EXHIBIT 10.8
SENIOR MANAGEMENT
NON-QUALIFIED
STOCK OPTION AGREEMENT
UNDER
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of this _____ day of ________, ____ (the
"Grant Date"), by and between Loral Space & Communications Inc., a Delaware
corporation (the "Company"), and _______________ (the "Optionee").
WHEREAS, the Optionee is employed by or providing services to the
Company or an Affiliate in a key capacity, and the Company desires to have
Optionee remain in such employment or service and to afford Optionee the
opportunity to acquire, or enlarge, Optionee's stock ownership of the Company's
Common Stock, par value $.01 per share (the "Stock"), so that Optionee may have
a direct proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall
have the same meaning as set forth in Company's 2005 Stock Incentive Plan (the
"Plan").
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the terms and conditions set forth herein and
in the Plan, the Company hereby grants to the Optionee, during the period
commencing on the Grant Date and ending on the date that is seven years
from the Grant Date (the "Option Period"), the right and option (the right
to purchase any one share of Stock hereunder being an "Option") to
purchase from the Company, at an exercise price of [$____] per share (the
"Option Price"), an aggregate of [______] shares of Stock (the "Share
Number"). The Options are not intended to be "incentive stock options", as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.
[NOTE: SUBJECT TO COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED ("SECTION 409A"), THE OPTIONS SHALL HAVE A PER
SHARE EXERCISE PRICE OF $19.00 (THE "TARGET EXERCISE PRICE"). SECTION
409A, PLACES CERTAIN RESTRICTIONS ON STOCK OPTIONS THAT HAVE A PER SHARE
EXERCISE PRICE LESS THAN THE FAIR MARKET VALUE OF A SHARE OF THE
UNDERLYING STOCK AT THE TIME OF GRANT. IF THE TARGET EXERCISE PRICE IS
LESS THAN THE FAIR MARKET VALUE OF A SHARE OF STOCK ON THE GRANT DATE (THE
"GRANT DATE VALUE"), THE OPTIONS SHALL HAVE AN OPTION PRICE EQUAL TO THE
GRANT DATE VALUE RATHER THAN THE TARGET EXERCISE PRICE.]
[NOTE: IF THE TARGET EXERCISE PRICE IS LESS THAN THE GRANT DATE VALUE, THE
COMPANY SHALL ESTABLISH A DEFERRED COMPENSATION BOOKKEEPING ACCOUNT FOR THE
OPTIONEE AND INCLUDE THE FOLLOWING SECTION IN THIS OPTION AGREEMENT.]
2. [DEFERRED COMPENSATION ACCOUNT. As of the Grant Date, the
Company shall establish a deferred compensation bookkeeping account for the
Optionee (the "Deferred Compensation Account") and shall credit to the Deferred
Compensation Account a dollar amount equal to (A) the difference between the
Option Price and $19.00 (the "Target Exercise Price"), multiplied by (B) the
Share Number. The Deferred Compensation Account shall become vested in the same
proportion as the Options vest and becomes exercisable, including any
accelerated vesting upon (A) a termination of the Optionee's employment or
service by the Company or an Affiliate without Cause, (B) a termination of the
Optionee's employment or service with the Company and all Affiliates by the
Optionee for Good Reason, (C) a Change in Control (as defined in the Plan), (D)
a New Skynet Sale Event (as defined in the Plan), but only to the extent that
the Optionee is an employee or service provider of New Skynet, or (E) a New SS/L
Sale Event (as defined in the Plan), but only to the extent that the Optionee is
an employee or service provider of New SS/L.
(a) The vested portion of the Deferred Compensation Account
shall be distributed to the Optionee upon the earlier to occur of (i) a
termination of the Optionee's employment or service with the Company and
all Affiliates, (ii) a Change in Control, (iii) a New Skynet Sale Event,
but only to the extent that the Optionee is an employee or service
provider of New Skynet, (iv) a New SS/L Sale Event, but only to the extent
that the Optionee is an employee or service provider of New SS/L, and (v)
the date which is the seventh anniversary of the Grant Date; provided,
however, that in the event the Optionee is determined to be a "specified
person," as defined in Section 409A of the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder,
including Treasury Notice 2005-1 ("Notice 2005-1") ("Section 409A"), as of
the date of the Optionee's termination of employment or service, any
distribution of the Deferred Compensation Account scheduled to be made
upon such termination shall be delayed for six months or such other period
as required to comply with Section 409A; and further provided, however,
that there shall be no distribution upon a Change in Control, a New Skynet
Sale Event or a New SS/L Sale Event unless such event also constitutes a
"Change in Control Event" with respect to the Optionee under Notice 2005-1
or such distribution is otherwise an allowable distribution under Section
409A.
(b) Amounts in the Deferred Compensation Account shall be
subject to forfeiture upon termination of the Optionee's employment with
the Company to the same extent as the Option is subject to forfeiture
pursuant to Section 4 herein.
(c) Except as provided below, the value of the Deferred
Compensation Account shall not be credited with interest or be subject to
any rate of return. Upon any exercise of all or a portion of the Options,
the corresponding portion of the Deferred Compensation Account shall
automatically be converted into an interest-
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bearing account from the date of such exercise through the date of
distribution. For example, if 50% of the Options are exercised, 50% of the
Deferred Compensation Account shall be converted into an interest-bearing
account. Once converted, the amounts credited to this interest-bearing
Deferred Compensation Account shall receive a rate of return equal to the
highest rate of return then available to the Company in an
interest-bearing account. To the extent possible, the Company will seek to
avoid or, if not avoidable, to minimize any administrative expense
incurred in maintaining the interest-bearing Deferred Compensation
Account. However, the balance in the interest-bearing Deferred
Compensation Account attributable to the rate of return on the
interest-bearing Deferred Compensation Account shall be reduced, but not
below the principal amount, by any administrative expense incurred by the
Company in maintaining the interest-bearing Deferred Compensation Account.
(d) While all or a portion of the Options remain unexercised
and outstanding, the corresponding portion of the Deferred Compensation
Account shall be linked to the value of the Stock as follows. To the
extent the value of the Stock declines to a level between the Option Price
and the Target Exercise Price (the "Spread Value Zone"), the corresponding
portion of the Deferred Compensation Account shall also decline in the
same percentage as the Stock declines as measured against the Target
Exercise Price and the value of the corresponding portion of the Deferred
Compensation Account shall track the percentage increase or decrease in
the value of the Stock while its value remains in the Spread Value Zone
such that if the value of the Stock declines to the Target Exercise Price
or below, the value of the corresponding portion of the Deferred
Compensation Account shall decline to zero and if the value of the Stock
rebounds to the Option Price, the corresponding portion of the Deferred
Compensation Account shall regain its proportional full value. To the
extent the Stock rises above the Option Price the corresponding portion of
the Deferred Compensation Account shall not rise above its proportional
full value.
(e) The amounts credited to the Deferred Compensation Account
will be subject to all applicable legally required tax withholding as
determined by the Company, unless such determination is unreasonable.
(f) It is intended that this Agreement be structured so as to
avoid any tax under Section 409A(a)(B). To the extent that the Optionee
has reason to believe that the Deferred Compensation Account will subject
the Optionee to a tax under Section 409A(a)(B), the Optionee may request
that this Agreement be restructured to avoid any such tax. To the extent
the Optionee requests any such restructuring, the Company agrees to enter
into good faith negotiations with the Optionee to accommodate such
restructuring to the extent possible so as to avoid any such tax.
(g) In no event shall this Agreement and any restructuring
thereof result in the Company incurring any cost or expense to a greater
extent than the Company would have incurred had the Option been granted
with an Option Price equal to the Target Exercise Price.]
3. EXERCISE OF OPTIONS.
(a) Subject to the terms and conditions set forth herein and
provided the Optionee's employment continues, the Options shall vest and
become exercisable in accordance with the following schedule:
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(i) one-fourth of the Options shall vest and become
exercisable on the one-year anniversary of the Effective Date;
(ii) an additional one-fourth of the Options shall vest and
become exercisable on the two-year anniversary of the Effective
Date;
(iii) an additional one-fourth of the Options shall vest and
become exercisable on the three-year anniversary of the Effective
Date; and
(iv) the remainder of the Options shall vest and become
exercisable on the four-year anniversary of the Effective Date (each
such anniversary date shall hereafter be referred to as a "Vesting
Date" and the period between the date hereof and the first Vesting
Date and the subsequent periods between Vesting Dates shall
hereafter be referred to as "Vesting Periods").
(b) The Options shall vest only as to full shares of Stock
rounded down to the nearest full share during the first three vesting
dates and all fractions shall be amalgamated and become exercisable on the
last vesting date. Except as otherwise stated in this Agreement, the
Options shall expire on the seven-year anniversary of the Effective Date.
4. TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment or service with the Company
and all Affiliates is terminated for Cause, all Options [and the full
value of the Deferred Compensation Account] (whether vested or not) shall
immediately expire.
(b) If the Optionee resigns from employment or service with
the Company and all Affiliates other than for "Good Reason," all unvested
Options [and the unvested portion of the Deferred Compensation Account]
shall expire and all vested Options shall remain exercisable for the
shorter of (i) three months following the date of termination or (ii) the
remainder of the Option Period.
(c) If the Optionee's employment or service with the Company
and all Affiliates is terminated by the Company or an Affiliate other than
for Cause or the Optionee resigns for "Good Reason" during the time that
the Optionee's employment with the Company is subject to an employment
agreement between the Optionee and the Company and such employment
agreement so provides, all unvested Options [and the unvested portion of
the Deferred Compensation Account] shall vest immediately. If the
Optionee's employment with the Company and all Affiliates is terminated by
the Company or an Affiliate other than for Cause or the Optionee resigns
for "Good Reason" during the time that the Optionee's employment with the
Company is no longer subject to an employment agreement between the
Optionee and the Company and such employment is on an "at-will" basis, the
unvested Options that are scheduled to vest on the next Vesting Date
immediately following such termination date [and the corresponding portion
of the Deferred Compensation Account] shall vest on a pro rata basis where
the number of Options subject to pro rata vesting is equal to the number
of Options subject to vesting on such Vesting Date multiplied by a
fraction, the numerator of which shall be equal to the number of days the
Optionee was employed during the applicable Vesting Period and the
denominator of which shall be equal to 365 [(the "Pro Rata Fraction"), and
the portion of
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the Deferred Compensation Account subject to pro rata vesting is that
portion subject to vesting on such Vesting Date multiplied by the Pro Rata
Fraction] and all other unvested Options [and the unvested portion of the
Deferred Compensation Account] remaining at the time of such termination
after application of such pro rata vesting shall expire. In the event that
the Optionee's employment with the Company and all Affiliates is
terminated by the Company or an Affiliate other than for Cause or the
Optionee resigns for "Good Reason" (regardless of whether the Optionee's
employment is then subject to an employment agreement), all vested Options
(including those that vest upon such termination) shall remain exercisable
for the shorter of (i) the Post Termination Exercise Period (as defined
below) or (ii) the remainder of the Option Period. The Post Termination
Exercise Period shall mean (x) the period that is two years following the
date of termination, if the termination occurs prior to the third
anniversary of the Grant Date, (y) the period that is one year following
the date of termination, if the termination occurs on or following the
third anniversary of the Grant Date but prior to the fifth anniversary of
the Grant Date, or (z) the period that is three months following the date
of termination, if the termination occurs on or following the fifth
anniversary of the Grant Date; provided, however, that if the Optionee's
employment is terminated on account of death or Disability, the Post
Termination Exercise Period shall not be shorter than one year following
the date of the Optionee's termination of employment.
(d) If the Optionee's employment with the Company and all
Affiliates terminates on account of the Optionee's death or Disability all
unvested Options [and the unvested portion of the Deferred Compensation
Account] shall immediately expire and all vested Options will remain
exercisable for the shorter of (i) the Post Termination Exercise Period or
(ii) the Option Period.
(e) For purposes of clarification, neither a New FSS Sale
Event nor a New SS/L Sale Event, shall in and of itself, be considered a
termination of the Optionee's employment with the Company and all
Affiliates without Cause or an event constituting "Good Reason."
5. METHOD OF EXERCISING OPTION.
(a) Options which have become exercisable may be exercised by
delivery of written notice of exercise to the Committee accompanied by
payment of the Option Price. Payment for shares of Stock acquired pursuant
to Options shall be made in full, upon exercise of the Options in
immediately available funds in United States dollars, by certified or bank
cashier's check or, in the discretion of the Committee, (i) by surrender
to the Company of Mature Shares held by the Participant; (ii) by
delivering to the Committee a copy of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the aggregate Option exercise price; (iii)
through a net exercise of the Options whereby the Participant instructs
the Company to withhold that number of shares of Stock having a fair
market value equal to the aggregate Option Price of the Options being
exercised and deliver to the Participant the remainder of the shares
subject to exercise or (iv) by any other means approved by the Committee.
For purposes of this paragraph, the term "Mature Shares" shall mean shares
of Stock for which the Optionee has good title, free and clear of all
liens and encumbrances, and which the Optionee either (i) has held for at
least six months or (ii) has purchased on the open market.
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(b) At the time of exercise, (i) the Company shall have the
right to withhold from the number of shares of Stock to be issued upon
exercise, the minimum number of shares necessary or (ii) at the discretion
of the Committee, the Optionee shall be obligated to pay to the Company
such amount as the Company deems necessary, in either event, to satisfy
its obligation to withhold Federal, state or local income or other taxes
incurred by reason of the exercise or the transfer of shares thereupon.
6. ISSUANCE OF SHARES. As promptly as practical after receipt by
the Company of a written notice of exercise and full payment to the
Company of the aggregate Option Price and any required income tax
withholding amount, the Company shall issue or transfer to the Optionee
the number of shares of Stock with respect to which Options have been so
exercised, or the net number of shares of Stock in the event of an
exercise pursuant to Section 5(a)(iii), or to the extent applicable in
Section 5(a)(iv), or after application of Section 5(b), or both, and shall
deliver to the Optionee (or the Optionee's estate or beneficiary, if
applicable) a certificate or certificates therefore, registered in the
name of the Optionee (or such estate or beneficiary).
7. NON-TRANSFERABILITY. The Options are not transferable by the
Optionee otherwise than by will or the laws of descent and distribution
and are exercisable during the Optionee's lifetime only by Optionee. No
assignment or transfer of the Options, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or
otherwise (except by will or the laws of descent and distribution), shall
vest in the assignee or transferee any interest or right herein
whatsoever, but immediately upon such assignment or transfer the Options
shall terminate and become of no further effect.
8. RIGHTS AS STOCKHOLDER. Neither the Optionee nor a permitted
transferee of the Options shall have any rights as a stockholder with
respect to any share of Stock covered by the Options until the Optionee or
any transferee shall have become the holder of record of such share, and
no adjustment shall be made for dividends or distributions or other rights
in respect of such share for which the record date is prior to the date
upon which the Optionee or any transferee shall become the holder of
record thereof.
9. COMPLIANCE WITH LAW. Notwithstanding any of the provisions
hereof, the Optionee hereby agrees that Optionee will not exercise the
Options, and that the Company will not be obligated to issue or transfer
any shares of Stock to the Optionee hereunder, if the exercise hereof or
the issuance or transfer of such shares shall constitute a violation by
the Optionee or the Company of any provisions of any law or regulation of
any governmental authority. Any determination in this connection by the
Committee shall be final, binding and conclusive. The Company shall in no
event be obliged to register any securities pursuant to the Securities Act
of 1933 (as now in effect or as hereafter amended) or to take any other
affirmative action in order to cause the exercise of the Options or the
issuance or transfer of shares of Stock pursuant thereto to comply with
any law or regulation of any governmental authority.
10. NOTICE. Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the
party for whom it is intended at such address as may from time to time be
designated by it in a notice mailed or delivered to the other party as
herein provided, provided that, unless and until some other address be so
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designated, all notices or communications by the Optionee to the Company
shall be mailed or delivered to the Company at its principal executive
office, and all notices or communications by the Company to the Optionee
may be given to the Optionee personally or may be mailed to Optionee at
the Optionee's last known address, as reflected in the Company's records.
11. BINDING EFFECT. Subject to Section 7 hereof, this Agreement
shall be binding upon the heirs, executors, administrators and successors
of the parties hereto.
12. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the state of Delaware, without
regard to the principles of conflicts of law thereof.
13. PLAN. The terms and provisions of the Plan are incorporated
herein by reference. In the event of a conflict or inconsistency between
discretionary terms and provisions of the Plan and the express provisions
of this Agreement, this Agreement shall govern and control. In all other
instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: ____________________________
Name:
Title:
Accepted:
____________________________
Optionee
____________________________
Address
____________________________
____________________________
Social Security Number
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