EXHIBIT 99.2
LORAL SPACE & COMMUNICATIONS LTD.
GUARANTY
This GUARANTY dated as of December , 2001 (this "Guaranty" or this
"Agreement")), is made by LORAL SPACE & COMMUNICATIONS LTD., a Bermuda company
(the "Loral Space" or the "Guarantor"), in favor of BANKERS TRUST COMPANY, a New
York banking corporation, as trustee under the indenture referred to below
(including any successor trustee under the Indenture referred to below, the
"Trustee") for the benefit of the Trustee and the holders from time to time of
the Notes (as defined below).
RECITALS
WHEREAS, pursuant to the Indenture dated as of December , 2001 (the
"Indenture"), among the Trustee, Loral Cyberstar, Inc., a Delaware corporation
(the "Company") and the Subsidiary Guarantors party from time to time thereto,
the Company will issue up to $675,000,000 aggregate principal amount of its 10%
Senior Notes due 2006 (such notes, together with any notes issued in exchange
for such notes or in replacement of such notes pursuant to the exchange and
replacement provisions of the Indenture, being herein called the "Notes");
WHEREAS, the Company is an indirectly wholly owned subsidiary of Loral
Space;
WHEREAS, it is a condition to the issuance of the Notes that Loral Space
provide its unconditional guarantee of the payment of the principal of, premium,
if any and interest on the Notes;
WHEREAS, Loral Space has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of Loral Space to execute this
Guaranty inasmuch as Loral Space will derive substantial direct and indirect
benefits from the issuance of the Notes;
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, Loral Space agrees, for the benefit of the Trustee and the
holders from time to time of the Notes, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person
is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with
or into, or becoming a Restricted Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"ASSET SALE" means:
(1) the sale, lease, transfer, conveyance or other disposition of any
assets or rights, other than sales of inventory in the ordinary course
of business consistent with past practices; provided that the sale,
lease, transfer, conveyance or other disposition of all or
substantially all of the assets of Loral Space and its Restricted
Subsidiaries taken as a whole will be governed by Article V;
(2) the issuance of Equity Interests in any of Loral Space's Restricted
Subsidiaries or the sale of Equity Interests in any of its Restricted
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $5 million; or
(b) results in net proceeds to Loral Space and its Restricted
Subsidiaries of less than $5 million;
(2) a transfer of assets between or among Loral Space and its Restricted
Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to Loral
Space or to another Restricted Subsidiary;
(4) the sale or lease of satellites, transponders or other equipment,
inventory, accounts receivable or other assets in the ordinary course
of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted under
Section 4.04; and
(7) the issuance of partnership interests by CyberStar, L.P. pursuant to
participation bonuses in accordance with Section 4.3 of the CyberStar
partnership agreement.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The term
"beneficially owns" shall have a corresponding meaning.
"BOARD OF DIRECTORS" means the Board of Directors of Loral Space.
"BUSINESS DAY" means each day which is not a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
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(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than one year
from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
one year or less from the date of acquisition, bankers' acceptances
with maturities not exceeding one year and overnight bank deposits, in
each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500
million and a Xxxxxxxx Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable from
Xxxxx'x Investors Service, Inc. or Standard & Poor's Rating Services
and in each case maturing within six months after the date of
acquisition;
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition; and
(7) the Xxxxxxx Xxxxx US$ Liquid Reserves Fund and other funds with
substantially similar investment policies.
"CONSOLIDATED CAPITAL RATIO" of any Person as of any date means the ratio
of
(1) the Total Indebtedness of such Person then outstanding to
(2) the stockholders' equity as of such date as shown on the consolidated
balance sheet of such Person in accordance with GAAP (which, in the
case of Loral Space, shall include the Series C Preferred Stock) after
giving pro forma effect to
(a) the incurrence of any Indebtedness proposed to be incurred or the
issuance of any Disqualified Stock proposed to be issued and the
receipt and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or
retirement of any of the foregoing since such balance sheet date
and the receipt and application of the proceeds thereof,
(c) any asset dispositions or asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset
disposition) that has occurred since such balance sheet date, in
each case as if they had occurred and such proceeds had been
applied on the date of such balance sheet.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss realized by
such Person or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and its
Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business,
in each case, on a consolidated basis and determined in accordance with
GAAP.
Notwithstanding the preceding, amounts in respect of items (1), (2) and (4)
for a Restricted Subsidiary of Loral Space shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of Loral Space only to the extent that
a corresponding percentage of the Consolidated Net Income of such Restricted
Subsidiary would be permitted at the date of determination to be dividended to
Loral Space by such Restricted Subsidiary without prior approval (that has not
been obtained) pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"CONSOLIDATED LEVERAGE RATIO" means the ratio of
(1) the Total Indebtedness of Loral Space outstanding as of the most recent
available quarterly or annual balance sheet to
(2) the Consolidated Cash Flow of Loral Space for the four full fiscal
quarters next preceding the incurrence of such Indebtedness or the
issuance of such Disqualified Stock for which consolidated financial
statements are available; provided that pro forma effect shall be given
to
(a) the incurrence of any Indebtedness proposed to be incurred or the
issuance of any Disqualified Stock proposed to be issued and the
receipt and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or
retirement of any of the foregoing since the beginning of such four
fiscal quarter period and the receipt and application of the
proceeds thereof and
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(c) any asset dispositions or asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset
disposition) that has occurred during such four fiscal quarter
period, in each case as if they had occurred and such proceeds had
been applied on the first day of such four fiscal quarter period.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the specified person or one of
its Subsidiaries; and
(5) the cumulative effect of a change in accounting principles shall be
excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common stockholders of such Person and
its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of Preferred Stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment,
but only to the extent of any cash received by such Person upon
issuance of such Preferred Stock.
"CONSOLIDATED TANGIBLE ASSETS" of any Person means the total amount of
assets (less applicable reserves and any other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting therefrom all goodwill (but not any other
intangible assets) which under GAAP would be included on such consolidated
balance sheet.
"CREDIT AGREEMENT" means that certain Amended and Restated Credit and
Participation Agreement among Loral SpaceCom Corporation, Space Systems/Loral,
Inc., certain lending banks, Bank of America National Trust and Savings
Association, as Administrative Agent, and Istituto Bancario San Paolo Di Torino
S.P.A., individually and as Italian Export Financing Arranger and as Selling
Bank, dated as of November 14, 1997, providing for up to $850 million of credit
extensions, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"CREDIT FACILITIES" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or
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letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time.
"DESIGNATED OTHER PERMITTED CONSIDERATION" means the fair market value of
non-cash consideration received by Loral Space or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Other Permitted Consideration pursuant to an Officers' Certificate,
setting forth the basis of such valuation, less the amount of cash or Cash
Equivalents received in connection with a sale of such Designated Other
Permitted Consideration.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require Loral Space to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that Loral Space may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.04.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of Loral Space and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date, until such amounts are repaid.
"EXCHANGE ACT" means the Securities & Exchange Act of 1934, as amended (or
any successor act) and to rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by any such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"GLOBALSTAR" means Globalstar, L.P., a Delaware limited partnership.
"GTL" means Globalstar Telecommunications Limited, a Bermuda Company.
"GUARANTEE" means a guaranty other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements entered into in the ordinary course of
business and consistent with past practices designed to protect such
Person against fluctuations in interest rates or currency exchange
rates.
"INDEBTEDNESS" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
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(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit, excluding letters of credit supporting obligations under
customer contracts until such letters of credit are drawn;
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount;
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness;
and
(3) in the case of an obligation under a Hedging Obligation
(a) zero if such obligation has been incurred pursuant to clause (7) of
the second paragraph of Section 4.05; or
(b) the notional amount of such obligation if not incurred pursuant to
such clause.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided,
however, that Investments shall not include any commercially reasonable (as
determined in good faith by either the Board of Directors of Loral Space or
senior management of Loral Space) extensions of credit to, or Investments made
in, any Person in connection with the purchase or sale of satellites or
satellite services. If Loral Space or any Restricted Subsidiary of Loral Space
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of Loral Space such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of Loral
Space and is not a Permitted Venture, Loral Space shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Restricted Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of
Section 4.04.
"ISSUE DATE" means the date on which notes were originally issued under the
Loral Space Indenture, which was January 21, 1999.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
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"LORAL SPACE DEFAULT" means any event that is, or with the passage of time
or the giving of notice or both would be, a Loral Space Event of Default.
"LORAL SPACE EVENT OF DEFAULT": A Loral Space Event of Default occurs if:
(1) [Intentionally omitted];
(2) [Intentionally omitted];
(3) Loral Space fails to comply with Section 5.01;
(4) Loral Space fails to comply Section 4.04, Section 4.05, Section
4.13 or Section 4.14 and such failure continues for 30 days after the
notice specified below;
(5) Loral Space or any of its Restricted Subsidiaries fails to comply
with any of their agreements in this Guaranty (other than those referred to
in clause (1), (2), (3) or (4) above) and such failure continues for 60
days after the notice specified below;
(6) Loral Space or any of its Restricted Subsidiaries defaults under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed
by Loral Space or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by Loral Space or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the
Issue Date, if such default: (A) is caused by a failure to pay principal at
maturity of such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default"); or (B) results in the acceleration of such Indebtedness prior to
its express maturity, and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $25 million or more;
(7) any judgment or decree for the payment of money in excess of $25
million or its foreign currency equivalent at the time is entered against
Loral Space or any of its Subsidiaries, remains outstanding for a period of
60 days following the entry of such judgment or decree and is not
discharged, waived or the execution thereof stayed within 10 days after the
notice specified below;
(8) Loral Space or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency; or
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against Loral Space or any Significant Subsidiary
in an involuntary case;
(B) appoints a Custodian of Loral Space or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of Loral Space or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days.
The foregoing will constitute Loral Space Events of Default whatever the
reason for any such Loral Space Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or
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pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body. The term "Bankruptcy Law"
means Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar Federal or state law for the
relief of debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy Law. A Loral
Space Default under clauses (4), (5), or (7) is not a Loral Space Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding Notes notify Loral Space of the Loral Space Default and Loral
Space does not cure such Loral Space Default within the time specified after
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".
"LORAL SPACE INDENTURE" means the indenture dated as of January 15, 1999
between Loral Space and The Bank of New York, as trustee, relating to Loral
Space's 9 1/2% Senior Notes due 2006.
"MARKETABLE SECURITIES" means, with respect to any Asset Sale, any readily
marketable equity securities that are
(1) traded on the New York Stock Exchange, the American Stock Exchange or
the Nasdaq National Market and
(2) issued by a corporation having a total equity market capitalization of
not less than $250 million; provided that the excess of
(a) the aggregate amount of securities of any one such corporation held
by Loral Space and any Restricted Subsidiary over
(b) ten times the average daily trading volume of such securities during
the 20 immediately preceding trading days shall be deemed not to be
Marketable Securities, as determined on the date of the contract
relating to such Asset Sale.
"NET INCOME" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with:
(a) any Asset Sale or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Loral Space or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness (other than Indebtedness under any one or more Credit Facilities)
secured by a lien on the asset or assets that were the subject of such Asset
Sale, and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness as to which neither Loral Space nor
any of its Restricted Subsidiaries (other than the Restricted Subsidiary that is
the primary obligor and its
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Subsidiaries so long as no Capital Stock of such Subsidiaries is owned by Loral
Space or any other Restricted Subsidiary),
(1) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness),
(2) is directly or indirectly liable as a guarantor or otherwise, or
(3) constitutes the lender.
"OBLIGATIONS" means any principal, premium if any, interest, penalties,
fees, indemnifications, guarantees, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"OFFER TO PURCHASE" means a written offer (the "Offer") sent by Loral Space
by first class mail, postage prepaid, to each Holder at his address appearing in
the register for the Notes on the date of the Offer offering to purchase up to
the principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to this Guaranty). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer and a settlement date for purchase of
Securities within five Business Days after the Expiration Date. Loral Space
shall notify the Trustee at least 15 Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of Loral Space s
obligation to make an Offer to Purchase, and the Offer shall be mailed by Loral
Space or, at Loral Space's request, by the Trustee in the name and at the
expense of Loral Space. The Offer shall contain information concerning the
business of Loral Space and its Subsidiaries which Loral Space in good faith
believes will enable such Holders to make an informed decision with respect to
the Offer to Purchase (which at a minimum shall include (1) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to this Guaranty (which
requirements may be satisfied by delivery of such documents together with the
Offer), (2) a description of material developments in Loral Space's business
subsequent to the date of the latest of such financial statements referred to in
clause (1) (including a description of the events requiring Loral Space to make
the Offer to Purchase), (3) if applicable, appropriate pro forma financial
information concerning the Offer to Purchase and the events requiring Loral
Space to make the Offer to Purchase and (4) any other information required by
applicable law to be included therein). The Offer shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Offer to Purchase.
"OFFICER" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of Loral Space.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers.
"OPINION OF COUNSEL" means an opinion from legal counsel who is acceptable
to the Trustee. The counsel may be an employee of, or counsel to, the Company,
Loral Space or the Trustee.
"PERMITTED BUSINESS" means any of the lines of business conducted by Loral
Space and its Restricted Subsidiaries or its existing Permitted Ventures on the
Issue Date and any other space or communication businesses and any business
reasonably related thereto.
"PERMITTED INVESTMENTS" means:
(1) any Investment in Loral Space or in a Restricted Subsidiary of Loral
Space;
(2) any Investment in Cash Equivalents;
(3) any Investment by Loral Space or any Restricted Subsidiary of Loral
Space in a Person engaged in a Permitted Business, if as a result of
such Investment:
(a) such Person becomes a Restricted Subsidiary of Loral Space; or
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(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Loral Space or a Restricted Subsidiary of Loral
Space;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.14;
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Loral Space;
(6) Hedging Obligations;
(7) Investments in Permitted Ventures;
(8) Investments existing on the Issue Date;
(9) Investments in Skybridge, L.P. that are either
(a) required pursuant to the partnership agreement in existence on the
Issue Date, or
(b) required to avoid disproportionate dilution to Loral Space's equity
interest therein pursuant to such partnership agreement or to avoid
financial penalties; and
(10) other Investments in any Person principally engaged in Permitted
Businesses having an aggregate fair market value (measured on the date
each such Investment was made and without giving effect to subsequent
changes in value), when taken together with all other Investments made
pursuant to this clause (10) at any time outstanding not to exceed 5%
of Loral Space's Consolidated Tangible Assets.
"PERMITTED LIENS" means:
(1) Liens on assets of Loral Space or its Restricted Subsidiaries securing
Indebtedness and other Obligations under Credit Facilities that were
permitted by the Loral Space Guaranty to be incurred;
(2) Liens in favor of Loral Space or any of its Restricted Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Loral Space or any Restricted
Subsidiary of Loral Space; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or
consolidated with Loral Space or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by Loral
Space or any Restricted Subsidiary of Loral Space; provided that such
Liens were in existence prior to the contemplation of such
acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph(b) of Section 4.05;
(7) Liens existing on the Issue Date and Liens Loral Space or any
Restricted Subsidiary are or may be obligated to create pursuant to
agreements in existence on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
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(9) Liens incurred in the ordinary course of business of Loral Space or
any Restricted Subsidiary of Loral Space with respect to obligations
that do not exceed $50 million at any one time outstanding;
(10) other Liens incidental to the conduct of Loral Space's and its
Restricted Subsidiaries' businesses or the ownership of their
respective property not securing any Indebtedness, and which do not in
the aggregate materially detract from the value of Loral Space's and
its Restricted Subsidiaries' property when taken as a whole, or
materially impair the use thereof in the operation of their respective
businesses;
(11) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries and;.
(12) Liens on materials and work-in-progress in favor of customers of Loral
Spaces and its Restricted Subsidiaries for amounts paid to Loral Space
or any of its Restricted Subsidiaries as progress payments,
milestones, advances or similar arrangements under any provision of
any security issued by Loral Space or such Restricted Subsidiary or of
any agreement, instrument or other undertaking to which such Person or
any of its property is bound, in each case entered into by Loral Space
or such Restricted Subsidiary with respect to such materials or
work-in-progress.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Loral Space
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Loral Space or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable), of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all customary expenses incurred in
connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later
than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is junior in right of payment to the Loral Space
Guaranty of the new notes, such Permitted Refinancing Indebtedness has
a final maturity date later than the final maturity date of, and is
junior in right of payment to, the Loral Space Guaranty of the new
notes on terms at least as favorable to the Holders of the Loral Space
Guaranty of the new notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Loral Space or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERMITTED VENTURE" means:
(1) a corporation, partnership or other entity, other than a Subsidiary
engaged in one or more Permitted Businesses in respect of which Loral
Space or a Restricted Subsidiary
(a) beneficially owns at least 20% of the Capital Stock of such
entity, and
(b) either is a party to an agreement providing for one or more
parties to such agreement (which may or may not be Loral Space or
a Subsidiary), or is a member of a group that, pursuant to the
constituent documents of the applicable corporation, partnership
or other entity, has the power, to direct the policies, management
and affairs of such entity; or
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(2) Globalstar Telecommunications Limited ("Globalstar Telecommunications
Limited"), so long as Globalstar, L.P. is a Permitted Venture and
Globalstar Telecommunications Limited's principal asset consists of
Equity Interests in Globalstar.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"PREFERRED STOCK" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"SERIES C PREFERRED STOCK" means Loral Space's 6% Series C Convertible
Redeemable Preferred Stock due 2007.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated by
the SEC, as such Regulation is in effect on the Issue Date, using a percentage
of 5% for such calculations instead of the percentage set forth therein.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any specified Person, any corporation,
partnership, association or other business entity that would be required under
GAAP to be consolidated in the financial statements of such Person or one or
more of the other Subsidiaries of that Person (or a combination thereof).
"TOTAL INDEBTEDNESS" means, at any time of determination, without
duplication, the sum of
(1) all Indebtedness of Loral Space and its Restricted Subsidiaries at such
time,
(2) the aggregate redemption price of any Disqualified Stock, and
(3) the aggregate liquidation preference of any Preferred Stock of Loral
Space's Restricted Subsidiaries, in each case as determined on a
consolidated basis in accordance with GAAP.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of Loral Space that is
designated by the Board of Directors of Loral Space as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with Loral Space or any Restricted Subsidiary of Loral Space unless the
terms of any such agreement, contract, arrangement or understanding are
no less favorable to Loral Space or such Restricted Subsidiary than
those that might be obtained at the time from Persons who are not
Affiliates of Loral Space;
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(3) is a Person with respect to which neither Loral Space nor any of its
Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests, or
(b) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating
results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Loral Space or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Loral Space or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Loral Space or any of its Restricted
Subsidiaries.
SECTION 1.02. INDENTURE DEFINITIONS. The term "Legal Holiday" is defined
in Section 6.07. Unless otherwise defined herein or the context otherwise
requires, capitalized terms used in this Guaranty, including its preamble and
recitals, have the meanings provided in the Indenture.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of Loral Space dated such date prepared in
accordance with GAAP but accretion of principal on such security shall not
be deemed to be the incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater;
(9) [intentionally omitted]; and
(10) the terms "redemption" and "redeemable" shall not be deemed to
refer to Offers to Purchase or to repurchases pursuant to Section 4.12 of
the Indenture or similar offers or repurchases.
ARTICLE II
GUARANTEE OF NOTES
SECTION 2.01. GUARANTEE. (a) Subject to the provisions of this Article
Two, Loral Space hereby, fully, unconditionally and irrevocably guarantees on a
senior basis to each Holder and to the Trustee on behalf of the Holders: (i) the
due and punctual payment of the principal of, premium, if any, and accrued
interest on each Note, when and as the same shall become due and payable,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal of and interest, if any, on the Notes, to
the extent lawful, and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee, all in accordance with the terms
of such Note, the Indenture and this Guaranty and (ii) in the case of any
extension of time of payment or renewal of
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any Notes or any of such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, at Stated Maturity, by acceleration or otherwise. Loral Space hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, the benefit of discussion, protest or
notice with respect to any such Note or the debt evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged as
to any such Note except by payment in full of the principal thereof, premium, if
any, and interest thereon and as provided in Section 8.01 of the Indenture,
Section 8.02 of the Indenture and Section 8.03 of the Indenture (subject to
Section 8.06 of the Indenture). The maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six of the Indenture for the
purposes of this Article Two. In the event of any declaration of acceleration of
such obligations as provided in Article Six of the Indenture such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor jointly and severally, for the purpose of this Article Two. In
addition, without limiting the foregoing provisions, upon the effectiveness of
an acceleration under Article Six of the Indenture, the Trustee shall promptly
make a demand for payment of the Notes under this Guarantee provided for in this
Article Two.
(b) If the Trustee or the Holder of any Note is required by any court or
otherwise to return to the Company or any Guarantor, or any custodian, receiver,
liquidator, trustee, bequestrator or other similar official acting in relation
to the Company or any Guarantor, any amount paid to the Trustee or such Holder
in respect of a Note, any Guarantee of the Notes, to the extent theretofore
discharged, shall be reinstated in full force and effect. Loral Space further
agrees, to the fullest extent that it may lawfully do so, that, as between it,
on the one hand, and the Holders and the Trustee, on the other hand, the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Six of the Indenture of the purposes of the Guarantee hereunder,
notwithstanding any stay, injunction or other prohibition extant under any
applicable bankruptcy law preventing such acceleration in respect of the
obligations guaranteed hereby.
(c) Loral Space hereby further agrees that its obligations under this
Guaranty and the Notes shall be unconditional, regardless of the validity,
regularity or enforceability of this Guaranty or the Notes, the absence of any
action to enforce this Guaranty or the Notes, any modification or amendment of,
or supplement to, this Guaranty, the Indenture or the Notes, the recovery of any
judgment against the Company or any action to enforce any such judgment, or any
other circumstance that might otherwise constitute a legal or equitable
discharge or defense of a guarantor.
(d) If Loral Space makes or is required to make any payment in respect of
its Guarantee hereunder, it shall be entitled to seek contribution from the
other Guarantors to the extent permitted by applicable law; provided that Loral
Space agrees that any such claim for contribution that Loral Space may have
against any other Guarantor shall be subrogated to the prior payment in full, in
cash, of all obligations owed to Holders under or in respect of the Notes.
(e) Loral Space hereby irrevocably defers, until the principal of, premium,
if any, and interest on the Notes shall have been paid in full, any claim or
other rights which it may now or hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of its obligations
under this Guarantee and the Indenture, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Holders against the Company
or any collateral which any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including, without limitation, the
right to take or receive from the company, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to Loral
Space in violation of the preceding sentence and the principal of, premium, if
any, and accrued interest on the Notes shall not have been paid in full, such
amount shall be deemed to have been paid to Loral Space for the benefit of, and
held in trust for the benefit of, the Holders, and shall forthwith be paid to
the Trustee for the benefit of the Holders to be credited and applied upon the
principal of, premium, if any, and accrued interest on the Notes. Loral
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Space acknowledges that it will receive direct and indirect benefits from the
issuance of the Notes pursuant to this Guaranty and that the waivers set forth
in this Section 2.01 are knowingly made in contemplation of such benefits.
(f) The Guarantee set forth in this Section 2.01 shall not be valid or
become obligatory for any purpose with respect to a Note until the certificate
of authentication on such Note shall have been signed by or on behalf of the
Trustee.
(g) Loral Space consents to the terms of the Indenture, including the
Guarantee of the Subsidiary Guarantors included therein.
SECTION 2.02. OBLIGATIONS UNCONDITIONAL. Nothing contained in this
Article Two or elsewhere in the Guaranty, the Indenture or in the Notes is
intended to or shall impair, as among Loral Space and the Holders, the
obligation of Loral Space, which is absolute and unconditional, upon failure by
the Company, to pay to the Holders the principal of, premium, if any, and
interest on the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of Loral Space, nor shall anything herein or
therein prevent any Holder or the Trustee on its behalf from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture.
Without limiting the foregoing, nothing contained in this Article Two will
restrict the right of the Trustee or the Holders to take any action to declare
the Guarantee hereunder to be due and payable prior to the Stated Maturity of
the Notes pursuant to Section 6.02 of the Indenture or to pursue any rights or
remedies hereunder.
SECTION 2.03. NOTICE TO TRUSTEE. Loral Space shall give prompt written
notice to the Trustee of any fact known to it which would prohibit the making of
any payment to or by the Trustee in respect of its Guarantee pursuant to the
provisions of this Article Two.
SECTION 2.04. THIS ARTICLE NOT TO PREVENT LORAL SPACE EVENT OF
DEFAULT. The failure to make a payment on account of principal of, premium, if
any, or accrued interest on the Notes by reason of any provision of this Article
Two will not be construed as preventing the occurrence of a Loral Space Event of
Default.
ARTICLE III
OPINIONS AND CERTIFICATES
SECTION 3.01. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon
any request or application by Loral Space to the Trustee to take or refrain from
taking any action under this Guaranty, Loral Space shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Guaranty relating to
the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 3.02. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Guaranty shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
ARTICLE IV
COVENANTS
SECTION 4.01. INTENTIONALLY OMITTED.
SECTION 4.02. INTENTIONALLY OMITTED.
SECTION 4.03. REPORTS. (a) Whether or not required by the SEC, so long as
any Notes are outstanding, Loral Space shall furnish to the Holders of Notes,
within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K
(or any successor forms) if Loral Space were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and
results of operations of Loral Space and its Subsidiaries and, with respect
to the annual information only, a report on the annual financial statements
by Loral Space's certified independent accountants; and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K (or any successor form) if Loral Space were required to
file such reports.
(b) If Loral Space has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
this Section 4.03 shall include selected financial information, either on the
face of the financial statements or in the footnotes thereto, regarding the
financial condition and results of operations of Loral Space and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of Loral Space.
(c) In addition, whether or not required by the SEC, Loral Space shall file
a copy of all information and reports referred to in clauses (1) and (2) of
paragraph (a) of this Section 4.03 with the SEC for public availability within
the time periods specified in the SEC's rules and regulations (unless the SEC
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
(d) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including Loral Space's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. RESTRICTED PAYMENTS. (a) Loral Space will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Loral Space's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
distribution, dividend or payment in connection with any merger or
consolidation involving Loral Space or any of its Restricted Subsidiaries)
or to the direct or indirect holders of Loral Space's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of Loral Space or to Loral Space or a Restricted
Subsidiary or Loral Space);
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(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Loral Space) any Equity Interests of Loral Space,
any Restricted Subsidiary of Loral Space or any direct or indirect parent
of Loral Space;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
junior in right of payment to this Guaranty of the Notes, except the
scheduled payment of interest or principal at the Stated Maturity thereof;
or
(4) make any Restricted Investment
(all such payments and other actions set forth in clauses (1) through (4)
above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Loral Space Default or Event of Loral Space shall have occurred
and be continuing or would occur as a consequence thereof; and
(2) Loral Space would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
either test set forth in the proviso to paragraph (a) of Section 4.05; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Loral Space and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2), (3), (4) and (6) of paragraph (b) of this Section 4.04) is
less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of Loral Space for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the Issue Date to the end of Loral
Space's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit); plus
(B) 100% of the aggregate net cash proceeds received by Loral Space
since the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of Loral Space (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or
debt securities of Loral Space that have been converted into or
exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary
of Loral Space), except to the extent such net cash proceeds are used to
increase the amount of dividends on Preferred Stock of Loral Space or
the amount of Restricted Investments that may be made pursuant to clause
(7) of paragraph (b) of this Section 4.04; plus
(C) 100% of the fair market value (as determined by the Board of
Directors and evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of assets
used or useful in a Permitted Business received by Loral Space since
the Issue Date as a contribution to its common equity
capital or from the issue or sale of Equity Interests of Loral Space
(other than Disqualified Stock); plus
(D) to the extent not already included in Consolidated Net Income
of Loral Space for such period, if any Restricted Investment that was
made by Loral Space or any Restricted Subsidiary after the Issue Date is
sold for cash or otherwise liquidated or repaid for cash, the
lesser of (i) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and
(ii) the initial amount of such Restricted Investment or designated
amount of Unrestricted Subsidiary; plus
(E) to the extent that any Unrestricted Subsidiary is designated by
Loral Space as a Restricted Subsidiary after the Issue Date, an amount
equal to the lesser of (i) the net book value of Loral Space's
Investment in such Unrestricted Subsidiary at the time of such
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designation and (ii) the fair market value of Loral Space's Investment
in such Unrestricted Subsidiary at the time of such designation.
(b) The preceding paragraph (a) shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the foregoing paragraph (a) of this Section
4.04;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Loral Space or of any
Equity Interests of Loral Space or any Restricted Subsidiary in exchange
for, or out of the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of Loral Space) of, Equity Interests of Loral
Space (other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(3)(B) of paragraph (a) of this Section 4.04;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated indebtedness of Loral Space with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend or distribution by a Restricted
Subsidiary of Loral Space to the holders of its common Equity Interests so
long as Loral Space or such Restricted Subsidiary receives at least its pro
rata share (and in like form) of such dividend or distribution in
accordance with its common Equity Interests;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Loral Space or any Restricted Subsidiary
of Loral Space held by any employee of Loral Space or a Restricted
Subsidiary or member of Loral Space's (or any of its Restricted
Subsidiaries') management pursuant to any equity subscription agreement or
stock option agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $10 million;
(6) the purchase by a Restricted Subsidiary of shares of Capital Stock
of Loral Space from Loral Space or the deemed repurchase of Capital Stock
by Loral Space or a Restricted Subsidiary on the exercise of stock options;
(7) payments of dividends by Loral Space on Preferred Stock of the
Guarantor or the making of Restricted Investments by Loral Space or any
Restricted Subsidiary in an aggregate amount not to exceed 100% of the
aggregate net cash proceeds received by Loral Space since the Issue Date
from the issue or sale of Equity Interests of Loral Space (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such dividend payment or Restricted Investment
shall be excluded from clause (3)(B) of paragraph (a) of this Section 4.04;
(8) the purchase by Loral Space or a Restricted Subsidiary of Equity
Interests in a Restricted Subsidiary from another Person;
(9) scheduled dividends payable on the Series C Preferred Stock;
(10) payment of dividends on Preferred Stock of a Restricted
Subsidiary; and
(11) other Restricted Payments in an aggregate principal amount not to
exceed $25 million;
provided that Loral Space shall not and shall not permit any of its Restricted
Subsidiaries to make any Restricted Payment contemplated by clauses (2) through
(10) above so long as a Loral Space Default has occurred and is continuing.
(c) The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the assets or
securities proposed to be transferred or issued to or by Loral Space or a
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this Section 4.04 shall be either
19
(1) determined by the Board of Directors, whose resolution with respect thereto
shall be delivered to the Trustee or (2) based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of international
standing if the fair market value exceeds $25 million. Not later than the date
of making any Restricted Payment, Loral Space shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.04 were computed, together with a copy of any fairness opinion or appraisal
required by this Section 4.04.
SECTION 4.05. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) Loral Space shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and Loral Space shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of Preferred
Stock; provided, however, that Loral Space or any Restricted Subsidiary may
incur Indebtedness (including Acquired Debt), and Loral Space may issue
Disqualified Stock, and any Restricted Subsidiary may issue Preferred Stock, if,
after giving effect to the incurrence of such Indebtedness or the issuance of
such Disqualified Stock or Preferred Stock and the application of the proceeds
thereof, no Loral Space Default would occur as a consequence of such incurrence
or issuance or be continuing following such incurrence or issuance and either
(1) the Consolidated Leverage Ratio of Loral Space would be less than 5.0 to
1.0, or (2) Loral Space's Consolidated Capital Ratio as of the most recent
available quarterly or annual balance sheet is less than 2.0 to 1.0.
(b) Nothing contained in paragraph (a) of this Section 4.05 shall prohibit
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by Loral Space and its Restricted Subsidiaries of
additional Indebtedness and letters of credit pursuant to Credit Facilities
in an aggregate principal amount at any one time outstanding under this
clause (1) not to exceed $850 million as of such date of incurrence less
the aggregate amount of all Net Proceeds of Asset Sales applied to repay
term Indebtedness outstanding under one or more Credit Facilities pursuant
to clause (1) of paragraph (b) of Section 4.14;
(2) the incurrence by Loral Space and its Restricted Subsidiaries of
the Existing Indebtedness;
(3) the incurrence by Loral Space of Indebtedness represented by the
Notes and Loral Space's 9 1/2% Senior Notes due 2006;
(4) the issuance by a Subsidiary of Preferred Stock or the incurrence
by Loral Space's Subsidiaries of Non-Recourse Debt (including Acquired Debt
that constitutes Non-Recourse Debt); provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of a Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Loral Space that was not permitted by this clause (4);
(5) the incurrence by Loral Space or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness)that was permitted by this Guaranty
to be incurred under paragraph (a) of this Section 4.05 or clauses (2), (3)
or this clause (5) of this paragraph (b);
(6) the incurrence by Loral Space or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Loral Space and
any of its Restricted Subsidiaries; provided, however, that:
(A) if Loral Space is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to all Obligations with
respect to this Guaranty of the Notes; and
(B) (i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
Loral Space or a Restricted Subsidiary thereof
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and (ii) any sale or other transfer of any such Indebtedness to a Person
that is not either Loral Space or a Restricted Subsidiary thereof shall
be deemed, in each case, to constitute an incurrence of such
Indebtedness by Loral Space or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (6);
(7) the incurrence by Loral Space or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk or currency exchange rate risk;
(8) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock or Preferred Stock in the form of additional shares
of the same class of Disqualified Stock or Preferred Stock, as the case may
be, will not be deemed to be an incurrence of Indebtedness or an issuance
of Disqualified Stock or Preferred Stock for purposes of this Section 4.05;
(9) the incurrence by Loral Space or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (9), not to exceed $50
million; or
(10) the incurrence by Restricted Subsidiaries of Guarantees of
Indebtedness of Loral Space or any Restricted Subsidiary that is not
subordinated to the Guaranty of the Notes.
(c) Loral Space shall not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of Loral Space unless such Indebtedness is also contractually subordinated in
right of payment to the Loral Space Guaranty of the Notes on substantially
identical terms; provided, however, that no Indebtedness of Loral Space shall be
deemed to be contractually subordinated in right of payment to any other
Indebtedness of Loral Space solely by virtue of being unsecured.
(d) For purposes of determining compliance with this Section 4.05, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (10) of
paragraph (b) of this Section 4.05, or is entitled to be incurred pursuant to
paragraph (a) of this Section 4.05, Loral Space shall be permitted to classify
such item of Indebtedness on the date of its incurrence in any manner that
complies with this Section 4.05.
SECTION 4.06. LIENS. Loral Space shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind on any asset now owned or hereafter
acquired, except Permitted Liens.
SECTION 4.07. SALE AND LEASEBACK TRANSACTIONS. Loral Space shall not, and
shall not permit any of its Restricted Subsidiaries to, enter into any Sale and
Leaseback Transaction; provided that Loral Space or any Restricted Subsidiary
may enter into a Sale and Leaseback Transaction if:
(1) Loral Space or such Restricted Subsidiary, as applicable, could
have (A) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction under Section 4.05 and (B)
incurred a Lien to secure such Indebtedness pursuant to Section 4.06;
(2) the gross cash proceeds of such Sale and Leaseback Transaction are
at least equal to the fair market value, as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to
the Trustee, of the property that is the subject of such Sale and Leaseback
Transaction; and
(3) the transaction complies with Section 4.14.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. (a) Loral Space shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create
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or permit to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
to Loral Space or any of its Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to Loral Space or any of its Restricted Subsidiaries;
(2) make loans or advances to Loral Space or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Loral Space or any of
its Restricted Subsidiaries.
(b) The restrictions set forth in paragraph (a) of this Section 4.08 shall
not apply to encumbrances or restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than
those contained in such Existing Indebtedness, as in effect on the Issue
Date;
(2) any customary (as conclusively determined in good faith by the
Chief Financial Officer of Loral Space) encumbrance or restriction
applicable to Loral Space or a Restricted Subsidiary that is contained in
an agreement or instrument governing or relating to Indebtedness of Loral
Space or Indebtedness contained in any Credit Facilities or Indebtedness
incurred pursuant to clause (4) of paragraph (b) of Section 4.05; provided
that, other than with respect to Preferred Stock of a Subsidiary or
Non-Recourse Debt of a Subsidiary (including Non-Recourse Debt that is
Acquired Debt), such encumbrances and restrictions permit the distribution
of funds to the Guarantor in an amount sufficient for Loral Space to make
the timely payment of interest, premium, if any, and principal (whether at
stated maturity, by way of a sinking fund applicable thereto, by way of any
mandatory redemption, defeasance, retirement or repurchase thereof,
including upon the occurrence of designated events or circumstances or by
virtue of acceleration upon an event of default, or by way of redemption or
retirement at the option of the holder of the Indebtedness, including
pursuant to offers to purchase) according to the terms of this Guaranty and
other Indebtedness that is solely an obligation of Loral Space, but
provided further that such agreement may nevertheless contain customary (as
so determined) net worth, leverage, invested capital and other financial
covenants, customary (as so determined) covenants regarding the merger of
or sale of all or any substantial part of the assets of Loral Space or any
Restricted Subsidiary, customary (as so determined) restrictions on
transactions with affiliates and customary (as so determined) subordination
provisions governing Indebtedness owed to Loral Space or any Restricted
Subsidiary;
(3) the Credit Agreement as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than
those contained in such Credit Agreement, as in effect on the Issue Date;
(4) the Loral Space Indenture and the notes issued thereunder, this
Guaranty and the Notes and the Guarantees of the Notes by the Subsidiary
Guarantors;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Loral Space or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired; provided that, in
22
the case of Indebtedness, such Indebtedness was permitted by the terms of
this Guaranty to be incurred;
(7) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of paragraph (a) of this Section 4.08;
(9) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(10) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced;
(11) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(12) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business; and
(13) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
SECTION 4.09. DESIGNATION OF RESTRICTED AND UNRESTRICTED
SUBSIDIARIES. The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Loral Space
Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary,
the aggregate fair market value of all outstanding Investments owned by Loral
Space and its Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be an Investment made as of the time of such designation and will
reduce the amount available for Restricted Payments under paragraph (a) of
Section 4.04 or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments set forth in Section
1.01, as Loral Space shall determine. That designation will only be permitted if
such Investment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary set
forth in Section 1.01. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Loral Space Default.
SECTION 4.10. TRANSACTIONS WITH AFFILIATES. (a) Loral Space shall not,
and shall not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION"),
unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to Loral Space or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by Loral Space or such
Restricted Subsidiary with an unrelated Person; and
(2) Loral Space delivers to the Trustee with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $15 million, either (A) a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with this Section 4.10 and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors or (B) an opinion as to the fairness to
the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of
international standing.
23
(b) The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject, except as set forth below, to the
provisions of paragraph (a) of this Section 4.10:
(1) any employment agreement entered into by Loral Space or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of Loral Space or such Restricted Subsidiary, as the
case may be;
(2) transactions between or among Loral Space and/or its Restricted
Subsidiaries;
(3) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of Loral Space;
(4) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of Loral Space;
(5) Restricted Payments that are permitted by, and Permitted
Investments that are not prohibited by, Section 4.04; and
(6) transactions between the Company and/or its Restricted
Subsidiaries, on the one hand, and a Permitted Venture, on the other hand,
provided that the condition set forth in clause (1) of paragraph (a) of
this Section 4.10 is satisfied.
SECTION 4.11. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS. (a)
Loral Space shall not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any other
Indebtedness of Loral Space unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture or a
supplemental agreement to this Guaranty or a separate Guarantee providing for
the Guarantee of the payment of the Notes by such Restricted Subsidiary (a
"GUARANTOR"), which Guarantee shall (1) be senior to or pari passu with such
Restricted Subsidiary's Guarantee of or pledge to secure such other Indebtedness
and (2) remain in effect for so long as the Guarantee or pledge to secure such
other Indebtedness remains in effect.
(b) No Guarantor shall incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of such Guarantor unless such Indebtedness is also contractually subordinated in
right of payment to such Guarantor's Guarantee of the Notes on substantially
identical terms; provided, however, that no Indebtedness of a Guarantor shall be
deemed to be contractually subordinated in right of payment to any other
Indebtedness of such Guarantor solely by virtue of being unsecured.
SECTION 4.12. BUSINESS ACTIVITIES. Loral Space shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than Permitted
Businesses, except to the extent as would not be material to Loral Space and its
Restricted Subsidiaries, taken as a whole.
SECTION 4.13. INTENTIONALLY OMITTED.
SECTION 4.14. ASSET SALES. (a) Loral Space shall not, and shall not
permit any Restricted Subsidiary to, consummate an Asset Sale unless:
(1) Loral Space (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) such fair market value is (A) determined by two Officers of Loral
Space if the fair market value is less than $25 million or (B) determined
by the Board of Directors and evidenced by a resolution of the Board of
Directors if the fair market value is $25 million or greater, and, in each
case, such fair market value is set forth in an Officers' Certificate
delivered to the Trustee; and
24
(3) at least 75% of the consideration therefor received by Loral Space
or such Restricted Subsidiary is in the form of cash or Cash Equivalents.
Only for purposes of this clause (3), each of the following shall be deemed
to be cash:
(A) any liabilities (as shown on Loral Space's or such Restricted
Subsidiary's most recent balance sheet), of Loral Space or any
Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Securities) that are assumed
by the transferee of any such assets pursuant to a customary novation
agreement that releases Loral Space or such Restricted Subsidiary from
further liability;
(B) any securities, notes or other obligations received by the
Guarantor or any such Restricted Subsidiary from such transferee that
are contemporaneously (subject to ordinary settlement periods) converted
by Loral Space or such Restricted Subsidiary into cash (to the extent of
the cash received in that conversion);
(C) any assets described in clause (2) or (4) of paragraph (b) of
this Section 4.14;
(D) Marketable Securities; and
(E) Designated Other Permitted Consideration; provided that the
aggregate fair market value (as determined pursuant to clause (2) above)
of such Designated Other Permitted Consideration, taken together with
the fair market value at the time of receipt of all other designated
Other Permitted Consideration received pursuant to this clause (E), less
the amount of net cash proceeds previously realized in cash from prior
Designated Other Permitted Consideration is less than 5% of Loral
Space's Consolidated Tangible Assets at the time of the receipt of such
Designated Other Permitted Consideration (with the fair market value of
each item of Designated Other Permitted Consideration being measured at
the time received and without giving effect to subsequent changes in
value).
(b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, Loral Space may apply (or, in the case of clause (2), (3) or (4) below,
enter into a binding commitment to apply) such Net Proceeds:
(1) to repay Indebtedness of Loral Space or any Restricted Subsidiary
which is not subordinated to this Guaranty;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business or to purchase
Equity Interests of a Restricted Subsidiary from another Person;
(3) to make a capital expenditure in a Permitted Business or to make
an Investment in a Permitted Venture; or
(4) to acquire or to acquire the right to use other long-term assets
that are used or useful in a Permitted Business.
(c) Pending the final application of any such Net Proceeds, Loral Space may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Guaranty.
(d) Any Net Proceeds from Asset Sales that are not applied or invested as
provided in paragraph (b) of this Section 4.14 shall constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $15 million,
Loral Space shall make, or shall cause the Company to make, an Offer to Purchase
to all Holders of Notes and all holders of other Indebtedness that is pari passu
with the Guaranty of the Notes containing provisions similar to those set forth
in this Guaranty with respect to offers to purchase or redeem with the proceeds
of sales of assets to purchase the maximum principal amount of Notes and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds.
The offer price in any Offer to Purchase shall be equal to 101% of principal
amount plus accrued and unpaid interest to the date of purchase, and shall be
payable in cash. If any Excess Proceeds
25
remain after consummation of an Offer to Purchase, Loral Space may use such
Excess Proceeds for any purpose not otherwise prohibited by this Guaranty. If
the aggregate principal amount of Notes and such other pari passu Indebtedness
tendered into such Offer to Purchase exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis based on the principal amount of Notes and such
other pari passu Indebtedness tendered. Upon completion of each Offer to
Purchase required by this Section 4.14, the amount of Excess Proceeds shall be
reset at zero.
(e) Loral Space shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes required by this Section 4.14. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.14 or the definition of the Offer to Purchase, Loral Space shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the provisions of this Section
4.14 or such definition by virtue of such conflict.
SECTION 4.15. ADDITIONAL AMOUNTS. (a) All payments in respect of this
Guaranty will be made free and clear of, and without withholding or deduction
for, any present or future taxes, duties, assessments or governmental charges of
whatever nature (collectively, "TAXES") imposed, levied, collected, withheld or
assessed by or within any jurisdiction in which Loral Space is then incorporated
(or the jurisdiction of incorporation of any successor of Loral Space) or any
other jurisdiction in which Loral Space (or such successor) is resident for tax
purposes or any political subdivision or taxing authority thereof or therein
(hereinafter, a "RELEVANT JURISDICTION"), unless such withholding or deduction
is required by law or by regulation or governmental policy having the force of
law. In the event that any such withholding or deduction in respect of such
payment is so required, Loral Space, or any successor, shall pay such additional
amounts ("ADDITIONAL AMOUNTS") as will result in receipt by each Holder of a
Note of such gross amount as would have been received by such Holder or the
beneficial owner with respect to such Note, as applicable, had no such
withholding or deduction (including any withholding or deduction applicable to
Additional Amounts payable) been required, except that no Additional Amounts
will be payable for or on account of:
(1) Taxes that would not have been imposed but for
(A) the existence of any present or former connection between such
Holder or such beneficial owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over,
such Holder, if such Holder is an estate, trust, partnership or
corporation) and the Relevant Jurisdiction, including such Holder (or
such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a national, domiciliary or resident of or treated
as a resident thereof or being or having been present or engaged in a
trade or business therein or having had a permanent establishment
therein; or
(B) Section 881(c)(3)(A) of the Code (or any successor provision);
(2) any estate, inheritance, gift, sale, transfer or similar tax,
assessment or other governmental charge;
(3) any Tax that is imposed or withheld by reason of the failure of
the Holder or beneficial owner of a Security to timely comply with a
request of Loral Space, addressed to the Holder (A) to provide reasonably
required or requested information concerning the nationality, residence or
identity of the Holder or such beneficial owner or (B) to make any
reasonably required or requested declaration, filing or claim or satisfy
any reasonably required or requested information or reporting requirement,
which, in the case of (A) or (B), is required or imposed by statute,
treaty, regulation or administrative practice of the taxing jurisdiction as
a precondition to exemption from all or part of such Tax; provided,
however, that (i) providing information required by Internal Revenue
Service Forms W-8, W-9, 1001 and 4224 and any successors thereto and (ii)
the execution and delivery of such forms is deemed to be reasonably
required or requested; or
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(4) any combination of (1), (2) and (3);
nor shall Additional Amounts be paid with respect to payment of the principal of
or any premium or interest on any such Note, to any Holder (including any
fiduciary or partnership) to the extent that the beneficial owner would not have
been entitled to such Additional Amounts had it been the Holder of the Note.
(b) Where required by applicable law, Loral Space or any Paying Agent, as
the case may be, shall also (1) make such withholding or deduction in respect of
any Taxes and (2) remit the full amount withheld or deducted to the relevant
authority in accordance with applicable law. Loral Space shall furnish to each
Holder of Notes, within 30 days after the date the payment of any Taxes is due
pursuant to applicable law, certified copies of tax receipts satisfactory to the
Trustee evidencing such payment by Loral Space.
(c) Whenever there is mentioned in any context the payment of principal of
or any premium or interest on, or in respect of, a Note, or the net proceeds
received from Loral Space on the sale or exchange of any Note, such mention
shall be deemed to include mention of the payment of Additional Amounts provided
for in this Section 4.15 to the extent that, in such context, Additional Amounts
are, were, or would be payable in respect thereof pursuant to this Section 4.15.
(d) Loral Space shall pay any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges, or similar levies that
arise in any jurisdiction from the execution, delivery, enforcement or
registration of this Guaranty or any other document or instrument relating
thereto, or the receipt of any payments with respect to the Notes, excluding
such taxes, charges, or similar levies imposed by any jurisdiction outside of
any jurisdiction in which Loral Space or the Paying Agent is located or
incorporated (except those resulting from or required to be paid in connection
with, the enforcement of Notes or any other such document or instrument
following the occurrence of any Loral Space Event of Default with respect to the
Notes), and shall indemnify the Holders for any such taxes paid by such Holders.
(e) The foregoing obligations shall survive any termination, defeasance or
discharge of this Guaranty.
SECTION 4.16. INTENTIONALLY OMITTED.
SECTION 4.17. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee,
Loral Space will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Guaranty and the Indenture.
SECTION 4.18. PAYMENTS FOR CONSENT. Loral Space shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration to or for the benefit of any Holder of Notes
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Guaranty or the Notes unless such consideration is offered
to be paid to all Holders of Notes that consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such consent, waiver
or agreement.
ARTICLE V
MERGER, CONSOLIDATION OR SALE OF ASSETS
SECTION 5.01. WHEN LORAL SPACE MAY MERGE, CONSOLIDATE OR SELL ASSETS.
(a) Loral Space shall not, directly or indirectly: (x) consolidate or merge
with or into another Person (whether or not Loral Space is the surviving
corporation); or (y) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of Loral Space and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions,
to another Person, unless:
(1) either: (A) Loral Space is the surviving corporation; or (B) the
Person formed by or surviving any such consolidation or merger (if other
than Loral Space) or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made is a corporation organized
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or existing under the laws of Bermuda, the United States, any state thereof
or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than Loral Space) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of Loral Space under this Guaranty pursuant to agreements
reasonably satisfactory to the Trustee;
(3) immediately after such transaction no Loral Space Default exists;
and
(4) Loral Space or the Person formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made (if other than Loral
Space):
(A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of Loral
Space immediately preceding the transaction; and
(B) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period or
balance sheet date, as applicable, be permitted to incur at least $1.00
of additional Indebtedness pursuant to at least one of the tests set
forth in the proviso to paragraph (a) of Section 4.05.
(b) In addition, Loral Space shall not, directly or indirectly, lease all
or substantially all of its properties or assets in one or more related
transactions, to any other Person.
(c) When a successor corporation, trustee, paying agent or registrar
assumes all of the obligations of its predecessor under the Notes, the Indenture
and this Guaranty, the predecessor shall be released from those obligations.
(d) This Section 5.01 shall not apply to a sale, assignment, transfer,
conveyance or other disposition of assets between or among Loral Space and any
of its Restricted Subsidiaries.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. AMENDMENTS, ETC. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by Loral Space herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Trustee (on behalf of the Holders of the Notes) pursuant to the provisions of
Article of the Indenture, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 6.02. ADDRESSES FOR NOTICES TO LORAL SPACE. All notices and other
communications provided to Loral Space under this Guaranty shall be in writing
or by facsimile and addressed, delivered or transmitted to Loral Space at its
address or facsimile number set forth on Schedule 1 hereto or at such other
address or facsimile number as may be designated by Loral Space in a notice to
the Trustee. Any notice, if mailed and properly addressed with postage prepaid
or if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted.
SECTION 6.03. NO WAIVER; REMEDIES. No failure on the part of the Trustee
or any Holder of a Note to exercise, and no delay in exercise, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. No Holder shall be entitled
to enforce any provision of this Note other than through the Trustee except as
expressly specified in the Indenture.
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SECTION 6.04. JOINT AND SEVERAL. The obligations of Loral Space under
this Guaranty are joint and several with the obligations of the Subsidiary
Guarantors under their guaranty contained in the Indenture.
SECTION 6.05. SECTION CAPTIONS. Section captions used in this Guaranty
are for convenience of reference only, and shall not affect the construction of
this Guaranty.
SECTION 6.06. SEVERABILITY AND COUNTERPARTS. Wherever possible each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. This Guaranty may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement. This Guaranty shall
become effective when a counterpart hereof executed on behalf of Loral Space
shall have been received by the Trustee.
SECTION 6.07. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday
or a day on which banking institutions are not required to be open in the State
of New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 6.08. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
SECTION 6.09. NO RECOURSE AGAINST OTHERS. No past, present or future
director, officer, partner (including any general partner) employee,
incorporator or stockholder, as such, of Loral Space shall have any liability
for any obligations of Loral Space under this Guaranty or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Holder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Notes.
SECTION 6.10. SUCCESSORS. All agreements of Loral Space in this Guaranty
shall bind their successors. All agreements of the Trustee in this Guaranty
shall bind its successors.
SECTION 6.11. DEFEASANCE. The obligations of Loral Space under this
Guaranty may be defeased in whole or in part under the circumstances and to the
extent set forth in Article VIII of the Indenture.
SECTION 6.12. JURISDICTION; CONSENT TO SERVICE OF PROCESS. LORAL SPACE
HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK FOR ANY LAWSUITS, CLAIMS OR
OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES NOT TO
COMMENCE ANY SUCH LAWSUIT, CLAIM OR OTHER PROCEEDING EXCEPT IN SUCH COURTS.
LORAL SPACE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY LAWSUIT, CLAIM, OR OTHER PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH LAWSUIT, CLAIM OR OTHER PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. LORAL SPACE HAS APPOINTED XXX
XXXX, ESQ. AT 000 XXXXX XXXXXX, XXX XXXX, XXX XXXX 00000, X.X.X. (HEREINAFTER
REFERRED TO IN SUCH CAPACITY AS THE "PROCESS AGENT"), AS ITS AUTHORIZED AGENT
UPON WHOM PROCESS MAY BE SERVED IN ANY SUCH SUIT OR PROCEEDING. LORAL SPACE
REPRESENTS TO THE TRUSTEE THAT IT HAS NOTIFIED THE PROCESS AGENT OF SUCH
DESIGNATION
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AND APPOINTMENT AND THAT THE PROCESS AGENT HAS ACCEPTED THE SAME IN WRITING.
LORAL SPACE HAS AUTHORIZED AND DIRECTED THE PROCESS AGENT TO ACCEPT SUCH
SERVICE. IF THE PROCESS AGENT SHALL CEASE TO ACT AS LORAL SPACE'S AGENT FOR
SERVICE OF PROCESS, LORAL SPACE SHALL APPOINT WITHOUT DELAY ANOTHER SUCH AGENT
AND NOTIFY THE TRUSTEE OF SUCH APPOINTMENT. LORAL SPACE FURTHER AGREES THAT
SERVICE OF PROCESS UPON THE PROCESS AGENT AND WRITTEN NOTICE OF SAID SERVICE TO
LORAL SPACE MAILED BY FIRST CLASS MAIL OR DELIVERED TO THE PROCESS AGENT SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT
OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE TRUSTEE'S RIGHT OR THE RIGHT OF
ANY PERSON CONTROLLING THE TRUSTEE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. LORAL SPACE AGREES THAT A FINAL ACTION IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
IN WITNESS WHEREOF, Loral Space has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
LORAL SPACE & COMMUNICATIONS LTD.
By:
--------------------------------------
Name:
Title:
Accepted:
BANKERS TRUST COMPANY
as Trustee
By:
--------------------------------------
Title: Authorized Officer
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SCHEDULE 1
ADDRESSES FOR NOTICE
Loral Space & Communications Ltd.
c/o Loral SpaceCom Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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