encourage or entertain (including by way of furnishing
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information) discussions, inquiries, offers or proposals or participate in any
discussions or negotiations for the purpose or with the intention of leading to
any proposal or offer from any Person which constitutes or concerns, or may
reasonably be expected to lead to, any transaction involving any proposal or
offer to acquire all or any portion of the Apstar IIR Assets. APT will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with respect to
any of the foregoing.
Section 8.3. Representations and Warranties. APT will not nor will it
permit any of its Affiliates to take or agree or commit to take any action on or
prior to the Closing Date that could reasonably be expected to result in any of
its representations and warranties hereunder being untrue.
Section 8.4. Access to Information. Until the Closing, APT shall cause
APT and its independent auditors and other representatives to afford to the
officers, independent auditors, counsel and other representatives of Loral
reasonable access to the properties, books, records (including Tax returns,
information returns and disclosures filed and those in preparation) and
personnel of APT in order that Loral may have a full opportunity to make such
investigation as it reasonably desires to make of the Apstar IIR Business and
the Apstar IIR Assets, and to the independent auditors and other representatives
of Loral reasonable access and, if available, to the audit and Tax work papers
and other records of the independent auditors of APT. Additionally, until the
Closing, APT shall permit Loral to make such reasonable inspections of the
operations of the Apstar IIR Business during normal business hours as Loral may
reasonably require and furnish Loral with such financial and operating data and
other information with respect to the Apstar IIR Business as Loral may from time
to time reasonably request.
Section 8.5. Notification of Certain Matters. APT and Loral shall give
prompt notice to the other party of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing Date, (ii) any
material failure by it to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice or
other communication from any third party alleging that the Consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement, or (iv) any Material Adverse Effect; provided, that the delivery
of any notice pursuant to this Section 8.5 shall not cure such breach or
non-compliance or limit or otherwise affect the remedies available hereunder to
the non-breaching party. APT shall give prompt notice to Loral of any notice of,
or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by APT or any of its
Affiliates subsequent to the date of this Agreement and prior to the Closing
Date, under any Contract material to the financial condition, properties,
businesses or results of operations of the Apstar IIR Business or to which any
of the Leased Assets is subject.
Section 8.6. Public Announcements. No press release or announcement
concerning the transactions contemplated hereby will be issued by any party
hereto without the prior consent of the other party hereto, except as such
release or announcement may be required by
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Laws or the rules of any applicable securities exchanges in which case the party
required to make the release or announcement will allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance.
ARTICLE IX
POST-CLOSING COVENANTS
Section 9.1. Coordination. APT shall use its best efforts to conduct
coordination activities for the Satellite and any replacement or additional
satellite at the Orbital Slot . APT shall keep Loral fully informed of the
status of all such coordination activities and shall allow Loral to participate
in such activities. APT shall not enter into any coordination agreements
(including Summary Record Documents) without Loral's prior written consent. APT
shall use its best efforts to fully enforce the terms of the coordination
agreements (including Summary Record Documents) for APT and the Satellite. APT
shall use its best efforts to obtain the cooperation of the Governmental
Entities of the PRC to coordinate the Orbital Slot in a manner designed to make
full use of the frequencies assigned to the Orbital Slot. APT shall, at Loral's
request, use its best efforts to serve as Loral's intermediary to the PRC in
connection with such activities.
Section 9.2. Orbital Slot.
(a) APT shall (i) make all regulatory filings and take such other
actions on a timely basis with the MII, the OFTA, the ITU and the applicable
Governmental Entities of those jurisdictions to which the Satellite may provide
coverage, as may be necessary or appropriate to secure and maintain its rights
to utilize the Orbital Slot, including without limitation, using its best
efforts to preserve the unencumbered and unrestricted use of the Orbital Slot
and diligently prosecuting renewal of the ITU authorization during a reasonable
period prior to its scheduled expiration date, (ii) use its best efforts to
achieve, maintain and renew notification for the Orbital Slot at the ITU and
have the filing entered in the ITU Master Frequency Register and (iii) make such
filings as Loral may reasonably request, including filings to expand the
frequencies and coverage area of the Orbital Slot. APT shall consult with, and
obtain the consent of, Loral prior to making such filings or taking such
actions.
(b) Each of APT and Loral shall comply with the OFTA Licenses and the
rules and regulations of the ITU with respect to the Orbital Slot.
(c) APT shall use its best efforts to provide Loral with quiet
enjoyment of the Orbital Slot.
Section 9.3. LMI. APT shall use its best efforts to diligently
prosecute coordination proceedings (the ALMI Coordination") with Lockheed Martin
Intersputnik (ALMI") regarding 75 degrees E.L. In connection therewith, APT
agrees that it shall bear all costs and expenses (including payments (the ALMI
Payments") made to LMI or its governing administrations to cause LMI to agree to
move its satellite to 74.5 degrees E.L.) related to LMI's
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move of its satellite from 75 degrees E.L. to 74.5 degrees E.L. If APT is not
able to obtain LMI's agreement to move its satellite to 74.5 degrees E.L. and,
as a result, customers of the Satellite are required to use dishes having a dish
size in excess of 3.7m in diameter, then APT shall bear the cost of retrofitting
the dishes of affected customers or to reimburse Loral for such amount, to the
extent Loral undertakes the retrofitting efforts, and shall assume Liabilities
that may arise under Customer Contracts with such affected customers as a result
of such increase in dish size. APT shall not enter into any agreement with LMI
regarding the LMI Coordination without Loral's prior written consent.
Section 9.4. Insurance. Loral and APT shall obtain and maintain, at all
times during the life of the Satellite, in-orbit insurance and third-party
liability insurance in relation to the Satellite as required under the OFTA
Licenses, in accordance with their respective economic interests in the
Satellite. Nothing in this Section 9.4 shall affect Loral's obligations under
Section 3.1 of this Agreement.
Section 9.5. Regulatory Matters. APT and Loral shall cooperate and
assist each other in obtaining the Consents of, and/or complying with the
requirements that may imposed by, Governmental Entities, that may arise from
time to time following the Closing Date in connection with the Apstar IIR
Business, in each case to the extent such approval or compliance would at the
time have been customarily obtained by or sought from satellite operators.
Section 9.6. Name of Satellite. APT hereby agrees that following the
Closing Date, it shall, at Loral's request, change the name of the Satellite to
such other name as Loral may designate, provided that the name shall at all
times include the word "Apstar IIR".
Section 9.7. Arrangements re Orbital Slot and Satellite. APT and its
Affiliates shall not enter into any Contract with any other Person relating to
the Satellite (other than the Excluded Transponder) or the Orbital Slot without
the prior written consent of Loral. APT shall immediately notify Loral in
writing of any changes that affect operation of the Satellite in the Orbital
Slot imposed by any Governmental Entity of the PRC or Hong Kong.
Section 9.8. Non-Competition. APT agrees that for a period of five
years from the Closing Date, neither it nor its Affiliates will, without the
prior written consent of Loral, directly or indirectly, solicit or seek the
business of customers, or compete with Loral or its Affiliates in the provision
of satellite capacity, for fixed satellite service applications using Ku-band,
other than on Loral's behalf pursuant to the Marketing Agreement, provided that
nothing in this Section 9.8 shall restrict the ability of APT or its Affiliates
from providing direct broadcast services directly to the end-users. If any
portion of this Section 9.8 shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Section, but this Section shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein. It is the intention of the parties that if any of the
restrictions or covenants contained herein is held to cover a geographic area or
to be of a length of time which is not permitted by applicable Laws, or in any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but the extent such provision
would be valid or enforceable under applicable Laws, a court of competent
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jurisdiction shall construe and interpret or reform this Section to provide for
a covenant having the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable Laws. APT acknowledges that Loral would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Loral for any such breach.
APT agrees that Loral shall be entitled to injunctive relief requiring specific
performance by APT of this Section, and APT consents to the entry thereof.
Section 9.9. Option to Lease Replacement Satellite. If at any time
after this Agreement, APT launches any replacement satellite to be located at
the Orbital Slot (whether a replacement satellite for the Satellite or
otherwise), Loral shall have the exclusive right to lease at its option such
replacement satellite through the End of Life of the replacement satellite upon
the terms and conditions substantially similar to those set forth in this
Agreement, provided that the total sum of the lease price payable under such
lease agreement shall equal the Replacement Lease Price, which shall, except as
otherwise set forth herein, be payable in 16 equal quarterly installments over a
four-year period commencing on the satellite's in-service date.
Section 9.10. Replacement Satellite. APT shall, at Loral's request,
procure from Space Systems/Loral, Inc. or such other satellite manufacturer
and/or vendor as Loral may designate, the purchase, launch and in-orbit delivery
of one or more replacement satellites, which satellites shall be located at the
Orbital Slot. APT shall use its best efforts to obtain all necessary Consents
from Governmental Entities or third parties in connection therewith. The
replacement satellites shall have such designs and specifications as are
acceptable to Loral. Such procurement shall be made promptly after an in-orbit
failure or at a time prior to the end of the Useful Life of the Satellite (or
any successor satellite then located at the Orbital Slot) (the "Existing
Satellite") as reasonably determined by Loral to permit the smooth transition of
customers from the Existing Satellite to the replacement satellite at the end of
the Useful Life of the Existing Satellite. APT and Loral hereby agree that such
procurement of the replacement satellite may be effected in various manner, at
Loral's discretion, including without limitation, in the form of a sale
leaseback transaction pursuant to which Loral or its Affiliates would (i)
arrange for the construction and launch of the replacement satellite, (ii) sell
the replacement satellite to APT and then (iii) lease back the satellite from
APT in accordance with the provisions of Section 9.9. Notwithstanding this
Section 9.10, nothing contained herein shall be construed to impose any
obligation on APT to make any payment on the replacement satellite prior to the
time it receives payment pursuant to the lease agreement with respect to such
replacement satellite as described in Section 9.9 above. None of APT and its
Affiliates shall launch any replacement or other satellites into the Orbital
Slot other than pursuant to, and in accordance with, this Section 9.10.
Section 9.11. Additional Satellites. APT and Loral hereby agree that
the provisions of Sections 9.9 through 9.10 hereof shall apply mutatis mutandis
to the procurement of additional satellites to be placed into the Orbital Slot,
as may be requested by Loral, provided that the aggregate lease payments with
regard to such additional satellites shall equal the amounts set forth in
clauses (ii) through (iv) of the definition of Replacement Lease Price.
Section 9.12. Billing and Customer Management Systems. Prior to the
Closing Date, APT will cooperate with Loral to facilitate the planning of the
consolidation of billing and
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customer service relating to the Apstar IIR Business.
Section 9.13. Expenses. Loral shall reimburse APT upon production of
appropriate supporting documentation for the reasonable and customary
out-of-pocket expenses incurred by APT in connection with its performance under
Sections 9,1, 9.2 and 9.5 of this Agreement except that APT shall pay the
license fees related to the Orbital Slot during the lease term of the Satellite.
Section 9.14. Novation of Customer Contracts. APT shall use its best
efforts to obtain the novation of Customer Contracts to Loral as promptly as
practicable following the Closing Date. Nothing in this Agreement shall be
construed as an attempt or agreement to assign any Customer Contract which by
its terms or by law is non-assignable without the Consent of the customer or
other third Persons unless and until such Consent shall be given
("Non-assignable Contracts"). In the event Consents to the assignment thereof
cannot be obtained, such Non-assignable Contracts shall be held, as and from the
Closing Date, by APT or its Affiliates in trust for Loral and the covenants and
obligations thereunder shall be performed by Loral in the name of APT or its
Affiliate and all benefits and obligations existing thereunder shall be for
Loral's account. APT shall take or cause to be taken such action in its name or
otherwise as Loral may reasonably request so as to provide Loral with the
benefits of the Non-assignable Contracts and to effect collection of money or
other consideration to become due and payable under the Non-assignable
Contracts, and APT shall promptly pay over to Loral all money or other
consideration received by it or its Affiliates in respect of all Non-assignable
Contracts. In connection therewith, APT shall arrange for the customers of the
Non-assignable Contracts to apply all moneys owing thereunder to a lockbox
account, which shall provide that moneys deposited therein may be withdrawn only
by individuals designated by Loral. As of and from the Closing Date, APT and its
Affiliates shall authorize Loral to perform all the obligations and receive all
the benefits of APT or its Affiliates under the Non-assignable Contracts and
appoints Loral as its attorney-in-fact to act in its name on behalf of APT or
its Affiliates with respect thereto. APT hereby agrees that it shall not amend
or enter into any agreement or take any other action relating to the
Non-assignable Contracts without Loral's prior written consent.
Section 9.15. Audit Rights. Loral shall have the right to audit the
costs and expenses incurred by APT or its Affiliates hereunder, which are
reimbursable by Loral under this Agreement. For purposes of this Section 9.15,
the amounts described in clause (iii) of the definition of Replacement Lease
Price shall be deemed to be cost and expenses reimbursable by Loral.
Section 9.16. TT+C. APT shall provide spacecraft operation services,
satellite systems engineering, transponder loading and customer technical
support and other related and ancillary services regarding the Satellite as set
forth in the Services Agreement.
Section 9.17. Tax Matters. The following provisions shall govern
certain tax matters following the Closing.
(a) APT shall be financially responsible for, and shall pay, any Tax
liability arising in connection with, or otherwise related to, amounts payable
by Loral to APT
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pursuant to Section 3.1.
(b) Amounts payable by APT to Loral pursuant to Section 9.14 shall be
made without reduction for any Tax. For the avoidance of doubt, if any amounts
payable under the Non-assignable Contracts are paid to APT net of any
withholding tax imposed on such payments by the PRC, APT shall not be required
to gross-up the payments to be made by APT to Loral pursuant to Section 9.14 for
such tax.
(c) As soon as reasonably practicable (but not later than 120 days)
following the Closing Date, Loral shall prepare and deliver to APT an allocation
schedule which shall set forth the allocation of the Lease Price, the
Liabilities assumed by Loral in accordance with Section 4 hereof and any
non-recourse Liabilities to which any Apstar IIR Asset is subject among the
Apstar IIR Assets. APT shall accept and agree to the allocation unless such
allocation is manifestly unreasonable, in which case APT shall deliver written
notice to Loral within 30 days of APT's receipt of such allocation schedule from
Loral. Any payments or adjustments resulting in a change in the Lease Price,
assumed Liabilities or any non-recourse Liabilities shall be allocated to the
portion of the Lease Price paid with respect to the Apstar IIR Assets. APT and
Loral each hereby covenant and agree that it will not take a position on any Tax
return, before any governmental agency charged with the collection of any Tax,
or in any judicial proceeding that is in any way inconsistent with the terms of
this Section 9.17.If Loral and APT are unable to agree upon any of the matters
set forth in this Section 9.17, within sixty (60) days (or such later date as is
mutually agreed upon by both parties), the matter or matters in dispute shall be
submitted for binding arbitration before the Singapore International Arbitration
Center in accordance with Section 13.5 of this Agreement.
(d) Each of APT and Loral shall cooperate fully with each other and
make available or cause to be made available to each other in a timely fashion
such Tax data, Tax returns and filings and other information as may be
reasonably required (including, making employees available (without charge) on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder) for the preparation by Loral or APT of any Tax
returns, elections, consents or certificates required to be prepared and filed
by Loral or APT and any audit or other examination by any taxing authority, or
judicial or administrative proceeding relating to liability for Taxes arising as
a result of, in connection with, or directly or indirectly attributable to, the
transactions contemplated in this Agreement. APT will retain and provide to
Loral all records and other information which may be relevant to any such Tax
return, audit or examination, proceeding or determination, and will provide
Loral with any final determination of any such audit or examination, proceeding
or determination that affects any amount required to be shown on any Tax return
of the other party for any period. Without limiting the generality of the
foregoing, APT will retain copies of all Tax returns, supporting work schedules
and other records relating to Tax periods or portions thereof ending prior to or
on the Closing Date.
Section 9.18. Year 2000. APT shall take all actions reasonably believed
by it to be necessary or appropriate to assure that its computer-based and other
systems used to operate the Satellite (including without limitation providing
TT+C), are able to effectively process data before, on and after January 1, 2000
without experiencing any problem that could reasonably be expected to have a
Material Adverse Effect.
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ARTICLE X
CONDITIONS TO THE CLOSING
Section 10.1. Conditions to Obligations of Loral. The obligations of
Loral to effect the transactions contemplated by Sections 2.1 and 2.2 are
subject to the satisfaction or waiver by Loral on or prior to the Closing Date
of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of APT set forth in Section 6 shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date. APT shall have delivered to Loral a certificate
signed by one of its executive officers confirming the foregoing as of the
Closing Date.
(b) Performance of Obligations of APT. Each and all of the covenants
and agreements of APT to be performed or complied with pursuant to this
Agreement on or prior to the Closing Date shall have been fully performed and
complied with in all material respects, and APT shall have delivered to Loral a
certificate signed by one of its executive officers confirming the foregoing as
of the Closing Date.
(c) Litigation, Etc. There shall not exist or have been instituted or
be pending any Action (i) which could reasonably be expected to make illegal, or
to materially delay or otherwise directly or indirectly materially restrain or
prohibit, the consummation of the transactions contemplated by the Transaction
Documents, or which could reasonably be expected to result in material Damages
in connection with the transactions contemplated by the Transaction Documents;
(ii) which could reasonably be expected to result in (x) the prohibition of
lease or operation by Loral of any portion of the Leased Assets or the ownership
by Loral of any portion of the Related Assets or (y) Loral being compelled to
dispose of or to hold separately any portion of the business or assets of Loral
or its Affiliates as a result of the transactions contemplated by the
Transaction Documents, (iii) which could reasonably be expected to result in any
material diminution in the benefits expected to be derived by Loral as a result
of the transactions contemplated by this Agreement or (iv) which otherwise has
had or could reasonably be expected to have a material adverse effect on Loral
or a material adverse effect on the ability of Loral to consummate the
transactions contemplated hereby.
(d) Laws, Etc. On or after the date of this Agreement, there shall not
exist or have been enacted, entered, enforced, promulgated or deemed applicable
to the transactions contemplated by this Agreement, any Laws or any other action
taken by any Governmental Entity that has resulted, or could reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in clauses (i) through (iv) of Section 10.1(c) above.
(e) Consents. All Consents of all Persons (including Governmental
Entities) required to be obtained prior to the Closing Date in connection with
the execution, delivery and performance of the Transaction Documents by APT and
Loral, shall have been obtained and shall be in full force and effect and APT
shall have delivered to Loral resolutions authorizing the transactions
contemplated under this Agreement, duly executed by the Board
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of Directors of APT.
(f) OFTA. Loral shall have received either OFTA's approval to the
transactions contemplated hereunder (including without limitation the approval
of the transfer of any Licenses OFTA determines must be transferred) or OFTA's
written confirmation, reasonably satisfactory to Loral, that no such approval is
required.
(g) Master Lease Agreement. The Master Lease Agreement shall have been
terminated by APT and APT Satellite Enterprise Limited.
(h) No Material Adverse Change. There shall not have occurred (or
reasonably be expected to occur) any Material Adverse Change.
(i) Marketing Agreement. The Marketing Agreement substantially in the
form attached as Exhibit A shall have been executed and delivered by APT.
(j) Services Agreement. The Services Agreement substantially in the
form attached as Exhibit B shall have been executed and delivered by APT.
(k) Termination of Liens. APT shall have delivered to Loral (i) a
certificate from APT certifying that all Liabilities underlying the Liens as set
forth on Schedule 6.3 have been fully paid and the Liens have been fully
released, (ii) documentation duly filed with the relevant Governmental Entity
evidencing that the Liens set forth on Schedule 6.3 have been terminated, and
(iii) consents and releases executed by the lenders or beneficiaries of the
Liens as set forth on Section 6.3 releasing all such Liens in a form acceptable
to Loral.
(l) Insurance. Loral shall have obtained insurance for the Satellite as
set forth in Section 9.4.
(m) Contribution by Parent. APT Holdings shall have contributed to APT
any right, title and interest it or its Affiliates may have in and to the Apstar
IIR Assets, including without limitation all of APT Satellite Enterprise
Limited's interests in and to the Customer Contracts.
(n) Additional Conditions. Loral shall be satisfied and APT shall
certify to Loral to the effect that, there exist on such date no arrangements
whereby APT or any of its Affiliates has any Contract or other interest with
respect to any of the Apstar IIR Assets except as expressly set forth hereunder.
(o) APT Holdings Guarantee. APT Holdings shall have delivered to Loral
a duly executed guarantee in favor of Loral guaranteeing the obligations of APT
hereunder, in substantially the form attached as Exhibit C.
(p) China Great Wall. APT shall have exercised its option to make a
cash payment in lieu of delivery of the CGW Transponder and shall have made such
payment to China Great Wall.
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(q) Due Diligence. Loral shall have been reasonably satisfied with the
results of its confirmatory due diligence.
Section 10.2. Conditions to Obligations of APT. The obligation of APT
to effect the transactions contemplated by Sections 2.1 and 2.2 is subject to
the satisfaction or waiver by APT on or prior to the Closing Date of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Loral set forth in Section 7 shall be true and correct in all material
respects, as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, and Loral shall have delivered to APT, a
certificate signed by an executive officer of Loral confirming the foregoing as
of the Closing Date.
(b) Performance of Obligations of Loral. Each and all of the covenants
and agreements of Loral to be performed or complied with pursuant to this
Agreement on or prior to the Closing Date shall have been fully performed and
complied with in all material respects, and Loral shall have delivered to APT, a
certificate signed by an executive officer of Loral confirming the foregoing as
of the Closing Date.
(c) Litigation, Etc. There shall not exist or have been instituted or
be pending any Action which could reasonably be expected to make illegal, or to
materially delay or otherwise directly or indirectly materially restrain or
prohibit, the consummation of the transactions contemplated by the Transaction
Documents, or which could reasonably be expected to result in material Damages
to APT in connection with the transactions contemplated by the Transaction
Documents.
(d) Marketing Agreement. The Marketing Agreement substantially in the
form attached as Exhibit A shall have been executed and delivered by Loral.
(e) Services Agreement. The Services Agreement substantially in the
form attached as Exhibit B shall have been executed and delivered by Loral.
(f) Loral Guarantee. Loral Space & Communications Ltd. shall have
delivered to APT a duly executed guarantee in favor of APT guaranteeing the
obligations of Loral hereunder, in substantially the form attached as Exhibit D.
(g) Board Resolution. Loral shall have delivered to APT a duly
certified copy of the resolutions authorizing the transactions contemplated
under this Agreement on the part of the Board of Directors of Loral Space &
Communications Ltd.
ARTICLE XI
REMEDIES FOR BREACH OF THIS AGREEMENT
Section 11.1. Survival. All covenants and agreements contained in this
Agreement and the right to indemnification with respect to all representations
and warrants contained in
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this Agreement or in any certificate, document or statement delivered pursuant
hereto, shall survive (and not be affected in any respect by) the Closing, any
investigation conducted by any party hereto and any information which any party
may receive. Notwithstanding anything to the contrary in this Article, the right
to indemnification with respect to each representation and warranty (but not the
covenants and other agreements) contained in this Agreement or made pursuant to
any certificate, document or statement delivered pursuant hereto except with
respect to the representations and warranties set forth in Section 6.14, shall
terminate on the last day of the thirty-sixth month after the month that
includes the Closing Date (the "Survival Date"); provided, however, that the
right to indemnification with respect to such representations and warranties,
and the Liability of any party with respect thereto, shall not terminate with
respect to any claim, whether or not fixed as to Liability or liquidated as to
amount, with respect to which such party has been given written notice prior to
the Survival Date. The representations and warranties set forth in Section 6.14
and shall survive the applicable statute of limitations.
Section 11.2. Indemnification Provision for Benefit of the APT. Loral
shall indemnify each of the APT and its Affiliates and their respective
shareholders, officers, directors, employees and agents and hold each of them
harmless from and against and in respect of any Damages directly or indirectly
incurred by any of them as a result of (i) any breach of a representation,
warranty, covenant or agreement of Loral made hereunder or (ii) the Assumed
Liabilities.
Section 11.3. Indemnification Provisions for Benefit of Loral. APT
shall indemnify each of Loral and its Affiliates, and their respective
shareholders, officers, directors, employees and agents and hold each of them
harmless from and against and in respect of any Damages directly or indirectly
incurred by any of them as a result of (i) any breach of a representation,
warranty, covenant or agreement of APT made hereunder or (ii) the Excluded
Liabilities.
Section 11.4. Notification; Rights of Parties to Settle or Defend.
Promptly after the occurrence of any event which may give rise to a claim for
indemnification under this Section 11, the party entitled to indemnification
(the "Indemnified Party") shall notify the indemnifying party (the "Indemnitor")
in writing of such claim (the "Claims Notice"). The Claims Notice shall describe
the asserted liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Damages that have
been or may be suffered by the Indemnified Party. Except as provided in Section
11.1 above, failure by the Indemnified Party to give a Claims Notice to the
Indemnitor in accordance with the provisions of this Section 11.4 shall not
relieve the Indemnitor of its obligations hereunder except to the extent that
the Indemnitor has been actually and materially prejudiced by such failure. The
Indemnitor may elect to compromise or defend, at its own expense, by its own
counsel and to the extent an election with respect to such compromise or defense
is available to the Indemnified Party, any asserted liability. If the Indemnitor
elects to compromise or defend such asserted liability, it shall within 30
calendar days (or sooner, if the nature of the asserted liability so requires)
notify the Indemnified Party of its intent to do so, and the Indemnified Party
shall cooperate, at the expense of the Indemnitor, in the compromise of, or
defense against, such asserted liability. If the Indemnitor elects to defend any
claim, the Indemnified Party shall make available to the Indemnitor any books,
records or other
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documents within its control that are necessary or appropriate for such defense.
If the Indemnitor elects not to compromise or defend the asserted liability,
fails to notify the Indemnified Party of its election as herein provided or
contests its obligation to indemnify under this Agreement (or if counsel to the
Indemnified Party advises such party that there may be a potential conflict of
interest between the Indemnitor and the Indemnified Party, or between the
Indemnified Party and any other indemnified party, or that different or
additional defenses from those available to the Indemnified Party may be
available to any other indemnified party), the Indemnified Party may pay,
compromise or defend (at the expense of the Indemnitor) such asserted liability
as the Indemnified Party considers appropriate. The parties agree to cooperate
fully with one another in the defense, settlement or compromise of any asserted
liability. Notwithstanding the foregoing, neither the Indemnitor nor the
Indemnified Party may settle or compromise any claim over the objection of the
other, provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnified Party and the Indemnitor
may participate, at their own expense, in the defense of such asserted
liability. For the avoidance of doubt, the rights to indemnification under this
Agreement shall arise in the event of both claims asserted directly by one party
against the other as well as claims asserted by third parties against a party.
Section 11.5. Remedy. Nothing in this Section 11 shall limit in any way
the availability of (i) specific performance, injunctive relief or other
equitable remedies to which a party may otherwise be entitled or (ii) a cause of
action for fraud or any remedies to which a party may be entitled as a result of
fraud.
ARTICLE XII
TERMINATION
Section 12.1. Termination. This Agreement may be terminated at any time
prior to the Closing by any of the following:
(a) By mutual written agreement of Loral and APT;
(b) By either Loral or APT if the Closing has not occurred by 12:00
a.m. New York time, September 30, 1999 upon written notice by such terminating
party, provided that at the time such notice is given a material breach of this
Agreement by such terminating party shall not be the reason for the Closing's
failure to occur;
(c) Subject to the provisions of Section 12.2, by Loral, by written
notice to APT, if there has been a material violation or breach of any of APT's
covenants or agreements made herein or in connection herewith or if any
representation or warranty of APT made herein or in connection herewith proves
to be materially inaccurate or misleading, and such violation, breach or
misrepresentation cannot be cured by APT by September 30, 1999; or
(d) Subject to the provisions of Section 12.2, by APT, by written
notice to Loral, if there has been a material violation or breach of any of
Loral's covenants or agreements
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made herein or in connection herewith or if any representation or warranty of
Loral made herein or in connection herewith proves to be materially inaccurate
or misleading, and such violation, breach or misrepresentation cannot be cured
by Loral by September 30, 1999.
Section 12.2. Effect of Termination. If this Agreement is terminated as
provided in Section 12.1, there shall be no liability or obligation on the part
of any party hereto (or any of their respective officers, directors or
employees) except that if Loral terminates this Agreement pursuant to Section
12.1(c) or APT terminates this Agreement pursuant to Section 12.1(d), the
non-terminating party shall remain liable for any breach hereof.
Section 12.3. Failure to Pay Lease Price.
(a) If Loral shall default in payment of the Lease Price (the
"Defaulted Payment Amount") for a period in excess of 30 calendar days ("Payment
Default") and such Payment Default shall not have been cured by Loral within 15
calendar days from the date it receives notice from APT of such Payment Default,
then Loral's rights to lease the Satellite under this Agreement shall be
suspended, and APT shall have the right to re-occupy the Satellite from Loral as
set forth herein, until such time as APT shall have received payments under
Customer Contracts relating to the Satellite in an amount equal to the Defaulted
Payment Amount plus interest thereon as set forth in Section 12.4 (the "Make
Whole Amount") and at such time as APT shall have received the Make Whole Amount
(the "Make Whole Date"), Loral shall thereafter have the right to re-occupy the
Satellite from APT and to continue with the lease of the Satellite as set forth
hereunder. In the event APT shall exercise its rights under this Section 12.3,
APT shall (i) continue to provide transponder capacity and related TT+C under
the existing Customer Contracts then in effect with respect to the Satellite and
in return therefor shall be entitled to the lease payments thereunder and (ii)
shall be further entitled to enter into lease agreements (the "Suspension
Contracts") relating to vacant transponders on the Satellite at prevailing
market rates and terms if it has not recovered the Make Whole Amount by the
three-month anniversary following the date APT shall have re-occupied the
Satellite pursuant to this Section 12.3. Following the Make Whole Date, APT
shall cause the Suspension Contracts to be novated to Loral and if such
Suspension Contracts cannot be novated, then APT and Loral shall enter into
arrangements with respect to such Suspension Contracts consistent with those set
forth in Section 9.14.
(b) Nothing in this Section 12.3(a) shall prevent APT from pursuing all
other remedies available to it to recover payment of the Defaulted Payment
Amount from Loral following expiration of the cure period described in Section
12.3(a) above provided however that once APT shall have received the Make Whole
Amount (whether pursuant to the receipt of payments from Customer Contracts as
set forth in Section 12.3(a) above or pursuant to its exercise of remedies),
Loral shall have the right to re-occupy the Satellite and continue with the
lease thereof as described in Section 12.3(a) above.
Section 12.4. Interest. Loral shall pay APT interest of 12% per annum
in respect of any Defaulted Payment Amount, which interest shall be calculated
on a daily basis from the date of the Payment Default.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1. Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto, sets forth the entire agreement and understanding among
the parties and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature among them as to the subject matter
hereof, and no party shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement or as may
be on a date on or subsequent to the date hereof duly set forth in writing
signed by each party which is to be bound thereby. Unless otherwise expressly
defined, terms defined in the Agreement shall have the same meanings when used
in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall
have the same meanings when used in the Agreement or in any other Schedule. This
Agreement (including the Exhibits and Schedules hereto) shall not be changed,
modified or amended except by a writing signed by each party to be charged and
this Agreement may not be discharged except by performance in accordance with
its terms or by a writing signed by each party to be charged.
Section 13.2. Benefit of Parties; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, legal representatives and permitted assigns. The
Agreement may not be assigned by Loral or APT except with the prior written
consent of the other party except that Loral may assign this agreement to an
Affiliate without the consent of APT. Nothing herein contained shall confer or
is intended to confer on any third party or entity which is not a party to this
Agreement any rights under this Agreement.
Section 13.3 Notices. Any notice, request, demand, waiver, consent,
approval or other communication required or permitted to be given hereunder
shall be in writing and shall be delivered by hand or telecopied or sent by
facsimile with confirmation receipt, or sent, postage prepared, by registered,
certified or express mail or reputable overnight courier service, return receipt
required, as follows:
If to Loral, to:
Loral Space & Communications Ltd.
c/o Loral SpaceCom Corporation
600 Third Avenue
New York, NY 10016
Facsimile No.: 212-338-5350
Attention: Eric J. Zahler
If to APT, to:
APT Satellite Company Limited
c/o APT Satellite Holdings Limited
Rooms 3111-3112
One Pacific Place
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<PAGE> 36
88 Queensway
Hong Kong
Facsimile No.: 852-2522-0419
Attention: Professor Bao Miao Qin
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed given when so delivered
by hand or telecopied or faxed, or five Business Days after being so mailed (two
Business Days in the case of express mail or overnight courier service).
Section 13.4. Governing Law. This Agreement will be governed by and
construed in accordance with the Laws of the State of New York without giving
effect to choice of law principles.
Section 13.5. Dispute Resolution. In the event that a dispute arises in
connection with this Agreement, Loral and APT shall attempt to resolve such
dispute through friendly consultation. If the parties are unable to resolve the
matter in dispute through consultation within thirty (30) days following the
date on which one party's request for consultation is delivered to the other
party, the parties shall resolve the dispute through arbitration. The party
shall submit the dispute to arbitration in Singapore to the Singapore
International Arbitration Centre for resolution in accordance with the
arbitration rules of that body, in which case (i) there should be three (3)
arbitrators (one appointed by each party and the third arbitrator appointed by
the Singapore International Arbitration Centre), (ii) all proceedings in any
such arbitration shall be conducted in English, and (iii) any such arbitration
award shall be final and binding on the parties. The arbitrators may not limit,
expand or otherwise modify the terms of this Agreement or award exemplary or
punitive damages or attorney's fees. The arbitrators shall apply the substantive
(not the conflicts) law of the state specified in the choice of law provision
set forth elsewhere in this Agreement. The award shall be in Dollars. Judgment
upon the award rendered in the arbitration may be entered in any court having
jurisdiction thereof. Each party shall bear its own expenses (including
attorney's fees) and an equal share of the expenses of the arbitrators and the
fees of the Singapore International Arbitration Centre. The parties, their
representatives, other participants and arbitrators shall hold the existence,
content and result of the arbitration in confidence. Nothing in this clause
shall be construed to preclude any party from seeking injunctive relief in order
to protect its rights pending arbitration. A request by a party to a court for
such injunctive relief shall not be deemed a waiver of the obligation to
arbitrate.
Section 13.6. Set-off. Each of APT and Loral (in either case, the
"Offsetting Party"), in addition to (and without limitation of) any right or
counterclaim it may have, may offset and apply any credits, indebtedness or
claims at any time held or owing by the other Party (the "Notified Party") to
the Offsetting Party under this Agreement, against or on account of the
obligations and liabilities of the Offsetting Party to the Notified Party
arising under this Agreement or other Transaction Documents. The Offsetting
Party shall provide to the Notified Party a certificate executed by a duly
authorized officer of the Offsetting Party setting forth in reasonable detail
the Offsetting Party's calculation in good faith of the amount
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of such credits, indebtedness and claims. The exercise of such right of set-off
by the Offsetting Party in good faith, whether or not ultimately determined to
be justified, will not constitute a breach of this Agreement or other
Transaction Documents by the Offsetting Party.
Section 13.7. Severability. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 13.8. Pronouns. Whenever the context requires, the use in this
Agreement of a pronoun of any gender shall be deemed to refer also to any other
gender, the use of the singular shall be deemed to refer also to the plural and
the use of the plural shall be deemed to refer also to the singular.
Section 13.9. Headings. The headings in the sections and Schedules of
this Agreement are inserted for convenience of reference only and shall not
constitute a part hereof. The words "herein," "hereof," "hereto" and
"hereunder," and other words of similar import refer to this Agreement as a
whole and not to any particular provision of this Agreement.
Section 13.10. Expenses. Except as specifically provided otherwise in
this Agreement, the parties hereto shall pay all of their own expenses relating
to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, accountants and
financial advisors.
Section 13.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first written above.
LORAL ASIA PACIFIC SATELLITE (HK) LIMITED
By: /S/ Nicholas C. Moren
-----------------------------------
Name: Nicholas C. Moren
Title: Senior Vice President and
Treasurer
APT SATELLITE COMPANY LIMITED
By: /S/ He Ke Rang
-----------------------------------
Name: He Ke Rang
Title: Vice Chairman and President
<PAGE> 1
Exhibit 10.2
GUARANTEE
APT Satellite Company Limited
c/o APT Satellite Holdings Limited
Room 3111-3112
One Pacific Place
88 Queensway
Hong Kong
Re: Guarantee of Obligations of Loral Asia Pacific Satellite (HK)
Limited
Dear Sirs:
1. In connection with Loral Asia Pacific Satellite (HK) Limited ("Loral")
entering into that certain lease agreement dated as of August 18, 1999
(the "Lease Agreement") with APT Satellite Company Limited ("APT") for
the lease and purchase of certain satellite and satellite-related
assets, and for good and valuable consideration, Loral Space &
Communications Ltd., a Bermuda company which is the corporate parent of
Loral (the "Guarantor"), hereby unconditionally and irrevocably
guarantees to APT, in accordance with the terms and conditions set
forth below, the due and punctual performance by Loral of its
contractual obligations under the Lease Agreement (Capitalized terms
used herein and not otherwise defined herein shall have the meanings
ascribed thereto in the Lease Agreement.)
2. The Guarantor irrevocably guarantees to APT:
2.1 that upon a default by Loral of its obligations under the
Lease Agreement, the Guarantor will, upon demand, do all
things necessary to forthwith remedy the default and to
completely perform or cause to be completely performed Loral's
obligations under the Lease Agreement; and
2.2 to indemnify and hold harmless APT and its Affiliates from any
loss, damage and expenses that may be suffered or incurred by
APT and its Affiliates as a result of any default of Loral
under the Lease Agreement.
3. Guarantor acknowledges that:
3.1 although, as between the Guarantor and Loral, the Guarantor
may be a surety only, as between the Guarantor and APT, the
Guarantor will be liable as a primary obligor for all the
contractual obligations of Loral under the Lease Agreement;
3.2 this Guarantee constitutes a continuing guaranty, is
irrevocable and will remain in full force and effect until all
the obligations of Loral under the Lease
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Agreement have been fully performed and satisfied; and
3.3 The Guarantor's obligations hereunder will not be released or
in any way affected by:
(i) any amendment, change or modification, in whole or in
part, of the Lease Agreement; or
(ii) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of
Loral or APT under the Lease Agreement.
4. The Guarantor hereby represents and warrants to APT that:
4.1 It is a company duly organized, validly existing and in good
standing under the laws of Bermuda; it is registered or
qualified to do business in every jurisdiction where such
registration or qualification is necessary; and it has all
legal power and authority to own its property and to carry on
its present business.
4.2. The execution, delivery and performance of this Guarantee are
within its corporate powers and have been duly authorized by
all necessary corporate action. It is not in default under any
credit or other agreement, indenture, lease or instrument in
any respect that can reasonably be expected to have any
material adverse effect on its business, operations or
financial condition or its ability to perform its obligations
hereunder.
4.3 The execution, delivery and performance of this Guarantee (i)
will not violate any law, order, decree, regulation or other
governmental directive having the force of law which is
applicable to the Guarantor; (ii) will not contravene any
governmental guidelines or policy statement applicable to the
Guarantor but not having the force of law; (iii) will not
conflict with the Memorandum of Association or Bye-Laws, or
equivalent documents, of the Guarantor; (iv) will not conflict
with or result in the breach of, or in the imposition of any
lien, security interest, encumbrance or charge under, any
agreement or instrument to which the Guarantor is a party or
by which it or any of its properties or assets is bound; and
(v) will not constitute a default or an event that, with the
giving of notice or the passage of time or both, would
constitute a default under any such agreement or instrument.
4.4 No authorizations, approvals, exemptions or consents of, and
no filings or registrations with, any government authority are
necessary for the execution, delivery or performance by the
Guarantor of this Guarantee or for the validity or
enforceability hereof.
4.5 This Guarantee constitutes its legal, valid and binding
obligations enforceable against the Guarantor in accordance
with its terms, except as enforceability
2
<PAGE> 3
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
5. Guarantor agrees with APT that:
5.1 This Guarantee shall be governed by and construed in
accordance with the law of the State of New York;
5.2 This Guarantee shall be binding upon, and inure to the benefit
of, Guarantor and APT and their respective successors and
assigns;
5.3 Failure or delay on the part of APT to exercise any right or
privilege hereunder shall not operate as a waiver nor shall
any partial exercise of any right or privilege preclude any
further exercise thereof and that any waiver by APT at any
time of a breach of any term or provision of this Guarantee
shall not be construed as a waiver by APT of any subsequent
breach, its rights to such provision, or any of its other
rights hereunder;
5.4 If any one or more provisions contained in this Guarantee
shall be invalid, illegal or unenforceable in any respect
under any applicable law, the validity, legality and
enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired;
5.5 Service of notices, demands and proceedings under this
Guarantee may be effected by facsimile transmission directed
to the attention of Eric J. Zahler at 212-338-5350 or such
other number as the Guarantor may designate by notice in
writing to APT; and
5.6 Any dispute arising out of or in connection with this
Guarantee shall be submitted for binding arbitration to be
conducted pursuant to the provisions of Article 13.5 of the
Lease Agreement.
DATED this 18th day of August 1999.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Nicholas C. Moren
-----------------------------------
Name: Nicholas C. Moren
Title: Senior Vice President and Treasurer
3
<PAGE> 4
Accepted and agreed to by
APT SATELLITE COMPANY LIMITED
By: /s/ He Ke Rang
---------------------------
Name: He Ke Rang
Title: Vice Chairman and President
Dated: August 18, 1999
4
