Exhibit 10.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
LORAL SPACE & COMMUNICATIONS INC.
AND
MHR FUND MANAGEMENT LLC
DATED: October 17, 2006
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS........................................... 1
ARTICLE 2 PURCHASE AND SALE OF SECURITIES; CLOSING.............. 10
Section 2.01. Authorization of Securities........................... 10
Section 2.02. Sale and Purchase of Series A Preferred Stock and
Series B Preferred Stock.............................. 11
Section 2.03. Closing; Delivery..................................... 11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES........................ 11
Section 3.01. Representations and Warranties of the Corporation..... 11
Section 3.02. Representations and Warranties of the Investors....... 18
ARTICLE 4 CONDITIONS TO OBLIGATIONS............................. 19
Section 4.01. Conditions to Each Party's Obligation................. 19
Section 4.02. Conditions to the Obligations of the Corporation...... 20
Section 4.03. Conditions to the Obligation of the Investors......... 21
ARTICLE 5 COVENANTS OF THE CORPORATION AND THE INVESTORS........ 22
Section 5.01. Redemption of SkyNet 14% Notes........................ 22
Section 5.02. Authorization of Class B Common Stock................. 23
Section 5.03. Bring-Down Certificate................................ 24
Section 5.04. Trading............................................... 24
Section 5.05. Conversion Upon Certain Transfers..................... 24
Section 5.06. Threshold Conversion.................................. 25
Section 5.07. Contributions to SkyNet............................... 26
Section 5.08. Permitted Indebtedness................................ 28
Section 5.09. Limitations on Disposition............................ 29
Section 5.10. Investor Transfer Restriction......................... 29
Section 5.11. MHR Board Representation.............................. 29
Section 5.12. MHR Voting Covenant................................... 29
Section 5.13. Further Actions....................................... 30
ARTICLE 6 MISCELLANEOUS......................................... 32
Section 6.01. Survival of Representations and Warranties............ 32
Section 6.02. Indemnification....................................... 32
Section 6.03. Termination........................................... 34
Section 6.04. Legends............................................... 35
Section 6.05. Fees and Expenses..................................... 37
Section 6.06. Equitable Remedies.................................... 37
Section 6.07. Notices............................................... 38
Section 6.08. Entire Agreement...................................... 39
Section 6.09. Remedies Cumulative................................... 39
Section 6.10. Governing Law......................................... 39
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Section 6.11. Counterparts.......................................... 40
Section 6.12. Waivers............................................... 40
Section 6.13. Successors and Assigns................................ 40
Section 6.14. Further Assurances.................................... 40
Section 6.15. Public Announcements.................................. 40
Section 6.16. Jurisdiction; Consent to Service of Process........... 41
Section 6.17. Amendment............................................. 41
Section 6.18. Schedule 13D Filings Conclusive....................... 41
Section 6.19. Headings.............................................. 41
Section 6.20. Severability.......................................... 41
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EXHIBITS
EXHIBIT A FORM OF SERIES A CERTIFICATE OF DESIGNATION
EXHIBIT B FORM OF SERIES B CERTIFICATE OF DESIGNATION
EXHIBIT C FORM OF AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
EXHIBIT D AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
EXHIBIT E CORPORATION SCHEDULE OF EXCEPTIONS
EXHIBIT F [INTENTIONALLY OMITTED]
EXHIBIT G FORM OF OPINION OF XXXXXXX XXXX & XXXXXXXXX LLP
EXHIBIT H FORM OF AMENDMENT TO AMENDED AND RESTATED BYLAWS
EXHIBIT I FORM OF BRING-DOWN CERTIFICATE
EXHIBIT J FORM OF BRING-DOWN OPINION
EXHIBIT K FORM OF THRESHOLD CONVERSION NOTICE
EXHIBIT L FORM OF NOTICE OF CONFIRMATION
EXHIBIT M FORM OF NOTICE OF DISAGREEMENT
EXHIBIT N FORM OF JOINDER AGREEMENT
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (including all Exhibits thereto, the
"Agreement"), dated as of October 17, 2006, by and between LORAL SPACE &
COMMUNICATIONS INC., a Delaware corporation (the "Corporation") and MHR Fund
Management LLC or any of its permitted assignees (each an "Investor" and
collectively, the "Investors").
WITNESSETH:
WHEREAS, the Corporation is engaged in the global satellite communications
business;
WHEREAS, the Board of Directors of the Corporation (the "Board") (excluding
directors who are Affiliates of the Investors) has unanimously declared,
following the unanimous recommendation of the Special Committee (as defined
below) to such effect (the "Recommendation"), that the terms of the transactions
contemplated hereby are fair, from a financial point of view, to the Corporation
and its stockholders (other than MHR), and, taken as a whole, are no less
favorable, from a financial point of view, than the Corporation could obtain
from an unrelated third party, and has approved this Agreement and the
transactions contemplated hereby;
WHEREAS, the Board has determined to issue and sell, and the Investors have
determined to purchase, for an aggregate purchase price of Three Hundred Million
and Ninety Eight Dollars ($300,000,098.00) in cash, (i) 136,526 shares of Series
A Cumulative 7.50% Convertible Preferred Stock, par value $0.01 per share, of
the Corporation (the "Series A Preferred Stock"), having the rights,
preferences, privileges and powers set forth in the certificate of designation
of the Series A Preferred Stock attached hereto as Exhibit A (the "Series A
Certificate of Designation"), and (ii) 858,486 shares of Series B Cumulative
7.50% Preferred Stock, par value $0.01 per share, of the Corporation (the
"Series B Preferred Stock"), having the rights, preferences, privileges and
powers set forth in the certificate of designation of the Series B Preferred
Stock attached hereto as Exhibit B (the "Series B Certificate of Designation");
and
WHEREAS, immediately following the consummation of the transactions
contemplated hereby, the shares of Common Stock issuable upon the conversion of
the Series A Preferred Stock, together with the shares of Common Stock held by
the Investors and their Affiliates, will represent 39.999% of the issued and
outstanding shares of Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context otherwise requires, the terms defined hereunder shall
have the meanings therein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms defined
herein. For purposes of this Agreement:
"Acquisition" shall have the meaning set forth in Section 5.01.
"Adjusted Tangible Asset Value" shall mean, as of any period, the excess,
if any, of (i) Consolidated Tangible Asset Value, over (ii) SkyNet Tangible
Asset Value.
"Affiliate" shall mean, with respect to any Person hereto, any corporation
or other business entity which directly or indirectly through stock ownership or
through any other arrangement either controls, is controlled by or is under
common control with, such Person. The term "control" shall mean the power to
direct the affairs of such Person by reason of ownership of voting stock or
other equity interests, by contract or otherwise.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Amended and Restated Certificate of Incorporation" shall mean the Amended
and Restated Certificate of Incorporation, substantially identical in form and
substance to that attached hereto as Exhibit C.
"Applicable Law" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals, and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
"Arrearages" shall mean, as of any particular date, the amount of any
accumulated and unpaid dividends on any shares of Preferred Stock.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
"Balance Sheet" shall mean the Consolidated Balance Sheets of the
Corporation included within the Corporation's periodic reports filed pursuant to
the Exchange Act.
"Beneficial Owner" shall have the meaning as defined in Rules 13d-3 and
13d-5 under the Exchange Act.
"Board" shall have the meaning set forth in the second recital hereof.
"Bring-Down Certificate" shall have the meaning set forth in Section 5.03.
"Business Day" shall mean any day, other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Bylaws" shall mean the Amended and Restated Bylaws of the Corporation,
dated as of November 21, 2005, as amended and restated from time to time.
"Capital Lease" shall mean, for any Person, a lease of any interest in any
kind of property (whether real, personal or mixed) or asset by such Person as
lessee that is, should be or should have been recorded as a "capital lease" on
the balance sheet of such Person in accordance with GAAP.
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"Certificate of Incorporation" means the Restated Certificate of
Incorporation of the Corporation.
"Class B Common Stock" shall mean, from the date of the Class B Common
Stock Authorization, Class B Common Stock, par value $0.01, of the Corporation,
which shall be (i) non-voting (except as required by Applicable Law) if the
Class B Common Stock Authorization is effected pursuant to Section 5.02(a)(i) or
voting (to the extent set forth in Section 5.02(a)(ii)) if the Class B Common
Stock Authorization is effected pursuant to Section 5.02(a)(ii), (ii) identical
to the Common Stock in all respects (except as set forth in clause (i) above),
including with respect to dividend distributions and distributions upon
liquidation, winding-up and dissolution, and (iii) convertible into Common Stock
only under the conditions set forth in the Amended and Restated Certificate of
Incorporation.
"Class B Common Stock Authorization" shall mean the filing of the Amended
and Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware authorizing the creation of the Class B Common Stock, pursuant
to Sections 5.02(a)(i) or (ii), as the case may be and the subsequent
reservation of all such shares for issuance upon the exchange of all shares of
Series B Preferred Stock issued upon the Closing Date and in payment of Series A
PIK Dividends and Series B PIK Dividends.
"Class B Proposal" shall have the meaning set forth in Section 5.02(a).
"Closing" shall have the meaning set forth in Section 2.03(a).
"Closing Date" shall have the meaning set forth in Section 2.03(a).
"Collateral" shall have the meaning set forth in Section 5.07(b).
"Collateral Documents" shall mean the Registration Rights Agreement, the
Series A Certificate of Designation and the Series B Certificate of Designation.
"Common Stock" shall mean the common stock, par value $.01 per share, of
the Corporation.
"Communications Act" shall mean the Communications Act of 1934 and the
Communications Satellite Act of 1962, as amended.
"Consolidated Deferred Income Tax Asset" shall mean, as of any period, the
amount identified as an asset on the Corporation's Balance Sheet relating to
deferred income tax assets of the Corporation or any of its Consolidated
Entities resulting from net operating loss carryforwards generated prior to
November 21, 2005, net of any applicable valuation allowances as determined in
accordance with GAAP consistently applied.
"Consolidated Entities" shall mean those entities that are consolidated
into the Consolidated Financial Statements of the Corporation in accordance with
GAAP.
"Consolidated Intangible Assets" shall mean, as of any period, to the
extent not included in Goodwill, the amount identified as intangible assets of
the Corporation and its Consolidated
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Entities on the Corporation's Balance Sheet, including but not limited to,
patents, trademarks, tradenames, copyrights and franchises, and all capitalized
transaction fees and expenses.
"Consolidated Preferred Stock" shall mean, as of any period, to the extent
not included in Minority Interest, the amount identified as preferred stock of
the Corporation or any of its Consolidated Entities on the Corporation's Balance
Sheet.
"Consolidated Tangible Asset Value" shall mean, as of any period, the
excess, if any, of (a) Total Shareholders' Equity, over (b) the sum of (i)
Consolidated Preferred Stock, (ii) Goodwill, (iii) Consolidated Intangible
Assets, and (iv) Consolidated Deferred Income Tax Asset.
"Contract" shall mean any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation.
"Conversion Issuance Date" shall have the meaning set forth in Section
5.03.
"Corporation" shall have the meaning set forth in the preamble hereof.
"Corporation Schedule of Exceptions" shall have the meaning set forth in
Section 3.01.
"Disqualified Transferee" shall have the meaning set forth in Section
5.05(b).
"Dollar" or "$" shall mean the basic unit of the lawful currency of the
United States of America.
"Exchange Act" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"Fairness Opinion" shall mean the opinion of North Point, to the effect
that, as of the date hereof, the terms of the transactions contemplated hereby
are fair, from a financial point of view, to the Corporation and its
stockholders (other than MHR), and, taken as a whole, are no less favorable,
from a financial point of view, than the Corporation could obtain from an
unrelated third party.
"Federal" shall mean of, relating to or promulgated by the United States of
America, as distinct from its constituent states.
"GAAP" shall mean generally accepted accounting principles, consistently
applied, as in effect in the United States.
"Goodwill" shall mean, as of any period, the amount identified as Goodwill
on the Balance Sheet.
"Governmental Approval" shall mean any consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Legal Requirement,
which consent, license, registration or permit is related primarily to or
required for the operation of the business of the Corporation.
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"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof or any entity (other than the NASD or any
securities exchange) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
government authority, agency, department, board, commission or instrumentality
of the United States, any state of the United States or any political
subdivision thereof. For the avoidance of doubt, neither the NASD nor any
securities exchange shall be deemed to be a Governmental Authority as defined
herein.
"Guarantee" by any Person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Indebtedness of any other Person (the "Primary Obligor") in
any manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person: (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness; (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness; or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Hedge Agreement" shall mean any and all transactions, agreements or
documents now existing or hereafter entered into by the Corporation or any of
its Consolidated Entities which provide for an interest rate, credit, commodity
or equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination of,
or option with respect to, these or similar transactions, for the purpose of
hedging exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indebtedness" of any Person shall mean, without duplication, (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments and
all reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, xxxxxx, derivatives or other financial
products; (iii) all obligations of such Person as a lessee under Capital Leases;
(iv) all obligations or liabilities of others secured by a Lien on any asset of
such Person, irrespective of whether such obligation or liability is assumed;
(v) all obligations of such Person to pay the deferred purchase price of assets;
(vi) all obligations of such Person owing under Hedge Agreements; and (vii) any
obligations of such Person Guaranteeing or intended to Guarantee (whether
directly or indirectly Guaranteed, endorsed, co-made, discounted, or sold with
recourse) any obligation of any other Person that constitutes Indebtedness of
such other Person under any of clauses (i) through (vi) above.
"Indebtedness Incurrence Period" shall have the meaning set forth in
Section 5.08(a).
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"Indemnifying Party" shall have the meaning set forth in Section 6.02(a).
"Investor(s)" shall have the meaning set forth in the preamble hereof.
"Investor Indemnified Liabilities" shall have the meaning set forth in
Section 6.02(a).
"Investor Indemnified Party" shall have the meaning set forth in Section
6.02(a).
"Joint Venture" shall mean any joint venture between the Corporation or any
of its Subsidiaries and any other Person.
"Knowledge" shall mean the actual knowledge, after due inquiry, of Xxxxxxx
X. Xxxxxxx, Xxxx Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxx Xxxx, Xxxxxxx Xxxxxxxxx and
Xxxxx Xxxxx.
"Legal Requirement" shall mean any Federal, state or municipal law,
ordinance, regulation, statute or treaty, which shall not include any rules or
regulations of the NASD or any securities exchange.
"Lien" shall mean any mortgage, pledge, lien, security interest, claim,
voting agreement, conditional sale agreement, title retention agreement,
restriction, option or encumbrance of any kind, character or description
whatsoever.
"Majority Ownership Date" means the earlier of the date that (i) MHR
becomes the Beneficial Owner, directly or indirectly, of more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
(excluding any shares of Series A Preferred Stock issued on the Closing Date or
Common Stock issued upon the conversion thereof), and (ii) a Person unrelated to
MHR becomes the Beneficial Owner, directly or indirectly, of shares of capital
stock of the Corporation (other than any shares acquired in violation of the
Transfer Restriction) constituting, upon exercise or conversion into Common
Stock of all in-the-money convertible securities, options and warrants that such
Person has the immediate right to so exercise or exchange, more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
that would be outstanding following the exercise or conversion of all
in-the-money convertible securities, options and warrants of the Corporation
then outstanding; provided that the Majority Ownership Date shall not be deemed
to have occurred pursuant to clause (ii) above if at such time MHR would, upon
conversion of any shares of Series A Preferred Stock or Class B Common Stock
then held by it into Common Stock and upon conversion of any shares of Series B
Preferred Stock then held by it into Series A Preferred Stock or Common Stock,
become the Beneficial Owner of more than 50% of the Common Stock of the
Corporation (including any successor to the Corporation), that would be
outstanding following the exercise or conversion of all in-the-money convertible
securities, options and warrants of the Corporation then outstanding.
"Material Adverse Effect" shall mean such facts, circumstances,
developments, events, changes or effects that are, or would reasonably be
expected to become, individually or in the aggregate, materially adverse to the
business, financial condition or continuing operations of the Corporation and
its Subsidiaries, taken as a whole, but shall not include facts, circumstances,
developments, events, changes or effects (a) generally affecting the satellite
services or satellite manufacturing industries (except to the extent such facts,
circumstances, developments, events,
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changes or effects have had or would reasonably be expected to have a materially
disproportionate effect on the Corporation and its Subsidiaries, taken as a
whole as compared to other Persons in the industry in which the Corporation and
its Subsidiaries operate), or (b) resulting from (i) the announcement or the
existence of, or compliance with, this Agreement or any of the transactions
contemplated by this Agreement, or (ii) changes in Applicable Law, GAAP (as
hereinafter defined) or accounting standards.
"MHR" shall mean MHR Fund Management LLC and any successor thereto and its
Affiliates.
"MHR Designee" shall have the meaning set forth in Section 5.11.
"Minority Interest" shall mean the amount identified as Minority Interest
on the Balance Sheet.
"NASD" means the National Association of Securities Dealers.
"NASD Request" shall have the meaning set forth in Section 4.01(h).
"Non-Voting Securities Proposal" shall have the meaning set forth in
Section 5.02(a).
"North Point" shall mean North Point Advisors, LLC.
"Notes" shall have the meaning set forth in Section 5.01.
"Notice of Confirmation" shall have the meaning set forth in Section
5.06(b).
"Notice of Disagreement" shall have the meaning set forth in Section
5.06(b).
"Person" shall mean any individual, corporation, company, association,
partnership, limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
"PIK Dividend Issuance Date" shall have the meaning set forth in Section
5.03.
"PIK Dividends" shall have the meaning set forth in Section 3.01(c)(iii).
"Preferred Stock" shall mean the Series A Preferred Stock and the Series B
Preferred Stock.
"Proceeding" shall the meaning set forth in Section 6.02(b).
"Proxy Statement" shall have the meaning set forth in 5.02(a).
"Purchased Shares" shall have the meaning set forth in Section 2.02.
"Qualified Transferee" shall mean a Person other than a Disqualified
Transferee.
"Recommendation" shall have the meaning set forth in the second recital
hereof.
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"Registration Rights Agreement" shall mean the Amended and Restated
Registration Rights Agreement, substantially identical in form and substance to
that attached hereto as Exhibit D.
"Restricted Transferee" shall mean a Person other than MHR who either (i)
solely as a result of a transfer by MHR of shares of Series A Preferred Stock
issued on the Closing Date (or Common Stock issued upon the conversion thereof)
would become the Beneficial Owner of more than 35.9% of the aggregate voting
power of all outstanding securities issued by the Corporation (assuming the
conversion of all the then-outstanding Series A Preferred Stock) immediately
after such transfer, or (ii) is the Beneficial Owner of more than 35.9% but less
than 50% of the aggregate voting power of all outstanding securities issued by
the Corporation (assuming the conversion of all the then-outstanding Series A
Preferred Stock) immediately prior to any transfer by MHR of shares of Series A
Preferred Stock issued on the Closing Date (or Common Stock issued upon the
conversion thereof).
"SEC" shall mean the United States Securities and Exchange Commission or
any successors thereto.
"SEC Reports" shall mean all reports filed by the Corporation with the SEC
pursuant to the provisions of the Exchange Act or the Securities Act.
"Secured Loan Agreement" shall have the meaning set forth in Section
5.07(b).
"Securities Act" shall mean the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, from time to time.
"Security Interest" shall have the meaning set forth in Section 5.07(b).
"Series A Certificate of Designation" shall have the meaning set forth in
the third recital hereof.
"Series A PIK Dividends" shall have the meaning set forth in Section
3.01(c)(ii).
"Series A Preferred Stock" shall have the meaning set forth in the third
recital hereof.
"Series B Certificate of Designation" shall have the meaning set forth in
the third recital hereof.
"Series B PIK Dividends" shall have the meaning set forth in Section
3.01(c)(iii).
"Series B Preferred Stock" shall have the meaning set forth in the third
recital hereof.
"Share Purchase Price" shall have the meaning set forth in Section 2.02.
"SkyNet" shall mean Loral Skynet Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Corporation.
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"SkyNet Deferred Income Tax Asset" shall mean, as of any period, any
portion of the Consolidated Deferred Income Tax Asset attributable to SkyNet and
its Consolidated Entities as of such period.
"SkyNet Goodwill" shall mean, as of any period, the amount of Goodwill
attributable to SkyNet and its Consolidated Entities as of such period.
"SkyNet Intangible Assets" shall mean, as of any period, that portion of
Consolidated Intangible Assets attributable to SkyNet and its Consolidated
Entities.
"SkyNet Preferred Stock" shall mean, as of any period, (i) any portion of
the Consolidated Preferred Stock attributable to SkyNet and its Consolidated
Entities, and (ii) without duplication, the amount of Minority Interest
reflected on the Balance Sheet that is attributable to preferred stock issued by
SkyNet or its Consolidated Entities, in each case, as of such period.
"SkyNet Shareholders' Equity" shall mean, as of any period, that portion of
Total Shareholders' Equity attributable to SkyNet and its Consolidated Entities.
"SkyNet Tangible Asset Value" shall mean, as of any period, the excess, if
any, of (a) SkyNet Shareholders' Equity, over (b) the sum of (i) SkyNet
Preferred Stock, (ii) SkyNet Goodwill, (iii) SkyNet Intangible Assets, and (iv)
SkyNet Deferred Income Tax Asset.
"Special Committee" shall mean the special committee of independent
directors of the Corporation, formed for the purpose of considering, negotiating
and evaluating this Agreement and the Collateral Documents and the transactions
contemplated hereby and thereby.
"SS/L" shall mean Space Systems/Loral, Inc., a Delaware corporation and a
wholly-owned Subsidiary of the Corporation.
"Subsidiary" shall mean as to any Person, any other Person of which more
than 50% of the shares of the voting stock or other voting interests are owned
or controlled, or the ability to select or elect more than 50% of the directors
or similar managers is held, directly or indirectly, by such first Person or one
or more of its Subsidiaries or by such first Person and one or more of its
Subsidiaries.
"Supplemental Listing Application" shall have the meaning set forth in
4.01(g).
"TAV Threshold" shall mean (i) the sum of (A) Adjusted Tangible Asset Value
as set forth on Schedule 1.01 hereto, (B) $400 million, and (C) any increase in
Consolidated Preferred Stock from the prior Indebtedness Incurrence Period to
the extent attributable to the issuance of any PIK Dividends, over (ii) any
decrease in Consolidated Preferred Stock from the prior Indebtedness Incurrence
Period to the extent attributable to the redemption or conversion of any shares
of Preferred Stock.
"Termination Date" shall have the meaning set forth in 6.03(b).
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"Threshold" shall mean 39.999% of the aggregate voting power of all
outstanding securities issued by the Corporation at any time and from time to
time (assuming the conversion of all of the then outstanding shares of Series A
Preferred Stock).
"Threshold Conversion Issuance Date" shall have the meaning set forth in
Section 5.06(b).
"Threshold Conversion Notice" shall have the meaning set forth in Section
5.06(b).
"Total Shareholders' Equity" shall mean, as of any period, the amount
identified as Total Shareholders' Equity on the Balance Sheet.
"Transfer" shall mean any sale, transfer, advancement of funds, extension
of credit, financial accommodation, credit support, pledge, hypothecation,
encumbrance, assignment or constructive sale or other disposition, or the offer
to make such a sale, transfer, constructive sale or other disposition, and each
agreement, arrangement or understanding, whether or not in writing, to effect
any of the foregoing.
"Transfer Restriction" shall have the meaning set forth in Section 5.10.
"Transferee" shall have the meaning set forth in Section 5.07.
"Transferor" shall have the meaning set forth in Section 5.07.
"Willkie" shall have the meaning set forth in Section 2.03(a).
When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The use of a
gender herein shall be deemed to include the neuter, masculine and feminine
genders whenever necessary or appropriate. Whenever the word "herein" or
"hereof" is used in this Agreement, it shall be deemed to refer to this
Agreement and not to a particular Section of this Agreement unless expressly
stated otherwise.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES; CLOSING
Section 2.01. Authorization of Securities.
(a) The Corporation has duly authorized the issuance and sale pursuant to
the terms and conditions of this Agreement of up to 2,000,000 shares of its
Series A Preferred Stock. The Series A Preferred Stock has all of the rights,
preferences, privileges, powers and restrictions set forth in the Series A
Certificate of Designation, a copy of which, in the form being filed by the
Corporation with the Secretary of State of the State of Delaware
contemporaneously with the execution of this Agreement as provided herein, is
attached hereto as Exhibit A.
(b) The Corporation has duly authorized the issuance and sale pursuant to
the terms and conditions of this Agreement of up to 2,000,000 shares of its
Series B Preferred Stock. The
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Series B Preferred Stock has all of the rights, preferences, privileges, powers
and restrictions set forth in the Series B Certificate of Designation, a copy of
which, in the form being filed by the Corporation with the Secretary of State of
the State of Delaware contemporaneously with the execution of this Agreement as
provided herein, is attached hereto as Exhibit B.
Section 2.02. Sale and Purchase of Series A Preferred Stock and Series B
Preferred Stock.
Subject to the terms and conditions set forth in this Agreement, the
Corporation agrees to sell at the Closing to each of the Investors, and each of
the Investors severally and not jointly agrees to purchase at such Closing from
the Corporation, for $301.504 per share (the "Share Purchase Price"), the number
of shares of Series A Preferred Stock and Series B Preferred Stock set forth in
a written notice by any of the Investors to the Corporation, which notice may be
given pursuant to the Joinder Agreement (as defined below). The total number of
shares of Series A Preferred Stock and Series B Preferred Stock to be purchased
by the Investors is referred to herein as the "Purchased Shares".
Section 2.03. Closing; Delivery.
(a) The Closing. The closing of the purchase and sale of the Series A
Preferred Stock and Series B Preferred Stock pursuant to this Agreement (the
"Closing") shall take place on the second Business Day following the
satisfaction or waiver of all conditions to the Closing set forth in Article IV
hereof (the "Closing Date") at 10:00 a.m. at the offices of Xxxxxxx Xxxx &
Xxxxxxxxx LLP ("Xxxxxxx"), New York, New York, or at such other place and at
such time and date as the Investors and the Corporation shall mutually agree.
(b) Delivery. At the Closing, the Corporation shall deliver to each
Investor duly executed and issued stock certificates evidencing the Series A
Preferred Stock and Series B Preferred Stock being purchased by such Investor,
against delivery to the Corporation of the purchase price therefor, by a wire
transfer of immediately available funds to the account specified therefor by the
Corporation, not less than three (3) Business Days prior to the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the Investors, as of the
date hereof as follows (except (i) to the extent such representations and
warranties expressly relate only to another date, in which case such
representations and warranties shall be correct and accurate in all material
respects on and as of such other date, and (ii) as set forth in the Corporation
Schedule of Exceptions attached as Exhibit E hereto (the "Corporation Schedule
of Exceptions") which specifically identify the subsection hereof and which
exceptions shall be deemed to be representations and warranties as if made
hereunder; provided that notwithstanding anything in this Agreement to the
contrary, the inclusion of any item on the Corporation Schedule of Exceptions
will not be deemed an admission that such item is material for any purpose):
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(a) Organization, Good Standing and Qualifications. Each of the Corporation
and its Subsidiaries is a corporation, partnership or limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own or lease and operate its properties and to conduct its business as it is
currently being conducted and is proposed to be conducted. Each of the
Corporation and its Subsidiaries is duly licensed, authorized or qualified as a
foreign corporation, partnership or limited liability company for the
transaction of business and is in good standing under of laws of each other
jurisdiction in which its ownership, lease or operation of property or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect. The Corporation is not in default under or in violation
of any provision of its Certificate of Incorporation or its Bylaws.
(b) Authorization. The Corporation has all requisite power and authority to
execute and deliver this Agreement and the Registration Rights Agreement and to
perform all its obligations and consummate all of the transactions contemplated
hereunder and thereunder. Except for the Class B Common Stock Authorization, the
filing of the Series A Certificate of Designation and the Series B Certificate
of Designation on the Closing Date and any approval of the Corporation's
stockholders if required by the NASD, all corporate action on the part of the
Corporation necessary for the authorization, execution and delivery of this
Agreement, the Registration Rights Agreement and each other document or
agreement to be executed by the Corporation in connection with the execution,
delivery and performance of this Agreement and the Registration Rights
Agreement, the performance of the obligations of the Corporation and the
consummation of all the transactions contemplated hereby and thereby, prior to,
at or after the Closing, and the issuance and delivery of the shares of Series A
Preferred Stock, Series B Preferred Stock, Common Stock and Class B Common Stock
has been taken, and no further action is or will be required to be taken with
respect to the issuance and delivery of such Series A Preferred Stock, Series B
Preferred Stock, Common Stock and Class B Common Stock on any PIK Dividend
Issuance Date or any Conversion Issuance Date, and this Agreement, the
Registration Rights Agreement and each other document or agreement to be
executed by the Corporation in connection with the execution, delivery and
performance of this Agreement and the Registration Rights Agreement have been
duly executed and delivered by the Corporation and constitute a valid and
legally binding obligation of the Corporation, enforceable in accordance with
its terms, except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.
(c) Valid Issuance.
(i) Subject to the Class B Common Stock Authorization, the Purchased
Shares have been duly and validly authorized, reserved for issuance and,
when issued, sold and delivered by the Corporation in accordance with the
terms of this Agreement for the consideration provided for herein, will
have been duly and validly issued, fully paid and nonassessable and will be
free of any Lien (other than those that may be created by the Investor) and
free of any restrictions on transfer other than restrictions on transfer
contained in this Agreement and under applicable Federal and state
securities laws.
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(ii) The shares of Series A Preferred Stock issuable on any Threshold
Conversion Issuance Date and in payment of dividends on the Series A
Preferred Stock and Series B Preferred Stock pursuant to the terms of the
Series A Certificate of Designation and the Series B Certificate of
Designation (the "Series A PIK Dividends") have been duly and validly
authorized by the Corporation and reserved for issuance and, when issued on
any Threshold Conversion Issuance Date or PIK Dividend Issuance Date in
accordance with the terms of the Series A Certificate of Designation and
Series B Certificate of Designation will have been duly and validly issued,
fully paid and nonassessable and will be free of any Liens and free of any
restrictions on transfer other than restrictions on transfer contained in
this Agreement and under applicable Federal and state securities laws.
(iii) Subject to the Class B Common Stock Authorization, the shares of
Series B Preferred Stock issuable in payment of dividends on the Series A
Preferred Stock and Series B Preferred Stock pursuant to the terms of the
Series A Certificate of Designation and Series B Certificate of Designation
(the "Series B PIK Dividends" and, together with the Series A PIK
Dividends, the "PIK Dividends") have been duly and validly authorized by
the Corporation and reserved for issuance and, when issued on any PIK
Dividend Issuance Date in accordance with the terms of the Series A
Certificate of Designation or the Series B Certificate of Designation, will
have been duly and validly issued, fully paid and nonassessable and will be
free of any Liens and free of any restrictions on transfer other than
restrictions on transfer contained in this Agreement and under applicable
Federal and state securities laws.
(iv) Subject to the Class B Common Stock Authorization and any
approval of the Corporation's stockholders if required by the NASD, the
shares of Common Stock issuable upon the conversion of the Series A
Preferred Stock, Series B Preferred Stock and Class B Common Stock,
respectively, have been duly and validly authorized by the Corporation and
reserved for issuance and, when issued on any Threshold Conversion Issuance
Date or Conversion Issuance Date in accordance with the terms of the Series
A Certificate of Designation, Series B Certificate of Designation, Amended
and Restated Certificate of Incorporation or Section 5.06 hereof, as the
case may be, will have been duly and validly issued, fully paid and
nonassessable and will be free of any Liens and free of any restrictions on
transfer other than restrictions on transfer contained in this Agreement
and under applicable Federal and state securities laws.
(v) Upon the Class B Common Stock Authorization, the shares of Class B
Common Stock issuable upon the conversion of the Series B Preferred Stock
will have been duly and validly authorized by the Corporation and reserved
for issuance and, when issued on any Conversion Issuance Date in accordance
with the terms of the Series B Certificate of Designation, will have been
duly and validly issued, fully paid and nonassessable and will be free of
any Liens and free of any restrictions on transfer other than restrictions
on transfer contained in this Agreement and under applicable Federal and
state securities laws.
(d) Capitalization. Except as set forth on Section 3.01(d) of the
Corporation Schedule of Exceptions, the entire authorized capital stock of the
Corporation consists of 40,000,000
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shares of Common Stock, of which 20,000,000 shares are issued and outstanding,
and 10,000,000 shares of preferred stock, par value $0.01 per share, of which no
shares, except for the shares issued pursuant to this Agreement, are issued and
outstanding as of the date of this Agreement. Except as set forth in the
Corporation's SEC Reports, and except as contemplated hereby, there are no
outstanding or authorized warrants, options, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts, commitments or
obligations that could require the Corporation or any of its Subsidiaries to
issue, grant, deliver or sell or otherwise cause to be issued, granted,
delivered or sold or become outstanding any capital stock of the Corporation or
any of its Subsidiaries. Except as set forth in the Corporation's SEC Reports,
and except as contemplated hereby, to the Corporation's Knowledge, there are no
outstanding or authorized warrants, options, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts, commitments or
obligations that could require any entity of which more than 10% of the shares
of the voting stock or other voting interests are owned or controlled, or the
ability to select or elect more than 10% of the directors or similar managers is
held, directly or indirectly, by the Corporation or any of its Subsidiaries, to
issue, grant, deliver or sell or otherwise cause to be issued, granted,
delivered or sold or become outstanding any capital stock of the Corporation or
any of its Subsidiaries. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Corporation or any of its Subsidiaries. Except as provided in this
Agreement, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the
Corporation to which the Corporation is a party and to the Corporation's
Knowledge, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the
Corporation to which the Corporation is not a party.
(e) Series A Preferred Stock Issuance. Immediately following the Closing,
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock, together with the shares of Common Stock held by MHR as disclosed in
MHR's most recent Schedule 13D filing under the Exchange Act, will represent
39.999% of the issued and outstanding shares of Common Stock, subject to the
exercise of the options set forth on Section 3.01(d) of the Corporation Schedule
of Exceptions.
(f) Noncontravention.
(i) Assuming the Class B Common Stock Authorization and the accuracy
of each Investor's representations in Section 3.02(b), neither the
execution and delivery of this Agreement or the Registration Rights
Agreement, nor the consummation of the transactions contemplated hereby and
thereby (which shall include the issuance of (A) PIK Dividends on any PIK
Dividend Issuance Date, (B) the Common Stock, Class B Common Stock and
Series A Preferred Stock upon conversion of the Series A Preferred Stock,
the Series B Preferred Stock and the Class B Common Stock on any Conversion
Issuance Date, and (C) Series A Preferred Stock and Common Stock upon the
conversion of Series B Preferred Stock and Class B Common Stock on any
Threshold Conversion Issuance Date), will (A) violate any Applicable Law to
which the Corporation or any of its Subsidiaries is subject or any
provision of the Certificate of Incorporation or the Bylaws or the
certificate of incorporation or bylaws or similar constituent documents of
the Corporation's Subsidiaries or (B) conflict with, result in a breach or
violation of,
14
constitute a default (with or without notice or the passage of time) under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or give rise to a right to put or to compel a
tender offer for outstanding securities of the Corporation or any of its
Subsidiaries or require any notice, consent, waiver or approval under, any
agreement, contract, lease, license, loan, debt instrument, note, bond,
indenture, mortgage, deed of trust, joint venture agreement, approval of a
Governmental Authority (other than any notification and waiting period that
may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976) or other arrangement to which the Corporation or any of its
Subsidiaries is a party or by which the Corporation or any of its
Subsidiaries is bound or to which any of the Corporation's or its
Subsidiaries' assets is subject (or result in the imposition of any
mortgage, pledge, Lien, encumbrance, charge or other security interest upon
any of such assets or properties), except in either case, where such
violation, conflict or default would not reasonably be expected to have a
Material Adverse Effect.
(ii) Assuming the Class B Common Stock Authorization and the accuracy
of each Investor's representations in Section 3.02(b), the execution and
delivery of this Agreement and the Registration Rights Agreement, and the
consummation of the transactions contemplated hereby and thereby (which
shall include the issuance of (A) PIK Dividends on any PIK Dividend
Issuance Date, (B) the Common Stock, Class B Common Stock and Series A
Preferred Stock upon conversion of the Series A Preferred Stock, Series B
Preferred Stock and Class B Common Stock on any Conversion Issuance Date,
and (C) Series A Preferred Stock and Common Stock upon the conversion of
Series B Preferred Stock and Class B Common Stock on any Threshold
Conversion Issuance Date), will be in compliance with all Applicable Law
(other than any notification and waiting period that may be required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976).
(iii) Except for filings which may be required under state securities
laws and the filings with the NASD as provided in Sections 4.01(g) and 5.13
below, for which filings the Corporation shall be responsible, and assuming
the Class B Common Stock Authorization and the accuracy of each Investor's
representation in Section 3.02(b), neither the Corporation nor any of its
Subsidiaries is required to give any notice to, make any filing or
registration with, or obtain any authorization, consent or approval of any
Governmental Authority in connection with the execution, delivery and
performance by the Corporation of this Agreement, the Registration Rights
Agreement and the transactions contemplated hereby and thereby, other than
any notification and waiting period that may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
(iv) Except for the approval of the Class B Proposal, (A) no consent
or approval of the Corporation's stockholders is required by Applicable
Law, the Certificate of Incorporation or the Bylaws for the execution,
delivery and performance by the Corporation of this Agreement and the
Registration Rights Agreement, and the consummation of the transactions
contemplated hereby and thereby; and (B) after due inquiry, the Corporation
has no reason to believe, as of the date hereof, that any such stockholder
approval is required by the rules and regulations of the NASD for the
15
execution, delivery and performance by the Corporation of this Agreement
and the Registration Rights Agreement, and the consummation of the
transactions contemplated hereby and thereby (which shall include the
issuance of (A) PIK Dividends on any PIK Dividend Issuance Date, (B) the
Common Stock, Class B Common Stock and Series A Preferred Stock upon
conversion of the Series A Preferred Stock, the Series B Preferred Stock
and the Class B Common Stock on any Conversion Issuance Date, and (C)
Series A Preferred Stock and Common Stock upon the conversion of Series B
Preferred Stock and Class B Common Stock on any Threshold Conversion
Issuance Date).
(v) The execution, delivery and performance of this Agreement by the
Corporation and the consummation of transactions contemplated hereby will
not constitute a "Change of Control," or other term which has a similar
meaning, as such or similar term is defined in any contract, agreement,
indenture, mortgage, note, lease or other instrument to which the
Corporation or any of its Subsidiaries is a party or by which the
Corporation or any such Subsidiary is bound or to which the properties of
the Corporation or any such Subsidiary is subject, except as would not
reasonably be expected to have a Material Adverse Effect.
(g) SEC Reports; Financial Statements.
(i) The Corporation has timely filed with the SEC all SEC Reports
required to be filed by the Corporation under the Exchange Act since
November 21, 2005. All such SEC Reports since November 21, 2005 (A) comply
in all material respects, with the applicable requirements of the Exchange
Act and the Securities Act, and (B) contain all statements required to be
stated therein in accordance with the Exchange Act and do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(ii) As of their respective dates, the financial statements of the
Corporation included in the SEC Reports since November 21, 2005 (A)
complied in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
(B) have been prepared in accordance with GAAP during the periods involved
(except (i) as may be otherwise indicated in such financial statements or
the notes thereto or (ii) in the case of unaudited interim financial
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and (C) fairly present in all material respects the
financial position of the Corporation and its Subsidiaries as of the dates
thereof and the results of its operations and cash flows of the Corporation
and its Subsidiaries (on a consolidated basis) for the periods then ended
(subject, in the case of unaudited interim financial statements, to normal
year-end audit adjustments).
(iii) Except as disclosed in the SEC Reports since November 21, 2005,
there are no liabilities or obligations of any nature (whether accrued,
absolute, fixed, contingent, liquidated, unliquidated or otherwise and
whether due or to become due) required by GAAP to be set forth on the
financial statements of the Corporation included in any SEC Reports since
November 21, 2005. Since August 7, 2006, the Corporation has not incurred
any liabilities or obligations of any nature (whether accrued, absolute,
16
fixed, contingent, liquidated, unliquidated or otherwise and whether due or
to become due) other than in the ordinary course of business or suffered
any loss or loss contingency that could be reasonably likely to materially
affect the Investors' investment decision to consummate the transactions
contemplated hereby, except such as would not be reasonably expected to
have a Material Adverse Effect.
(h) Absence of Certain Changes. Except as disclosed in the SEC Reports or
otherwise disclosed in public announcements or press releases since November 21,
2005, the Corporation and its Subsidiaries have conducted their consolidated
business in the ordinary and usual course and there has been no change to the
business, properties, assets, operations, results of operations or condition
(financial or otherwise) of the Corporation or its Subsidiaries (taken as a
whole), except for such changes which would not be reasonably expected to have a
Material Adverse Effect.
(i) No General Solicitation. Neither the Corporation, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D promulgated under the Securities Act) in connection with the offer
or sale of the Purchased Shares.
(j) Disclosure. The documents set forth on Section 3.01(j) of the
Corporation Schedule of Exceptions, which have been provided to the Investors by
the Corporation, are based on assumptions and projections that the Corporation
has determined in good faith to be reasonable.
(k) Information Provided for Fairness Opinion. The information (other than
any projections) provided by the Corporation to North Point, in connection with
the delivery of the Fairness Opinion, taken as a whole, was true, complete and
accurate in all material respects as of the dates such information was furnished
to North Point and is true, complete and accurate in all material respects,
taken as a whole, as of the date hereof. As to any projections provided by the
Corporation to North Point, such projections were based on assumptions that the
Corporation has determined in good faith to be reasonable.
(l) No Litigation. Except as set forth in Section 3.01(l) of the
Corporation Schedule of Exceptions, there is no action, suit, proceeding or
investigation pending or, to the Corporation's Knowledge, threatened, against
the Corporation or any Subsidiary or, to the Corporation's Knowledge, against
any director, officer or employee of the Corporation or any Subsidiary. Except
as disclosed in SEC Reports, neither the Corporation nor any Subsidiary is a
party to, or subject to the provisions of, any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality. Except as
disclosed in SEC Reports, there is no action, suit, proceeding or investigation
by the Corporation or any Subsidiary currently pending or that the Corporation
or any Subsidiary intends to initiate, in each case that would have,
individually or in the aggregate, a Material Adverse Effect.
(m) No Brokers. Except for North Point, Xxxxxx Xxxxxxx & Co. Incorporated
and Deutsche Bank Securities, Inc., no agent, broker, investment banker, Person
or firm is or shall be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly in connection with the
transactions contemplated by this Agreement or the Collateral
17
Documents based in any way on any arrangements, agreements or understandings
made by or on behalf of the Corporation or an Affiliate thereof, and the
Corporation hereby agrees to indemnify the Investors and agrees to hold harmless
the Investors against and in respect of any claims for brokerage and other
commissions relating to such transactions based in any way on any arrangements,
agreements or understandings made by or on behalf of the Corporation or an
Affiliate of the Corporation.
(n) Related Transactions. Except (i) as disclosed in the SEC Reports, (ii)
for the transactions contemplated hereby and (iii) as set forth in Section
3.01(n) of the Corporation Schedule of Exceptions, there is no transaction,
agreement or arrangement between the Corporation or any of its Subsidiaries on
the one hand, and any Person on the other hand, that would constitute a "Related
Transaction" within the meaning of Item 404 of Regulation S-K under the Exchange
Act.
(o) Receipt of Fairness Opinion. The Special Committee has received the
Fairness Opinion and true and correct copies thereof have been delivered to the
Board and the Investors.
Section 3.02. Representations and Warranties of the Investors
Each Investor hereby, severally and not jointly, represents and warrants to
the Corporation as of the date hereof as follows:
(a) Authorization. Each Investor has the requisite power and authority to
execute and deliver this Agreement and the Registration Rights Agreement, and to
perform its obligations and consummate all of the transactions contemplated
hereunder and thereunder. All corporate action on the part of each Investor
necessary for the authorization, execution and delivery of this Agreement and
the Registration Rights Agreement, and each other document or agreement to be
executed by each Investor in connection with the execution, delivery and
performance of this Agreement and the Registration Rights Agreement, the
performance of the obligations of each Investor at the Closing and the
consummation of all the transactions contemplated hereby and thereby, prior to,
at or after the Closing, and the issuance and delivery of the shares of Series A
Preferred Stock and Series B Preferred Stock has been taken, and this Agreement,
the Registration Rights Agreement and each other document or agreement to be
executed by each Investor in connection with the execution, delivery and
performance of this Agreement and the Registration Rights Agreement has been
duly executed and delivered by such Investor and constitutes a valid and legally
binding obligation of such Investor, enforceable in accordance with its terms,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies. No Investor is required to
give any notice to, make any filing or registration with, or obtain any
authorization, consent or approval of any Governmental Authority in connection
with the execution, delivery and performance by such Investor of this Agreement,
the Registration Rights Agreement and the transactions contemplated hereby and
thereby, other than any notification and waiting period that may be required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
18
(b) Securities Representation. Each Investor acknowledges that: (i) it is
an accredited investor (as defined in Rule 501 under the Securities Act); (ii)
it is acquiring the Purchased Shares in the ordinary course of business and for
its own account for investment only and with no present intention of
distributing any such Purchased Shares; (iii) it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of investing in the Corporation as contemplated hereby or,
alternatively, that it has engaged the services of a representative who has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of the proposed investment and who has reviewed
the proposed investment on its behalf; (iv) the Purchased Shares being delivered
by the Corporation to the Investors have not been registered under the
Securities Act or under the securities laws of any state in reliance upon
Federal and state exemptions for offshore transactions or transactions not
involving a public offering and are not being acquired with a view to the
distribution thereof except pursuant to a registration statement in compliance
with Federal and state securities laws or an exemption therefrom; (v) the
Purchased Shares must be held by the Investor indefinitely unless subsequently
so registered or if an exemption from such registration is available; and (vi)
it has received information concerning the Corporation and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and risks inherent in holding the Purchased Shares.
(c) No Brokers. Except for the advisory fees of Deutsche Bank Securities,
Inc. payable pursuant to Section 6.05, no agent, broker, investment banker,
Person or firm is or shall be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with the
transactions contemplated by this Agreement or the Collateral Documents based in
any way on any arrangements, agreements or understandings made by or on behalf
of the Investors or an Affiliate thereof, and the Investors hereby agree to
indemnify the Corporation and agree to hold harmless the Corporation against and
in respect of any claims for brokerage and other commissions relating to such
transactions based in any way on any arrangements, agreements or understandings
made by or on behalf of the Investors or an Affiliate of the Investors.
ARTICLE 4
CONDITIONS TO OBLIGATIONS
Section 4.01. Conditions to Each Party's Obligation.
The respective obligations of the Corporation and the Investors to perform,
fulfill or carry out its agreements, undertakings and obligations herein made or
expressed to be performed, fulfilled or carried out on the Closing Date is and
shall be subject to fulfillment of or compliance with, on or prior to the
Closing Date, the following conditions precedent, any of which may be waived, in
whole or in part, by the party being benefited thereby to the extent permitted
by Applicable Law:
(a) Contemporaneous Transactions. Prior to or contemporaneously with the
Closing, the Corporation shall have sold to each Investor, and each Investor
shall have purchased, the Series A Preferred Stock and Series B Preferred Stock
to be purchased by such Investor under this Agreement.
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(b) Registration Rights Agreement. The Registration Rights Agreement shall
have been executed by the parties thereto.
(c) Fairness Opinion. North Point shall have delivered the Fairness Opinion
to the Special Committee.
(d) Recommendation of Special Committee and Approval of the Board. The
Special Committee shall have delivered its Recommendation to the Board, together
with a true and correct copy of the Fairness Opinion, and the Board shall have
approved this Agreement, the Registration Rights Agreement, the Collateral
Documents and the transactions contemplated hereby and thereby.
(e) No Injunction. Consummation of the transactions contemplated hereby, by
the Registration Rights Agreement or the Collateral Documents shall not have
been restrained, enjoined, made illegal or otherwise prohibited by any
Applicable Law, including any order, injunction, decree or judgment of any court
or other Governmental Authority. No court or Governmental Authority shall have
determined by any Applicable Law to make illegal the consummation of the
transactions contemplated hereby.
(f) HSR Act Notification. Any applicable approvals or waiting periods
required under the HSR Act in respect of this Agreement and the transactions
contemplated hereby and any extensions thereof shall have expired or early
termination thereof shall have been granted.
(g) NASD Supplemental Listing Notification. The Corporation shall have
filed a supplemental listing notification with the NASD pursuant to NASD Rule
4310(c)(17)(D) for the listing of the shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock, Series B Preferred Stock and Class B
Common Stock (the "Supplemental Listing Application"), and the NASD shall have
approved the listing of such shares of Common Stock.
(h) NASD Confirmation. The NASD shall have confirmed, in response to a
written request by the Corporation, the form of which has been previously
provided to the Investors (the "NASD Request"), that no approval of the
Corporation's shareholders shall be required for the consummation of the
transactions contemplated hereby (including the issuance of the Preferred Stock)
and that NASDAQ will not subject the Corporation to de-listing if Loral issues
the Preferred Stock without shareholder approval on the terms proposed in this
Agreement, or, if such shareholder approval is required by the NASD, such
shareholder approval shall have been obtained on or before June 30, 2007.
(i) Securities Exemptions. The offer and sale of the Purchased Shares to
the Investors pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification
requirements of all applicable state securities laws.
Section 4.02. Conditions to the Obligations of the Corporation. The
obligations of the Corporation to perform, fulfill or carry out its agreements,
undertakings and obligations herein made or expressed to be performed, fulfilled
or carried out on the Closing Date is and shall be subject to fulfillment of or
compliance with, on or prior to the Closing Date, the following
20
conditions precedent, any of which may be waived in whole or in part by the
Corporation to the extent permitted by Applicable Law:
(a) Representations and Warranties; Performance. The representations and
warranties of the Investors set forth in Section 3.02 of the Agreement (a) shall
be true and correct in all respects (in the case of any representation or
warranty that is qualified as to "materiality" or "Material Adverse Effect") or
in all material respects (in the case of any representation or warranty that is
not so qualified), at and as of the date hereof and (b) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty that is qualified as to "materiality" or "Material Adverse Effect") or
in all material respects (in the case of any representation or warranty that is
not so qualified) at and as of the Closing Date as if made on such date.
(b) Agreements and Covenants. The Investors shall have duly and, if
required to be performed within a specified time period, timely performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by them prior to or
on the Closing Date; and
(c) Certificate. The Investors shall have delivered to the Corporation a
certificate, dated the Closing Date and signed by a duly authorized officer of
each Investor, certifying as to the matters set forth in Sections 4.02(a) and
(b).
Section 4.03. Conditions to the Obligation of the Investors.
The obligation of the Investors to perform, fulfill or carry out their
agreements, undertakings and obligations herein made or expressed to be
performed, fulfilled or carried out on the Closing Date is and shall be subject
to fulfillment of or compliance with, on or prior to the Closing Date, the
following conditions precedent, any of which may be waived by the Investors, in
their sole discretion, in whole or in part:
(a) Representations and Warranties; Performance. The representations and
warranties of the Corporation set forth in Section 3.01 of the Agreement (a)
shall be true and correct in all respects (in the case of any representation or
warranty that is qualified as to "materiality" or "Material Adverse Effect") or
in all material respects (in the case of any representation or warranty that is
not so qualified), at and as of the date hereof and (b) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty that is qualified as to "materiality" or "Material Adverse Effect") or
in all material respects (in the case of any representation or warranty that is
not so qualified) at and as of the Closing Date (except for representations and
warranties expressly made as of a specified date, which need be true only as of
the specified date) as if made on such date.
(b) Agreements and Covenants. The Corporation shall have duly and, if
required to be performed within a specified time period, timely performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
21
(c) Certificate. The Corporation shall have delivered to the Investors a
certificate, dated the Closing Date and signed by its duly authorized executive
officer of the Corporation, certifying as to the matters set forth in Sections
4.03(a) and (b).
(d) No Material Adverse Effect. No event shall have occurred and no
condition shall have arisen or been created since the date of this Agreement
which has had, or would be reasonably expected to have, and there shall not
otherwise have been, a Material Adverse Effect.
(e) Placement Fee. The Corporation shall have paid to, or to such designee
as directed by, MHR Fund Management LLC, by a wire transfer of immediately
available funds to the account specified therefor by MHR Fund Management LLC, a
placement fee equal to $6,750,000.
(f) Fees and Expenses. The Corporation shall have paid all fees and
expenses set forth in Sections 6.05(a)(i) and 6.05(a)(ii) in accordance with the
terms thereof and at the times provided for in Sections 6.05(b)(i) and
6.05(b)(ii).
(g) Certificates of Designation. The Series A Certificate of Designation
and Series B Certificate of Designation shall have been duly filed with the
Secretary of State of the State of Delaware and a copy of the Certificate of
Incorporation of the Corporation (including the Series A Certificate of
Designation and Series B Certificate of Designation) certified by the Secretary
of State of the State of Delaware shall have been delivered to the Investors.
(h) Opinion of Counsel to the Corporation. Willkie shall have delivered an
opinion, dated the Closing Date, and addressed to the Investors, substantially
identical in form and substance to that attached hereto as Exhibit G.
(i) Stock Certificates. The Corporation shall have delivered to the
Investors duly executed and issued stock certificates representing the Purchased
Shares as required hereunder.
(j) Proceedings. All corporate and other proceedings to be taken by the
Corporation in connection with this Agreement and the Registration Rights
Agreement and with respect to the transactions contemplated hereby and thereby
to be completed at or prior to the Closing and documents incident thereto shall
have been completed in form and substance reasonably satisfactory to the
Investors, and the Investors shall have received all such counterpart originals
or certified or other copies of this Agreement and the Registration Rights
Agreement.
(k) Amendment of Bylaws. The Bylaws shall have been amended in form and
substance identical to the Form of Amendment to Amended and Restated By-Laws
attached hereto as Exhibit H.
ARTICLE 5
COVENANTS OF THE CORPORATION AND THE INVESTORS
Section 5.01. Redemption of SkyNet 14% Notes. If (i) the Corporation enters
into a definitive binding agreement for the acquisition (through merger,
consolidation, exchange, asset purchase, recapitalization, business combination
or other similar transaction) by the Corporation of a business or business
entity, or a substantial interest therein, for aggregate consideration
22
(including debt assumed, refunded or remaining outstanding) exceeding $600
million (an "Acquisition"), and (ii) the Board of Directors of SkyNet determines
in connection with an Acquisition, that it will exercise SkyNet's right of
optional redemption of the SkyNet 14% Senior Secured Cash/PIK Notes due 2015
(the "Notes") after the first anniversary of the issuance thereof, pursuant to
Section 5 of the Notes, then the Investors, as holders of the Notes (directly or
through any of their Affiliates), will, at the request of SkyNet, not object to
such optional redemption of the Notes, subject to the consummation of such
Acquisition.
Section 5.02. Authorization of Class B Common Stock.
(a) From and after June 30, 2007, MHR shall be entitled to request by
written notice to the Secretary of the Corporation that the Corporation convene,
and following such notice the Corporation shall take all actions necessary to
convene and the Chief Executive Officer of the Corporation shall call, a special
meeting of stockholders for the purpose of seeking approvals of proposals to
amend the Certificate of Incorporation to (i) remove Section (c) of Article IV
thereof (the "Non-Voting Securities Proposal") and (ii) authorize the Class B
Common Stock (the "Class B Proposal"). Prior to filing or mailing of any proxy
statement (together with any amendments thereof and any supplements thereto, the
"Proxy Statement") in connection with the Class B Proposal, upon MHR's request,
the Corporation shall provide MHR a reasonable opportunity to review and comment
on such Proxy Statement with respect to any information about the Class B
Proposal included therein and shall include in such Proxy Statement all such
comments reasonably proposed by MHR pursuant to the foregoing. If:
(i) the Non-Voting Securities Proposal and the Class B Proposal are
approved by the stockholders of the Corporation, promptly following such
approvals, the Corporation shall (A) file an amendment to the Certificate
of Incorporation with the Secretary of State of the State of Delaware (x)
removing Section (c) of Article IV thereof, and (y) authorizing the
creation of the Class B Common Stock as a non-voting class of the
Corporation's securities, and (B) reserve all such shares of Class B Common
Stock for issuance upon the exchange of all shares of Series B Preferred
Stock issued on the Closing Date and in payment of Series A PIK Dividends
and Series B PIK Dividends;
(ii) the Non-Voting Securities Proposal is not approved by the
stockholders of the Corporation and the Class B Proposal is approved by the
stockholders of the Corporation, the Corporation shall (A) file an
amendment to the Certificate of Incorporation with the Secretary of State
of the State of Delaware authorizing the creation of the Class B Common
Stock with voting rights that entitle the holders thereof to a number of
votes equal to one ten-thousandth of one (1/10,000) vote per share of Class
B Common Stock, and (B) reserve all such shares of Class B Common Stock for
issuance upon the exchange of all shares of Series B Preferred Stock issued
upon the Closing Date and in payment of Series A PIK Dividends and Series B
PIK Dividends; or
(iii) the Non-Voting Securities Proposal is approved by the
stockholders of the Corporation and the Class B Proposal is not approved by
the stockholders of the Corporation, the Corporation shall file an
amendment to the Certificate of Incorporation with the Secretary of State
of the State of Delaware removing Section (c) of Article IV thereof.
23
(b) If MHR does not deliver a written request to hold a special meeting of
stockholders as provided for in subsection (a) above, then not less than
seventy-five (75) days prior to the next annual meeting of the stockholders of
the Corporation (or forty-five (45) days if such meeting is held in 2006), or
promptly following the Board's determination to convene or the Corporation's
receipt of notice of a special meeting of stockholders (but excluding any
special meeting of stockholders held in 2006), the Corporation shall provide MHR
notice of such meeting and include among the matters to be voted upon at such
meeting the Class B Proposal and the Non-Voting Securities Proposal.
(c) Until the earlier of the Majority Ownership Date and the date that the
Class B Proposal is approved by the stockholders of the Corporation, the
Corporation shall include among the matters to be voted upon at any annual
meeting the Class B Proposal.
Section 5.03. Bring-Down Certificate. Immediately prior to each date that
(i) shares of Series A Preferred Stock and Series B Preferred Stock are issued
as PIK Dividends (the "PIK Dividend Issuance Date"), (ii) shares of Common
Stock, Class B Common Stock or Series A Preferred Stock are issued upon
conversion of the Series A Preferred Stock or Series B Preferred Stock and Class
B Common Stock (the "Conversion Issuance Date") or (iii) shares of Series A
Preferred Stock or Common Stock are issued pursuant to Section 5.06 on any
Threshold Conversion Issuance Date, the Corporation shall (A) execute and
deliver to the Investor(s) receiving such PIK Dividends or converting such
share(s) of Preferred Stock, Class B Common Stock or Common Stock, as
applicable, a certificate (the "Bring-Down Certificate"), dated as of the PIK
Dividend Issuance Date, the Conversion Issuance Date or the Threshold Conversion
Issuance Date, as the case may be, and substantially in the form attached hereto
as Exhibit I, from the Chief Executive Officer or Chief Financial Officer of the
Corporation, and (B) in the case of any Conversion Issuance Date involving the
conversion of 3% or more of the number of outstanding shares of Series A
Preferred Stock, or in the case of any Threshold Conversion Issuance Date, cause
to be delivered to such Investor(s) an opinion of outside counsel to the
Corporation, dated as of the Conversion Issuance Date or Threshold Conversion
Issuance Date, as the case may be, and substantially in the form attached hereto
as Exhibit J.
Section 5.04. Trading. The Preferred Stock issued pursuant hereto shall not
be listed on any national securities exchange or included in any automated
quotation system on the Closing Date. Upon the written request of the holders of
a majority of the then-outstanding shares of Preferred Stock, the Corporation
shall promptly apply for and use best efforts to obtain the listing of the
Preferred Stock on the national securities exchange or automated quotation
system as so requested by the holders of the Preferred Stock and register the
Preferred Stock and the shares of Common Stock issuable pursuant thereto under
the Exchange Act.
Section 5.05. Conversion Upon Certain Transfers.
(a) Upon the transfer of any share(s) of Series B Preferred Stock or Class
B Common Stock to any Person who is not and does not become an Affiliate or
Associate of, or a member of a "group" (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934) with, MHR, and is a Qualified
Transferee, then the Series B Preferred Stock (including any Series B PIK
Dividends paid or accrued in respect thereof), or Class B Common Stock held by
such transferee shall be automatically converted into shares of Series A
Preferred Stock (in the case of
24
Series B Preferred Stock) or Common Stock (in the case of Class B Common Stock),
on a one for one basis.
(b) In the event that (i) solely as a result of such transfer of shares of
Series B Preferred Stock or Class B Common Stock, such transferee would become
the Beneficial Owner of more than 35.9% of the voting power of Corporation, or
(ii) such transferee is the Beneficial Owner of more than 35.9% but less than
50% of the voting power of the Corporation immediately prior to such transfer of
shares of Series B Preferred Stock or Class B Common Stock (such transferee in
each of (i) and (ii), a "Disqualified Transferee") then (A) in the case of
clause (i) above, such number of shares of Series B Preferred Stock or Class B
Common Stock transferred shall not be converted into shares of Series A
Preferred Stock (in the case of Series B Preferred Stock) or Common Stock (in
the case of Class B Common Stock), so that the transferee does not become the
Beneficial Owner of more than 35.9% of the voting power of the Corporation
solely as a result of such transfer, and (B) in the case of clause (ii) above,
all the shares of Series B Preferred Stock or Class B Common Stock so
transferred shall not be converted into shares of Series A Preferred Stock (in
the case of Series B Preferred Stock) or Common Stock (in the case of Class B
Common Stock). The restrictions on the conversion of shares of Series B
Preferred Stock or Class B Common Stock for shares of Series A Preferred Stock
(in the case of Series B Preferred Stock) or Common Stock (in the case of Class
B Common Stock) set forth in this Section 5.05, (i) shall be of no further and
effect as of and from the Majority Ownership Date, and (ii) may be waived upon
the Corporation's prior written consent.
Section 5.06. Threshold Conversion.
(a) If at any time after the Closing Date, the sum of the number of shares
of Common Stock issuable upon exchange of the Series A Preferred Stock and the
number of shares of Common Stock held by MHR is below the Threshold, then a
number of shares of the Series B Preferred Stock (including any PIK Dividends
paid or accrued thereon) then held by MHR shall be converted in accordance with
the procedures set forth in subsection (b) below into such number of shares of
Series A Preferred Stock (on a one for one basis) or Common Stock (at the
then-applicable conversion rate) (such choice to be at the option and sole
discretion of MHR) such that the aggregate number of shares of Common Stock
issuable upon conversion of the shares of Series A Preferred Stock and Common
Stock held by MHR equals (but does not exceed), as a percentage of the aggregate
voting power of all outstanding securities issued by the Corporation at any time
and from time to time (assuming the exchange of all outstanding shares of Series
A Preferred Stock held by MHR), the Threshold. In the event that (i) the shares
of Series B Preferred Stock that are converted for Series A Preferred Stock or
Common Stock, as the case may be, pursuant to the immediately preceding sentence
are not sufficient to increase the number of shares of Series A Preferred Stock
and Common Stock held by MHR so as to equal (but not exceed) the Threshold, or
(ii) MHR does not hold any shares of Series B Preferred Stock to convert for
Series A Preferred Stock or Common Stock, as the case may be, pursuant to the
immediately preceding sentence, then a number of shares of Class B Common Stock
held by MHR (if any) shall be converted in accordance with the procedures set
forth in the Amended and Restated Certificate of Incorporation into Common Stock
(on a one for one basis) such that the aggregate number of shares of Series A
Preferred Stock and Common Stock held by MHR (including the shares of Series B
Preferred Stock that were converted for Series A Preferred
25
Stock or Common Stock, as the case may be, pursuant to the immediately preceding
sentence) equals (but does not exceed) the Threshold.
(b) The Corporation shall provide a written notice in substantially the
form attached hereto as Exhibit K (the "Threshold Conversion Notice") not less
than ten (10) days following the end of each calendar quarter and within five
(5) Business Days after any issuance of securities exceeding two percent (2%) of
the voting power of the Corporation. Within five (5) Business Days after receipt
of the Threshold Conversion Notice, MHR shall either confirm the calculations
set forth therein with respect to the number of shares of Series B Preferred
Stock and/or Class B Common Stock to be converted pursuant to clause (a) above,
in a written notice substantially in the form attached hereto as Exhibit L (a
"Notice of Confirmation") or dispute the calculations set forth therein with
respect to the number of shares of Series B Preferred Stock and/or Class B
Common Stock to be converted pursuant to clause (a) above, in a written notice
substantially in the form attached hereto as Exhibit M (a "Notice of
Disagreement"), and in either case specify whether any or all of such shares of
Series B Preferred Stock, if any, are to be converted into shares of Series A
Preferred Stock or Common Stock. Within three (3) Business Days (or fifteen (15)
calendar days if the physical delivery of any certificate is involved) after the
Corporation's receipt of (i) a Notice of Confirmation, the Corporation shall
issue such number of shares of Series A Preferred Stock and/or Common Stock as
set forth in the Threshold Conversion Notice, and (ii) a Notice of Disagreement,
the Corporation shall issue such number of shares of Series A Preferred Stock
and/or Common Stock set forth in the Threshold Conversion Notice and the parties
shall use their reasonable best efforts to resolve the disagreements set forth
in the Notice of Disagreement and the Corporation shall, promptly upon such
resolution, issue such number of additional shares of Series A Preferred Stock
and/or Common Stock as necessary. Each such date of issuance of shares of Series
A Preferred Stock and/or Common Stock pursuant to the terms of this Section 5.06
shall be referred to herein as a "Threshold Conversion Issuance Date".
Section 5.07. Contributions to SkyNet. For as long as at least thirty-three
(33%) percent of the shares of Preferred Stock originally issued on the Closing
Date are held by the Investors, neither the Corporation nor any of its
Subsidiaries, whether now or hereafter existing (other than SkyNet and any of
its Subsidiaries (for purposes of this paragraph, the "Transferor")), shall, and
the Corporation and any of its Subsidiaries shall not take any action that would
cause any Joint Venture in which the Corporation or any of its Subsidiaries
(other than SkyNet and any of its Subsidiaries) has an equity interest, whether
now or hereafter existing, to, Transfer any assets or property (whether cash or
otherwise) to SkyNet, any of its Subsidiaries or any Joint Venture in which
SkyNet or any of its Subsidiaries has an equity interest, whether now or
hereafter existing (collectively, for purposes of this paragraph, a
"Transferee") unless:
(a) such Transfer is (i) made pursuant to agreements in existence on the
date hereof, copies of which are listed on Section 5.07(a) of the Corporation
Schedule of Exceptions and which were previously provided to the Investors if
the consideration paid by the Transferor pursuant to such agreement exceeded one
million dollars ($1,000,000) in the aggregate (other than satellite construction
contracts made in the ordinary course of business), (ii) made pursuant to or in
connection with any satellite construction contracts made in the ordinary course
of business, (iii) made in the ordinary course of the business relationship
between the Transferor and the Transferee consistent with their respective past
practice, (iv) for consideration or services
26
received and on terms that, in the aggregate, are, no less favorable to the
Transferor than those that could be obtained at the time in arms' length
dealings with a Person who is not an Affiliate, provided that such determination
shall be made (A) if such consideration or services received exceed $500,000, in
good faith by the Board, and (B) if such consideration or services received
exceed $5,000,000, in good faith by the Board upon consultation and after taking
the advice of an independent third party expert, if requested by the Investors,
which request shall be made within ten (10) Business Days after notice to the
Investors, which shall be given not less than fifteen (15) Business Days prior
to the date of such determination, (v) made pursuant to tax sharing arrangements
approved by the Investors at or prior to the time such tax sharing arrangements
are determined, such approval not to be unreasonably withheld, or (vi) of the
four (4) SatMex 6 transponders pursuant to the terms set forth on Section
5.07(a) of the Corporation Schedule of Exceptions; or
(b) as conditions precedent to the consummation of the transactions
contemplated by such Transfer:
(i) the Transferee represents and covenants to the Transferor that the
Secured Loan Agreement (as defined below) and the terms of such acquisition
shall be approved by the board of directors of SkyNet;
(ii) the Transferor (as lender) and Transferee (as borrower) enter
into an intergroup secured loan agreement (the "Secured Loan Agreement")
pursuant to which, except in the case of the Transfers disclosed in Section
5.07(b) of the Corporation Schedule of Exceptions, which Security Interest
shall be as described in such Schedule of Exceptions, the Transferee grants
to the Transferor for its sole benefit a first-priority security interest
(the "Security Interest") in (i) all of the assets so Transferred, (ii) all
of the assets or property acquired using or in substitution for, in each
case in whole or in part, the assets so Transferred, or (iii) other assets
of the Transferee having at least an equivalent value to the assets
Transferred by the Transferor, as determined in good faith by the Board
(each of (i), (ii) and (iii), individually or collectively, the
"Collateral"). For the avoidance of doubt, (a) in the event that the
Collateral is a satellite(s), the Collateral shall include any and all
transponder leases thereon entered into at any time and from time to time,
and (b) the amount of the obligation secured shall not exceed the principal
of the applicable loan, plus interest, fees, expenses and indemnities or
any other amounts that may become due and payable in connection with such
loan; and
(iii) the Transferor receives the written legal opinion of outside
counsel (which counsel, if not the Corporation's regular outside counsel,
shall be reasonably acceptable to the Investors), which shall be addressed
to and be in form and substance reasonably and in good faith satisfactory
to the Transferor and the Board, regarding the Transfer and the
transactions contemplated thereby, which opinion shall include customary
opinions and exceptions (including that such opinion shall be limited to
matters of New York and Delaware corporate law and the law of the Uniform
Commercial Code), including (i) the enforceability of the Secured Loan
Agreement, (ii) if the Collateral shall constitute property the perfection
of which is governed by the Uniform Commercial Code, the validity,
enforceability and perfection of the Transferor's security interest in the
Collateral, (iii) the receipt of all required consents, the execution and
delivery of all
27
agreements, the making of any required filings, the taking of any other
actions and the absence of any conflicts that any of the Transfer, Secured
Loan Agreement or Security Interest have under the Transferee's charter or
bylaws, or with any then-existing obligations of the Transferee or to which
the Transferee is subject that exceed $5 million as certified by the
Transferee (with a copy to the Transferor), provided, however, that any
opinion with respect to any obligations of the Transferee or to which the
Transferee is subject that are between $5 million and $10 million or which
are pursuant to satellite construction contracts may be delivered by the
Transferee's in-house counsel rather than such outside counsel.
Section 5.08. Permitted Indebtedness. For as long as at least thirty-three
(33%) percent of the shares of Preferred Stock originally issued on the Closing
Date are held by the Investors:
(a) The Corporation shall not incur any Indebtedness (other than (i) any
Guarantees by the Corporation in favor of SS/L relating solely to SS/L's
performance under any satellite manufacturing agreements, and (ii) from any
wholly-owned Subsidiary so long as the Corporation does not grant any security
interest relating to or in connection with such Indebtedness) in excess of One
Million Dollars ($1,000,000) in the aggregate unless the Adjusted Tangible Asset
Value as of the date set forth in the most recent periodic report of the
Corporation filed pursuant to the Exchange Act exceeds the TAV Threshold. If the
Adjusted Tangible Asset Value as of the date set forth in the most recent
periodic report of the Corporation filed pursuant to the Exchange Act exceeds
the TAV Threshold, the Corporation shall be permitted to incur Indebtedness from
the day after the filing of such periodic report until the day of the filing of
the next periodic report (the "Indebtedness Incurrence Period"), provided that
the amount of such Indebtedness shall not exceed, when aggregated with all other
Indebtedness incurred during such Indebtedness Incurrence Period, an amount
equal to one-half of the difference between the Adjusted Tangible Asset Value as
of the date set forth in the most recent periodic report of the Corporation
filed pursuant to the Exchange Act and the TAV Threshold;
(b) Prior to any incurrence of any Indebtedness permitted by the paragraph
immediately above, the Corporation shall deliver to the Investors a certificate,
signed by a duly authorized officer of the Corporation, stating that the
Corporation has determined, in good faith and in consultation with and after
taking the advice of the Chief Financial Officer of the Corporation, that (A)
the Adjusted Tangible Asset Value exceeds the TAV Threshold, and (B) the
Indebtedness to be incurred will not exceed one-half of the difference between
the Adjusted Tangible Asset Value and the TAV Threshold, in each case as of the
date of the incurrence of such Indebtedness; and
(c) If any Subsidiary of the Corporation (other than SkyNet and its
Subsidiaries) incurs Indebtedness, such Subsidiary shall not Transfer (i) any
proceeds or other consideration received by such Subsidiary from the incurrence
of such Indebtedness, and (ii) any substitution of such proceeds or other
consideration, including assets or property acquired using such proceeds or
consideration or proceeds or other consideration received from the disposition
of such assets or property, to SkyNet or any of its Subsidiaries, except in
compliance with Section 5.07 hereof.
28
Section 5.09. Limitations on Disposition. Each of the Investors agrees not
to make any disposition of all or any portion of the Series A Preferred Stock,
Series B Preferred Stock or the shares of Common Stock or Class B Common Stock
issued upon conversion thereof unless and until:
(a) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement;
(b) such disposition is made pursuant to Rule 144 promulgated under the
Securities Act;
(c) such Investor shall have delivered to the Corporation a written opinion
by counsel which is reasonably acceptable to the Corporation to the effect that
the proposed transfer is exempt from the registration and prospectus delivery
requirements of the Securities Act; or
(d) such Investor shall have transferred such shares of Series A Preferred
Stock, Series B Preferred Stock, Common Stock or Class B Common Stock, as the
case may be, to an Affiliate of such Investor and such Affiliate has delivered
to the Corporation a written agreement making the representations set forth in
Section 3.02(b) and agreeing to be bound by the restrictions of Sections 5.09,
5.10 and 5.12 hereof, in each case to the extent applicable, with respect to the
shares so transferred.
Section 5.10. Investor Transfer Restriction. In addition to the limitations
on disposition set forth in Section 5.09 hereof, the Investors shall not, in any
single transaction or series of related transactions, without the Corporation's
prior written consent, transfer Beneficial Ownership of any shares, directly or
indirectly, of Series A Preferred Stock issued on the Closing Date (or Common
Stock issuable to the Investors upon the conversion thereof) to any Person who
is a Restricted Transferee (the "Transfer Restriction"). The Transfer
Restriction shall be of no further force and effect as of the Majority Ownership
Date.
Section 5.11. MHR Board Representation. The Investors shall have the right,
as of the Closing Date, to designate a director (the "MHR Designee") to the
Board, and upon such designation, the Board shall appoint such MHR Designee to
the Class II directors, and recommend to the stockholders of the Corporation to
vote for the election of the MHR Designee at any meeting of stockholders
convened to elect directors to such class of directors. Simultaneously with the
appointment of the MHR Designee to the Board, the boards of directors of SS/L
and SkyNet shall appoint such MHR Designee to the boards of directors of SS/L
and SkyNet, respectively.
Section 5.12. MHR Voting Covenant.
(a) For a period terminating upon the earlier of (i) the fifth (5th)
anniversary of the Closing Date, and (ii) the Majority Ownership Date, the
Investors agree to vote all of the shares of Series A Preferred Stock issued on
the Closing Date (or shares of Common Stock issued upon the conversion thereof)
then held by the Investors with respect to election or removal of directors in
accordance with the recommendation of the Board; provided, however, that
notwithstanding the foregoing, the Investors shall have a right to abstain from
voting any securities of the
29
Corporation that it may hold at any time, including the shares of Series A
Preferred Stock issued on the Closing Date (or any shares of Common Stock
issuable upon the conversion thereof).
(b) At the next annual meeting of stockholders of the Corporation, MHR
shall vote all shares of Common Stock held as of the record date for such
meeting in favor of a proposal to increase the number of authorized shares of
Common Stock to sixty (60) million shares.
Section 5.13. Further Actions.
(a) The Corporation and the Investors agree to use all reasonable best
efforts to take all actions and to do or cause to be done all other things
required, necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable. In furtherance and
not in limitation of the foregoing:
(i) the Corporation and the Investors agree to make, or cause to be
made, all appropriate filings pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and to supply,
or cause to be supplied, as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and use their reasonable best efforts to take, or cause to be
taken, all other actions consistent with this Section 5.13(a)(i) necessary
to cause the expiration or termination of all applicable waiting periods
under the HSR Act as soon as practicable;
(ii) the Corporation shall, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications, notifications
and information required to be filed or supplied by the Corporation
pursuant to Applicable Law in connection with this Agreement and the
consummation of the transactions contemplated hereby, including (A) filings
with the SEC, (B) the Supplemental Listing Application with the NASD, and
(C) (1) as promptly as practicable, but in no event more than three (3)
Business Days after the date hereof, submit the NASD Request and make any
required submissions to the NASD or submissions to the NASD that the
Corporation determines should be made with respect to this Agreement and
the transactions contemplated hereby as are advisable to consummate the
transactions contemplated hereby, (2) supply, as promptly as practicable,
any additional information and documentary material that may be requested
by the NASD or which the Corporation determines should be supplied, and (3)
use its reasonable best efforts to timely obtain any required consent,
permit, authorization, approval, interpretive letter or waiver in
connection with such submissions or otherwise from the NASD, in each case
in compliance with Section 5.13(c) below. In furtherance and not in
limitation of the foregoing (and without prejudice to the obligations of
the Corporation pursuant to Section 5.13(b) below), in the event that the
NASD makes a final determination that the transactions contemplated hereby
require the approval of the Corporation's shareholders, the Corporation
shall promptly convene a meeting of shareholders and take all action
necessary or advisable to obtain such shareholder approval. Prior to the
filing or mailing of any Proxy Statement in connection with seeking to
obtain such shareholder approval, the Corporation shall provide the
Investors a reasonable opportunity to review and comment on such Proxy
Statement and shall include in such Proxy Statement all such comments
reasonably proposed by the Investors
30
pursuant to the foregoing. Any Proxy Statement submitted to the
Corporation's shareholders pursuant to this Section 5.13(a)(ii)(C) shall
also include the Class B Proposal and the Non-Voting Securities Proposal.
(b) If any objections are asserted with respect to the transactions
contemplated hereby by any Governmental Authority or the NASD, the Corporation
and the Investors shall use its reasonable best efforts to resolve any such
objections with the goal of enabling the transactions contemplated by this
Agreement to be consummated as promptly as practicable. In furtherance and not
in limitation of the covenants of the parties contained in this Section 5.13,
each of the Corporation and the Investors shall use its reasonable best efforts
to resolve such objections, if any, as may be asserted by a Governmental
Authority or the NASD with respect to the transaction contemplated hereby. In
connection with the foregoing, if any administrative or judicial action or
proceeding by any party is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement, each of the
Corporation and the Investors shall cooperate in all respects with each other
and use its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction, interpretive letter or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents, conditions or restricts the consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement other than the obligation of the Corporation to
convene a special meeting of shareholders as described in Section
5.13(a)(ii)(C), nothing contained in this Section 5.13 shall require the
Investors or the Corporation to consummate the transactions contemplated hereby
on terms materially different from the terms set forth in this Agreement.
(c) Each of the Corporation and the Investors shall, in connection with the
efforts referenced in this Section 5.13, (i) cooperate and consult with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by any party,
(ii) promptly inform the other party of any material communication received by
such party from, or given by such party to, any Governmental Authority or the
NASD and of any material communication received or given in connection with any
proceeding by any party, in each case, regarding the transactions contemplated
hereby, (iii) consult with the other party in advance of any meeting or
conference, whether in-person or by telephone, with any Governmental Authority,
the NASD or, in connection with any proceeding by any party, with any other
Person, and to the extent permitted by such applicable Governmental Authority,
the NASD or other Person, give the other party the opportunity to attend and
participate in such meetings and conferences. In furtherance and not in
limitation of the foregoing, the Corporation shall, in connection with the
efforts referenced in Section 5.13(a)(ii)(C), (i) permit counsel for the
Investors to review in advance, and consider in good faith the views of the
Investors in connection with, any proposed written communication to the NASD and
provide counsel for the Investors with copies of all filings and submissions
made by the Corporation and all correspondence between the Corporation (and its
advisors) with the NASD and any other information supplied by the Corporation
and the Corporation's Subsidiaries to the NASD or received from the NASD in
connection with the transactions contemplated by this Agreement, (ii) furnish to
the Investors such information and assistance as the Investors reasonably may
request in connection with the preparation of any submissions to, or proceedings
by, the NASD, and (iii) obtain the consent of the Investors prior to the
submission of any
31
proposed written communication to the NASD, which consent shall not be
unreasonably withheld.
(d) Notwithstanding anything to the contrary herein, nothing in this
Section 5.13 shall require any party to amend this Agreement or to waive or
forbear from exercising any of its rights or remedies hereunder.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Survival of Representations and Warranties. The respective
representations and warranties of the Corporation and the Investors contained in
or made pursuant to this Agreement shall remain in full force and effect and
shall survive the execution and delivery of this Agreement and the delivery of
and payment for the Series A Preferred Stock and Series B Preferred Stock
through the date that is thirty (30) months after Closing Date, and shall in no
way be affected by any investigation of the subject matter thereof, or statement
as to the results thereof, made by or on behalf of the Investors or the
Corporation; provided that the representations and warranties of the Corporation
contained in Sections 3.01(a) (Organization, Good Standing and Qualification),
3.01(b) (Authorization), 3.01(c) (Valid Issuance), 3.01(d) (Capitalization),
3.01(e) (Series A Preferred Stock Issuance), 3.01(f) (Noncontravention), 3.01(i)
(No General Solicitation) and 3.01(m) (No Brokers) shall survive until the
expiration of the applicable statute of limitations. The representations and
warranties of the Corporation contained in any Bring-Down Certificate shall
survive until the expiration of the applicable statute of limitations; provided,
that the survival of the representations and warranties of the Corporation in
any Bring-Down Certificate shall be only to the extent of the issuance of
capital stock covered by such certificate.
Section 6.02. Indemnification.
(a) The Corporation (the "Indemnifying Party") shall indemnify, defend and
hold harmless to the fullest extent permitted by law the Investor and the
Investor's Affiliates and each of their respective officers, directors,
managers, partners, stockholders, members, investors, employees, advisors,
agents and other representatives and any Affiliate of the foregoing, and each of
their respective successors and permitted assigns and each Person who controls
any of the foregoing, within the meaning of the Securities Act and the Exchange
Act (each, an "Investor Indemnified Party"), from and against, and shall
promptly reimburse each Investor Indemnified Party for, all demands, claims,
actions or causes of action (whether or not such demands, claims, actions or
causes of action are brought by the Corporation, the SEC, the United States
Department of Justice or any other governmental entity, or whether or not the
Investor Indemnified Party is a party thereto), assessments, losses, damages,
liabilities, costs and expenses, including reasonable attorney's fees and
expenses of investigation and attorneys' and accountants' fees and expenses in
connection with any action, suit or proceeding, including those incurred upon
any appeal, joint or several, arising or resulting from or in connection with
any misrepresentation or any breach of any representation or warranty, covenant
or agreement of the Corporation contained in this Agreement, any of the other
Collateral Documents, or in any certificate or other document required to be
furnished by the Corporation pursuant to this Agreement (collectively, the
"Investor Indemnified Liabilities").
32
(b) Whenever any claim for indemnification shall arise under this Section
6.02, the Investor Indemnified Party shall notify the Indemnifying Party of the
claim and, when known, the facts constituting the basis for such claim;
provided, however, that failure to give such notice shall not affect any of the
indemnification or other rights of any Investor Indemnified Party hereunder,
except if and to the extent the Corporation is prejudiced by such failure. In
the event of any claim for indemnification hereunder resulting from or in
connection with legal proceedings by a third party (a "Proceeding"), such notice
shall also specify, if known, the amount or an estimate of the amount of the
liability arising therefrom.
If any Proceeding is filed or instituted against the Investor Indemnified Party
asserting any claim for which the Indemnifying Party may be responsible
hereunder, written notice thereof shall be given to the Indemnifying Party as
promptly as practicable; and if the Indemnifying Party shall acknowledge in
writing that the Indemnifying Party shall be responsible and liable for all
Investor Indemnified Liabilities in connection with such lawsuit as and to the
extent set forth herein, then the Indemnifying Party shall be entitled, if the
Indemnifying Party so elects (subject to the Investor Indemnified Party's
written consent which may be withheld by the Investor Indemnified Party to the
extent that the Investor Indemnified Party's rights under any other contested
matter or any aspect of the Investor Indemnified Party's ongoing business
operations may be prejudiced by the Investor Indemnified Party's lack of control
over such lawsuit, to take control of the defense and investigation of such
lawsuit and to employ and engage attorneys of their own choice, reasonably
satisfactory to such Investor Indemnified Party, to handle and defend the same,
at the Indemnifying Party's cost, risk and expense; and the Investor Indemnified
Party shall cooperate in all reasonable respects, at the Indemnifying Party's
cost, risk and expense, with the Indemnifying Party and such attorneys in the
investigation, trial and defense of such lawsuit and any appeal arising
therefrom. If the Investor Indemnified Party withholds its consent for the
Indemnifying Party to take control of the defense and investigation of such
lawsuit because and to the extent that the Investor Indemnified Party's rights
under any other contested matter or any aspect of the Investor Indemnified
Party's ongoing business operations may be prejudiced by the Investor
Indemnified Party's lack of control over such lawsuit), the Investor Indemnified
Party may employ counsel and participate in the defense thereof but the
reasonable fees and expenses of such counsel shall be at the expense of the
Indemnifying Party and shall be borne by such Indemnifying Party and paid as
incurred (it being understood, however, that such Indemnifying Party shall not
be liable for the expenses of more than one separate counsel in any one
Proceeding or series of related Proceedings together with reasonably necessary
local counsel representing the Investor Indemnified Parties who are parties to
such Proceeding). Except as set forth in the immediately preceding sentence,
such Investor Indemnified Party shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Investor Indemnified Party unless the employment of such counsel
shall have been authorized in writing by such Indemnifying Party in connection
with the defense of such Proceeding or such Indemnifying Party shall not have
employed counsel to have charge of the defense that is reasonably satisfactory
to the Investor Indemnified Party of such Proceeding within 60 days of the
receipt of notice thereof or such Investor Indemnified Party shall have
reasonably concluded that there may be defenses available to it that are
different from, additional to, or in conflict with those available to such
Indemnifying Party (in which case such Indemnifying Party shall not have the
right to direct that portion of the defense of such Proceeding on behalf of such
Investor Indemnified Party, but such Indemnifying Party may employ counsel and
participate in the defense thereof but the fees and
33
expenses of such counsel shall be at the expense of such Indemnifying Party), in
any of which events such reasonable fees and expenses shall be borne by such
Indemnifying Party and paid as incurred (it being understood, however, that such
Indemnifying Party shall not be liable for the expenses of more than one
separate counsel in any one Proceeding or series of related Proceedings together
with reasonably necessary local counsel representing the Investor Indemnified
Parties who are parties to such Proceeding). An Indemnifying Party shall not be
liable for any settlement or compromise of any such Proceeding effected without
its consent, but if settled or compromised with the written consent of such
Indemnifying Party, such Indemnifying Party agrees to indemnify and hold
harmless an Investor Indemnified Party from and against any loss or liability by
reason of such settlement. An Indemnifying Party shall not, without the prior
written consent of the Investor Indemnified Party, consent to a settlement of,
or the entry of any judgment arising from, any pending or threatened Proceeding
in respect of which such Investor Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Investor
Indemnified Party, unless such settlement includes an unconditional release of
such Investor Indemnified Party from all liability on claims that are the
subject matter of such Proceeding and does not include an admission of fault,
culpability or failure to act, by or on behalf of such Investor Indemnified
Party.
(c) The rights of the Investor Indemnified Parties under this Section 6.02
shall be in addition to (i) any cause of action or similar right of any Investor
Indemnified Party against an Indemnifying Party or other Persons, or (b) any
liabilities to which the parties may be subject to pursuant to any Applicable
Law. In the event that the transactions described herein are not consummated, or
are otherwise modified or prevented in any way, other than in accordance with
Section 6.17 hereof, the provisions of this Section 6.02 shall remain and
continue to be valid, legally binding and in full force and effect. The
Indemnifying Party agrees that no Investor Indemnified Party shall have any
liability to an Indemnifying Party or other Persons (including its security
holders or creditors) for any damages, indirect, consequential or otherwise
arising out of, related to, or in connection with this Agreement or any of the
transactions contemplated hereby, except only for actual damages arising solely
in connection with breach by the Investors of any of their representations,
warranties or covenants that are contained in this Agreement.
Section 6.03. Termination. This Agreement may be terminated:
(a) at any time prior to the Closing Date by the written agreement of the
Corporation and the Investors;
(b) at any time prior to the Closing Date by either the Corporation or the
Investors by written notice to the other party if the transactions contemplated
hereby shall not have been consummated pursuant hereto by 5:00 p.m. New York
City time ninety (90) days after the date hereof (the "Termination Date"),
unless such date shall be extended by the mutual written consent of the
Corporation and the Investors; provided, however, that the right to terminate
this Agreement under this Section 6.03(b) shall not be available to any party
until June 30, 2007 if all of the conditions set forth in Article IV shall have
been satisfied at any time prior to the Termination Date, except for (A) such
conditions that, by their terms, can only or must be satisfied on the Closing
Date, and (B) the conditions set forth in Sections 4.01(g) and 4.01(h) hereof;
provided further, however, that the right to terminate this Agreement under this
Section 6.03(b) shall not be available to any party that has breached in any
material respect its
34
obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Closing to occur.
(c) at any time prior to the Closing Date by either the Corporation or the
Investors by written notice to the other party if any court of competent
jurisdiction in the United States or Federal, state or local government or
regulatory body in the United States shall have issued an order, decree or
ruling or taken such action that permanently restrains, enjoins or otherwise
prohibits the transactions contemplated hereby and such order, decree, ruling or
other action shall have become final and non-appealable after the taking of all
actions by the Corporation and the Investors contemplated by Section 5.13
hereto; and
(d) at any time prior to the Closing Date by the Investors if there shall
have occurred or a condition shall have arisen or been created since the date of
this Agreement which has had, or would reasonably be expected to have, a
Material Adverse Effect.
Section 6.04. Legends.
(a) The Investors agree that the share certificate(s) that the Investors
receive from the Corporation in respect of the Purchased Shares, and any shares
of Series A Preferred Stock, Series B Preferred Stock, Common Stock and Class B
Common Stock issued in respect thereof shall be legended with the following
legend:
"THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT") AND THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT THEREUNDER."
(b) The Investors agree that the share certificate(s) that the Investors
receive from the Corporation in respect of the Purchased Shares, and any shares
of Series A Preferred Stock, Series B Preferred Stock, Common Stock and Class B
Common Stock issued in respect thereof shall be legended with the following
legends:
(i) With respect to Series A Preferred Stock:
"THE SECURITIES ARE SUBJECT TO RESTRICTIONS [ON VOTING AND
TRANSFERABILITY](1) PROVIDED IN THE CERTIFICATE OF DESIGNATION FOR THE
SECURITIES AND THE SECURITIES PURCHASE AGREEMENT, DATED OCTOBER 17, 2006, AS
AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS NAMED
THEREIN. COPIES OF SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE
CORPORATION UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION AT
THE PRINCIPAL OFFICE OF THE CORPORATION."
----------
(1) Words in italics to be included only in share certificates for Series A
Preferred Stock issued on the Closing Date.
35
(ii) with respect to the Series B Preferred Stock:
"THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON CONVERTIBILITY PROVIDED IN
THE CERTIFICATE OF DESIGNATION FOR THE SECURITIES AND THE SECURITIES PURCHASE
AGREEMENT, DATED OCTOBER 17, 2006 AS AMENDED FROM TIME TO TIME, BY AND BETWEEN
THE CORPORATION AND THE PERSONS NAMED THEREIN. COPIES OF SUCH DOCUMENTS MAY BE
OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION UPON REQUEST WITHOUT CHARGE FROM
THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE CORPORATION."
(iii) with respect to the Class B Common Stock issuable upon
conversion of the Series B Preferred Stock:
"THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON CONVERTIBILITY PROVIDED IN
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION AND THE
SECURITIES PURCHASE AGREEMENT, DATED OCTOBER 17, 2006 AS AMENDED FROM TIME TO
TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS NAMED THEREIN. COPIES OF
SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION UPON
REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
OFFICE OF THE CORPORATION."
(iv) with respect to the Common Stock issuable upon conversion of the
Series A Preferred Stock, Series B Preferred Stock or Class B Common Stock:
"THE SECURITIES ARE SUBJECT TO AGREEMENTS, COVENANTS AND RESTRICTIONS ON
[VOTING AND](2) TRANSFERABILITY PROVIDED IN THE SECURITIES PURCHASE AGREEMENT,
DATED OCTOBER 17, 2006 AS AMENDED FROM TIME TO TIME, BY AND BETWEEN THE
CORPORATION AND THE PERSONS NAMED THEREIN. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION UPON REQUEST WITHOUT CHARGE FROM
THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE CORPORATION."
(c) The legends referred to in Section 6.04(a) above shall be removed from
a certificate representing such shares of Series A Preferred Stock, Series B
Preferred Stock or shares of Common Stock and Class B Common Stock issued upon
conversion thereof if the securities represented thereby are sold pursuant to an
effective registration statement under the Securities Act, or there is delivered
to the Corporation such satisfactory evidence, which may include an opinion of
independent counsel, as reasonably may be requested by the Corporation, to
confirm that neither such legend nor the instructions on transfer set forth
therein are required to ensure that transfers of such securities will not
violate the registration requirements of the Securities Act. The legends
referred to in Section 6.04(b) shall be removed from the certificates
----------
(2) Words in italics to be included only in share certificates for Common Stock
issuable on conversion of Series A Preferred Stock issued on the Closing
Date.
36
representing such shares of Series A Preferred Stock or Series B Preferred Stock
or shares of Common Stock or Class B Common Stock issued upon conversion thereof
promptly, but in no event more than five (5) Business Days, after the later of
(i) receipt of a request for conversion received from a holder following the
Majority Ownership Date or a transfer of such shares to a Qualified Transferee,
as applicable and (ii) delivery of the applicable certificates to the
Corporation.
Section 6.05. Fees and Expenses.
(a) The Corporation shall pay (i) to Deutsche Bank Securities, Inc., an
advisory fee in the amount notified by the Investors to the Corporation prior to
the date hereof, and to Stroock & Stroock & Xxxxx LLP and Xxxxxxxx, Xxxxxx &
Finger, P.A., all reasonable and documented legal fees and expenses incurred
through the Closing Date (including in connection with the preparation and
submission of any filings in connection with the HSR Act and response to
comments, inquiries and requests for information related thereto) in the amounts
notified by the Investors to the Corporation prior to the Closing Date; (ii)
directly to the appropriate governmental entity, on behalf of each of Investors,
any fees payable by each of the Investors in connection with their compliance
with the applicable requirements of the HSR Act (including filing fees and
expenses related thereto); and (iii) all reasonable and documented legal fees
and expenses of the Investors incurred in connection with the Class B Proposal,
the Non-Voting Securities Proposal, and any amendment, waiver, notice or consent
under this Agreement, the Series A Certificate of Designation, the Series B
Certificate of Designation or the Amended and Restated Certificate of
Incorporation, provided that, as to any such amendment, waiver or consent, the
taking of such action by the Investors is requested by the Corporation.
(b) The Corporation shall pay the fees and expenses of the Investors
provided in Section 6.05(a) by wire transfers of immediately available fund to
the accounts specified therefor by the Investors as follows: (i) the fees and
expenses described in Section 6.05(a)(i) on or prior to the Closing Date; (ii)
the fees and expenses described in Section 6.05(a)(ii) as and at the time
required to be paid to such governmental entity; and (iii) the fees and expenses
described in Section 6.05(a)(iii), not later than thirty (30) days following
request for such payment.
(c) In the event this Agreement is terminated under any of the
circumstances described in Section 6.03, the Corporation shall promptly (but in
no event more than ten (10) Business Days following such termination) pay to
Stroock & Stroock & Xxxxx LLP and Xxxxxxxx, Xxxxxx & Finger, P.A., all
reasonable and documented legal fees and expenses incurred through the date of
such termination (including in connection with the preparation and submission of
any filings in connection with the HSR Act and response to comments, inquiries
and requests for information related thereto) in the reasonable and documented
amounts notified by the Investors to the Corporation within five (5) Business
Days following such termination; provided, however, that the Investors have not
breached in any material respects their obligations under this Agreement which
breach caused such termination.
Section 6.06. Equitable Remedies.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with the specific terms of the
37
provisions or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Each party agrees that it shall not assert, as a defense against a claim for
specific performance, that the party seeking specific performance has an
adequate remedy at law.
Section 6.07. Notices.
All notices, claims and other communications hereunder shall be in writing
and shall be made by hand delivery, registered or certified mail (postage
prepaid, return receipt requested), facsimile, or overnight air courier
guaranteeing next day delivery,
(a) if to the Corporation, to it at:
Loral Space & Communications Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Willkie, Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Special Committee of the Board of Directors
Loral Space & Communications Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx and Xxxx X. Xxxxxx, Xx.
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
King & Spalding LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxx, Esq.
38
Telephone: 000-000-0000
Facsimile: 212-556-2222
(b) if to the Investors, to them at:
MHR Fund Management LLC
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
or at such other address as any party may from time to time furnish to the other
parties by a notice given in accordance with the provisions of this Section
6.07. All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; when receipt is
confirmed, if sent by facsimile; and the next Business Day after timely delivery
to the courier, if sent by an overnight air courier service guaranteeing next
day delivery.
Section 6.08. Entire Agreement.
This Agreement, together with the Exhibits annexed hereto, contains the
entire understanding among the parties hereto concerning the subject matter
hereof and this Agreement may not be changed, modified, altered or terminated
except by an agreement in writing executed by the parties hereto. Any waiver by
any party of any of its rights under this Agreement or of any breach of this
Agreement shall not constitute a waiver of any other rights or of any other or
future breach.
Section 6.09. Remedies Cumulative.
Except as otherwise provided herein, each and all of the rights and
remedies in this Agreement provided, and each and all of the rights and remedies
allowed at law and in equity in like case, shall be cumulative, and the exercise
of one right or remedy shall not be exclusive of the right to exercise or resort
to any and all other rights or remedies provided in this Agreement or at law or
in equity.
Section 6.10. Governing Law.
39
This Agreement shall be construed in accordance with and subject to the
laws and decisions of the State of New York applicable to contracts made and to
be performed entirely therein, except to the extent that the Delaware General
Corporation Law applies and, to that extent, by the internal laws of the State
of Delaware.
Section 6.11. Counterparts.
This Agreement may be executed in several counterparts hereof, and by the
different parties hereto on separate counterparts hereof, each of which shall be
an original; but such counterparts shall together constitute one and the same
instrument.
Section 6.12. Waivers.
No provision in this Agreement shall be deemed waived except by an
instrument in writing signed by the party waiving such provision.
Section 6.13. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Corporation shall not
assign this Agreement or any rights or obligations hereunder. Notwithstanding
the foregoing, the Investors may assign their rights hereunder to any of their
Affiliates, without the consent of the Corporation or to any other Person or
entity with the consent of the Corporation, which consent shall not be
unreasonably withheld, in either case provided that such Person executes and
delivers to the Corporation an agreement to be bound by the provisions of, and
to become a party to, this Agreement, substantially in the form attached hereto
as Exhibit N (a "Joinder Agreement"). By executing and delivering to the
Corporation a completed Joinder Agreement, such Person shall be deemed to be an
"Investor" party hereto, and shall be bound by all covenants, agreements,
representations and warranties made by it as an Investor hereunder, as if such
Person was an original party hereto and if the Investor set forth on the
signature page hereto so assigns all of its rights and obligations hereunder,
such Investor shall cease to be a party hereto and to have any further rights or
obligations hereunder.
Section 6.14. Further Assurances.
The Investors shall, at the request of the Corporation, and the Corporation
shall, at the request of the Investors, from time to time, execute and deliver
such other assignments, transfers, conveyances and other instruments and
documents and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting complete consummation of this Agreement,
the Registration Rights Agreement and the transactions herein and therein
contemplated.
Section 6.15. Public Announcements. No public announcement by any party
hereto with regard to the transactions contemplated hereby or the material terms
hereof shall be issued by any party without the mutual prior consent of the
other parties, except that in the event the parties are unable to agree on a
press release or other public disclosure and legal counsel for one party is of
the opinion that such press release or other public disclosure is required by
law and such party
40
furnishes the other party an opinion to that effect, then such party may issue
the legally required press release or other public disclosure.
Section 6.16. Jurisdiction; Consent to Service of Process.
Each party hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court for the Southern District of New York and any court
of the State of New York located in the City of New York in any such action,
suit or proceeding, and agrees that any such action, suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 6.16 and shall not be deemed to be a general submission to the
jurisdiction of said courts or the State of New York other than for such
purpose.
Section 6.17. Amendment. This Agreement may not be amended, except by an
instrument in writing signed by the parties hereto or their permitted successors
and assigns.
Section 6.18. Schedule 13D Filings Conclusive. The information contained in
the Schedule 13D filed by the Investors with the United States Securities and
Exchange Commission with respect to the Corporation, as amended from time to
time, shall be conclusive for the purposes of the Corporation's compliance with
its obligations under Section 5.06 hereunder, absent manifest error, unless the
Investors have delivered written notice to the contrary to the Corporation as
provided in Section 6.07.
Section 6.19. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 6.20. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
41
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
INVESTORS
MHR FUND MANAGEMENT LLC
By: /s/ Xxx Xxxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxxx
Title: Managing Principal
42
EXHIBIT A
FORM OF SERIES A CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATION
OF
SERIES A CUMULATIVE 7.50% CONVERTIBLE PREFERRED STOCK
OF
LORAL SPACE & COMMUNICATIONS INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
----------
Loral Space & Communications Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation (the "Board of Directors") pursuant to
authority of the Board of Directors as required by Section 151 of the General
Corporation Law of the State of Delaware:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors in accordance with the provisions of the Restated Certificate
of Incorporation of the Corporation, (the "Certificate of Incorporation"), the
Board of Directors hereby creates a series of the Corporation's previously
authorized preferred stock, par value $0.01 per share, and hereby states the
designation and number of shares thereof, and fixes the voting powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions thereof, as follows:
Series A Cumulative 7.50% Convertible Preferred Stock:
I. Designation and Amount
A. The designation of this series of shares shall be "Series A
Cumulative 7.50% Convertible Preferred Stock" (the "Series A Preferred Stock"),
par value $0.01 per share; and the authorized number of shares constituting such
series shall be 2,000,000. Shares of Series A Preferred Stock may be issued by
the Corporation from time to time by a resolution or resolutions of the Board of
Directors. The number of shares of the Series A Preferred Stock may be decreased
from time to time by a resolution or resolutions of the Board of Directors,
provided that such decrease complies with the terms hereof.
II. Rank
A. With respect to dividend rights, the Series A Preferred Stock shall
rank (i) junior to each other class or series of capital stock which by its
terms ranks senior to the Series A Preferred Stock, (ii) on a parity with the
Corporation's Series B 7.50% Convertible Preferred Stock, par value $0.01 per
share (the "Series B Preferred Stock") and each other class or series of capital
stock which by its terms ranks on a parity with the Series A Preferred Stock,
and (iii) prior to the Corporation's Common Stock, par value $0.01 per share
(the "Common
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Stock") and Class B Common Stock (as defined below) and, except as specified
above, all other classes and series of capital stock of the Corporation
hereafter issued by the Corporation. Dividends paid on the shares of Series A
Preferred Stock and Series B Preferred Stock (including any Arrearages (as
defined below) and any accumulated dividends thereon) shall be allocated pro
rata on a share-by-share basis among all shares of Series A Preferred Stock and
Series B Preferred Stock then outstanding. With respect to dividend rights, all
equity securities of the Corporation to which the Series A Preferred Stock ranks
senior, including the Common Stock and Class B Common Stock, are collectively
referred to herein as the "Junior Dividend Securities"; all equity securities of
the Corporation with which the Series A Preferred Stock ranks on a parity,
including the Series B Preferred Stock, are collectively referred to herein as
the "Parity Dividend Securities"; and all equity securities of the Corporation
to which the Series A Preferred Stock ranks junior are collectively referred to
herein as the "Senior Dividend Securities." All references herein to "Class B
Common Stock" shall be applicable and shall mean the Class B Common Stock, par
value $0.01 per share, of the Corporation, only if and when authorized and
issued pursuant to the Class B Common Stock Authorization.
B. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the Series A Preferred Stock shall rank (i) junior to each other class or series
of capital stock which by its terms ranks senior to the Series A Preferred
Stock, (ii) on a parity with the Corporation's Series B Preferred Stock and each
other class or series of capital stock or series of Preferred Stock of the
Corporation which by its terms ranks on a parity with the Series A Preferred
Stock, and (iii) prior to the Corporation's Common Stock and Class B Common
Stock and, except as specified above, all other classes and series of capital
stock of the Corporation hereafter issued by the Corporation. Any distribution
of assets upon liquidation, distribution or winding up of the Corporation,
whether voluntary or involuntary, to shares of the Series A Preferred Stock and
Series B Preferred Stock shall be allocated pro rata on a share-by-share basis
among all shares of Series A Preferred Stock and Series B Preferred Stock then
outstanding. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
all equity securities of the Corporation to which the Series A Preferred Stock
ranks senior, including the Common Stock and Class B Common Stock, are
collectively referred to herein as "Junior Liquidation Securities" (and together
with the Junior Dividend Securities are referred to herein as the "Junior
Securities"); all equity securities of the Corporation to which the Series A
Preferred Stock ranks on parity, including the Series B Preferred Stock, are
collectively referred to herein as "Parity Liquidation Securities" (and together
with the Parity Dividend Securities are referred to herein as the "Parity
Securities"); and all equity securities of the Corporation to which the Series A
Preferred Stock ranks junior are collectively referred to herein as "Senior
Liquidation Securities" (and together with the Senior Dividend Securities are
referred to herein as the "Senior Securities").
III. Dividends
A. Mandatory Dividends. To the full extent of the assets and funds of
the Corporation lawfully available therefor, the Board of Directors shall
declare, and the Corporation shall pay to the holders of shares of Series A
Preferred Stock (each a "Holder" and collectively, the "Holders"), as to each
share, mandatory dividends at a rate of 7.50% per annum (such rate, the
"Dividend Rate") of the sum of (i) the Share Purchase Price plus (ii) an amount
equal to all
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Arrearages, if any, that are payable in respect of such share, whether or not
such dividends are declared, payment of which shall be made in either (i) cash
or (ii) additional shares of Series B Preferred Stock (or Series A Preferred
Stock under the circumstances set forth in Section III.D below) (in either case,
the "PIK Shares"), upon and pursuant to the determination of the Board of
Directors pursuant to Section B of this Article III. Dividends shall be paid in
four equal quarterly installments on January 15, April 15, July 15 and October
15 of each year, or if any such date is not a Business Day, on the Business Day
immediately preceding such day (each such date, regardless of whether any
dividends have been paid or declared and set aside for payment on such date, a
"Dividend Payment Date"), to the Holders of record as they appear on the stock
record books of the Corporation (the "Registered Holders") on the tenth (10th)
day prior to the relevant Dividend Payment Date. Dividends shall be cumulative
from the most recent Dividend Payment Date as to which dividends shall have been
paid or, if no dividends have ever been paid, from the date of issuance and
shall accumulate from day to day whether or not earned or declared until paid.
Dividends shall accumulate on the basis of a 360-day year consisting of twelve
30-day months (four 90-day quarters). For the purpose of this Article III, if
dividends are paid in PIK Shares, the number of PIK Shares issuable on any
Dividend Payment Date for each share of Series A Preferred Stock shall equal the
amount payable pursuant to this Section A of Article III divided by the Share
Purchase Price.
B. Dividend Determination. Not later than thirty (30) days prior to
any Dividend Payment Date, the Board of Directors shall determine (the "Dividend
Determination") whether the Corporation shall pay any portion or all of the
dividend in PIK Shares or in cash (the "Cash Dividend"); provided, however, that
the dividend payment for all relevant periods through the seventeenth (17th)
Dividend Payment Date for all shares of the Series A Preferred Stock shall be
payable solely in PIK Shares; provided further, however, that from and after the
seventeenth (17th) Dividend Payment Date, in the event that (i) SkyNet either
did not pay dividends to the holders of the SkyNet Preferred Stock or paid
dividends to the holders of the SkyNet Preferred Stock, in whole or in part, in
additional shares of SkyNet Preferred Stock on the "Dividend Payment Date" (as
such term is defined in the Certificate of Designations of the SkyNet Preferred
Stock) immediately preceding the date of the then current Dividend
Determination, (ii) the Consolidated Free Cash Flow for the twelve (12) month
period ending on the last day of the most recently completed fiscal quarter
ending at least 50 days prior to the date of the then current Dividend
Determination (such period, the "Prior Twelve Month Period") is less than 400%
of the amount that is payable on the outstanding shares of Series A Preferred
Stock and Series B Preferred Stock on the next scheduled Dividend Payment Date
to which the Dividend Determination relates (assuming such amount were to be
payable as a Cash Dividend), or (iii) the Consolidated Free Cash Flow for the
Prior Twelve Month Period is less than 110% of the Consolidated Free Cash Flow
for the twelve (12) month period ended December 31 of the year immediately
preceding the last day of the Prior Twelve Month Period, then the dividend
payment for the relevant period for all Series A Preferred Stock shall be
payable solely in PIK Shares. If, subject to the proviso set forth in the
immediately preceding sentence, the Dividend Determination is that any portion
or all of the dividend be paid in (i) cash, then such portion or all of the
dividend payment, as the case may be, for the relevant period shall be a Cash
Dividend, and (ii) PIK Shares, then such portion or all of the dividend payment,
as the case may be, for the relevant period shall be in PIK Shares. If, as a
result of changes in GAAP, the Corporation's accounting methodologies,
practices, presentations or otherwise, the Board of Directors is unable to
determine the Consolidated Free Cash Flow when and as required pursuant to this
Section B,
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the Board of Directors shall, in good faith and in consultation with and after
taking the advice of its independent auditors, determine the Consolidated Free
Cash Flow in a manner that would most closely reflect the Consolidated Free Cash
Flow that would have been determined as defined herein if such changes had not
occurred and such determination of Consolidated Free Cash Flow shall be
conclusive for the purposes of the Dividend Determination.
C. Accumulation. Dividends on the Series A Preferred Stock shall be
cumulative, and from and after any Dividend Payment Date on which any dividend
that has accumulated through such date on a share of Series A Preferred Stock
has not been paid in full (the amount of such unpaid dividends, an "Arrearage"),
additional dividends shall accumulate on such share of Series A Preferred Stock
in respect of the amount of such Arrearage at the Dividend Rate. Any and all
such additional dividends in respect of any Arrearages shall accumulate from day
to day and compound quarterly, whether or not earned or declared until the
Arrearage is paid in full, and shall constitute an additional Arrearage from and
after any Dividend Payment Date to the extent not paid on such Dividend Payment
Date. Reference in any Article herein to dividends that have accumulated with
respect to a share of Series A Preferred Stock shall include the amount, if any,
of any Arrearage together with any dividends accumulated on such Arrearage
pursuant to the immediately preceding two sentences. Additional dividends in
respect of any Arrearage may be declared and paid at any time, in whole or in
part, in accordance with Section E of this Article III without reference to any
regular Dividend Payment Date, to Registered Holders on such record date as may
be fixed by the Board of Directors (which record date shall be no less than ten
(10) days prior to the corresponding payment date).
D. Payment of PIK Shares in Shares of Series A Preferred Stock. The
payment of any PIK Shares as dividends pursuant to this Article III shall be
made in additional shares of Series A Preferred Stock and not in shares of
Series B Preferred Stock: (i) on and after the Majority Ownership Date, or (ii)
at any time and to the extent that MHR is the Beneficial Owner, directly or
indirectly, after giving effect to the payment of PIK Shares in question, of
less than 39.999% of the aggregate voting power of all outstanding securities
issued by the Corporation. Prior to the Majority Ownership Date, the information
contained in the Schedule 13D filed by MHR with the United States Securities and
Exchange Commission with respect to its beneficial ownership of securities of
the Corporation as stated therein, as amended from time to time, shall be
conclusive for the purposes of the Corporation's compliance with its obligations
under this Section III.D, absent manifest error, unless MHR has delivered
written notice to the Corporation relating to the information contained in such
Schedule 13D to the Corporation as provided in Section IX.A.
E. Legal Limit on Dividends. The Board of Directors shall declare and
the Corporation shall pay all dividends, in the form prescribed by this Article
III, to the full extent, but only to such extent, that there exist at the time
assets or funds of the Corporation legally available for the payment of
dividends in accordance with the DGCL. In the event that there do not exist
lawfully available funds for the payment of dividends on any Dividend Payment
Date, any dividends that would otherwise be payable on all outstanding shares of
Series A Preferred Stock (and on any Arrearage and any dividends accumulated
thereon) shall accrue and shall not be paid unless and until the Corporation has
funds or other assets legally available for the
A-4
payment of such dividends in accordance with the DGCL, in which event such
dividends shall be payable in PIK Shares, rather than in cash.
F. Method of Payment. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the full amount of such dividends at the
time accumulated and payable on all outstanding shares of Series A Preferred
Stock and Series B Preferred Stock (including any Arrearages and any dividends
accumulated thereon) shall be allocated pro rata on a share-by-share basis among
all such shares of Series A Preferred Stock and Series B Preferred Stock then
outstanding. Dividends paid in an amount less than the full amount of dividends
at the time accumulated and payable on the Series A Preferred Stock (and on any
Arrearage and any dividends accumulated thereon) shall be applied first to the
earliest dividend which has not theretofore been paid. All cash payments of
dividends on the shares of Series A Preferred Stock shall be made in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. If a dividend is paid in PIK
Shares, no fractional PIK Shares shall be issued, so that the number of PIK
Shares issued to each Registered Holder shall be rounded down to the nearest
whole number of shares of Series B Preferred Stock or (to the extent
contemplated by Section III.D hereof) Series A Preferred Stock, as applicable.
All dividends paid in PIK Shares shall be deemed issued on the applicable
Dividend Payment Date and shall thereupon be duly authorized, validly issued,
fully paid and non-assessable and free and clear of all liens, charges, security
interests or other encumbrances.
G. Restrictions on Dividends. So long as any shares of the Series A
Preferred Stock are outstanding, the Board of Directors shall not declare, and
the Corporation shall not pay or set apart for payment any dividend on any
Junior Securities or Parity Securities or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the repurchase,
redemption or other retirement of, any Junior Securities or Parity Securities or
any warrants, rights or options exercisable for or convertible into any Junior
Securities or Parity Securities, or make any distribution in respect of the
Junior Securities or Parity Securities, either directly or indirectly, and
whether in cash, obligations or shares of the Corporation or other property
(other than distributions or dividends in Junior Securities to the holders of
Junior Securities), and shall not permit any Subsidiary of the Corporation to
purchase or redeem any Junior Securities or Parity Securities or any warrants,
rights, calls or options exercisable for or convertible into any Junior
Securities or Parity Securities unless prior to or concurrently with such
declaration, payment, setting apart for payment, repurchase, redemption or other
retirement or distribution, as the case may be, all accumulated and unpaid
dividends on shares of the Series A Preferred Stock not paid on the dates
provided for in Section A of Article III hereof (including any Arrearages and
any dividends accumulated thereon) shall have been paid, except that when
dividends are not paid in full as aforesaid upon the shares of Series A
Preferred Stock, dividends may be declared on the Series A Preferred Stock and
on any series of Parity Dividend Securities (including the Series B Preferred
Stock) and paid pro rata so that the amount of dividends so declared and paid on
Series A Preferred Stock and such series of Parity Dividend Securities
(including the Series B Preferred Stock) shall in all cases bear to each other
the same ratio that accumulated dividends (including additional dividends
accumulated in respect of such accumulated dividends) on the shares of Series A
Preferred Stock and such Parity Dividend Securities (including the Series B
Preferred Stock) bear to each other. Notwithstanding the foregoing, this
paragraph shall not prohibit the acquisition, repurchase, exchange, conversion,
redemption or other retirement for value of shares of Series A Preferred Stock
or any Parity
A-5
Dividend Security (including the Series B Preferred Stock) by the Corporation in
accordance with the terms of such securities.
IV. Liquidation Preference
A. In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the Holders of then-outstanding
shares of Series A Preferred Stock shall be entitled to receive, out of the
assets of the Corporation, prior and in preference to the holders of any Junior
Securities, whether such assets are capital or surplus of any nature, an amount
per share equal to the greater of (i) the sum of (A) the Share Purchase Price
plus (B) an amount equal to the unpaid dividends, if any, accumulated or deemed
to have accumulated thereon (including any Arrearages and any dividends
accumulated thereon) through and including the date of final distribution to
such Holders, whether or not such dividends are declared, plus (C) the
Make-Whole Amount, and (ii) the amount that would be payable to such Holders if
the Holders had converted all outstanding shares of Series A Preferred Stock
into shares of Common Stock immediately prior to such liquidation, dissolution
or winding up (the "Liquidation Preference"). After any such payment in full,
the Holders, only in their capacity as such, shall not be entitled to any
further participation in any distribution of assets of the Corporation. All the
assets of the Corporation available for distribution to stockholders after the
liquidation preferences of any Senior Liquidation Securities shall be
distributed ratably (in proportion to the full distributable amounts to which
Holders and Parity Liquidation Securities (including the Series B Preferred
Stock) are respectively entitled upon such liquidation, dissolution, or winding
up) among the Holders of the then-outstanding shares of Series A Preferred Stock
and Parity Liquidation Securities (including the Series B Preferred Stock) when
such assets are not sufficient to pay in full the aggregate amounts payable
thereon. The Corporation shall not make any distribution of assets upon such
liquidation, dissolution or winding up in respect of any Junior Liquidation
Securities, either directly or indirectly, unless prior to such distribution,
the Liquidation Preference shall have been paid in full in respect of all
outstanding shares of Series A Preferred Stock, Series B Preferred Stock and any
other Parity Liquidation Securities.
Neither a voluntary consolidation or merger of the Corporation with or
into any other Person or Persons, nor a sale, conveyance, lease, exchange or
transfer of all or substantially all of the Corporation's assets for cash,
securities or other property to a Person or Persons shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Article IV.
V. Mandatory Conversion and Change of Control.
A. Mandatory Conversion.
(a) If, at any time after the date that is sixty-six (66) months after
the original issuance of the Series A Preferred Stock, for twenty (20) Trading
Days in any 30-Trading Day Reference Period, the Closing Price of the Common
Stock exceeds 125% of the Conversion Price (as adjusted pursuant to Article VII
hereof), then the Corporation shall have the right, at its option and election,
to convert the then-outstanding shares of Series A Preferred Stock, in whole
A-6
and not in part, into a number of shares of Common Stock equal to the Conversion
Number on the Mandatory Conversion Date.
(b) Notwithstanding anything in this Section A to the contrary, the
Corporation shall not have the right to convert the Series A Preferred Stock
into Common Stock pursuant to this Section A unless (i) the Corporation
simultaneously exercises the right, pursuant to Section V.A of the Series B
Preferred Stock Certificate of Designation (the "Series B Certificate of
Designation"), to convert the then-outstanding shares of Series B Preferred
Stock, in whole and not in part, into shares of Common Stock or Class B Common
Stock, as the case may be, (ii) the Common Stock shall have been validly listed
for trading on NASDAQ or another national securities exchange or quoted on a
nationally recognized quotation system on each day in the 30-Day Reference
Period and as of the date of such conversion, (iii) the average daily trading
volume in the Common Stock during the 30-Day Reference Period is at least fifty
percent (50%) of the average daily trading volume in the Common Stock for the
180-day period ending on the date of the Securities Purchase Agreement, and (iv)
the Class B Common Stock Authorization has occurred. The Corporation may not
effect any such conversion if such conversion would: (A) violate any provision
of the Certificate of Incorporation or the Bylaws; (B) conflict with, contravene
or result in a breach or violation of any of the terms or provisions of, or
constitute a default (with or without notice or the passage of time) under, or
result in or give rise to a right of termination, cancellation, acceleration or
modification of any right or obligation under, or give rise to a right to put or
to compel a tender offer for outstanding securities of the Corporation or any of
its Subsidiaries under, or require any consent, waiver or approval under (unless
such consent, waiver or approval is obtained prior to effecting such
conversion), any note, bond, debt instrument, indenture, mortgage, deed of
trust, lease, loan agreement, joint venture agreement, Regulatory Approval,
contract or any other agreement, instrument or obligation to which the
Corporation or any of its Subsidiaries is a party or by which the Corporation or
any of its Subsidiaries or any property of the Corporation or any of its
Subsidiaries is bound; (C) result in the creation or imposition of any Lien upon
any assets or properties of the Corporation or any of its Subsidiaries other
than immaterial Liens; or (D) violate any Law applicable to the Corporation or
any of its Subsidiaries. The Holders agree to cooperate with the Corporation in
providing such information and supplying such assistance as may be reasonably
requested by the Corporation in connection with obtaining any consent, waiver or
approval in respect of any Regulatory Approval required prior to effecting any
such conversion.
(c) Notice of a conversion of shares of Series A Preferred Stock
pursuant to this Section A (a "Notice of Mandatory Conversion") shall be sent to
the Holders of record by first class mail, postage prepaid, at each such
Holder's address as it appears on the stock record books of the Corporation, not
before the expiration of the 30-Day Reference Period and not more than six (6)
Business Days subsequent to the last day of the 30-Day Reference Period. The
Notice of Mandatory Conversion shall set forth the date fixed for the conversion
which shall not be before, and shall not be more than 30 days after, the date of
the mailing of the Notice of Mandatory Conversion (the "Mandatory Conversion
Date") and shall set forth in reasonable detail the calculations and supporting
data used by the Corporation in its determination that it had the right to
effect such conversion. From and after the Mandatory Conversion Date, all
dividends on the shares of Series A Preferred Stock that are converted shall
cease to accumulate and all rights of the Holders thereof as Holders shall cease
and terminate, except if the
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Corporation shall default in its obligation to deliver shares of Common Stock to
Holders on the Mandatory Conversion Date, in which case all such rights shall
continue unless and until such shares are redeemed or converted in accordance
with the terms hereof. Prior to the Mandatory Conversion Date, each Holder shall
provide a written notice to the Corporation specifying the name or names in
which such Holder wishes the certificate or certificates for shares of Common
Stock to be issued. If no such notice is delivered, such certificates for shares
of Common Stock and cash in lieu of fractional shares, if any, shall be
delivered to such Holder. In case such notice shall specify a name or names
other than that of such Holder, such notice shall be accompanied by payment of
all transfer taxes payable upon the issuance of shares of Common Stock in such
name or names. Other than such taxes, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes (other than taxes based on
income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series A Preferred Stock pursuant to this Section
A. On or after the Mandatory Conversion Date, each Holder whose shares are so
converted shall surrender the certificate formerly evidencing such shares of
Series A Preferred Stock to the Corporation at the place designated in the
Notice of Mandatory Conversion. As promptly as practical, and in any event
within three (3) Business Days after the Mandatory Conversion Date, the
Corporation shall deliver or cause to be delivered as directed by the Holder of
shares being so converted certificates representing the number of validly
issued, fully paid and nonassessable full shares of Common Stock to which such
Holder shall be entitled. Except as otherwise specified in this Article V, for
the purposes hereof, such conversion shall be deemed a conversion effected
pursuant to Article VII and the terms and procedures set forth in Article VII
shall apply. For such purpose, the applicable Conversion Date shall be the
Mandatory Conversion Date.
(d) In the event the Corporation delivers a Notice of Mandatory
Conversion, the Corporation shall be obligated to effect the conversion
described therein, provided that each of the conditions to such conversion set
forth in subsections (a), (b) and (c) above is (i) satisfied or (ii) waived by
the Holders of a majority of the shares of Series A Preferred Stock then
outstanding.
B. Change of Control. Any Holder of record immediately prior to either
(i) the occurrence of a Change of Control, or (ii) the approval by the Board of
Directors (or any committee thereof) in existence immediately prior to the
earlier of the public announcement or consummation of such Change of Control, of
such Change of Control, or any transaction related thereto or that results
therefrom, whether prior or subsequent to such Change of Control (the "Change of
Control Approval"), shall have the right immediately prior to the occurrence of
a Change of Control or upon the Change of Control Approval, as the case may be,
and may, but shall not be required to, in any case, require the Corporation to,
in accordance with the procedures set forth in Sections C or D of this Article
V, as the case may be, with the choice between (a) and (b) below being at the
Holder's sole discretion (and the Corporation shall not consummate a Change of
Control that is not in compliance with the provisions of Section C or D of this
Article V); provided, however, that if the rights of any Holder to redeem any of
its shares of Series A Preferred Stock pursuant to paragraph (a) below, which
right shall continue to be in full force and effect until it is exercised in
full by the Holder as provided herein, arises as a result of a Change of Control
as defined in paragraphs (a)(i), (a)(ii) or (b) of the definition thereof, such
Holder may exercise its rights hereunder and under paragraph (a) below only upon
or at any time following the Change of Control Approval:
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(a) redeem any of the shares of Series A Preferred Stock held by such
Holder in an amount per share, payable in cash (out of funds legally available
therefor), equal to the amount set forth in Section IV.A(i) above; provided,
however, that if (x) (i) the Change of Control is triggered by paragraph (a) of
the definition thereof, (ii) the "Person" referred to in paragraph (a) of the
definition of "Change of Control" is MHR, (iii) MHR is the Beneficial Owner
immediately following such Change of Control of more than 50% but less than 90%
of the aggregate voting power of the then outstanding capital stock of the
Corporation, and (iv) such Change of Control is not approved or recommended by
the Board of Directors (or a committee thereof), or (y) (i) the Change of
Control is triggered by paragraph (a) of the definition thereof, (ii) the
"Person" referred to in paragraph (a) of the definition of "Change of Control"
acquires more than 50% of the aggregate voting power of the then outstanding
capital stock of the Corporation as a result of the acquisition by such Person
from MHR of any securities of the Corporation held by MHR and becomes such
Person as a result of such acquisition, and (iii) such Change of Control is not
first approved or recommended by the Board of Directors (or a committee
thereof), then the amount per share payable in cash (out of funds legally
available therefor) shall equal the amount set forth in Section IV.A(i) above
less the Make-Whole Amount; or
(b) convert any of the then-outstanding shares of Series A Preferred
Stock into such number of shares of Common Stock equal to the sum of (i) the
number of shares of Common Stock such Holder would receive if such
then-outstanding shares of Series A Preferred Stock had been converted by the
Holders thereof pursuant to Article VII hereof at the Conversion Price in effect
on the date immediately preceding the consummation of the Change of Control,
plus (ii) for each such share of Series A Preferred Stock, such number of
additional shares of Common Stock equal to (x) the Make-Whole Amount divided by
(y) the Conversion Price in effect on the date immediately preceding the
consummation of the Change of Control; provided, however, that if a Cash
Dividend would be permitted pursuant to Section B of Article III on the date of
the consummation of such Change of Control, the Make-Whole Amount may be paid,
at the Corporation's discretion, in cash rather than in additional shares of
Common Stock; provided further, however, that if (x) (i) the Change of Control
is triggered by paragraph (a) of the definition thereof, (ii) the "Person"
referred to in paragraph (a) of the definition of "Change of Control" is MHR,
(iii) MHR is the Beneficial Owner immediately following such Change of Control
of more than 50% but less than 90% of the aggregate voting power of the then
outstanding capital stock of the Corporation, and (iv) such Change of Control is
not approved or recommended by the Board of Directors (or a committee thereof),
or (y) (i) the Change of Control is triggered by paragraph (a) of the definition
thereof, (ii) the "Person" referred to in paragraph (a) of the definition of
"Change of Control" acquires more than 50% of the aggregate voting power of the
then outstanding capital stock of the Corporation as a result of the acquisition
by such Person from MHR of any securities of the Corporation held by MHR and
becomes such Person as a result of such acquisition, and (iii) such Change of
Control is not first approved or recommended by the Board of Directors (or a
committee thereof), then the Holder shall have the right immediately prior to
the occurrence of a Change of Control, and may require the Corporation to
convert all, but not less than all, of the then-outstanding shares of Series A
Preferred Stock held by such Holder into such number of shares of Common Stock
equal to the number of shares of Common Stock such Holder would receive if such
then-outstanding shares of Series A Preferred Stock had been converted by the
Holders thereof pursuant to Article VII
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hereof at the Conversion Price in effect on the date immediately preceding the
consummation of the Change of Control.
C. Change of Control Notice, Redemption and Conversion Procedures For
Holders. Except as provided in Section D below, within thirty (30) days
following any Change of Control, a notice of such Change of Control (a
"Post-Closing Change of Control Notice") shall be sent promptly to the Holders
of record on the date of the consummation of such Change of Control, which
Post-Closing Change of Control Notice shall describe the transaction or
transactions constituting such Change of Control and set forth each Holder's
right to require the Corporation to redeem (out of funds legally available
therefor) or convert any or all shares of Series A Preferred Stock held by such
Holder as provided in Section V.B above, the redemption or conversion date
(which date shall be thirty (30) days following the date of the Post-Closing
Change of Control Notice) (the "Change of Control Redemption Date"), and the
procedures to be followed by such Holders in exercising such Holder's right to
cause such redemption or conversion. Failure by the Corporation to give the
Post-Closing Change of Control Notice as prescribed by the preceding sentence,
or the formal insufficiency of any such Post-Closing Change of Control Notice or
the failure by the Holder to deliver a Post-Closing Election Notice (as defined
below), as prescribed by the preceding and following sentences, respectively,
shall not prejudice the rights of any Holder to cause the Corporation to redeem
or convert any such shares held by such Holder. Such Holder shall deliver,
within ten (10) Business Days following receipt of the Post-Closing Change of
Control Notice, or, if the Post-Closing Change of Control Notice is not given as
required by this Section C, at any time following the last day the Corporation
was required to give the Post-Closing Change of Control Notice in accordance
with this Section C, a written notice to the Corporation (a "Post-Closing
Election Notice"), stating whether it elects to require the Corporation to
redeem or convert any or all such shares of Series A Preferred Stock pursuant to
Section B hereof, and if so, specifying the number of shares to be so redeemed
or converted; provided, however, that in the event that such Holder does not
deliver a Post-Closing Election Notice within ten (10) Business Days following
receipt of the Post-Closing Change of Control Notice, such Holder shall be
deemed to have notified the Corporation that it elects to have all of its shares
redeemed pursuant to Section B(a) of this Article V. Notwithstanding the
foregoing, the Holder may provide in such Post-Closing Election Notice that it
will continue to hold any number of shares of Series A Preferred Stock rather
than redeeming or converting pursuant to Section B of this Article V. If the
Post-Closing Election Notice states that the Holder elects to require the
Corporation to redeem or convert any or all such shares of Series A Preferred
Stock pursuant to Section B hereof, the Corporation shall redeem or convert the
number of shares so specified on the written notice of the Holder. In the event
that shares of Series A Preferred Stock are converted into Common Stock pursuant
to Section B of this Article V, the terms and procedures to effect such
conversion set forth in Article VII.A shall apply. The Corporation shall comply
with the requirements of Rules 13e-4 and 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 the repurchase of the shares of
Series A Preferred Stock as a result of a Change of Control. If, and only if,
and from and after the time the Change of Control Redemption Price is paid or
shares of Common Stock are issued in accordance with the terms hereof with
respect to any share of Series A Preferred Stock to be redeemed or converted
pursuant to this Article V, all dividends on such share of Series A Preferred
Stock shall cease to accumulate and all rights of the Holder thereof as a Holder
shall cease and terminate. The Corporation shall not be required to redeem any
shares of
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Series A Preferred Stock upon any Holder's request pursuant to Section V.B above
if a third party redeems such shares of Series A Preferred Stock in the manner,
at the times and otherwise in compliance with the requirements applicable to the
Corporation set forth in this Article V. For the avoidance of doubt, any Holder
may elect to notify the Corporation that it shall not require the Corporation to
redeem or convert any share of Series A Preferred Stock in accordance with the
procedures set forth in Section C of this Article V and any such election or
notice shall not prejudice such Holder from exercising all rights to redeem or
convert such share of Series A Preferred Stock in accordance with the procedures
set forth in Section C of this Article V in any subsequent Change of Control.
Notwithstanding anything to the contrary in this Section C of Article V, in the
event that the Holder elects or is deemed to have elected to redeem any or all
such shares of Series A Preferred Stock prior to the occurrence of a Change of
Control Approval, such election (or deemed election) shall remain in full force
and effect until such Change of Control Approval and the Corporation shall
redeem the number of shares so specified (or deemed to be specified) on the
written notice of such Holder upon such Change of Control Approval, unless at
any time prior to such Change of Control Approval, the Holder delivers a notice
to the Corporation that it no longer elects to redeem any or all such shares of
Series A Preferred Stock (an "Election Change Notice"). If such Election Change
Notice states that the Holder elects to convert any or all shares of Series A
Preferred Stock pursuant to Section B of this Article V, then the Corporation
shall convert the number of shares so specified on the written notice of the
Holder.
D. MHR Change of Control Notice, Redemption and Conversion Procedures.
In the event that and for as long as MHR is the holder of a majority of the
then-outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, in the aggregate, notice of any Change of Control (a "Pre-Closing Change
of Control Notice") shall be sent to MHR (i) not later than fifteen (15)
Business Days prior to the Corporation entering into any binding agreement,
commitment or undertaking, or the offer or acceptance of any of the foregoing
(collectively, a "Change of Control Agreement") that could, in any case, result
in a Change of Control, and (ii) promptly, but in no event more than five (5)
Business Days after the Corporation becomes aware of any fact, event or
circumstance that could, in any case, result in a Change of Control other than
as contemplated by clause (i), which Pre-Closing Change of Control Notice shall
describe the transaction or transactions constituting such Change of Control and
set forth MHR's right to require the Corporation to redeem or convert any or all
shares of Series A Preferred Stock held by MHR at the effective time of the
consummation of such Change of Control, the anticipated date of consummation of
such Change of Control, and the procedures to be followed by MHR in exercising
MHR's right to cause such redemption or conversion. Failure by the Corporation
to give the Pre-Closing Change of Control Notice as prescribed by the preceding
sentence, or the formal insufficiency of any such Pre-Closing Change of Control
Notice, or the failure by the Holder to deliver a Pre-Closing Election Notice
(as defined below), as prescribed by the preceding and following sentences,
respectively, shall not prejudice the rights of MHR to cause the Corporation to
redeem or convert any such shares held by MHR on the date of the consummation of
such Change of Control or the date of the Change of Control Approval.
Notwithstanding the foregoing, the Corporation shall have no obligation to
provide MHR with the Pre-Closing Change of Control Notice under this Section V.D
if in order to comply with a legal obligation to such effect, the Corporation
requests but MHR does not enter into a confidentiality agreement with the
Corporation in form and substance required pursuant to such legal obligation.
MHR shall deliver, at least two (2) Business Days prior to the anticipated date
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of the consummation of such Change of Control (as set forth on the Pre-Closing
Change of Control Notice) or, if the Pre-Closing Change of Control Notice is not
given as required by this Section D, at any time following the last day the
Corporation was required to give the Pre-Closing Change of Control Notice in
accordance with this Section D, a written notice to the Corporation (a
"Pre-Closing Election Notice"), stating whether it elects to require the
Corporation to redeem or convert any or all such shares of Series A Preferred
Stock pursuant to Section B hereof, and if so, specifying the number of shares
to be so redeemed or converted; provided, however, that in the event that such
Holder does not deliver a Pre-Closing Election Notice at least two (2) Business
Days prior to the anticipated date of the consummation of such Change of Control
(as set forth on the Pre-Closing Change of Control Notice), such Holder shall be
deemed to have notified the Corporation that it elects to have all of its shares
redeemed pursuant to Section B(a) of this Article V. Notwithstanding the
foregoing, MHR may provide in such Pre-Closing Election Notice that it will
continue to hold any number of shares of Series A Preferred Stock rather than
redeeming or converting pursuant to Section B of this Article V. If the
Pre-Closing Election Notice states that MHR elects to require the Corporation to
redeem or convert any or all such shares of Series A Preferred Stock pursuant to
Section B hereof, the Corporation shall redeem or convert the number of shares
so specified on the written notice of MHR at the effective time of the
consummation of such Change of Control. In the event that shares of Series A
Preferred Stock are converted into Common Stock pursuant to Section B of this
Article V, the terms and procedures to effect such conversion set forth in
Article VII.A shall apply. The Corporation shall comply with the requirements of
Rules 13e-4 and 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 the repurchase of the shares of Series A Preferred Stock as a
result of a Change of Control. If, and only if, and from and after the time the
Change of Control Redemption Price is paid or shares of Common Stock are issued
in accordance with the terms hereof with respect to any share of Series A
Preferred Stock to be redeemed or converted pursuant to this Article V, all
dividends on such share of Series A Preferred Stock shall cease to accumulate
and all rights of MHR thereof as a holder of shares of Series A Preferred Stock
shall cease and terminate. The Corporation shall not be required to redeem any
shares of Series A Preferred Stock upon MHR's request pursuant to Section V.B(a)
above if a third party redeems such shares of Series A Preferred Stock in the
manner, at the times and otherwise in compliance with the requirements
applicable to the Corporation set forth in this Article V. For the avoidance of
doubt, MHR may elect to notify the Corporation that it shall not require the
Corporation to redeem or convert any share of Series A Preferred Stock in
accordance with the procedures set forth in Section D of this Article V and any
such election or notice shall not prejudice MHR from exercising all rights to
redeem or convert such share of Series A Preferred Stock in accordance with the
procedures set forth in Section D of this Article V in any subsequent Change of
Control. Notwithstanding anything to the contrary in this Section D of Article
V, in the event that MHR elects or is deemed to have elected to redeem any or
all such shares of Series A Preferred Stock prior to the occurrence of a Change
of Control Approval, such election (or deemed election) shall remain in full
force and effect until such Change of Control Approval and the Corporation shall
redeem the number of shares so specified (or deemed to be specified) on the
written notice of MHR upon such Change of Control Approval, unless at any time
prior to such Change of Control Approval, MHR delivers an Election Change
Notice. If such Election Change Notice states that MHR elects to convert any
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or all shares of Series A Preferred Stock pursuant to Section B of this Article
V, then the Corporation shall convert the number of shares so specified on the
written notice of MHR.
E. Change of Control Commitment. The Corporation shall not enter into
any Change of Control Agreement unless (i) the terms thereof comply with the
terms of this Certificate of Designation, including Article V.B hereto, and
permit any Holder to exercise their rights under this Article V, and (ii) there
exist funds legally available for the exercise by each Holder of its rights
under subsection (a) of Section V.B or a third party under the Change of Control
Agreement unconditionally agrees to redeem all the shares of Series A Preferred
Stock that Holders elect to redeem as set forth in full compliance with this
Article V, provided that the Corporation, or its successor, shall remain bound
by all its obligations under this Article V until all shares of Series A
Preferred Stock of Holders that have elected or that have been deemed to have
elected to have their shares redeemed are redeemed as provided herein.
F. Asset Sale Covenants. Following the consummation of an Asset Sale
(as defined in paragraph (d) of the definition of "Change of Control"), the
Corporation shall not, and shall not permit any of its Subsidiaries now or
hereafter existing to, directly or indirectly do any of the following (each, an
"Asset Sale Covenant"):
(a) make any Restricted Payment if, at the time the Company or such
Subsidiary makes such Restricted Payment, the aggregate amount of such
Restricted Payment and all other Restricted Payments since the consummation of
the Asset Sale would exceed the sum of 50% of the Adjusted Consolidated Net
Income of the Corporation accrued during the period (treated as one accounting
period) beginning on the Closing Date to the end of the most recent fiscal
quarter ended at least 45 days prior to the date of such Restricted Payment; or
(b) if such Asset Sale involves assets other than assets owned,
directly or indirectly, by SkyNet or any of its Subsidiaries, transfer, assign,
contribute or otherwise deliver any Asset Sale Proceeds (or any assets purchased
or otherwise obtained, in whole or in part, by such Asset Sale Proceeds),
directly or indirectly, to SkyNet or any of its Subsidiaries or any of their
respective successors or assigns.
VI. Voting Rights
A. The Holders shall have the voting rights set forth below and as
otherwise from time to time required by law. When voting separately as a class,
each share of Series A Preferred Stock shall entitle the Holder thereof to one
vote.
B. So long as any shares of the Series A Preferred Stock are
outstanding, each share of Series A Preferred Stock shall entitle the Holder
thereof to vote on all matters voted on by holders of Common Stock, and the
shares of Series A Preferred Stock shall vote together with shares of Common
Stock as a single class. With respect to any such vote, each share of Series A
Preferred Stock shall entitle its Holder to a number of votes equal to one ten
thousandth of one (1/10,000) vote for each share of Series A Preferred Stock.
C. If on any date (i) all accumulated and unpaid dividends (including
any Arrearages and any dividends accumulated thereon) on shares of Series A
Preferred Stock or shares of Series B Preferred Stock have not been paid on the
dates provided for in Section A of
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Article III hereof or on the dates required pursuant to the terms of the Series
B Preferred Stock for a period, whether or not consecutive, containing in the
aggregate a number of days equivalent to three (3) calendar quarters, or (ii)
the Corporation fails to pay any accumulated and unpaid dividends (including any
Arrearages and any dividends accumulated thereon) on the dates provided for in
Section A of Article III hereof or on the dates required pursuant to the terms
of the Series B Preferred Stock, for which there exist at such time assets or
funds legally available therefor in accordance with the DGCL, then the number of
directors constituting the Board of Directors shall, without further action, be
increased by two, or if the requisite increase in the number of directors
constituting the Board of Directors would require the approval of the
Corporation's stockholders, then the number of directors constituting the Board
of Directors shall be increased to the extent the approval of the Corporation's
stockholders is not required and a number of directors shall resign from the
Board of Directors so that the holders of shares of Series A Preferred Stock and
Series B Preferred Stock, voting together as a single class, may elect two
directors to the Board of Directors, and the holders of a majority of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
voting together as a single class, shall have, in addition to the other voting
rights set forth herein and in the Series B Certificate of Designation, the
exclusive right to elect two directors (the "Additional Directors") of the
Corporation to fill such newly-created or vacated directorships; provided,
however, that such Additional Directors shall not be employed by, or Affiliates
of, MHR if the election of such Additional Directors would result in MHR or its
employees or Affiliates constituting a majority of the Board of Directors;
provided further, however, that if such Additional Director(s) will cause a
majority of the Board of Directors to be appointed by the Holders of the Series
A Preferred Stock and Series B Preferred, then such Additional Director(s) shall
be appointed only if they are reasonably acceptable to the Corporation (provided
that if such nominee(s) is/are not reasonably acceptable, then the Series A
Preferred Stock and Series B Preferred Stock shall designate an alternate
nominee(s) and such alternate(s) shall be considered by the Corporation in
accordance with the foregoing). Additional Directors shall not be divided into
any class and shall continue as directors and such additional voting rights
shall continue until such time as all dividends accumulated on the Series A
Preferred Stock (including any Arrearages and any dividends accumulated thereon)
and the Series B Preferred Stock (including any Arrearages and any dividends
accumulated thereon) shall have been paid in full as required pursuant to the
terms hereof and the terms of the Series B Certificate of Designation, at which
time such Additional Directors shall cease to be directors and such additional
voting right of the holders of shares of Series A Preferred Stock and Series B
Preferred Stock shall terminate subject to revesting in the event of each and
every subsequent event of the character indicated above. When voting together as
a single class, as provided for herein, each share of Series A Preferred Stock
and Series B Preferred Stock shall entitle the holder thereof to one vote.
D. (a) The foregoing rights of the Holders to take any action as
provided in this Article VI may be exercised at any annual meeting of
stockholders or at a special meeting of stockholders held for such purpose as
hereinafter provided or at any adjournment thereof, or by the written consent,
delivered to the Secretary of the Corporation, of the holders of the minimum
number of shares required to take such action. So long as such right to vote
continues (and unless such right has been exercised by written consent of the
minimum number of shares required to take such action), the Chief Executive
Officer of the Corporation may call, and upon the written request of holders of
record of a majority of the outstanding shares of Series A Preferred Stock and
Series B Preferred Stock, addressed to the Secretary of the Corporation at
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the principal office of the Corporation, shall call, a special meeting of the
holders of shares entitled to vote as provided herein. Such meeting shall be
held as soon as reasonably practicable after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the Bylaws
for the holding of meetings of stockholders.
(b) Each director elected pursuant to Section C hereof shall serve
until the next annual meeting or until his or her successor shall be elected and
shall qualify, unless the director's term of office shall have terminated
pursuant to the provisions of Section C hereof, as the case may be. In case any
vacancy shall occur among the directors elected pursuant to Section C hereof,
such vacancy shall be filled for the unexpired portion of the term by vote of
the remaining director or directors theretofore elected pursuant to the same
Section (or such director's or directors' successor in office), if any. If any
such vacancy is not so filled within twenty (20) days after the creation thereof
or if all of the directors so elected shall cease to serve as directors before
their term shall expire, the holders of the shares of Series A Preferred Stock
and Series B Preferred Stock then outstanding and entitled to vote for such
director pursuant to the provisions of Section C hereof, as the case may be, may
elect successors to hold office for the unexpired terms of any vacant
directorships, by written consent as provided herein, or at a special meeting of
such holders called as provided herein. The holders of a majority of the shares
entitled to vote for directors pursuant to Section C hereof, shall have the
right to remove without cause at any time and replace any directors such holders
have elected pursuant to such section, by written consent as herein provided, or
at a special meeting of such holders called as provided herein.
E. Without the consent or affirmative vote of the holders of at least
a majority of the outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class, the Corporation shall not:
(i) authorize, create or issue, or increase the authorized amount of any Senior
Securities or Parity Securities, whether by or in connection with any merger,
consolidation, reclassification, business combination, joint venture,
partnership, exchange, recapitalization, sale, transfer, conveyance, lease or
other disposition of all or substantially all of its assets or otherwise; (ii)
issue or increase the authorized amount of the Series A Preferred Stock, whether
by or in connection with any merger, consolidation, reclassification, business
combination, joint venture, partnership, exchange, recapitalization, sale,
transfer, conveyance, lease or other disposition of all or substantially all of
its assets or otherwise; (iii) authorize, or take any action, directly or
indirectly, to alter, repeal, change or amend any provision of the Certificate
of Incorporation or this Certificate of Designation, whether by or in connection
with any merger, consolidation, reclassification, business combination,
exchange, recapitalization, joint venture, partnership, sale, transfer,
conveyance, lease, other disposition of all or substantially all of its property
or assets, any similar transaction or otherwise, if such authorization or action
would reasonably be expected to adversely affect the rights, preferences,
privileges or powers of the Series A Preferred Stock, Series B Preferred Stock,
the Common Stock into which the Series A Preferred Stock and Class B Common
Stock are convertible or the Class B Common Stock into which the Series B
Preferred Stock is convertible, or any of the holders thereof; (iv) and shall
not permit any of its Subsidiaries to, sell, lease, transfer, convey or dispose
of any of their respective properties or assets to, or enter any loan, guarantee
or other understanding with, any Affiliate other than MHR (excluding MHR's
Affiliates except for its funds under management and any Persons controlling or
under common control with such funds) (an "Affiliate Transaction") unless (A)
such Affiliate Transaction is on
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terms that are no less favorable to the Corporation or such Subsidiary than
those that could be obtained at the time of the Affiliate Transaction in arms'
length dealings with a Person who is not an Affiliate, and (B) such Affiliate
Transaction is approved by the Board of Directors (or any committee thereof)
excluding any interested directors; provided, however, that the consent or
affirmative vote of the holders of at least a majority of the outstanding shares
of Series A Preferred Stock and Series B Preferred Stock, voting together as a
single class, shall not be required for any Affiliate Transaction involving (1)
any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the Board of Directors (or
any committee thereof); (2) loans or advances to directors or executive officers
in the ordinary course of business, but in any event not to exceed $1.0 million
in the aggregate outstanding at any one time; (3) the payment of customary fees
and compensation (including health benefits, vacation, severance, compensation
and similar benefits) to, and provision of customary indemnification on behalf
of, directors and executive officers of the Corporation, or the entry into any
contract, agreement or other arrangement therefor, in each case, as determined
in good faith by the Board of Directors (or any committee thereof); (4) any
transaction between or among the Corporation and/or its Subsidiaries; or (5) any
transaction between the Corporation or any of its Subsidiaries and any Joint
Venture (whether existing now or at any time in the future) (except for any
transaction relating to or in connection with the formation of any Joint
Venture), provided that (I) such transaction is on terms that are no less
favorable to the Corporation or such Subsidiary than those that could be
obtained at the time in arms' length dealings and (II) the aggregate
consideration or value of such transaction does not exceed $1,000,000; (v) and
shall not permit any of its Subsidiaries now or hereafter existing to, as long
as at least fifty (50%) percent of the shares of Series A Preferred Stock and
Series B Preferred Stock, in the aggregate, originally issued on the Closing
Date are outstanding, consummate any Significant Sale which would require or is
otherwise submitted for the approval of the holders of the Corporation's Common
Stock under applicable law unless the Corporation grants each Holder of record
immediately prior to the consummation of such Significant Sale the right to
require the Corporation, in accordance with the procedures set forth in Section
G of this Article VI, to redeem any of the shares of Series A Preferred Stock
held by such Holder in an amount per share, payable in cash (out of funds
legally available therefor), equal to the amount set forth in Section IV.A(i)
above less the Make-Whole Amount (the "Significant Sale Redemption Price");
provided, however, that this clause (v) shall not apply in the event that
holders of at least 66 2/3% of the then-outstanding Common Stock vote in favor
of such Significant Sale; provided further, however, that if (A) holders of at
least a majority but less than 66 2/3% of the then-outstanding Common Stock vote
in favor of such Significant Sale, and (B) holders of a majority of the
then-outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, voting together as a single class, vote in favor of such Significant
Sale, then, notwithstanding anything to the contrary in this clause (v), the
Corporation shall not be required to grant each Holder the redemption right as
set forth in this clause (v); (vi) and shall not permit any of its Subsidiaries
now or hereafter existing (other than SkyNet or any of its Subsidiaries) to, as
long as at least thirty-three percent (33%) of the shares of Series A Preferred
Stock and Series B Preferred Stock, in the aggregate, originally issued on the
Closing Date are outstanding, purchase, repay, redeem, Guarantee or secure the
SkyNet Preferred Stock, in whole or in part, provide credit support for the
purpose of any of the foregoing, or otherwise agree to do any of the foregoing,
with any assets other than (A) assets of SkyNet or any of its Subsidiaries or
(B) the proceeds
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from a sale of Junior Securities; or (vii) and shall not permit any of its
Subsidiaries now or hereafter existing to, as long as at least thirty-three
percent (33%) of the shares of Series A Preferred Stock and Series B Preferred
Stock, in the aggregate, originally issued on the Closing Date are outstanding,
make any Restricted Payment if, at the time the Company or such Subsidiary makes
such Restricted Payment, the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Closing Date would exceed the sum of 50% of
the Adjusted Consolidated Net Income of the Corporation accrued during the
period (treated as one accounting period) beginning on the Closing Date to the
end of the most recent fiscal quarter ended at least 45 days prior to the date
of such Restricted Payment.
F. Without the consent or affirmative vote of each Holder affected,
the Corporation shall not (a) amend, alter, repeal or waive the Certificate of
Incorporation or this Certificate of Designation, whether by or in connection
with any merger, consolidation, reclassification, business combination, joint
venture, partnership, exchange, recapitalization, sale, transfer, conveyance,
lease or other disposition of all or substantially all of its property or assets
or otherwise, to (i) alter the voting rights of the Series A Preferred Stock or
reduce the number of shares of such Series A Preferred Stock whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the Liquidation
Preference, (iii) reduce the rate of or change the time for payment of dividends
or impair the right of any Holder to institute suit for the enforcement of any
payment of dividends; (iv) waive the consequences of any failure to pay
dividends; (v) make any share of Series A Preferred Stock payable in any form
other than as provided for in this Certificate of Designation; (vi) make any
change in the provisions of this Certificate of Designation relating to waivers
of rights of Holders to receive the Liquidation Preference and dividends; (vii)
make any change in the amendment and waiver provisions of this Certificate of
Designation; or (viii) make any change to the earliest date that the Corporation
may mandatorily convert the shares of Series A Preferred Stock pursuant to
Section A of Article V; or (b) from and after the date of the original issuance
of the Series A Preferred Stock, enter into any agreement, amend or modify any
existing agreement or obligation, or issue any security that prohibits,
conflicts or is inconsistent with, or would be breached by, the Corporation's
performance of its obligations hereunder.
G. Preferred Stock Voting Procedures Regarding Significant Sale. In
the event that the Corporation seeks the approval of the holders of the Common
Stock in connection with, including the approval of, a Significant Sale as
described in clause (v) of Section VI.E, the Corporation shall simultaneously
submit to such Holders of record any notice of a meeting, proxy statements,
information statements or other communications that it sends or makes available
to the holders of the Common Stock in connection with such Significant Sale
("Significant Sale Notice"). The Holders shall vote on such Significant Sale, as
a separate class and in accordance with their voting rights provided herein, at
the same meeting and pursuant to the same procedures that the Corporation
establishes with respect to the vote of the holders of the Common Stock in
connection with such Significant Sale; provided however, that if prior to the
date that the meeting is set for such vote of the Holders on such Significant
Sale, Holders of a majority of the then-outstanding shares of Series A Preferred
Stock notify the Corporation in writing that they desire to vote separately and
after the date set for the vote of the holders of Common Stock, then, if holders
of at least a majority but less than 66 2/3% of the then-outstanding shares of
Common Stock vote in favor of such Significant Sale, the Corporation shall
convene and hold a meeting of Holders not less than ten (10) Business Days after
the vote
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of the Common Stock is made available to such Holders, at which meeting the
Holders shall be entitled to vote with respect to such Significant Sale. The
Significant Sale Notice sent to Holders shall also set forth the circumstances
in which each Holder has the right to require the Corporation to redeem any or
all shares of Series A Preferred Stock held by such Holder at the effective time
of the consummation of such Significant Sale and the procedures to be followed
by such Holder in exercising such Holder's right to cause such redemption.
Failure by the Corporation to give the Significant Sale Notice as prescribed by
the preceding sentence, or the formal insufficiency of any such Significant Sale
Notice, shall not prejudice the rights of any Holder to cause the Corporation to
redeem any such shares held by such Holder on the date of the consummation of
such Significant Sale. At or prior to the time a Holder casts votes in
connection with the Significant Sale, such Holder shall deliver a written notice
to the Corporation (a "Significant Sale Election Notice"), stating whether or
not it elects to require the Corporation to redeem any or all such shares of
Series A Preferred Stock pursuant to clause (v) of Section VI.E hereof, and if
so, specifying the number of shares to be so redeemed; provided, however, that
in the event that such Holder does not deliver a Significant Sale Election
Notice, such failure shall not prejudice the right of such Holder to vote with
respect to the Significant Sale, and such Holder shall be deemed to have
notified the Corporation that it elects not to have any of its shares redeemed
pursuant to clause (v) of Section E of this Article VI. If the Significant Sale
Election Notice states that the Holder elects to require the Corporation to
redeem any or all such shares of Series A Preferred Stock pursuant to clause (v)
of Section VI.E hereof, the Corporation shall redeem the number of shares so
specified on the written notice of the Holder at the effective time of the
consummation of such Significant Sale. The Corporation shall comply with the
requirements of Rules 13e-4 and 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 the repurchase of the shares of
Series A Preferred Stock as a result of a Significant Sale. If, and only if, and
from and after the time the Significant Sale Redemption Price is paid in
accordance with the terms hereof with respect to any share of Series A Preferred
Stock to be redeemed pursuant to this Article VI, all dividends on such share of
Series A Preferred Stock shall cease to accumulate and all rights of the Holder
thereof as a Holder shall cease and terminate. For the avoidance of doubt, any
Holder may elect to notify the Corporation that it shall not require the
Corporation to redeem any share of Series A Preferred Stock in accordance with
the procedures set forth in Section G of this Article VI and any such election
or notice shall not prejudice such Holder from exercising all rights to redeem
such share of Series A Preferred Stock in accordance with the procedures set
forth in Section G of this Article VI in any subsequent Significant Sale.
VII. Conversion
A. (a) At the option and election of the Holder thereof, each share of
Series A Preferred Stock, and any unpaid dividends accumulated thereon
(including any Arrearages and any dividends accumulated thereon) to the
Conversion Date (as defined below), whether or not such dividends have been
declared, may be converted in the manner provided herein at any time into fully
paid and nonassessable shares of Common Stock. As of the Conversion Date with
respect to a share of Series A Preferred Stock, such share shall be converted
into that number (the "Conversion Number") of shares of Common Stock equal to
the quotient of (A) the sum of (i) the Share Purchase Price for each share of
Series A Preferred Stock, plus (ii) an amount equal to all unpaid dividends
accumulated on such share of Series A Preferred Stock (including any
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Arrearages and any dividends accumulated thereon) to the Conversion Date whether
or not such dividends have been declared, divided by (B) the Conversion Price in
effect on the Conversion Date.
(b) Conversion of shares of the Series A Preferred Stock may be
effected by any Holder thereof upon the surrender to the Corporation at the
principal office of the Corporation or at the office of any agent or agents of
the Corporation, as may be designated by the Board of Directors and identified
to the Holders in writing upon such designation, of the certificate for such
shares of Series A Preferred Stock to be converted accompanied by a written
notice stating that such Holder elects to convert all or a specified whole
number of shares represented by such certificate in accordance with the
provisions of this Section A and specifying the name or names in which such
Holder wishes the certificate or certificates for shares of Common Stock to be
issued. In case such notice shall specify a name or names other than that of
such Holder, such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series A Preferred Stock pursuant hereto. As promptly as
practical, and in any event within three (3) Business Days after the Conversion
Date (or fifteen (15) calendar days after the Conversion Date if the physical
delivery of any certificate is involved), the Corporation shall deliver or cause
to be delivered as directed by the Holder being converted (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which such Holder shall be entitled to, (ii) any cash
that is required to be paid pursuant to subsections (c) and (d) of this Section
A, and (iii) if less than the full number of shares of Series A Preferred Stock
evidenced by the surrendered certificate or certificates is being converted, a
new certificate or certificates, of like tenor, for the number of shares of
Series A Preferred Stock evidenced by such surrendered certificate or
certificates less the number of shares of Series A Preferred Stock being
converted. Such conversion shall be deemed to have occurred at the close of
business on the date (the "Conversion Date") of the giving of such notice by the
Holder to be converted and of such surrender of the certificate or certificates
representing the shares of Series A Preferred Stock to be converted so that as
of such time the rights of the Holder thereof as to the shares being converted
shall cease, except for the right to receive certificates representing shares of
Common Stock and/or cash in accordance herewith, and the Holder entitled to
receive the shares of Common Stock issued as a result of such conversion shall
be treated for all purposes as having become the holder of such shares of Common
Stock at such time.
(c) In the event that the Series A Preferred Stock is to be redeemed
or converted pursuant to Section V.B hereof, from and after 5:00 p.m. New York
City time on the Trading Day immediately preceding (i) the Change of Control
Redemption Date or the date of the Change of Control Approval (in the case of
the procedures set forth in Section C of Article V), or (ii) the date of the
consummation of the Change of Control or the date of the Change of Control
Approval (in the case of the procedures set forth in Section D of Article V),
the right of a Holder to convert shares of Series A Preferred Stock pursuant to
this Section A shall cease and terminate, except if the Corporation shall
default in payment thereof on the Change of Control Redemption Date or such
later date as provided pursuant to Section C of Article V (in the case of the
procedures set forth in Section C of Article V) or the date of the consummation
of the
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Change of Control or such later date as provided pursuant to Section D of
Article V (in the case of the procedures set forth in Section D of Article V),
in which case all such rights shall continue unless and until such shares are
redeemed or converted, as the case may be, and such price is paid in full in
accordance with the terms hereof. Notwithstanding anything in the foregoing to
the contrary, if the Conversion Date shall occur with respect to any shares of
Series A Preferred Stock on or prior to any (i) Change of Control Redemption
Date or the date of the Change of Control Approval (in the case of the
procedures set forth in Section C of Article V), or (ii) the date of the
consummation of the Change of Control or the date of the Change of Control
Approval (in the case of the procedures set forth in Section D of Article V),
such shares of Series A Preferred Stock shall be converted by the Corporation
into Common Stock in the manner provided in this Section A.
(d) In connection with the conversion of any shares of Series A
Preferred Stock, no fractions of shares of Common Stock shall be issued. If more
than one share of Series A Preferred Stock shall be surrendered for conversion
by the same Holder on the same Conversion Date, the number of full shares of
Common Stock issuable on conversion thereof shall be computed on the basis of
the total number of shares of Series A Preferred Stock so surrendered. If the
conversion of any shares of Series A Preferred Stock results in a fraction of a
share of Common Stock, an amount equal to such fraction multiplied by the
Closing Price per share of Common Stock on the Trading Day immediately preceding
the day of conversion shall be paid to such Holder in cash by the Corporation.
(e) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series A Preferred Stock in accordance with
the terms hereof, such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient to permit the conversion of all
outstanding shares of Series A Preferred Stock, and shall take all action
required to increase the authorized number of shares of Common Stock if
necessary to permit the conversion of all outstanding shares of Series A
Preferred Stock.
B. Adjustment of Conversion Price. Except in connection with an
Organic Change, which shall be subject to Section C below, the Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case the Corporation after the date of the original issuance of
the Series A Preferred Stock shall pay a dividend or make a distribution to all
holders of shares of Common Stock in shares of Common Stock, then in any such
case the Conversion Price in effect at the opening of business on the day
following the record date for the determination of stockholders entitled to
receive such dividend or distribution shall be reduced to a price obtained by
multiplying such Conversion Price by a fraction of which (x) the numerator shall
be the number of shares of Common Stock outstanding at the close of business on
such record date and (y) the denominator shall be the sum of such number of
shares of Common Stock outstanding and the total number of shares of Common
Stock constituting such dividend or distribution, such reduction to become
effective immediately after the opening of business on the day following such
record date. If any dividend or distribution of the type described in this
subsection (a) is declared but not so paid or made, the Conversion Price shall
again be adjusted to the Conversion Price that would then be in effect if such
dividend or distribution had not been declared. For purposes of this subsection
(a), the number of shares of Common Stock at any time outstanding
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shall not include shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Corporation shall not pay any dividend
or make any distribution on shares of Common Stock held in the treasury of the
Corporation.
(b) In case the Corporation after the date of the original issuance of
the Series A Preferred Stock shall issue rights or warrants to all holders of
any class of Common Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
(or having a conversion price per share) less than the Closing Price of the
Common Stock on the record date for the determination of stockholders entitled
to receive such right or warrant, the Conversion Price shall be reduced to a
price obtained by multiplying such Conversion Price by a fraction of which (x)
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on such record date plus the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at the Closing Price on such record date,
and (y) the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the total number
of shares of Common Stock so offered for subscription or purchase (or into which
the convertible securities so offered are convertible).
Such adjustment shall become effective immediately after the opening
of business on the day following such record date. To the extent that shares of
Common Stock (or securities convertible into Common Stock) are not delivered
pursuant to such rights or warrants, upon the expiration or termination of such
rights or warrants, the Conversion Price shall be readjusted to the Conversion
Price that would then be in effect had the adjustment made upon the issuance of
such rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered. If such rights or warrants are not so issued, the Conversion Price
shall again be adjusted to be the Conversion Price that would then be in effect
if such record date had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common Stock
at less than such Closing Price on such record date, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Corporation for such rights or
warrants and any amount payable on exercise or conversion thereof, the fair
market value of such consideration, if other than cash, to be determined by the
Board of Directors in its good faith judgment, whose determination shall be
conclusive.
(c) In case after the date of the original issuance of the Series A
Preferred Stock outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
after the original issuance of the Series A Preferred Stock outstanding shares
of Common Stock shall be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
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(d) In case the Corporation after the date of the original issuance of
the Series A Preferred Stock shall distribute to all holders of shares of Common
Stock evidences of its indebtedness or assets (including any regular periodic
cash dividend or extraordinary cash dividend), Equity Securities (other than
Common Stock) or rights to subscribe for Equity Securities other than Common
Stock, in each such case the Conversion Price in effect immediately prior to the
close of business on the record date for the determination of stockholders
entitled to receive such distribution shall be adjusted to a price obtained by
multiplying such Conversion Price by a fraction of which (x) the numerator shall
be the Closing Price per share of Common Stock on such record date, and (y) the
denominator shall be such Closing Price per share of Common Stock on such record
date plus the then-current fair market value as of such record date (as
determined by the Board of Directors in its good faith judgment) of the portion
of assets or evidences of indebtedness or Equity Securities or subscription
rights so distributed applicable to one share of Common Stock, such adjustment
to become effective immediately prior to the opening of business on the day
following such record date; provided, however, that no adjustment shall be made
if the Corporation issues or distributes to each Holder the assets, securities
or rights referred to above that each such Holder would have been entitled to
receive had the Series A Preferred Stock held by such Holder been converted
prior to such record date; provided further, however, that if the then-current
fair market value (as so determined by the Board of Directors in its good faith
judgment) of the portion of assets or evidences of indebtedness or Equity
Securities or subscription rights so distributed applicable to one share of
Common Stock is equal to or greater than the Closing Price on such record date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion the amount of such
assets or evidences of indebtedness or Equity Securities or subscription rights
so distributed that such Holder would have received had such Holder converted
each share of its Series A Preferred Stock on the record date. If any dividend
or distribution of the type described in this subsection (d) is declared but not
so paid or made, the Conversion Price shall again be adjusted to the Conversion
Price that would then be in effect if such dividend or distribution had not been
declared. The Corporation shall provide any Holder, upon receipt of a written
request therefor, with any indenture or other instrument defining the rights of
the holders of any indebtedness, assets, subscription rights or Equity
Securities referred to in this subsection (d).
(e) In case, after the date of the original issuance of the Series A
Preferred Stock, a tender or exchange offer made by the Corporation or any
Subsidiary of the Corporation for all or any portion of the Common Stock shall
be consummated and such tender offer shall involve an aggregate consideration
having a fair market value (as determined by the Board of Directors in its good
faith judgment) at the last time (the "Offer Time") tenders may be made pursuant
to such tender or exchange offer (as it may be amended) that, together with the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors in its good faith judgment), as of the Offer Time, of consideration
payable in respect of any tender or exchange offer by the Corporation or any
such Subsidiary for all or any portion of the Common Stock consummated preceding
the Offer Time and in respect of which no Conversion Price adjustment pursuant
to this subsection (e) has been made, exceeds 7.5% of the product of the Closing
Price of the Common Stock at the Offer Time multiplied by the number of shares
of Common Stock outstanding (including any tendered shares) at the Offer Time,
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Offer Time by a fraction of which (x) the
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numerator shall be (i) the product of the Closing Price of the Common Stock at
the Offer Time multiplied by the number of shares of Common Stock outstanding
(including any tendered shares) at the Offer Time minus (ii) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered and not
withdrawn as of the Offer Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Tendered Shares") and (y) the denominator
shall be the product of (i) such Closing Price at the Offer Time multiplied by
(ii) such number of outstanding shares at the Offer Time minus the number of
Tendered Shares, such reduction to become effective immediately prior to the
opening of business on the day following the Offer Time. For purposes of this
subsection (e), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock.
(f) The Corporation may make such reductions in the Conversion Price,
in addition to those required by clauses (a), (b), (c), (d) or (e) of this
Section B, as it considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock or from any event treated as such for income
tax purposes. In the event the Corporation elects to make such a reduction in
the Conversion Price, the Corporation will comply with the requirements of Rule
14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder if and to the extent that such laws and regulations are applicable in
connection with the reduction of the Conversion Price. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Corporation shall mail
to the Holders of then-outstanding shares of Series A Preferred Stock a notice
of the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file at the principal office of the Corporation, or
with an agent of the Corporation if one has been designated by the Board of
Directors pursuant to Article VII.A(b) hereof, a certificate signed by a duly
authorized officer of the Corporation, setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion Price
to each Holder at its last address appearing in the stock register within twenty
(20) days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(h) Notwithstanding anything herein to the contrary, no adjustment
under this Article VII shall be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least one-half of one
percent (0.5%) of the Conversion Price then in effect. Any lesser adjustment
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment, if any, which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease of at
least one-half of one percent (0.5%) of such Conversion Price. No adjustment
under this Article VII shall be
A-23
made if such adjustment will result in a Conversion Price that is less than the
par value of the Common Stock. All calculations under this Section B shall be
made by the Corporation and shall be made to the nearest cent or to the nearest
one-ten thousandth (1/10,000) of a share of Common Stock, as the case may be.
C. Organic Change. The Corporation shall not, without the consent or
affirmative vote of each Holder:
(a) consummate an Organic Change (other than a transaction in which
the Corporation is not the surviving entity as set forth in paragraph (b)
below), unless lawful provision shall be made as part of the terms of the
transaction effecting such Organic Change (i) whereby the terms hereof shall be
modified, without payment of any additional consideration by any Holder, so as
to provide that upon the conversion of shares of Series A Preferred Stock
following the consummation of such Organic Change, a Holder shall have the right
to acquire and receive (in lieu of or in addition to the shares of Common Stock
acquirable and receivable prior to the Organic Change), without payment of
additional consideration therefor (except as would otherwise have been required
by the terms of the Series A Preferred Stock as in effect prior to such Organic
Change), such securities, cash and other property as such Holder would have
received if such Holder had converted such shares of Series A Preferred Stock
into Common Stock immediately prior to such Organic Change, and (ii) so that all
other terms (including the rights, preferences, privileges and powers of the
Series A Preferred Stock and the holders thereof and the rights, preferences,
privileges and powers of the Common Stock and issuable upon the conversion
thereof and the holders thereof) hereof shall remain in full force and effect
following such an Organic Change. The provisions of this subsection (a) shall
similarly apply to successive Organic Changes of the character described in this
subsection (a); or
(b) enter into an Organic Change that is a transaction in which the
Corporation is not the surviving entity unless lawful provision shall be made as
part of the terms of such transaction whereby the surviving entity shall issue
new securities (the "New Securities") to each Holder, without payment of any
additional consideration by such Holder, with terms that provide that upon the
conversion of the New Securities, the holder of such securities shall have the
right to acquire and receive (in lieu of or in addition to the shares of Common
Stock acquirable and receivable prior to the Organic Change), without payment of
additional consideration therefor (except as would otherwise have been required
by the terms of the Series A Preferred Stock as in effect prior to such Organic
Change), such securities, cash and other property as such Holder would have
received if such Holder had converted such shares of Series A Preferred Stock
into Common Stock immediately prior to such Organic Change. The certificate or
articles of incorporation or other constituent document of the surviving entity
shall provide for such adjustments which, for events subsequent to the effective
date of such Organic Change, shall be equivalent to the adjustments provided for
in Section B of this Article VII. All other terms of such New Securities shall
be substantially equivalent to the terms provided herein (including the rights,
preferences, privileges and powers of the Series A Preferred Stock and the
holders thereof and the rights, preferences, privileges and powers of the common
stock and the holders thereof issuable upon the conversion thereof). The
provisions of this subsection (b) shall similarly apply to successive Organic
Changes of the character described in this subsection (b).
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D. Certain Events. If any event similar to or of the type contemplated
by the provisions of Section B or Section C of this Article VII, but not
expressly provided for by such provisions, occurs, then the Board of Directors
shall make an appropriate and equitable adjustment in the Conversion Price so as
to protect the rights, preferences, privileges and powers of the Series A
Preferred Stock and the Holders thereof; provided, that no such adjustment shall
decrease the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock.
VIII. Additional Definitions
For the purposes of this Certificate of Designation, the following
terms have the meanings indicated:
"Adjusted Consolidated Net Income" means, for any period, the excess,
if any, of (a) Consolidated Net Income, over (b) the sum of (i) Extraordinary
Gains minus Extraordinary Losses, (ii) equity income (losses) in Unconsolidated
Entities as set forth on the Income Statement using the equity method of
accounting, (iii) Dividend Expenses, (iv) Interest Expenses, and (v) to the
extent included in Consolidated Net Income, and not already accounted for in
clauses (i)-(iv) above, Net Asset Sale Proceeds.
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" has the meaning set forth in Section VI.E of
this Certificate of Designation.
"Arrearage" has the meaning set forth in Section III.C of this
Certificate of Designation.
"Asset Disposition" means a sale, lease or sub-lease (as lessor or
sublessor), sale and leaseback, assignment, contribution, conveyance, transfer
or other disposition to or for the benefit of, or any exchange of property with,
any Person (other than the Corporation or any of its Consolidated Entities),
directly or indirectly, in one transaction or a series of transactions, of all
or any part of the Corporation's or any of its Consolidated Entities'
businesses, assets or properties of any kind, whether real, personal, or mixed
and whether tangible or intangible, whether now owned or hereafter acquired,
including, without limitation, the Capital Stock of, or owned by, any of the
Corporation's Consolidated Entities, other than (i) Accounts Receivable, Net,
Inventories and Property, Plant and Equipment, Net sold or leased in the
ordinary course of business, and (ii) the book value of Property, Plant and
Equipment, Net, in each case, sold or leased other than in the ordinary course
of business.
"Asset Disposition Proceeds" means, with respect to any Asset
Disposition during any period, an amount equal to any payments, in cash,
securities or otherwise (including any payments received by way of deferred
payment pursuant to, or by monetization of, a note
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receivable or otherwise) received by or paid on account or for the benefit of
the Corporation or any of its Consolidated Entities from such Asset Disposition.
"Asset Sale" has the meaning set forth in paragraph (d) of the
definition of "Change of Control."
"Asset Sale Covenant" has the meaning set forth in Section V.F of this
Certificate of Designation.
"Asset Sale Default" means the occurrence of the Corporation's failure
to comply with any Asset Sale Covenant.
"Balance Sheet" means the Consolidated Balance Sheets of the
Corporation included within the Corporation's periodic reports filed pursuant to
the Exchange Act.
"Beneficial Owner" has the meaning as defined in Rules 13d-3 and 13d-5
under the Exchange Act.
"Business Day" means any day, other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended from time to
time.
"Capital Lease" means, for any Person, a lease of any interest in any
kind of property (whether real, personal or mixed) or asset by such Person as
lessee that is, should be or should have been recorded as a "capital lease" on
the balance sheet of such Person in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company interests, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such Capital Stock, whether existing now or at any time in the
future.
"Cash Dividend" has the meaning set forth in Section III.B of this
Certificate of Designation.
"Cash Flow Statement" means the Consolidated Statements of Cash Flows
of the Corporation included within the Corporation's periodic reports filed
pursuant to the Exchange Act.
"Change of Control" means the occurrence of any of the following
events:
(a) any Person (which, in the case of a merger, consolidation,
business combination, reclassification, joint venture, partnership, exchange,
recapitalization or other similar transaction, may include more than one Person
and such term in this clause shall be
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adjusted to be read in plural accordingly) is or becomes pursuant to a
transaction the Beneficial Owner (except that for purposes of this clause (a)
such Person (the "specified person") shall be deemed to be the Beneficial Owner
of all shares that such specified person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of either (i) more than 50%, or (ii) 90% or more of the aggregate
voting power of the then outstanding capital stock of the Corporation (including
any successor to the Corporation), each of which events (i) or (ii) shall be a
Change of Control (for the purposes of this clause (a), such specified person
shall be deemed to be the Beneficial Owner of any Common Stock of the
Corporation or any other Person held by any entity (a "parent entity") if such
specified person is the Beneficial Owner (as defined in this clause (a)),
directly or indirectly, of more than 50% of the voting power of the then
outstanding capital stock of such parent entity), including, without limitation,
in either event through merger or consolidation of the Corporation with or into
another Person or any Person consolidates or merges with or into the Corporation
and as a result of such transaction the Beneficial Owners of Common Stock
immediately prior to such transaction hold less than 50% in the case of clause
(i) above or 10% or less in the case of clause (ii) above, of the aggregate
voting power of the then outstanding capital stock of the surviving entity or
other acquisition of securities of the Corporation;
(b) individuals who on the Closing Date constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Corporation was approved by (i) a vote of a majority of the directors of the
Corporation then still in office who were either directors on the Closing Date
or whose election or nomination for election was previously so approved or (ii)
a vote of the holders of a majority of the outstanding shares of Series A
Preferred Stock and Series B Preferred Stock, voting together as a single class)
cease for any reason to constitute a majority of such Board of Directors then in
office;
(c) the Corporation commences a voluntary case under Title 11 of the
United States Code (the "Bankruptcy Code"), or any similar federal or state law
for the relief of debtors, or adopts a plan under the Bankruptcy Code, that
could result in the liquidation or dissolution of the Corporation;
(d) the consummation of any Sale or multiple Sales of any assets of
the Corporation or any of its Subsidiaries for consideration which, in the
aggregate, is received or is valued in excess of Twenty-Five Million Dollars
($25,000,000) that is not otherwise a Change of Control as defined in section
(e) below (an "Asset Sale"), provided, however, that such Asset Sale shall not
be deemed to constitute a Change of Control unless and until there has occurred
an Asset Sale Default, at which time such Asset Sale shall be deemed to be a
Change of Control; or
(e) the Sale of all or substantially all of the assets of the
Corporation (determined on a consolidated basis); provided, however, that any
one single Sale of only SkyNet or only SS/L (including any of their respective
Subsidiaries), or any of their respective assets, whether now owned or hereafter
acquired, other than inventory sold or leased in the ordinary course of
business, shall be deemed not to be a Sale of all or substantially all of the
assets of the Corporation (determined on a consolidated basis). Notwithstanding
the foregoing, any Sale of (i) SS/L or substantially all of SS/L's assets
subsequent to any Significant Sale, (ii) SkyNet or substantially all of SkyNet's
assets subsequent to any Significant Sale, or (iii) the
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Investment Interest, in any case, shall be a Sale of all or substantially all of
the assets of the Corporation (determined on a consolidated basis) if so
determined pursuant to and in accordance with applicable law on the date of the
consummation of such Sale.
"Change of Control Redemption Price" means the consideration to be
paid to a Holder pursuant to Section V.B(a) hereof.
"Changes in Operating Assets and Liabilities" means, for any period,
(a) the sum of the amounts identified as changes in operating assets under the
caption "Changes in Operating Assets and Liabilities" on the Cash Flow Statement
(including, without limitation, Accounts Receivable, Net, Contracts-in-Process,
Inventories, Long-Term Receivables (including Principal Orbital Receivables),
Deposits, Other Current Assets and Other Assets and deferred income taxes), over
(b) the sum of the amounts identified as changes in operating liabilities under
the caption "Changes in Operating Assets and Liabilities" on the Cash Flow
Statement (including, without limitation, Accounts Payable, Accrued Expenses and
other Current Liabilities, Customer Advances, Income Taxes Payable, Pension and
Other Postretirement Liabilities, Long-Term Liabilities, and Other).
Notwithstanding anything to the contrary set forth in this Certificate of
Designation, capitalized terms used but not defined in the definition of
"Changes in Operating Assets and Liabilities" means the amounts ascribed to such
capitalized terms on the Cash Flow Statement.
"Class B Common Stock Authorization" means the filing of an amendment
to the Certificate of Incorporation with the Secretary of State of the State of
Delaware authorizing the creation of the Class B Common Stock and the subsequent
reservation of all such shares for issuance upon the conversion of all
outstanding shares of Series B Preferred Stock and all shares of Series B
Preferred Stock issuable upon payment of dividends in respect thereof.
"Closing" has the meaning assigned to such term in the Securities
Purchase Agreement.
"Closing Date" has the meaning assigned to such term in the Securities
Purchase Agreement.
"Closing Price" with respect to the per share price of Common Stock on
any day means the last reported bid price regular way on NASDAQ (or the New York
Stock Exchange, NASDAQ Small Cap Market or American Stock Exchange, in the event
any such market or exchange constitutes the principal market on which the Common
Stock is quoted or listed or admitted to trading) (such four markets and
exchanges, the "Approved Markets") or, if not quoted or listed or admitted to
trading on any such Approved Market, the closing bid price in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Corporation for that purpose. In the
case of a dispute as to the calculation of the Conversion Price or if the
Closing Price cannot be calculated for such security as of either of such dates
on any of the foregoing bases, the Closing Price of such security on such date
shall be the fair market value as reasonably determined by an investment banking
firm selected by the Corporation and reasonably acceptable to the holders of a
majority of the then outstanding shares of Series A Preferred Stock.
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"Consolidated Entities" means those entities that are consolidated
into the Consolidated Financial Statements of the Corporation in accordance with
GAAP.
"Consolidated Free Cash Flow" means, for any period, the excess, if
any, of (a) the sum of (i) Net Income (Loss), (ii) Depreciation and
Amortization, (iii) amortization of goodwill to the extent not reflected in
Depreciation and Amortization, (iv) depreciation of property, plant and
equipment to the extent not reflected in Depreciation and Amortization, (v)
Amortization of Stock Option Compensation, (vi) to the extent included in Net
Income (Loss), any cash legal expenses incurred in connection with ongoing
litigation, (vii) cash dividends from Unconsolidated Entities, (viii) any
write-down minus any write-up of any item included in the Balance Sheet (other
than any write-down or write-up of any debt or Shareholders' Equity) to the
extent not included in Changes in Operating Assets and Liabilities, and (ix) any
decrease in goodwill, other than to the extent included in (ii), (iii) or (viii)
of this subclause (a), that results in an accounting reclassification, over (b)
the sum of (i) Extraordinary Gains minus Extraordinary Losses, (ii) cash,
securities, assets or other property received in connection with or pursuant to
any legal settlements entered into by the Corporation or any of its Consolidated
Entities, (iii) Changes in Operating Assets and Liabilities, (iv) Asset
Disposition Proceeds to the extent that such Asset Disposition Proceeds exceed
$100,000 in any single transaction or series of related transactions, (v)
Capital Expenditures minus (A) any Indebtedness incurred in connection with any
such Capital Expenditures, and (B) any Capital Expenditures to the extent such
Capital Expenditures were made with any Insurance Proceeds Received, (vi)
Repurchase Expenses, (vii) scheduled principal payments on Indebtedness of the
Corporation and its Consolidated Entities during such period, including the
principal portion of scheduled payments under any Capital Lease, other than in
connection with a refinancing of such Indebtedness, (viii) payments on
Indebtedness of any other Person during such period, other than in connection
with a refinancing of such Indebtedness, (ix) Dividend Expenses, (x) Insurance
Proceeds Received that are not used in such period for Capital Expenditures,
(xi) Investments In and Advances To Affiliates minus any Indebtedness incurred
in connection with any such Investments In and Advances To Affiliates, (xii) to
the extent not reflected in Changes in Operating Assets and Liabilities, any
increase in deferred tax asset minus any decrease in deferred tax asset, (xiii)
to the extent not reflected in Changes in Operating Assets and Liabilities, any
decrease in deferred tax liability minus any increase in deferred tax liability,
and (xiv) (A) any gains minus (B) any losses, in either case, (1) recognized on
any foreign exchange transaction not hedging a contract entered into in the
ordinary course of business consistent with past practice, and (2) in connection
with (I) the repurchase of any debt or equity of the Corporation or any of its
Consolidated Entities, (II) Discontinued Operations, (III) inventory
sales/obsolescence, (IV) sales of orbital slots and any other assets, (V) equity
income (losses) in Unconsolidated Entities as set forth on the Income Statement
using the equity method of accounting, and (VI) legal settlements to the extent
not included in Net Income (Loss) or Changes in Operating Assets and
Liabilities, in each case, for such period.
All of the terms contained within the definition of "Consolidated Free Cash
Flow" (including such terms contained within any defined terms) shall be
determined in accordance with GAAP consistent with the Corporation's practice as
of the date hereof. Capitalized terms used in the definition of "Consolidated
Free Cash Flow" but not defined in this Certificate of Designation mean the
amounts ascribed to such capitalized terms in the Consolidated Financial
Statements of
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the Corporation included within the Corporation's periodic reports filed
pursuant to the Exchange Act.
"Consolidated Net Income" means the amount ascribed to the term "Net
Income (Loss)" in the Income Statement.
"Conversion Price" equals (x) 0.1 multiplied by (y) Share Purchase
Price, as adjusted from time to time pursuant to Article VII hereof. With
respect to any share of Series A Preferred Stock issued after the date of the
original issuance of the Series A Preferred Stock, the Conversion Price of such
share shall be determined as if such share were issued on the date of the
original issuance of the Series A Preferred Stock.
"DGCL" means the General Corporation Law of the State of Delaware.
"Dividend Determination" has the meaning set forth in Section III.B of
this Certificate of Designation.
"Dividend Expenses" means, to the extent not included in Net Income
(Loss), any dividends paid in cash, Capital Stock, in kind or otherwise, in
respect of any Capital Stock issued at any time by the Corporation or any of its
Consolidated Entities.
"Eligible Joint Venture" means a Joint Venture the entire equity
interest of which (other than that held by the third party Joint Venture
partner(s)) is held by the Corporation or a wholly-owned Subsidiary thereof.
"Equity Securities" of any Person, means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company interests in, such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"Extraordinary Gains" means the amount ascribed to such term in the
Income Statement.
"Extraordinary Losses" means the amount ascribed to such term in the
Income Statement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in: (1) the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants; (2) statements and
pronouncements of the Financial Accounting Standards Board; (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession; and (4) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
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"Governmental Entity" means any government or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether federal, state, local or foreign.
"Group" has the meaning set forth in Rule 13d-5 under the Exchange
Act.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Indebtedness of any other Person (the "Primary Obligor") in
any manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person: (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness; (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness; or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into by the Corporation or any of
its Consolidated Entities which provide for an interest rate, credit, commodity
or equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination of,
or option with respect to, these or similar transactions, for the purpose of
hedging exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
"Income Statement" means the Consolidated Statements of Operations of
the Corporation included within the Corporation's periodic reports filed
pursuant to the Exchange Act.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments and
all reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, xxxxxx, derivatives or other financial
products; (iii) all obligations of such Person as a lessee under Capital Leases;
(iv) all obligations or liabilities of others secured by a Lien on any asset of
such Person, irrespective of whether such obligation or liability is assumed;
(v) all obligations of such Person to pay the deferred purchase price of assets;
(vi) all obligations of such Person owing under Hedge Agreements; and (vii) any
obligations of such Person Guaranteeing or intended to Guarantee (whether
directly or indirectly Guaranteed, endorsed, co-made, discounted, or sold with
recourse) any obligation of any other Person that constitutes Indebtedness of
such other Person under any of clauses (i) through (vi) above.
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"Interest Expenses" means, to the extent not included in Net Income
(Loss), for any period, the total interest expense of the Corporation and its
Consolidated Entities, plus, to the extent not included in such total interest
expense, and to the extent incurred by the Corporation or its Consolidated
Entities, without duplication, (1) non-cash interest expense, and (2) interest
expense in connection with vendor financing activities during such period.
"Investors" has the meaning set forth in the Securities Purchase
Agreement.
"Law" means any law, treaty, statute, ordinance, code, rule,
regulation, judgment, decree, order, writ, award, injunction or determination of
any Governmental Entity.
"Lien" means any mortgage, pledge, lien, security interest, claim,
voting agreement, conditional sale agreement, title retention agreement,
restriction, option or encumbrance of any kind, character or description
whatsoever.
"Majority Ownership Date" means the earlier of the date that (i) MHR
becomes the Beneficial Owner, directly or indirectly, of more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
(excluding any shares of Series A Preferred Stock issued on the Closing Date or
Common Stock issued upon the conversion thereof), and (ii) a Person unrelated to
MHR becomes the Beneficial Owner, directly or indirectly, of shares of capital
stock of the Corporation (other than any shares acquired in violation of the
Transfer Restriction) constituting, upon exercise or conversion into Common
Stock of all in-the-money convertible securities, options and warrants that such
person has the immediate right to so exercise or exchange, more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
that would be outstanding following the exercise or conversion of all
in-the-money convertible securities, options and warrants of the Corporation
then outstanding; provided that the Majority Ownership Date shall not be deemed
to have occurred pursuant to clause (ii) above if at such time MHR would, upon
conversion of any shares of Series A Preferred Stock or Class B Common Stock
then held by it into Common Stock and upon conversion of any shares of Series B
Preferred Stock then held by it into Series A Preferred Stock or Common Stock,
become the Beneficial Owner of more than 50% of the Common Stock of the
Corporation (including any successor to the Corporation), that would be
outstanding following the exercise or conversion of all in-the-money convertible
securities, options and warrants of the Corporation then outstanding.
"Make-Whole Amount" means an amount equal to all dividends that would
have accrued and accumulated on each share of Series A Preferred Stock (assuming
payment of all accrued dividends on each Dividend Payment Date) from the date of
a Change of Control (and assuming the Change of Control did not occur) through
the date that is sixty-six (66) months after the original issuance of the Series
A Preferred Stock.
"MHR" means MHR Fund Management LLC and any successor thereto ("Fund
Management") and any investment fund or other entity controlled by, or under
common control with, Fund Management or any Person that controls or is
controlled by Fund Management.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, an
amount equal to (i) cash payments (including any cash received by way of
deferred payment pursuant to,
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or by monetization of, a note receivable or otherwise, but only as and when so
received) received by the Corporation or any of its Subsidiaries from such Asset
Sale, minus (ii) any bona fide direct costs, including all fees and expenses,
incurred in connection with such Asset Sale.
"Organic Change" means, with respect to the Corporation, any
transaction other than a Change of Control (including without limitation any
recapitalization, capital reorganization or reclassification of any class of
capital stock (other than a change in par value, or from par value to no par
value, or from no par value to par value), any consolidation or amalgamation of
the Corporation with, or merger of the Corporation into, any other Person, any
merger of another Person into the Corporation (other than a merger in which the
Corporation survives and which does not result in any change of the capital
structure of the Corporation at that time, including a reclassification,
conversion, exchange or cancellation of outstanding shares of capital stock of
the Corporation), any sale or transfer or lease of all or substantially all of
the property or assets of the Corporation or any compulsory share exchange)
pursuant to which any class of capital stock of the Corporation is converted
into the right to receive other securities, cash or other property.
"Person" means any individual, corporation, company, association,
partnership, limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Principal Orbital Receivables" means any deferred receivable of
principal amounts due with respect to any satellite manufactured by SS/L, the
receipt of which is contingent upon the continued performance of SS/L's
obligations in connection with such satellite.
"Prior Twelve Month Period" has the meaning set forth in Section III.B
of this Certificate of Designation.
"Regulatory Approval" means any consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any regulatory body, commission, board, bureau, agency or
instrumentality, in each case whether federal, state, local or foreign.
"Repurchase Expenses" means, with respect to any redemption,
retirement, sinking fund or similar payment, purchase, repurchase, exchange or
other acquisition for value, direct or indirect, of any shares of Capital Stock
or Indebtedness of the Corporation or any of its Consolidated Entities other
than in connection with any refinancing during any period, an amount equal to
any payments, in cash or otherwise (including any cash payments made by way of
deferred payment pursuant to, or by monetization of, a note payable or
otherwise), paid by or
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on behalf or for the account of the Corporation or any of its Consolidated
Entities, directly or indirectly relating thereto.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Corporation, any of its Subsidiaries or any Joint Venture now or hereafter
outstanding (other than (x) by wholly-owned Subsidiaries (including, without
limitation, SkyNet, so long as SkyNet remains a wholly-owned Subsidiary), (y) by
XTAR, L.L.C. pursuant to the provisions of its applicable governing agreements
and related documents as in effect as of the Closing Date without any amendment,
restatement or any other change thereto, or (z) by an Eligible Joint Venture
formed by the Corporation or by a wholly-owned Subsidiary of the Corporation on
and after the Closing Date to the Corporation or any of its wholly-owned
Subsidiaries pursuant to such Eligible Joint Venture's applicable governing
documents); or (ii) any redemption, retirement, sinking fund or similar payment,
purchase, repurchase, exchange or other acquisition for value, direct or
indirect, of any shares of Capital Stock of the Corporation, any of its
Subsidiaries or any Joint Venture now or hereafter outstanding; in each case,
including any payment in connection with any merger or consolidation involving
the Corporation, any of its Subsidiaries or any Joint Venture (each, a
"Repurchase"); provided, however, that such Repurchase shall not constitute a
Restricted Payment if the Repurchase (v) is of convertible debt securities of
the Corporation or any of its Subsidiaries and such Repurchase is effected at
not greater than the stated value of such convertible debt securities plus
accrued interest, if any; (w) is by any wholly-owned Subsidiary of its own
Capital Stock; (x) is effected solely with the proceeds from a sale of Junior
Securities; (y) if approved pursuant to and in accordance with Section E(vi) of
Article VI hereunder by a majority of the Series A Preferred Stock and Series B
Preferred Stock voting together as a single class; or (z) is of an equity
interest of an Eligible Joint Venture.
"Sale" means any sale, lease or sub-lease (as lessor or sublessor),
sale and leaseback, assignment, contribution, conveyance, transfer or other
disposition to or for the benefit of, or any exchange of property with, any
Person (other than the Corporation and any of its Subsidiaries), directly or
indirectly, in one transaction or a series of transactions (whether through
merger, consolidation, reclassification, business combination, joint venture,
partnership, tender offer, exchange offer, share exchange, recapitalization,
sale of the Capital Stock of any of the Corporation's Subsidiaries or other
similar transaction or otherwise) other than in the ordinary course of business
consistent with past practice; provided, however, that any one single
transaction or one single series of related transactions (the "Exempted
Transaction") in which (i) the Corporation receives, in consideration for such
property, an equity interest (the "Investment Interest") of an entity that will
own, directly or indirectly, such property upon the consummation of such one
single transaction or one single series of related transactions, (ii) the
consideration other than the Investment Interest received by the Corporation in
connection with such Exempted Transaction constitutes not more than either (a)
25% of the total consideration received by the Corporation or (b) Twenty-Five
Million Dollars ($25,000,000) cash, and (iii) the Investment Interest has a fair
market value substantially equivalent to at least the fair market value of such
property, then such one single transaction or one single series of related
transactions shall be deemed not to constitute a "Sale" hereunder.
"Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, from time to time.
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"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of October 17, 2006, by and between the Investors and the
Corporation, as amended, supplemented or otherwise modified from time to time.
"Share Purchase Price" has the meaning set forth in the Securities
Purchase Agreement.
"Significant Sale" means a Sale of either SS/L or SkyNet or all or
substantially all of their respective assets (determined on a consolidated basis
of each of SS/L or SkyNet, as applicable).
"Significant Sale Election Notice" has the meaning set forth in
Section VI.G of this Certificate of Designation.
"Significant Sale Notice" has the meaning set forth in Section VI.G of
this Certificate of Designation.
"Significant Sale Redemption Price" has the meaning set forth in
Section VI.E of this Certificate of Designation.
"SkyNet" means Loral SkyNet Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Corporation.
"SkyNet Preferred Stock" means the Series A 12% Non-Convertible
Preferred Stock of SkyNet.
"Subsidiary" means as to any Person, any other Person of which more
than 50% of the shares of the voting stock or other voting interests are owned
or controlled, or the ability to select or elect more than 50% of the directors
or similar managers is held, directly or indirectly, by such first Person or one
or more of its Subsidiaries or by such first Person and one or more of its
Subsidiaries; provided, however, that no Joint Venture (as such term is defined
in the Securities Purchase Agreement) shall be considered (i) a "Subsidiary" of
the Corporation or (ii) a "Subsidiary" of any Subsidiary of the Corporation.
"30-Trading Day Reference Period" means any period of thirty (30)
consecutive Trading Days (including the last Trading Day of such period).
"Trading Day" means any day on which NASDAQ is open for trading, or if
the shares of Common Stock are not quoted on the NASDAQ, any day on which the
principal national securities exchange or national quotation system on which the
shares of Common Stock are listed, admitted to trading or quoted is open for
trading, or if the shares of Common Stock are not so listed, admitted to trading
or quoted, any Business Day.
"Transfer Restriction" has the meaning as set forth in the Securities
Purchase Agreement.
"Unconsolidated Entities" means those entities in which the
Corporation or any of its Consolidated Entities hold an equity interest, other
than any Consolidated Entities.
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IX. Miscellaneous
A. Notices. Any notice referred to herein shall be in writing and,
unless first-class mail shall be specifically permitted for such notices under
the terms hereof, shall be deemed to have been given upon (i) personal delivery
thereof, (ii) transmittal of such notice by telecopy (with confirmation of
receipt by telecopy), (iii) five days after transmittal by first-class,
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one day after transmittal by next-day or overnight mail or delivery, return
receipt requested, addressed as follows:
(a) if to the Corporation, to its office at 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000 (Attention: General Counsel) with a copy to the transfer agent
for the Series A Preferred Stock;
(b) if to a Holder, to such holder at the address of such Holder as
listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the Series A Preferred Stock); or
(c) to such other address as the Corporation or such Holder, as the
case may be, shall have designated by notice similarly given.
B. Reacquired Shares. Any shares of Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation, directly or indirectly, in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof (and shall not be deemed to be outstanding for any purpose)
and, if necessary to provide for the lawful redemption or purchase of such
shares, the capital represented by such shares shall be reduced in accordance
with the DGCL. All such shares of Series A Preferred Stock shall upon their
cancellation and upon the filing of an appropriate certificate with the
Secretary of State of the State of Delaware, become authorized but unissued
shares of Preferred Stock of the Corporation and may be reissued as part of
another series of Preferred Stock of the Corporation subject to the conditions
or restrictions on issuance set forth herein.
C. Enforcement. Any registered Holder may proceed to protect and
enforce its rights and the rights of such Holders by any available remedy by
proceeding at law or in equity to protect and enforce any such rights, whether
for the specific enforcement of any provision in this Certificate of Designation
or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
D. Transfer Taxes. Except as otherwise agreed upon pursuant to the
terms of this Certificate of Designation, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Common Stock on conversion or exchange of, or other
securities or property issued on account of, shares of Series A Preferred Stock
pursuant hereto or certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such tax or other charge
that may be imposed in connection with any transfer involved in the issue or
transfer and delivery of any certificate for Common Stock or
A-36
other securities or property in a name other than that in which the shares of
Series A Preferred Stock so converted, or on account of which such securities
were issued, were registered and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Corporation the
amount of any such tax or has established to the satisfaction of the Corporation
that such tax has been paid or is not payable.
E. Transfer Agent. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series A Preferred Stock. Upon
any such appointment or discharge of a transfer agent, the Corporation shall
send notice thereof by first-class mail, postage prepaid, to each Holder of
record.
F. Record Dates. In the event that the Series A Preferred Stock shall
be registered under either the Securities Act or the Exchange Act, the
Corporation shall establish appropriate record dates with respect to payments
and other actions to be made with respect to the Series A Preferred Stock.
G. Schedule 13D Filings Conclusive. The information contained in the
Schedule 13D filed by MHR with the United States Securities and Exchange
Commission with respect to its beneficial ownership of securities of the
Corporation as stated therein, as amended from time to time, shall be conclusive
for the purposes of the Corporation's compliance with its obligations under
Section III.D hereunder, absent manifest error, unless MHR has delivered written
notice to the Corporation relating to the information contained in such Schedule
13D to the Corporation as provided in Section IX.A.
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IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its _________________, this ____ day of
____________, ______.
LORAL SPACE & COMMUNICATIONS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-38
EXHIBIT B
FORM OF SERIES B CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATION
OF
SERIES B CUMULATIVE 7.50% CONVERTIBLE PREFERRED STOCK
OF
LORAL SPACE & COMMUNICATIONS INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
----------
Loral Space & Communications Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation (the "Board of Directors") pursuant to
authority of the Board of Directors as required by Section 151 of the General
Corporation Law of the State of Delaware:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors in accordance with the provisions of the Restated Certificate
of Incorporation of the Corporation, (the "Certificate of Incorporation"), the
Board of Directors hereby creates a series of the Corporation's previously
authorized preferred stock, par value $0.01 per share, and hereby states the
designation and number of shares thereof, and fixes the voting powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions thereof, as follows:
Series B Cumulative 7.50% Convertible Preferred Stock:
I. Designation and Amount
A. The designation of this series of shares shall be "Series B
Cumulative 7.50% Convertible Preferred Stock" (the "Series B Preferred Stock"),
par value $0.01 per share; and the authorized number of shares constituting such
series shall be 2,000,000. Shares of Series B Preferred Stock may be issued by
the Corporation from time to time by a resolution or resolutions of the Board of
Directors. The number of shares of the Series B Preferred Stock may be decreased
from time to time by a resolution or resolutions of the Board of Directors,
provided that such decrease complies with the terms hereof.
II. Rank
A. With respect to dividend rights, the Series B Preferred Stock shall
rank (i) junior to each other class or series of capital stock which by its
terms ranks senior to the Series B Preferred Stock, (ii) on a parity with the
Corporation's Series A 7.50% Convertible Preferred Stock, par value $0.01 per
share (the "Series A Preferred Stock") and each other class or series of capital
stock which by its terms ranks on a parity with the Series B Preferred Stock,
and (iii) prior to the Corporation's Common Stock, par value $0.01 per share
(the "Common
B-1
Stock") and Class B Common Stock (as defined below) and, except as specified
above, all other classes and series of capital stock of the Corporation
hereafter issued by the Corporation. Dividends paid on the shares of Series B
Preferred Stock and Series A Preferred Stock (including any Arrearages (as
defined below) and any accumulated dividends thereon) shall be allocated pro
rata on a share-by-share basis among all shares of Series B Preferred Stock and
Series A Preferred Stock then outstanding. With respect to dividend rights, all
equity securities of the Corporation to which the Series B Preferred Stock ranks
senior, including the Common Stock and Class B Common Stock, are collectively
referred to herein as the "Junior Dividend Securities"; all equity securities of
the Corporation with which the Series B Preferred Stock ranks on a parity,
including the Series A Preferred Stock, are collectively referred to herein as
the "Parity Dividend Securities"; and all equity securities of the Corporation
to which the Series B Preferred Stock ranks junior are collectively referred to
herein as the "Senior Dividend Securities." All references herein to "Class B
Common Stock" shall be applicable and shall mean the Class B Common Stock, par
value $0.01 per share, of the Corporation, only if and when authorized and
issued pursuant to the Class B Common Stock Authorization.
B. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the Series B Preferred Stock shall rank (i) junior to each other class or series
of capital stock which by its terms ranks senior to the Series B Preferred
Stock, (ii) on a parity with the Corporation's Series A Preferred Stock and each
other class or series of capital stock or series of Preferred Stock of the
Corporation which by its terms ranks on a parity with the Series B Preferred
Stock, and (iii) prior to the Corporation's Common Stock and Class B Common
Stock and, except as specified above, all other classes and series of capital
stock of the Corporation hereafter issued by the Corporation. Any distribution
of assets upon liquidation, distribution or winding up of the Corporation,
whether voluntary or involuntary, to shares of the Series B Preferred Stock and
Series A Preferred Stock shall be allocated pro rata on a share-by-share basis
among all shares of Series B Preferred Stock and Series A Preferred Stock then
outstanding. With respect to the distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
all equity securities of the Corporation to which the Series B Preferred Stock
ranks senior, including the Common Stock and Class B Common Stock, are
collectively referred to herein as "Junior Liquidation Securities" (and together
with the Junior Dividend Securities are referred to herein as the "Junior
Securities"); all equity securities of the Corporation to which the Series B
Preferred Stock ranks on parity, including the Series A Preferred Stock, are
collectively referred to herein as "Parity Liquidation Securities" (and together
with the Parity Dividend Securities are referred to herein as the "Parity
Securities"); and all equity securities of the Corporation to which the Series B
Preferred Stock ranks junior are collectively referred to herein as "Senior
Liquidation Securities" (and together with the Senior Dividend Securities are
referred to herein as the "Senior Securities").
III. Dividends
A. Mandatory Dividends. To the full extent of the assets and funds of
the Corporation lawfully available therefor, the Board of Directors shall
declare, and the Corporation shall pay to the holders of shares of Series B
Preferred Stock (each a "Holder" and collectively, the "Holders"), as to each
share, mandatory dividends at a rate of 7.50% per annum (such rate, the
"Dividend Rate") of the sum of (i) the Share Purchase Price plus (ii) an amount
equal to all
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Arrearages, if any, that are payable in respect of such share, whether or not
such dividends are declared, payment of which shall be made in either (i) cash
or (ii) additional shares of Series B Preferred Stock (or Series A Preferred
Stock under the circumstances set forth in Section III.D below) (in either case,
the "PIK Shares"), upon and pursuant to the determination of the Board of
Directors pursuant to Section B of this Article III; provided, however, that
prior to the earlier of the Class B Common Stock Authorization and the Majority
Ownership Date, in the event that the Corporation pays any dividends or makes
any other distributions on the shares of Common Stock during the period from the
immediately prior Dividend Record Date to the Dividend Record Date that
(assuming conversion of the Series B Preferred Stock to Common Stock) would, in
the aggregate, exceed the amount payable on a share of Series B Preferred Stock
pursuant to the Dividend Rate during such period, then, upon the request of the
Holders of a majority of the shares of Series B Preferred then outstanding, the
Corporation shall pay a mandatory dividend pursuant to this Section III.A, as to
each share of Series B Preferred Stock, equal to the amount that the Holder of
such share of Series B Preferred Stock would have been entitled to receive had
the Holder of such share converted such share to Common Stock immediately prior
to the record date of the dividends or distributions to the holders of the
Common Stock during such period in lieu of the amount payable pursuant to the
Dividend Rate (such dividend, the "Participating Dividend"). The Participating
Dividend shall be in the same form as and otherwise identical to the dividend or
distribution made to the holders of the Common Stock; provided, however, that if
the dividend or distribution to the holders of Common Stock was in additional
shares of Common Stock, the Holder of each share of Series B Preferred Stock
shall be entitled to an additional number of shares of Series B Preferred Stock
(in lieu of the number of shares of Common Stock that such Holder would have
otherwise received pursuant to this proviso) equal to the product of (v) the
number of shares of Common Stock distributed on each share of outstanding Common
Stock multiplied by (w) the Conversion Price divided by the Share Purchase
Price. Dividends shall be paid in four equal quarterly installments on January
15, April 15, July 15 and October 15 of each year, or if any such date is not a
Business Day, on the Business Day immediately preceding such day (each such
date, regardless of whether any dividends have been paid or declared and set
aside for payment on such date, a "Dividend Payment Date"), to the Holders of
record as they appear on the stock record books of the Corporation (the
"Registered Holders") on the tenth (10th) day prior to the relevant Dividend
Payment Date. Dividends shall be cumulative from the most recent Dividend
Payment Date as to which dividends shall have been paid or, if no dividends have
ever been paid, from the date of issuance and shall accumulate from day to day
whether or not earned or declared until paid. Dividends shall accumulate on the
basis of a 360-day year consisting of twelve 30-day months (four 90-day
quarters). For the purpose of this Article III, if dividends are paid in PIK
Shares, the number of PIK Shares issuable on any Dividend Payment Date for each
share of Series B Preferred Stock shall equal the amount payable pursuant to
this Section A of Article III divided by the Share Purchase Price.
B. Dividend Determination. Not later than thirty (30) days prior to
any Dividend Payment Date, the Board of Directors shall determine (the "Dividend
Determination") whether the Corporation shall pay any portion or all of the
dividend in PIK Shares or in cash (the "Cash Dividend"); provided, however, that
the dividend payment for all relevant periods through the seventeenth (17th)
Dividend Payment Date for all shares of the Series B Preferred Stock shall be
payable solely in PIK Shares; provided further, however, that from and after the
seventeenth (17th) Dividend Payment Date, in the event that (i) SkyNet either
did not pay dividends to the
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holders of the SkyNet Preferred Stock or paid dividends to the holders of the
SkyNet Preferred Stock, in whole or in part, in additional shares of SkyNet
Preferred Stock on the "Dividend Payment Date" (as such term is defined in the
Certificate of Designations of the SkyNet Preferred Stock) immediately preceding
the date of the then current Dividend Determination, (ii) the Consolidated Free
Cash Flow for the twelve (12) month period ending on the last day of the most
recently completed fiscal quarter ending at least 50 days prior to the date of
the then current Dividend Determination (such period, the "Prior Twelve Month
Period") is less than 400% of the amount that is payable on the outstanding
shares of Series B Preferred Stock and Series A Preferred Stock on the next
scheduled Dividend Payment Date to which the Dividend Determination relates
(assuming such amount were to be payable as a Cash Dividend), or (iii) the
Consolidated Free Cash Flow for the Prior Twelve Month Period is less than 110%
of the Consolidated Free Cash Flow for the twelve (12) month period ended
December 31 of the year immediately preceding the last day of the Prior Twelve
Month Period, then the dividend payment for the relevant period for all Series B
Preferred Stock shall be payable solely in PIK Shares. If, subject to the
proviso set forth in the immediately preceding sentence, the Dividend
Determination is that any portion or all of the dividend be paid in (i) cash,
then such portion or all of the dividend payment, as the case may be, for the
relevant period shall be a Cash Dividend, and (ii) PIK Shares, then such portion
or all of the dividend payment, as the case may be, for the relevant period
shall be in PIK Shares. If, as a result of changes in GAAP, the Corporation's
accounting methodologies, practices, presentations or otherwise, the Board of
Directors is unable to determine the Consolidated Free Cash Flow when and as
required pursuant to this Section B, the Board of Directors shall, in good faith
and in consultation with and after taking the advice of its independent
auditors, determine the Consolidated Free Cash Flow in a manner that would most
closely reflect the Consolidated Free Cash Flow that would have been determined
as defined herein if such changes had not occurred and such determination of
Consolidated Free Cash Flow shall be conclusive for the purposes of the Dividend
Determination.
C. Accumulation. Dividends on the Series B Preferred Stock shall be
cumulative, and from and after any Dividend Payment Date on which any dividend
that has accumulated through such date on a share of Series B Preferred Stock
has not been paid in full (the amount of such unpaid dividends, an "Arrearage"),
additional dividends shall accumulate on such share of Series B Preferred Stock
in respect of the amount of such Arrearage at the Dividend Rate. Any and all
such additional dividends in respect of any Arrearages shall accumulate from day
to day and compound quarterly, whether or not earned or declared until the
Arrearage is paid in full, and shall constitute an additional Arrearage from and
after any Dividend Payment Date to the extent not paid on such Dividend Payment
Date. Reference in any Article herein to dividends that have accumulated with
respect to a share of Series B Preferred Stock shall include the amount, if any,
of any Arrearage together with any dividends accumulated on such Arrearage
pursuant to the immediately preceding two sentences. Additional dividends in
respect of any Arrearage may be declared and paid at any time, in whole or in
part, in accordance with Section E of this Article III without reference to any
regular Dividend Payment Date, to Registered Holders on such record date as may
be fixed by the Board of Directors (which record date shall be no less than ten
(10) days prior to the corresponding payment date).
D. Payment of PIK Shares in Shares of Series A Preferred Stock. The
payment of any PIK Shares as dividends pursuant to this Article III shall be
made in additional
B-4
shares of Series A Preferred Stock and not in shares of Series B Preferred
Stock: (i) on and after the Majority Ownership Date, or (ii) at any time and to
the extent that MHR is the Beneficial Owner, directly or indirectly, after
giving effect to the payment of PIK Shares in question, of less than 39.999% of
the aggregate voting power of all outstanding securities issued by the
Corporation. Prior to the Majority Ownership Date, the information contained in
the Schedule 13D filed by MHR with the United States Securities and Exchange
Commission with respect to its beneficial ownership of securities of the
Corporation as stated therein, as amended from time to time, shall be conclusive
for the purposes of the Corporation's compliance with its obligations under this
Section III.D, absent manifest error, unless MHR has delivered written notice to
the Corporation relating to the information contained in such Schedule 13D to
the Corporation as provided in Section IX.A.
E. Legal Limit on Dividends. The Board of Directors shall declare and
the Corporation shall pay all dividends, in the form prescribed by this Article
III, to the full extent, but only to such extent, that there exist at the time
assets or funds of the Corporation legally available for the payment of
dividends in accordance with the DGCL. In the event that there do not exist
lawfully available funds for the payment of dividends on any Dividend Payment
Date, any dividends that would otherwise be payable on all outstanding shares of
Series B Preferred Stock (and on any Arrearage and any dividends accumulated
thereon) shall accrue and shall not be paid unless and until the Corporation has
funds or other assets legally available for the payment of such dividends in
accordance with the DGCL, in which event such dividends shall be payable in PIK
Shares, rather than in cash.
F. Method of Payment. Dividends paid on the shares of Series B
Preferred Stock in an amount less than the full amount of such dividends at the
time accumulated and payable on all outstanding shares of Series B Preferred
Stock and Series A Preferred Stock (including any Arrearages and any dividends
accumulated thereon) shall be allocated pro rata on a share-by-share basis among
all such shares of Series B Preferred Stock and Series A Preferred Stock then
outstanding. Dividends paid in an amount less than the full amount of dividends
at the time accumulated and payable on the Series B Preferred Stock (and on any
Arrearage and any dividends accumulated thereon) shall be applied first to the
earliest dividend which has not theretofore been paid. All cash payments of
dividends on the shares of Series B Preferred Stock shall be made in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. If a dividend is paid in PIK
Shares, no fractional PIK Shares shall be issued, so that the number of PIK
Shares issued to each Registered Holder shall be rounded down to the nearest
whole number of shares of Series B Preferred Stock or (to the extent
contemplated by Section III.D hereof) Series A Preferred Stock, as applicable.
All dividends paid in PIK Shares shall be deemed issued on the applicable
Dividend Payment Date and shall thereupon be duly authorized, validly issued,
fully paid and non-assessable and free and clear of all liens, charges, security
interests or other encumbrances.
G. Restrictions on Dividends. So long as any shares of the Series B
Preferred Stock are outstanding, the Board of Directors shall not declare, and
the Corporation shall not pay or set apart for payment any dividend on any
Junior Securities or Parity Securities or make any payment on account of, or set
apart for payment money for a sinking or other similar fund for, the repurchase,
redemption or other retirement of, any Junior Securities or Parity Securities or
any warrants, rights or options exercisable for or convertible into any Junior
Securities or Parity
B-5
Securities, or make any distribution in respect of the Junior Securities or
Parity Securities, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property (other than
distributions or dividends in Junior Securities to the holders of Junior
Securities), and shall not permit any Subsidiary of the Corporation to purchase
or redeem any Junior Securities or Parity Securities or any warrants, rights,
calls or options exercisable for or convertible into any Junior Securities or
Parity Securities unless prior to or concurrently with such declaration,
payment, setting apart for payment, repurchase, redemption or other retirement
or distribution, as the case may be, all accumulated and unpaid dividends on
shares of the Series B Preferred Stock not paid on the dates provided for in
Section A of Article III hereof (including any Arrearages and any dividends
accumulated thereon) shall have been paid, except that when dividends are not
paid in full as aforesaid upon the shares of Series B Preferred Stock, dividends
may be declared on the Series B Preferred Stock and on any series of Parity
Dividend Securities (including the Series A Preferred Stock) and paid pro rata
so that the amount of dividends so declared and paid on Series B Preferred Stock
and such series of Parity Dividend Securities (including the Series A Preferred
Stock) shall in all cases bear to each other the same ratio that accumulated
dividends (including additional dividends accumulated in respect of such
accumulated dividends) on the shares of Series B Preferred Stock and such Parity
Dividend Securities (including the Series A Preferred Stock) bear to each other.
Notwithstanding the foregoing, this paragraph shall not prohibit the
acquisition, repurchase, exchange, conversion, redemption or other retirement
for value of shares of Series B Preferred Stock or any Parity Dividend Security
(including the Series A Preferred Stock) by the Corporation in accordance with
the terms of such securities.
IV. Liquidation Preference
A. In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the Holders of then-outstanding
shares of Series B Preferred Stock shall be entitled to receive, out of the
assets of the Corporation, prior and in preference to the holders of any Junior
Securities, whether such assets are capital or surplus of any nature, an amount
per share equal to the greater of (i) the sum of (A) the Share Purchase Price
plus (B) an amount equal to the unpaid dividends, if any, accumulated or deemed
to have accumulated thereon (including any Arrearages and any dividends
accumulated thereon) through and including the date of final distribution to
such Holders, whether or not such dividends are declared, plus (C) the
Make-Whole Amount, and (ii) the amount that would be payable to such Holders if
the Holders had converted all outstanding shares of Series B Preferred Stock
into shares of Common Stock immediately prior to such liquidation, dissolution
or winding up (the "Liquidation Preference"). After any such payment in full,
the Holders, only in their capacity as such, shall not be entitled to any
further participation in any distribution of assets of the Corporation. All the
assets of the Corporation available for distribution to stockholders after the
liquidation preferences of any Senior Liquidation Securities shall be
distributed ratably (in proportion to the full distributable amounts to which
Holders and Parity Liquidation Securities (including the Series A Preferred
Stock) are respectively entitled upon such liquidation, dissolution or winding
up) among the Holders of the then-outstanding shares of Series B Preferred Stock
and Parity Liquidation Securities (including the Series A Preferred Stock) when
such assets are not sufficient to pay in full the aggregate amounts payable
thereon. The Corporation shall not make any distribution of assets upon such
liquidation, dissolution or winding up in respect of any Junior Liquidation
Securities, either directly or indirectly, unless
B-6
prior to such distribution, the Liquidation Preference shall have been paid in
full in respect of all outstanding shares of Series B Preferred Stock, Series A
Preferred Stock and any other Parity Liquidation Securities.
Neither a voluntary consolidation or merger of the Corporation with or
into any other Person or Persons, nor a sale, conveyance, lease, exchange or
transfer of all or substantially all of the Corporation's assets for cash,
securities or other property to a Person or Persons shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Article IV.
V. Mandatory Conversion and Change of Control.
A. Mandatory Conversion.
(a) If, at any time after the date that is sixty-six (66) months after
the original issuance of the Series B Preferred Stock, for twenty (20) Trading
Days in any 30-Trading Day Reference Period, the Closing Price of the Common
Stock exceeds 125% of the Conversion Price (as adjusted pursuant to Article VII
hereof), then the Corporation shall have the right, at its option and election,
to convert the then-outstanding shares of Series B Preferred Stock, in whole and
not in part, into (i) at any time prior to the Majority Ownership Date, such
number of shares of Common Stock as would then be permitted to be issued under
Section VII.A(c)(iii), with all shares of Series B Preferred Stock not so
converted into Common Stock being convertible into a number of shares of Class B
Common Stock equal to the Class B Common Stock Conversion Number on the
Mandatory Conversion Date, and (ii) at any time after the Majority Ownership
Date, a number of shares of Common Stock equal to the Common Stock Conversion
Number on the Mandatory Conversion Date; provided however, that if the Class B
Common Stock Authorization shall not have occurred prior to the Mandatory
Conversion Date, the Corporation shall not have the right to convert any
outstanding shares of Series B Preferred Stock as provided in this paragraph.
(b) Notwithstanding anything in this Section A to the contrary, the
Corporation shall not have the right to convert the Series B Preferred Stock
into Common Stock or Class B Common Stock pursuant to this Section A unless (i)
the Corporation simultaneously exercises the right, pursuant to Section V.A of
the Series A Preferred Stock Certificate of Designation (the "Series A
Certificate of Designation"), to convert the then-outstanding shares of Series A
Preferred Stock, in whole and not in part, into shares of Common Stock, (ii) the
Common Stock shall have been validly listed for trading on NASDAQ or another
national securities exchange or quoted on a nationally recognized quotation
system on each day in the 30-Day Reference Period and as of the date of such
conversion, (iii) the average daily trading volume in the Common Stock during
the 30-Day Reference Period is at least fifty percent (50%) of the average daily
trading volume in the Common Stock for the 180-day period ending on the date of
the Securities Purchase Agreement, and (iv) the Class B Common Stock
Authorization has occurred. The Corporation may not effect any such conversion
if such conversion would: (A) violate any provision of the Certificate of
Incorporation or the Bylaws; (B) conflict with, contravene or result in a breach
or violation of any of the terms or provisions of, or constitute a default (with
or without notice or the passage of time) under, or result in or give rise to a
right of termination, cancellation, acceleration or modification of any right or
obligation under, or give
B-7
rise to a right to put or to compel a tender offer for outstanding securities of
the Corporation or any of its Subsidiaries under, or require any consent, waiver
or approval under (unless such consent, waiver or approval is obtained prior to
effecting such conversion), any note, bond, debt instrument, indenture,
mortgage, deed of trust, lease, loan agreement, joint venture agreement,
Regulatory Approval, contract or any other agreement, instrument or obligation
to which the Corporation or any of its Subsidiaries is a party or by which the
Corporation or any of its Subsidiaries or any property of the Corporation or any
of its Subsidiaries is bound; (C) result in the creation or imposition of any
Lien upon any assets or properties of the Corporation or any of its Subsidiaries
other than immaterial Liens; or (D) violate any Law applicable to the
Corporation or any of its Subsidiaries. The Holders agree to cooperate with the
Corporation in providing such information and supplying such assistance as may
be reasonably requested by the Corporation in connection with obtaining any
consent, waiver or approval in respect of any Regulatory Approval required prior
to effecting any such conversion.
(c) Notice of a conversion of shares of Series B Preferred Stock
pursuant to this Section A (a "Notice of Mandatory Conversion") shall be sent to
the Holders of record by first class mail, postage prepaid, at each such
Holder's address as it appears on the stock record books of the Corporation, not
before the expiration of the 30-Day Reference Period and not more than six (6)
Business Days subsequent to the last day of the 30-Day Reference Period. The
Notice of Mandatory Conversion shall set forth the date fixed for the conversion
which shall not be before, and shall not be more than 30 days after, the date of
the mailing of the Notice of Mandatory Conversion (the "Mandatory Conversion
Date") and shall set forth in reasonable detail the calculations and supporting
data used by the Corporation in its determination that it had the right to
effect such conversion. From and after the Mandatory Conversion Date, all
dividends on the shares of Series B Preferred Stock that are converted shall
cease to accumulate and all rights of the Holders thereof as Holders shall cease
and terminate, except if the Corporation shall default in its obligation to
deliver shares of Common Stock and Class B Common Stock to Holders on the
Mandatory Conversion Date, in which case all such rights shall continue unless
and until such shares are redeemed or converted in accordance with the terms
hereof. Prior to the Mandatory Conversion Date, each Holder shall provide a
written notice to the Corporation specifying the name or names in which such
Holder wishes the certificate or certificates for shares of Common Stock or
Class B Common Stock to be issued. If no such notice is delivered, such
certificates for shares of Common Stock or Class B Common Stock and cash in lieu
of fractional shares, if any, shall be delivered to such Holder. In case such
notice shall specify a name or names other than that of such Holder, such notice
shall be accompanied by payment of all transfer taxes payable upon the issuance
of shares of Common Stock or Class B Common Stock in such name or names. Other
than such taxes, the Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of shares of Common Stock or Class B
Common Stock on conversion of Series B Preferred Stock pursuant to this Section
A. On or after the Mandatory Conversion Date, each Holder whose shares are so
converted shall surrender the certificate formerly evidencing such shares of
Series B Preferred Stock to the Corporation at the place designated in the
Notice of Mandatory Conversion. As promptly as practical, and in any event
within three (3) Business Days after the Mandatory Conversion Date, the
Corporation shall deliver or cause to be delivered as directed by the Holder of
shares being so converted certificates representing the number of validly
issued, fully paid and nonassessable full shares of Common Stock or Class B
Common Stock to which such Holder shall be entitled. Except as
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otherwise specified in this Article V, for the purposes hereof, such conversion
shall be deemed a conversion effected pursuant to Article VII and the terms and
procedures set forth in Article VII shall apply. For such purpose, the
applicable Conversion Date shall be the Mandatory Conversion Date.
(d) In the event the Corporation delivers a Notice of Mandatory
Conversion, the Corporation shall be obligated to effect the conversion
described therein, provided that each of the conditions to such conversion set
forth in subsections (a), (b) and (c) above is (i) satisfied or (ii) waived by
the Holders of a majority of the shares of Series B Preferred Stock then
outstanding.
B. Change of Control. Any Holder of record immediately prior to either
(i) the occurrence of a Change of Control, or (ii) the approval by the Board of
Directors (or any committee thereof) in existence immediately prior to the
earlier of the public announcement or consummation of such Change of Control, of
such Change of Control, or any transaction related thereto or that results
therefrom, whether prior or subsequent to such Change of Control (the "Change of
Control Approval"), shall have the right immediately prior to the occurrence of
a Change of Control or upon the Change of Control Approval, as the case may be,
and may, but shall not be required to, in any case, require the Corporation to,
in accordance with the procedures set forth in Sections C or D of this Article
V, as the case may be, with the choice between (a) and (b) below being at the
Holder's sole discretion (and the Corporation shall not consummate a Change of
Control that is not in compliance with the provisions of Section C or D of this
Article V); provided, however, that if the rights of any Holder to redeem any of
its shares of Series A Preferred Stock pursuant to paragraph (a) below, which
right shall continue to be in full force and effect until it is exercised in
full by the Holder as provided herein, arises as a result of a Change of Control
as defined in paragraphs (a)(i), (a)(ii) or (b) of the definition thereof, such
Holder may exercise its rights hereunder and under paragraph (a) below only upon
or at any time following the Change of Control Approval:
(a) redeem any of the shares of Series B Preferred Stock held by such
Holder in an amount per share, payable in cash (out of funds legally available
therefor), equal to the amount set forth in Section IV.A(i) above; provided,
however, that if (x) (i) the Change of Control is triggered by paragraph (a) of
the definition thereof, (ii) the "Person" referred to in paragraph (a) of the
definition of "Change of Control" is MHR, (iii) MHR is the Beneficial Owner
immediately following such Change of Control of more than 50% but less than 90%
of the aggregate voting power of the then outstanding capital stock of the
Corporation, and (iv) such Change of Control is not approved or recommended by
the Board of Directors (or a committee thereof), or (y) (i) the Change of
Control is triggered by paragraph (a) of the definition thereof, (ii) the
"Person" referred to in paragraph (a) of the definition of "Change of Control"
acquires more than 50% of the aggregate voting power of the then outstanding
capital stock of the Corporation as a result of the acquisition by such Person
from MHR of any securities of the Corporation held by MHR and becomes such
Person as a result of such acquisition, and (iii) such Change of Control is not
first approved or recommended by the Board of Directors (or a committee
thereof), then the amount per share payable in cash (out of funds legally
available therefor) shall equal the amount set forth in Section IV.A(i) above
less the Make-Whole Amount; or
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(b) convert any of the then-outstanding shares of Series B Preferred
Stock into such number of shares of Class B Common Stock or Common Stock that
the Series B Preferred Stock is then convertible into pursuant to Sections
VII.A(a) or VII.A(b), as the case may be, equal to the sum of (i) the number of
shares of Class B Common Stock or Common Stock, as the case may be, that such
Holder would receive if such then-outstanding shares of Series B Preferred Stock
had been converted by the Holders thereof pursuant to Article VII hereof at the
Conversion Price in effect on the date immediately preceding the consummation of
the Change of Control, plus (ii) for each such share of Series B Preferred
Stock, such number of additional shares of Class B Common Stock or Common Stock,
as the case may be, equal to (x) the Make-Whole Amount divided by (y) the
Conversion Price in effect on the date immediately preceding the consummation of
the Change of Control; provided, however, that if a Cash Dividend would be
permitted pursuant to Section B of Article III on the date of the consummation
of such Change of Control, the Make-Whole Amount may be paid, at the
Corporation's discretion, in cash rather than in additional shares of Common
Stock; provided further, however, that if (x) (i) the Change of Control is
triggered by paragraph (a) of the definition thereof, (ii) the "Person" referred
to in paragraph (a) of the definition of Change of Control is MHR, (iii) MHR is
the Beneficial Owner immediately following such Change of Control of more than
50% but less than 90% of the aggregate voting power of the then outstanding
capital stock of the Corporation, and (iv) such Change of Control is not
approved or recommended by the Board of Directors (or a committee thereof), or
(y) (i) the Change of Control is triggered by paragraph (a) of the definition
thereof, (ii) the "Person" referred to in paragraph (a) of the definition of
Change of Control acquires more than 50% of the aggregate voting power of the
then outstanding capital stock of the Corporation as a result of the acquisition
by such Person from MHR of any securities of the Corporation held by MHR and
becomes such Person as a result of such acquisition, and (iii) such Change of
Control is not first approved or recommended by the Board of Directors (or a
committee thereof), then the Holder shall have the right immediately prior to
the occurrence of a Change of Control, and may require the Corporation to
convert all, but not less than all, of the then-outstanding shares of Series B
Preferred Stock held by such Holder into such number of shares of Class B Common
Stock or Common Stock, as the case may be, equal to the number of shares of
Class B Common Stock or Common Stock, as the case may be, that such Holder would
receive if such then-outstanding shares of Series B Preferred Stock had been
converted by the Holders thereof pursuant to Article VII hereof at the
Conversion Price in effect on the date immediately preceding the consummation of
the Change of Control; provided further, however, that if (X) the Series B
Preferred Stock is convertible into Class B Common Stock pursuant to Article
VII.A(a) below immediately prior to the Change of Control, (Y) the Class B
Common Stock Authorization has not occurred prior the Change of Control
Redemption Date, and (Z) Holders of record of a majority of the outstanding
shares of Series B Preferred Stock immediately prior to the occurrence of such
Change of Control, elect to convert pursuant to this subsection (b), then (I)
the Corporation shall issue (except to the extent that the immediately preceding
proviso applies) to each Holder (other than any Holder electing to redeem
pursuant to subsection (a) above or deemed to have made such election pursuant
to Sections C or D of this Article V, as the case may be) for each share of
Series B Preferred Stock held by such Holder such number of additional shares of
Series B Preferred Stock equal to the Make-Whole Amount divided by the Share
Purchase Price, and (II) notwithstanding anything to the contrary in this
Certificate of Designation, the only dividends payable on the remaining
outstanding shares of
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Series B Preferred Stock shall be the Participating Dividends, to the extent
payable pursuant to Article III.A hereunder.
C. Change of Control Notice, Redemption and Conversion Procedures For
Holders. Except as provided in Section D below, within thirty (30) days
following any Change of Control, a notice of such Change of Control (a
"Post-Closing Change of Control Notice") shall be sent promptly to the Holders
of record on the date of the consummation of such Change of Control, which
Post-Closing Change of Control Notice shall describe the transaction or
transactions constituting such Change of Control and set forth each Holder's
right to require the Corporation to redeem (out of funds legally available
therefor) or convert any or all shares of Series B Preferred Stock held by such
Holder as provided in Section V.B above, the redemption or conversion date
(which date shall be thirty (30) days following the date of the Post-Closing
Change of Control Notice) (the "Change of Control Redemption Date"), and the
procedures to be followed by such Holders in exercising such Holder's right to
cause such redemption or conversion. Failure by the Corporation to give the
Post-Closing Change of Control Notice as prescribed by the preceding sentence,
or the formal insufficiency of any such Post-Closing Change of Control Notice or
the failure by the Holder to deliver a Post-Closing Election Notice (as defined
below), as prescribed by the preceding and following sentences, respectively,
shall not prejudice the rights of any Holder to cause the Corporation to redeem
or convert any such shares held by such Holder. Such Holder shall deliver,
within ten (10) Business Days following receipt of the Post-Closing Change of
Control Notice, or, if the Post-Closing Change of Control Notice is not given as
required by this Section C, at any time following the last day the Corporation
was required to give the Post-Closing Change of Control Notice in accordance
with this Section C, a written notice to the Corporation (a "Post-Closing
Election Notice"), stating whether it elects to require the Corporation to
redeem or convert any or all such shares of Series B Preferred Stock pursuant to
Section B hereof, and if so, specifying the number of shares to be so redeemed
or converted; provided, however, that in the event that such Holder does not
deliver a Post-Closing Election Notice within ten (10) Business Days following
receipt of the Post-Closing Change of Control Notice, such Holder shall be
deemed to have notified the Corporation that it elects to have all of its shares
redeemed pursuant to Section B(a) of this Article V. Notwithstanding the
foregoing, the Holder may provide in such Post-Closing Election Notice that it
will continue to hold any number of shares of Series B Preferred Stock rather
than redeeming or converting pursuant to Section B of this Article V. If the
Post-Closing Election Notice states that the Holder elects to require the
Corporation to redeem or convert any or all such shares of Series B Preferred
Stock pursuant to Section B hereof, the Corporation shall redeem or convert the
number of shares so specified on the written notice of the Holder. In the event
that shares of Series B Preferred Stock are converted into Common Stock or Class
B Common Stock, as the case may be, pursuant to Section B of this Article V, the
terms and procedures to effect such conversion set forth in Article VII.A shall
apply. The Corporation shall comply with the requirements of Rules 13e-4 and
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 the repurchase of the shares of Series B Preferred Stock as a result of a
Change of Control. If, and only if, and from and after the time the Change of
Control Redemption Price is paid or shares of Common Stock are issued in
accordance with the terms hereof with respect to any share of Series B Preferred
Stock to be redeemed or converted pursuant to this Article V, all dividends on
such share of Series B Preferred Stock shall cease to accumulate and all rights
of the Holder thereof as a Holder shall cease and terminate. The
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Corporation shall not be required to redeem any shares of Series B Preferred
Stock upon any Holder's request pursuant to Section V.B above if a third party
redeems such shares of Series B Preferred Stock in the manner, at the times and
otherwise in compliance with the requirements applicable to the Corporation set
forth in this Article V. For the avoidance of doubt, any Holder may elect to
notify the Corporation that it shall not require the Corporation to redeem or
convert any share of Series B Preferred Stock in accordance with the procedures
set forth in Section C of this Article V and any such election or notice shall
not prejudice such Holder from exercising all rights to redeem or convert such
share of Series B Preferred Stock in accordance with the procedures set forth in
Section C of this Article V in any subsequent Change of Control. Notwithstanding
anything to the contrary in this Section C of Article V, in the event that the
Holder elects or is deemed to have elected to redeem any or all such shares of
Series B Preferred Stock prior to the occurrence of a Change of Control
Approval, such election (or deemed election) shall remain in full force and
effect until such Change of Control Approval and the Corporation shall redeem
the number of shares so specified (or deemed to be specified) on the written
notice of such Holder upon such Change of Control Approval, unless at any time
prior to such Change of Control Approval, the Holder delivers a notice to the
Corporation that it no longer elects to redeem any or all such shares of Series
B Preferred Stock (an "Election Change Notice"). If such Election Change Notice
states that the Holder elects to convert any or all shares of Series B Preferred
Stock pursuant to Section B of this Article V, then the Corporation shall
convert the number of shares so specified on the written notice of the Holder.
D. MHR Change of Control Notice, Redemption and Conversion Procedures.
In the event that and for as long as MHR is the holder of a majority of the
then-outstanding shares of Series B Preferred Stock and Series A Preferred
Stock, in the aggregate, notice of any Change of Control (a "Pre-Closing Change
of Control Notice") shall be sent to MHR (i) not later than fifteen (15)
Business Days prior to the Corporation entering into any binding agreement,
commitment or undertaking, or the offer or acceptance of any of the foregoing
(collectively, a "Change of Control Agreement") that could, in any case, result
in a Change of Control, and (ii) promptly, but in no event more than five (5)
Business Days after the Corporation becomes aware of any fact, event or
circumstance that could, in any case, result in a Change in Control other than
as contemplated by clause (i), which Pre-Closing Change of Control Notice shall
describe the transaction or transactions constituting such Change of Control and
set forth MHR's right to require the Corporation to redeem or convert any or all
shares of Series B Preferred Stock held by MHR at the effective time of the
consummation of such Change of Control, the anticipated date of consummation of
such Change of Control, and the procedures to be followed by MHR in exercising
MHR's right to cause such redemption or conversion. Failure by the Corporation
to give the Pre-Closing Change of Control Notice as prescribed by the preceding
sentence, or the formal insufficiency of any such Pre-Closing Change of Control
Notice, or the failure by the Holder to deliver a Pre-Closing Election Notice
(as defined below), as prescribed by the preceding and following sentences,
respectively, shall not prejudice the rights of MHR to cause the Corporation to
redeem or convert any such shares held by MHR on the date of the consummation of
such Change of Control or the date of the Change of Control Approval.
Notwithstanding the foregoing, the Corporation shall have no obligation to
provide MHR with the Pre-Closing Change of Control Notice under this Section V.D
if in order to comply with a legal obligation to such effect, the Corporation
requests but MHR does not enter into a confidentiality agreement with the
Corporation in form and substance required pursuant to such legal obligation.
MHR shall deliver, at least two (2) Business Days prior to the anticipated date
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of the consummation of such Change of Control (as set forth on the Pre-Closing
Change of Control Notice) or, if the Pre-Closing Change of Control Notice is not
given as required by this Section D, at any time following the last day the
Corporation was required to give the Pre-Closing Change of Control Notice in
accordance with this Section D, a written notice to the Corporation (a
"Pre-Closing Election Notice"), stating whether it elects to require the
Corporation to redeem or convert any or all such shares of Series B Preferred
Stock pursuant to Section B hereof, and if so, specifying the number of shares
to be so redeemed or converted; provided, however, that in the event that such
Holder does not deliver a Pre-Closing Election Notice at least two (2) Business
Days prior to the anticipated date of the consummation of such Change of Control
(as set forth on the Pre-Closing Change of Control Notice), such Holder shall be
deemed to have notified the Corporation that it elects to have all of its shares
redeemed pursuant to Section B(a) of this Article V. Notwithstanding the
foregoing, MHR may provide in such Pre-Closing Election Notice that it will
continue to hold any number of shares of Series A Preferred Stock rather than
redeeming or converting pursuant to Section B of this Article V. If the
Pre-Closing Election Notice states that MHR elects to require the Corporation to
redeem or convert any or all such shares of Series B Preferred Stock pursuant to
Section B hereof, the Corporation shall redeem or convert the number of shares
so specified on the written notice of MHR at the effective time of the
consummation of such Change of Control. In the event that shares of Series B
Preferred Stock are converted into Common Stock or Class B Common Stock, as the
case may be, pursuant to Section B of this Article V, the terms and procedures
to effect such conversion set forth in Article VII.A shall apply. The
Corporation shall comply with the requirements of Rules 13e-4 and 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 the
repurchase of the shares of Series B Preferred Stock as a result of a Change of
Control. If, and only if, and from and after the time the Change of Control
Redemption Price is paid or shares of Common Stock are issued in accordance with
the terms hereof with respect to any share of Series B Preferred Stock to be
redeemed or converted pursuant to this Article V, all dividends on such share of
Series B Preferred Stock shall cease to accumulate and all rights of MHR thereof
as a holder of shares of Series B Preferred Stock shall cease and terminate. The
Corporation shall not be required to redeem any shares of Series B Preferred
Stock upon MHR's request pursuant to Section V.B(a) above if a third party
redeems such shares of Series B Preferred Stock in the manner, at the times and
otherwise in compliance with the requirements applicable to the Corporation set
forth in this Article V. For the avoidance of doubt, MHR may elect to notify the
Corporation that it shall not require the Corporation to redeem or convert any
share of Series B Preferred Stock in accordance with the procedures set forth in
Section D of this Article V and any such election or notice shall not prejudice
MHR from exercising all rights to redeem or convert such share of Series B
Preferred Stock in accordance with the procedures set forth in Section D of this
Article V in any subsequent Change of Control. Notwithstanding anything to the
contrary in this Section D of Article V, in the event that MHR elects or is
deemed to have elected to redeem any or all such shares of Series B Preferred
Stock prior to the occurrence of a Change of Control Approval, such election (or
deemed election) shall remain in full force and effect until such Change of
Control Approval and the Corporation shall redeem the number of shares so
specified (or deemed to be specified) on the written notice of MHR upon such
Change of Control Approval, unless at any time prior to such Change of Control
Approval, MHR delivers an Election Change Notice. If such Election Change Notice
states that MHR elects to convert any or all shares of Series B Preferred Stock
pursuant to Section B of this
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Article V, then the Corporation shall convert the number of shares so specified
on the written notice of MHR.
E. Change of Control Commitment. The Corporation shall not enter into
any Change of Control Agreement unless (i) the terms thereof comply with the
terms of this Certificate of Designation, including Article V.B hereto, and
permit any Holder to exercise their rights under this Article V, and (ii) there
exist funds legally available for the exercise by each Holder of its rights
under subsection (a) of Section V.B or a third party under the Change of Control
Agreement unconditionally agrees to redeem all the shares of Series B Preferred
Stock that Holders elect to redeem as set forth in full compliance with this
Article V, provided that the Corporation, or its successor, shall remain bound
by all its obligations under this Article V until all shares of Series B
Preferred Stock of Holders that have elected or that have been deemed to have
elected to have their shares redeemed are redeemed as provided herein.
F. Asset Sale Covenants. Following the consummation of an Asset Sale
(as defined in paragraph (d) of the definition of "Change of Control"), the
Corporation shall not, and shall not permit any of its Subsidiaries now or
hereafter existing to, directly or indirectly do any of the following (each, an
"Asset Sale Covenant"):
(a) make any Restricted Payment if, at the time the Company or such
Subsidiary makes such Restricted Payment, the aggregate amount of such
Restricted Payment and all other Restricted Payments since the consummation of
the Asset Sale would exceed the sum of 50% of the Adjusted Consolidated Net
Income of the Corporation accrued during the period (treated as one accounting
period) beginning on the Closing Date to the end of the most recent fiscal
quarter ended at least 45 days prior to the date of such Restricted Payment; or
(b) if such Asset Sale involves assets other than assets owned,
directly or indirectly, by SkyNet or any of its Subsidiaries, transfer, assign,
contribute or otherwise deliver any Asset Sale Proceeds (or any assets purchased
or otherwise obtained, in whole or in part, by such Asset Sale Proceeds),
directly or indirectly, to SkyNet or any of its Subsidiaries or any of their
respective successors or assigns.
VI. Voting Rights
A. The Holders shall have the voting rights set forth below and as
otherwise from time to time required by law. When voting separately as a class,
each share of Series B Preferred Stock shall entitle the Holder thereof to one
vote.
B. So long as any shares of the Series B Preferred Stock are
outstanding, each share of Series B Preferred Stock shall entitle the Holder
thereof to vote on all matters voted on by holders of Common Stock, and the
shares of Series B Preferred Stock shall vote together with shares of Common
Stock as a single class. With respect to any such vote, each share of Series B
Preferred Stock shall entitle its Holder to a number of votes equal to one ten
thousandth of one (1/10,000) vote for each share of Series B Preferred Stock.
C. If on any date (i) all accumulated and unpaid dividends (including
any Arrearages and any dividends accumulated thereon) on shares of Series B
Preferred Stock or shares of Series A Preferred Stock have not been paid on the
dates provided for in Section A of
B-14
Article III hereof or on the dates required pursuant to the terms of the Series
A Preferred Stock for a period, whether or not consecutive, containing in the
aggregate a number of days equivalent to three (3) calendar quarters, or (ii)
the Corporation fails to pay any accumulated and unpaid dividends (including any
Arrearages and any dividends accumulated thereon) on the dates provided for in
Section A of Article III hereof or on the dates required pursuant to the terms
of the Series A Preferred Stock, for which there exist at such time assets or
funds legally available therefor in accordance with the DGCL, then the number of
directors constituting the Board of Directors shall, without further action, be
increased by two, or if the requisite increase in the number of directors
constituting the Board of Directors would require the approval of the
Corporation's stockholders, then the number of directors constituting the Board
of Directors shall be increased to the extent the approval of the Corporation's
stockholders is not required and a number of directors shall resign from the
Board of Directors so that the holders of shares of Series B Preferred Stock and
Series A Preferred Stock, voting together as a single class, may elect two
directors to the Board of Directors, and the holders of a majority of the
outstanding shares of Series B Preferred Stock and Series A Preferred Stock,
voting together as a single class, shall have, in addition to the other voting
rights set forth herein and in the Series A Certificate of Designation, the
exclusive right to elect two directors (the "Additional Directors") of the
Corporation to fill such newly-created or vacated directorships; provided,
however, that such Additional Directors shall not be employed by, or Affiliates
of, MHR if the election of such Additional Directors would result in MHR or its
employees or Affiliates constituting a majority of the Board of Directors;
provided further, however, that if such Additional Director(s) will cause a
majority of the Board of Directors to be appointed by the Holders of the Series
A Preferred Stock and Series B Preferred, then such Additional Director(s) shall
be appointed only if they are reasonably acceptable to the Corporation (provided
that if such nominee(s) is/are not reasonably acceptable, then the Series A
Preferred Stock and Series B Preferred Stock shall designate an alternate
nominee(s) and such alternate(s) shall be considered by the Corporation in
accordance with the foregoing). Additional Directors shall not be divided into
any class and shall continue as directors and such additional voting rights
shall continue until such time as all dividends accumulated on the Series B
Preferred Stock (including any Arrearages and any dividends accumulated thereon)
and the Series A Preferred Stock (including any Arrearages and any dividends
accumulated thereon) shall have been paid in full as required pursuant to the
terms hereof and the terms of the Series B Certificate of Designation, at which
time such Additional Directors shall cease to be directors and such additional
voting right of the holders of shares of Series B Preferred Stock and Series A
Preferred Stock shall terminate subject to revesting in the event of each and
every subsequent event of the character indicated above. When voting together as
a single class, as provided for herein, each share of Series B Preferred Stock
and Series A Preferred Stock shall entitle the holder thereof to one vote.
D. (a) The foregoing rights of the Holders to take any action as
provided in this Article VI may be exercised at any annual meeting of
stockholders or at a special meeting of stockholders held for such purpose as
hereinafter provided or at any adjournment thereof, or by the written consent,
delivered to the Secretary of the Corporation, of the holders of the minimum
number of shares required to take such action. So long as such right to vote
continues (and unless such right has been exercised by written consent of the
minimum number of shares required to take such action), the Chief Executive
Officer of the Corporation may call, and upon the written request of holders of
record of a majority of the outstanding shares of Series B Preferred Stock and
Series A Preferred Stock, addressed to the Secretary of the Corporation at
B-15
the principal office of the Corporation, shall call, a special meeting of the
holders of shares entitled to vote as provided herein. Such meeting shall be
held as soon as reasonably practicable after delivery of such request to the
Secretary, at the place and upon the notice provided by law and in the Bylaws
for the holding of meetings of stockholders.
(b) Each director elected pursuant to Section C hereof shall serve
until the next annual meeting or until his or her successor shall be elected and
shall qualify, unless the director's term of office shall have terminated
pursuant to the provisions of Section C hereof, as the case may be. In case any
vacancy shall occur among the directors elected pursuant to Section C hereof,
such vacancy shall be filled for the unexpired portion of the term by vote of
the remaining director or directors theretofore elected pursuant to the same
Section (or such director's or directors' successor in office), if any. If any
such vacancy is not so filled within twenty (20) days after the creation thereof
or if all of the directors so elected shall cease to serve as directors before
their term shall expire, the holders of the shares of Series B Preferred Stock
and Series A Preferred Stock then outstanding and entitled to vote for such
director pursuant to the provisions of Section C hereof, as the case may be, may
elect successors to hold office for the unexpired terms of any vacant
directorships, by written consent as provided herein, or at a special meeting of
such holders called as provided herein. The holders of a majority of the shares
entitled to vote for directors pursuant to Section C hereof, shall have the
right to remove without cause at any time and replace any directors such holders
have elected pursuant to such section, by written consent as herein provided, or
at a special meeting of such holders called as provided herein.
E. Without the consent or affirmative vote of the holders of at least
a majority of the outstanding shares of Series B Preferred Stock and Series A
Preferred Stock, voting together as a single class, the Corporation shall not
(i) authorize, create or issue, or increase the authorized amount of any Senior
Securities or Parity Securities, whether by or in connection with any merger,
consolidation, reclassification, business combination, joint venture,
partnership, exchange, recapitalization, sale, transfer, conveyance, lease or
other disposition of all or substantially all of its assets or otherwise; (ii)
issue or increase the authorized amount of the Series A Preferred Stock or
Series B Preferred Stock, whether by or in connection with any merger,
consolidation, reclassification, business combination, joint venture,
partnership, exchange, recapitalization, sale, transfer, conveyance, lease or
other disposition of all or substantially all of its assets or otherwise; (iii)
authorize, or take any action, directly or indirectly, to alter, repeal, change
or amend any provision of the Certificate of Incorporation or this Certificate
of Designation, whether by or in connection with any merger, consolidation,
reclassification, business combination, exchange, recapitalization, joint
venture, partnership, sale, transfer, conveyance, lease, other disposition of
all or substantially all of its property or assets, any similar transaction or
otherwise, if such authorization or action would reasonably be expected to
adversely affect the rights, preferences, privileges or powers of the Series A
Preferred Stock, Series B Preferred Stock, the Common Stock into which the
Series A Preferred Stock and Class B Common Stock are convertible or the Class B
Common Stock into which the Series B Preferred Stock is convertible, or any of
the holders thereof; (iv) and shall not permit any of its Subsidiaries to, sell,
lease, transfer, convey or dispose of any of their respective properties or
assets to, or enter any loan, guarantee or other understanding with, any
Affiliate other than MHR (excluding MHR's Affiliates except for its funds under
management and any Persons controlling or under common control with such funds)
(an "Affiliate Transaction")
B-16
unless (A) such Affiliate Transaction is on terms that are no less favorable to
the Corporation or such Subsidiary than those that could be obtained at the time
of the Affiliate Transaction in arms' length dealings with a Person who is not
an Affiliate, and (B) such Affiliate Transaction is approved by the Board of
Directors (or any committee thereof) excluding any interested directors;
provided, however, that the consent or affirmative vote of the holders of at
least a majority of the outstanding shares of Series B Preferred Stock and
Series A Preferred Stock, voting together as a single class, shall not be
required for any Affiliate Transaction involving (1) any issuance of securities,
or other payments, awards or grants in cash, securities or otherwise pursuant
to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors (or any committee thereof);
(2) loans or advances to directors or executive officers in the ordinary course
of business, but in any event not to exceed $1.0 million in the aggregate
outstanding at any one time; (3) the payment of customary fees and compensation
(including health benefits, vacation, severance, compensation and similar
benefits) to, and provision of customary indemnification on behalf of, directors
and executive officers of the Corporation, or the entry into any contract,
agreement or other arrangement therefor, in each case, as determined in good
faith by the Board of Directors (or any committee thereof); (4) any transaction
between or among the Corporation and/or its Subsidiaries; or (5) any transaction
between the Corporation or any of its Subsidiaries and any Joint Venture
(whether existing now or at any time in the future) (except for any transaction
relating to or in connection with the formation of any Joint Venture), provided
that (I) such transaction is on terms that are no less favorable to the
Corporation or such Subsidiary than those that could be obtained at the time in
arms' length dealings and (II) the aggregate consideration or value of such
transaction does not exceed $1,000,000; (v) and shall not permit any of its
Subsidiaries now or hereafter existing to, as long as at least fifty (50%)
percent of the shares of Series B Preferred Stock and Series A Preferred Stock,
in the aggregate, originally issued on the Closing Date are outstanding,
consummate any Significant Sale which would require or is otherwise submitted
for the approval of the holders of the Corporation's Common Stock under
applicable law unless the Corporation grants each Holder of record immediately
prior to the consummation of such Significant Sale the right to require the
Corporation, in accordance with the procedures set forth in Section G of this
Article VI, to redeem any of the shares of Series B Preferred Stock held by such
Holder in an amount per share, payable in cash (out of funds legally available
therefor), equal to the amount set forth in Section IV.A(i) above less the
Make-Whole Amount (the "Significant Sale Redemption Price"); provided, however,
that this clause (v) shall not apply in the event that holders of at least 66
2/3% of the then-outstanding Common Stock vote in favor of such Significant
Sale; provided further, however, that if (A) holders of at least a majority but
less than 66 2/3% of the then-outstanding Common Stock vote in favor of such
Significant Sale, and (B) holders of a majority of the then-outstanding shares
of Series B Preferred Stock and Series A Preferred Stock, voting together as a
single class, vote in favor of such Significant Sale, then, notwithstanding
anything to the contrary in this clause (v), the Corporation shall not be
required to grant each Holder the redemption right as set forth in this clause
(v); (vi) and shall not permit any of its Subsidiaries now or hereafter existing
(other than SkyNet or any of its Subsidiaries) to, as long as at least
thirty-three percent (33%) of the shares of Series B Preferred Stock and Series
A Preferred Stock, in the aggregate, originally issued on the Closing Date are
outstanding, purchase, repay, redeem, Guarantee or secure the SkyNet Preferred
Stock, in whole or in part, provide credit support for the purpose of any of the
foregoing , or otherwise agree to do any of the foregoing, with any assets other
than (A) assets of SkyNet or any of its Subsidiaries or (B)
B-17
the proceeds from a sale of Junior Securities; or (vii) and shall not permit any
of its Subsidiaries now or hereafter existing to, as long as at least
thirty-three percent (33%) of the shares of Series B Preferred Stock and Series
A Preferred Stock, in the aggregate, originally issued on the Closing Date are
outstanding, make any Restricted Payment if, at the time the Company or such
Subsidiary makes such Restricted Payment, the aggregate amount of such
Restricted Payment and all other Restricted Payments since the Closing Date
would exceed the sum of 50% of the Adjusted Consolidated Net Income of the
Corporation accrued during the period (treated as one accounting period)
beginning on the Closing Date to the end of the most recent fiscal quarter ended
at least 45 days prior to the date of such Restricted Payment.
F. Without the consent or affirmative vote of each Holder affected,
the Corporation shall not (a) amend, alter, repeal or waive the Certificate of
Incorporation or this Certificate of Designation, whether by or in connection
with any merger, consolidation, reclassification, business combination, joint
venture, partnership, exchange, recapitalization, sale, transfer, conveyance,
lease or other disposition of all or substantially all of its property or assets
or otherwise, to (i) alter the voting rights of the Series B Preferred Stock or
reduce the number of shares of such Series B Preferred Stock whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the Liquidation
Preference, (iii) reduce the rate of or change the time for payment of dividends
or impair the right of any Holder to institute suit for the enforcement of any
payment of dividends; (iv) waive the consequences of any failure to pay
dividends; (v) make any share of Series B Preferred Stock payable in any form
other than as provided for in this Certificate of Designation; (vi) make any
change in the provisions of this Certificate of Designation relating to waivers
of rights of Holders to receive the Liquidation Preference and dividends; (vii)
make any change in the amendment and waiver provisions of this Certificate of
Designation; or (viii) make any change to the earliest date that the Corporation
may mandatorily convert the shares of Series B Preferred Stock pursuant to
Section A of Article V; or (b) from and after the date of the original issuance
of the Series B Preferred Stock, enter into any agreement, amend or modify any
existing agreement or obligation, or issue any security that prohibits,
conflicts or is inconsistent with, or would be breached by, the Corporation's
performance of its obligations hereunder.
G. Preferred Stock Voting Procedures Regarding Significant Sale. In
the event that the Corporation seeks the approval of the holders of the Common
Stock in connection with, including the approval of, a Significant Sale as
described in clause (v) of Section VI.E, the Corporation shall simultaneously
submit to such Holders of record any notice of a meeting, proxy statements,
information statements or other communications that it sends or makes available
to the holders of the Common Stock in connection with such Significant Sale
("Significant Sale Notice"). The Holders shall vote on such Significant Sale, as
a separate class and in accordance with their voting rights provided herein, at
the same meeting and pursuant to the same procedures that the Corporation
establishes with respect to the vote of the holders of the Common Stock in
connection with such Significant Sale; provided however, that if prior to the
date that the meeting is set for such vote of the Holders on such Significant
Sale, Holders of a majority of the then-outstanding shares of Series B Preferred
Stock notify the Corporation in writing that they desire to vote separately and
after the date set for the vote of the holders of Common Stock, then, if holders
of at least a majority but less than 66 2/3% of the then-outstanding shares of
Common Stock vote in favor of such Significant Sale, the Corporation shall
convene and hold a meeting of Holders not less than ten (10) Business Days after
the vote
B-18
of the Common Stock is made available to such Holders, at which meeting the
Holders shall be entitled to vote with respect to such Significant Sale. The
Significant Sale Notice sent to Holders shall also set forth the circumstances
in which each Holder has the right to require the Corporation to redeem any or
all shares of Series B Preferred Stock held by such Holder at the effective time
of the consummation of such Significant Sale and the procedures to be followed
by such Holder in exercising such Holder's right to cause such redemption.
Failure by the Corporation to give the Significant Sale Notice as prescribed by
the preceding sentence, or the formal insufficiency of any such Significant Sale
Notice, shall not prejudice the rights of any Holder to cause the Corporation to
redeem any such shares held by such Holder on the date of the consummation of
such Significant Sale. At or prior to the time a Holder casts votes in
connection with the Significant Sale, such Holder shall deliver a written notice
to the Corporation (a "Significant Sale Election Notice"), stating whether or
not it elects to require the Corporation to redeem any or all such shares of
Series B Preferred Stock pursuant to clause (v) of Section VI.E hereof, and if
so, specifying the number of shares to be so redeemed; provided, however, that
in the event that such Holder does not deliver a Significant Sale Election
Notice, such failure shall not prejudice the right of such Holder to vote with
respect to the Significant Sale, and such Holder shall be deemed to have
notified the Corporation that it elects not to have any of its shares redeemed
pursuant to clause (v) of Section E of this Article VI. If the Significant Sale
Election Notice states that the Holder elects to require the Corporation to
redeem any or all such shares of Series B Preferred Stock pursuant to clause (v)
of Section VI.E hereof, the Corporation shall redeem the number of shares so
specified on the written notice of the Holder at the effective time of the
consummation of such Significant Sale. The Corporation shall comply with the
requirements of Rules 13e-4 and 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 the repurchase of the shares of
Series B Preferred Stock as a result of a Significant Sale. If, and only if, and
from and after the time the Significant Sale Redemption Price is paid in
accordance with the terms hereof with respect to any share of Series B Preferred
Stock to be redeemed pursuant to this Article VI, all dividends on such share of
Series B Preferred Stock shall cease to accumulate and all rights of the Holder
thereof as a Holder shall cease and terminate. For the avoidance of doubt, any
Holder may elect to notify the Corporation that it shall not require the
Corporation to redeem any share of Series B Preferred Stock in accordance with
the procedures set forth in Section G of this Article VI and any such election
or notice shall not prejudice such Holder from exercising all rights to redeem
such share of Series B Preferred Stock in accordance with the procedures set
forth in Section G of this Article VI in any subsequent Significant Sale.
VII. Conversion
A. (a) Conversion to Class B Common Stock. Subject to subsection (b)
of this Section A, as of and from the date of the Class B Common Stock
Authorization, at the option and election of the Holder thereof, each share of
Series B Preferred Stock, and any unpaid dividends accumulated thereon
(including any Arrearages and any dividends accumulated thereon) to the
Conversion Date (as defined below), whether or not such dividends have been
declared, may be converted in the manner provided herein at any time into fully
paid and nonassessable shares of Class B Common Stock. As of the Conversion Date
with respect to a share of Series B Preferred Stock, such share shall be
converted into that number (the "Class B Common Stock Conversion Number") of
shares of Class B Common Stock equal to the quotient
B-19
of (A) the sum of (i) the Share Purchase Price for each share of Series B
Preferred Stock, plus (ii) an amount equal to all unpaid dividends accumulated
on such share of Series B Preferred Stock (including any Arrearages and any
dividends accumulated thereon) to the Conversion Date whether or not such
dividends have been declared, divided by (B) the Conversion Price in effect on
the Conversion Date.
(b) Conversion to Common Stock. Notwithstanding subsection (a) of this
Section A, as of and from the Majority Ownership Date, at the option and
election of the Holder thereof, each share of Series B Preferred Stock, and any
unpaid dividends accumulated thereon (including any Arrearages and any dividends
accumulated thereon) to the Conversion Date, whether or not such dividends have
been declared, may be converted in the manner provided herein at any time into
fully paid and nonassessable shares of Common Stock. As of the Conversion Date
with respect to a share of Series B Preferred Stock, such share shall be
converted into that number (the "Common Stock Conversion Number") of shares of
Common Stock equal to the quotient of (A) the sum of (i) the Share Purchase
Price for each share of Series B Preferred Stock, plus (ii) an amount equal to
all unpaid dividends accumulated on such share of Series B Preferred Stock
(including any Arrearages and any dividends accumulated thereon) to the
Conversion Date whether or not such dividends have been declared, divided by (B)
the Conversion Price in effect on the Conversion Date.
(c) Conversion to Series A Preferred Stock.
(i) Conversion to Series A Preferred Stock Upon Certain
Transfers. Upon the transfer of any share(s) of Series B Preferred Stock to any
Person who is not and does not become an Affiliate or Associate of, or a member
of a "group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934) with, MHR, and is a Qualified Transferee, then the Series B
Preferred Stock (including any PIK Shares paid or accrued thereon on additional
shares of Series B Preferred Stock) held by such transferee shall be
automatically converted into shares of Series A Preferred Stock on a one for one
basis.
In the event that (x) solely as a result of such transfer of
shares of Series B Preferred Stock, such transferee would become the Beneficial
Owner of more than 35.9% of the voting power of the Corporation, or (y) such
transferee is the Beneficial Owner of more than 35.9% but less than 50% of the
voting power of the Corporation immediately prior to such transfer of shares of
Series B Preferred Stock (such transferee in each of (x) and (y), a
"Disqualified Transferee"), then (A) in the case of clause (x) above, such
number of shares of Series B Preferred Stock transferred shall not be
automatically converted into shares of Series A Preferred Stock so that the
transferee does not become the Beneficial Owner of more than 35.9% of the voting
power of the Corporation solely as a result of such transfer, and (B) in the
case of clause (y) above, all the shares of Series B Preferred Stock so
transferred shall not be automatically converted into shares of Series A
Preferred Stock. The restrictions on the automatic conversion of shares of
Series B Preferred Stock for shares of Series A Preferred Stock set forth in
this paragraph shall be of no further and effect as of and from the Majority
Ownership Date.
(ii) Conversion to Series A Preferred Stock By Certain Holders.
Any Holder who is issued shares of Series B Preferred Stock as a dividend
pursuant to Section A of
B-20
Article III of the Series A Certificate of Designation on any shares of Series A
Preferred Stock then held by such Holder who received such shares of Series A
Preferred Stock either (i) as a Person other than a Restricted Transferee in
compliance with the Transfer Restriction, or (ii) as a Qualified Transferee
pursuant to Section A(c)(i) of this Article VII, shall, at such Holder's option
and election, convert such shares of Series B Preferred Stock in the manner
provided herein at any time into fully paid and nonassessable shares of Series A
Preferred Stock on a one for one basis.
(iii) Threshold Conversion. If at any time after the Closing
Date, the sum of the number of shares of Common Stock issuable upon exercise of
the Series A Preferred Stock and the number of shares of Common Stock held by
MHR is below the Threshold, then a number of shares of the Series B Preferred
Stock (including any PIK Dividends paid or accrued thereon) then held by MHR
shall be converted in accordance with the procedures set forth in the paragraph
immediately below into such number of shares of Series A Preferred Stock (on a
one for one basis) or Common Stock (at the then-applicable conversion rate)
(such choice to be at the option and sole discretion of MHR) such that the
aggregate number of shares of Common Stock issuable upon conversion of the
shares of Series A Preferred Stock and Common Stock held by MHR equals (but does
not exceed), as a percentage of the aggregate voting power of all outstanding
securities issued by the Corporation at any time and from time to time (assuming
the exchange of all outstanding shares of Series A Preferred Stock held by MHR),
the Threshold. In the event that (i) the shares of Series B Preferred Stock that
are converted for Series A Preferred Stock or Common Stock, as the case may be,
pursuant to the immediately preceding sentence are not sufficient to increase
the number of shares of Series A Preferred Stock and Common Stock held by MHR so
as to equal (but not exceed) the Threshold, or (ii) MHR does not hold any shares
of Series B Preferred Stock to convert for Series A Preferred Stock or Common
Stock, as the case may be, pursuant to the immediately preceding sentence, then
a number of shares of Class B Common Stock held by MHR (if any) shall be
converted in accordance with the procedures set forth in the Amended and
Restated Certificate of Incorporation into Common Stock (on a one for one basis)
such that the aggregate number of shares of Series A Preferred Stock and Common
Stock held by MHR (including the shares of Series B Preferred Stock that were
converted for Series A Preferred Stock or Common Stock, as the case may be,
pursuant to the immediately preceding sentence) equals (but does not exceed) the
Threshold.
The Corporation shall provide a written notice in substantially
the form attached hereto as Exhibit K to the Securities Purchase Agreement (the
"Threshold Conversion Notice") not less than ten (10) days following the end of
each calendar quarter and within five (5) Business Days after any issuance of
securities exceeding two percent (2%) of the voting power of the Corporation.
Within five (5) Business Days after receipt of the Threshold Conversion Notice,
MHR shall either confirm the calculations set forth therein in a written notice
substantially in the form attached to the Securities Purchase Agreement as
Exhibit L (a "Notice of Confirmation") or dispute the calculations set forth
therein in a written notice substantially in the form attached to the Securities
Purchase Agreement as Exhibit M (a "Notice of Disagreement"), and in either case
specify whether any or all of such shares of Series B Preferred Stock, if any,
are to be converted into shares of Series A Preferred Stock or Common Stock.
Within two (2) Business Days after the Corporation's receipt of (i) a Notice of
Confirmation, the Corporation shall issue such number of shares of Series A
Preferred Stock and/or Common Stock as set forth in the Threshold Conversion
Notice, and (ii) a Notice of
B-21
Disagreement, the Corporation shall issue such number of shares of Series A
Preferred Stock and/or Common Stock set forth in the Threshold Conversion Notice
and the parties shall use their reasonable best efforts to resolve the
disagreements set forth in the Notice of Disagreement and the Corporation shall,
promptly upon such resolution, issue such number of additional shares of Series
A Preferred Stock and/or Common Stock as necessary. Each such date of issuance
of shares of Series A Preferred Stock and/or Common Stock pursuant to the terms
of this Section A(c)(ii) shall be referred to herein as a "Threshold Conversion
Issuance Date").
(d) Except as otherwise provided in subsection (c) above, conversion
of shares of the Series B Preferred Stock may be effected by any Holder thereof
upon the surrender to the Corporation at the principal office of the Corporation
or at the office of any agent or agents of the Corporation, as may be designated
by the Board of Directors and identified to the Holders in writing upon such
designation, of the certificate for such shares of Series B Preferred Stock to
be converted accompanied by a written notice stating that such Holder elects to
convert all or a specified whole number of shares represented by such
certificate in accordance with the provisions of this Section A and specifying
the name or names in which such Holder wishes the certificate or certificates
for shares of Class B Common Stock or Common Stock to be issued. In case such
notice shall specify a name or names other than that of such Holder, such notice
shall be accompanied by payment of all transfer taxes payable upon the issuance
of shares of Class B Common Stock or Common Stock in such name or names. Other
than such taxes, the Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of shares of Class B Common Stock or
Common Stock on conversion of Series B Preferred Stock pursuant hereto. As
promptly as practical, and in any event within three (3) Business Days after the
Conversion Date (or fifteen (15) calendar days after the Conversion Date if the
physical delivery of any certificate is involved), the Corporation shall deliver
or cause to be delivered as directed by the Holder being converted (i)
certificates representing the number of validly issued, fully paid and
nonassessable full shares of Class B Common Stock or Common Stock to which such
Holder shall be entitled to, (ii) any cash that is required to be paid pursuant
to subsection (f) of this Section A, and (iii) if less than the full number of
shares of Series B Preferred Stock evidenced by the surrendered certificate or
certificates is being converted, a new certificate or certificates, of like
tenor, for the number of shares of Series B Preferred Stock evidenced by such
surrendered certificate or certificates less the number of shares of Series B
Preferred Stock being converted. Such conversion shall be deemed to have
occurred at the close of business on the date (the "Conversion Date") of the
giving of such notice by the Holder to be converted and of such surrender of the
certificate or certificates representing the shares of Series B Preferred Stock
to be converted so that as of such time the rights of the Holder thereof as to
the shares being converted shall cease, except for the right to receive
certificates representing shares of Class B Common Stock or Common Stock and/or
cash in accordance herewith, and the Holder entitled to receive the shares of
Class B Common Stock or Common Stock issued as a result of such conversion shall
be treated for all purposes as having become the holder of such shares of Class
B Common Stock or Common Stock at such time.
(e) In the event that the Series B Preferred Stock is to be redeemed
or converted pursuant to Section V.B hereof, from and after 5:00 p.m. New York
City time on the Trading Day immediately preceding (i) the Change of Control
Redemption Date or the date of the Change of Control Approval (in the case of
the procedures set forth in Section C of Article
B-22
V), or (ii) the date of the consummation of the Change of Control or the date of
the Change of Control Approval (in the case of the procedures set forth in
Section D of Article V), the right of a Holder to convert shares of Series B
Preferred Stock pursuant to this Section A shall cease and terminate, except if
the Corporation shall default in payment thereof on the Change of Control
Redemption Date or such later date as provided pursuant to Section C of Article
V (in the case of the procedures set forth in Section C of Article V) or the
date of the consummation of the Change of Control or such later date as provided
pursuant to Section D of Article V (in the case of the procedures set forth in
Section D of Article V), in which case all such rights shall continue unless and
until such shares are redeemed or converted, as the case may be, and such price
is paid in full in accordance with the terms hereof. Notwithstanding anything in
the foregoing to the contrary, if the Conversion Date shall occur with respect
to any shares of Series B Preferred Stock on or prior to any (i) Change of
Control Redemption Date or the date of the Change of Control Approval (in the
case of the procedures set forth in Section C of Article V), or (ii) the date of
the consummation of the Change of Control or the date of the Change of Control
Approval (in the case of the procedures set forth in Section D of Article V),
such shares of Series B Preferred Stock shall be converted by the Corporation
into Class B Common Stock or Common Stock in the manner provided in this Section
A.
(f) In connection with the conversion of any shares of Series B
Preferred Stock, no fractions of shares of Class B Common Stock or Common Stock
shall be issued. If more than one share of Series B Preferred Stock shall be
surrendered for conversion by the same Holder on the same Conversion Date, the
number of full shares of Class B Common Stock or Common Stock issuable on
conversion thereof shall be computed on the basis of the total number of shares
of Series B Preferred Stock so surrendered. If the conversion of any shares of
Series B Preferred Stock results in a fraction of a share of Class B Common
Stock or Common Stock, an amount equal to such fraction multiplied by the
Closing Price per share of Common Stock on the Trading Day immediately preceding
the day of conversion shall be paid to such Holder in cash by the Corporation.
(g) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series B Preferred Stock in accordance with
the terms hereof, such number of its authorized but unissued shares of Series A
Preferred Stock, Class B Common Stock and Common Stock as will from time to time
be sufficient to permit the conversion of all outstanding shares of Series B
Preferred Stock, and shall take all action required to increase the authorized
number of shares of Series A Preferred Stock, Class B Common Stock and Common
Stock if necessary to permit the conversion of all outstanding shares of Series
B Preferred Stock.
B. Adjustment of Conversion Price. Except in connection with an
Organic Change, which shall be subject to Section C below, the Conversion Price
shall be subject to adjustment from time to time as follows:
(a) In case the Corporation after the date of the original issuance of
the Series B Preferred Stock shall pay a dividend or make a distribution to all
holders of shares of Common Stock in shares of Common Stock, then in any such
case the Conversion Price in effect at the opening of business on the day
following the record date for the determination of stockholders entitled to
receive such dividend or distribution shall be reduced to a price obtained by
multiplying such Conversion Price by a fraction of which (x) the numerator shall
be the number
B-23
of shares of Common Stock outstanding at the close of business on such record
date and (y) the denominator shall be the sum of such number of shares of Common
Stock outstanding and the total number of shares of Common Stock constituting
such dividend or distribution, such reduction to become effective immediately
after the opening of business on the day following such record date; provided,
however, that no adjustment shall be made if the Corporation issues or
distributes to each Holder shares of Series B Preferred Stock as a Participating
Dividend in compliance with Section A of Article III. If any dividend or
distribution of the type described in this subsection (a) is declared but not so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price that would then be in effect if such dividend or distribution had not been
declared. For purposes of this subsection (a), the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Corporation but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Corporation shall not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Corporation.
(b) In case the Corporation after the date of the original issuance of
the Series B Preferred Stock shall issue rights or warrants to all holders of
any class of Common Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
(or having a conversion price per share) less than the Closing Price of the
Common Stock on the record date for the determination of stockholders entitled
to receive such right or warrant, the Conversion Price shall be reduced to a
price obtained by multiplying such Conversion Price by a fraction of which (x)
the numerator shall be the number of shares of Common Stock outstanding at the
close of business on such record date plus the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase (or the aggregate conversion price of the convertible
securities so offered) would purchase at the Closing Price on such record date,
and (y) the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on such record date plus the total number
of shares of Common Stock so offered for subscription or purchase (or into which
the convertible securities so offered are convertible).
Such adjustment shall become effective immediately after the
opening of business on the day following such record date. To the extent that
shares of Common Stock (or securities convertible into Common Stock) are not
delivered pursuant to such rights or warrants, upon the expiration or
termination of such rights or warrants, the Conversion Price shall be readjusted
to the Conversion Price that would then be in effect had the adjustment made
upon the issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock (or securities convertible into
Common Stock) actually delivered. If such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price that
would then be in effect if such record date had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Closing Price on such record date, and
in determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received by the Corporation
for such rights or warrants and any amount payable on exercise or conversion
thereof, the fair market value of such consideration, if other than cash, to be
determined by the Board of Directors in its good faith judgment, whose
determination shall be conclusive.
B-24
(c) In case after the date of the original issuance of the Series B
Preferred Stock outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
after the original issuance of the Series B Preferred Stock outstanding shares
of Common Stock shall be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(d) In case the Corporation after the date of the original issuance of
the Series B Preferred Stock shall distribute to all holders of shares of Common
Stock evidences of its indebtedness or assets (including any regular periodic
cash dividend or extraordinary cash dividend), Equity Securities (other than
Common Stock) or rights to subscribe for Equity Securities other than Common
Stock, in each such case the Conversion Price in effect immediately prior to the
close of business on the record date for the determination of stockholders
entitled to receive such distribution shall be adjusted to a price obtained by
multiplying such Conversion Price by a fraction of which (x) the numerator shall
be the Closing Price per share of Common Stock on such record date, and (y) the
denominator shall be such Closing Price per share of Common Stock on such record
date plus the then-current fair market value as of such record date (as
determined by the Board of Directors in its good faith judgment) of the portion
of assets or evidences of indebtedness or Equity Securities or subscription
rights so distributed applicable to one share of Common Stock, such adjustment
to become effective immediately prior to the opening of business on the day
following such record date; provided, however, that no adjustment shall be made
if the Corporation issues or distributes to each Holder the assets, securities
or rights referred to above that each such Holder would have been entitled to
receive had the Series B Preferred Stock held by such Holder been converted
prior to such record date; provided further, however, that no adjustment shall
be made if the Corporation issues or distributes to each Holder the assets,
securities or rights referred to above as a Participating Dividend in compliance
with Section A of Article III, provided further, however, that if the
then-current fair market value (as so determined by the Board of Directors in
its good faith judgment) of the portion of assets or evidences of indebtedness
or Equity Securities or subscription rights so distributed applicable to one
share of Common Stock is equal to or greater than the Closing Price on such
record date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Holder shall have the right to receive upon conversion the
amount of such assets or evidences of indebtedness or Equity Securities or
subscription rights so distributed that such Holder would have received had such
Holder converted each share of its Series B Preferred Stock on the record date.
If any dividend or distribution of the type described in this subsection (d) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price that would then be in effect if such dividend or
distribution had not been declared. The Corporation shall provide any Holder,
upon receipt of a written request therefor, with any indenture or other
instrument defining the rights of the holders of any indebtedness, assets,
subscription rights or Equity Securities referred to in this subsection (d).
(e) In case, after the date of the original issuance of the Series B
Preferred Stock, a tender or exchange offer made by the Corporation or any
Subsidiary of the Corporation
B-25
for all or any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors in its good faith judgment) at the last
time (the "Offer Time") tenders may be made pursuant to such tender or exchange
offer (as it may be amended) that, together with the aggregate of the cash plus
the fair market value (as determined by the Board of Directors in its good faith
judgment), as of the Offer Time, of consideration payable in respect of any
tender or exchange offer by the Corporation or any such Subsidiary for all or
any portion of the Common Stock consummated preceding the Offer Time and in
respect of which no Conversion Price adjustment pursuant to this subsection (e)
has been made, exceeds 7.5% of the product of the Closing Price of the Common
Stock at the Offer Time multiplied by the number of shares of Common Stock
outstanding (including any tendered shares) at the Offer Time, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the Offer Time
by a fraction of which (x) the numerator shall be (i) the product of the Closing
Price of the Common Stock at the Offer Time multiplied by the number of shares
of Common Stock outstanding (including any tendered shares) at the Offer Time
minus (ii) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered and not withdrawn as of the Offer Time (the shares deemed so accepted,
up to any such maximum, being referred to as the "Tendered Shares") and (y) the
denominator shall be the product of (i) such Closing Price at the Offer Time
multiplied by (ii) such number of outstanding shares at the Offer Time minus the
number of Tendered Shares, such reduction to become effective immediately prior
to the opening of business on the day following the Offer Time. For purposes of
this subsection (e), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Corporation but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock.
(f) The Corporation may make such reductions in the Conversion Price,
in addition to those required by clauses (a), (b), (c), (d) or (e) of this
Section B, as it considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock or from any event treated as such for income
tax purposes. In the event the Corporation elects to make such a reduction in
the Conversion Price, the Corporation will comply with the requirements of Rule
14e-1 under the Exchange Act, and any other securities laws and regulations
thereunder if and to the extent that such laws and regulations are applicable in
connection with the reduction of the Conversion Price. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Corporation shall mail
to the Holders of then-outstanding shares of Series B Preferred Stock a notice
of the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(g) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file at the principal office of the Corporation, or
with an agent of the Corporation if one has been designated by the Board of
Directors pursuant to Article VII.A(b) hereof, a certificate signed by a duly
authorized officer of the Corporation, setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Corporation shall
prepare a
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notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Price to each Holder
at its last address appearing in the stock register within twenty (20) days
after execution thereof. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
(h) Notwithstanding anything herein to the contrary, no adjustment
under this Article VII shall be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least one-half of one
percent (0.5%) of the Conversion Price then in effect. Any lesser adjustment
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment, if any, which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease of at
least one-half of one percent (0.5%) of such Conversion Price. No adjustment
under this Article VII shall be made if such adjustment will result in a
Conversion Price that is less than the par value of the Common Stock. All
calculations under this Section B shall be made by the Corporation and shall be
made to the nearest cent or to the nearest one-ten thousandth (1/10,000) of a
share of Common Stock, as the case may be.
C. Organic Change. The Corporation shall not, without the consent or
affirmative vote of each Holder:
(a) consummate an Organic Change (other than a transaction in which
the Corporation is not the surviving entity as set forth in paragraph (b)
below), unless lawful provision shall be made as part of the terms of the
transaction effecting such Organic Change (i) whereby the terms hereof shall be
modified, without payment of any additional consideration by any Holder, so as
to provide that upon the conversion of shares of Series B Preferred Stock
following the consummation of such Organic Change, a Holder shall have the right
to acquire and receive (in lieu of or in addition to the shares of Class B
Common Stock or Common Stock, as the case may be, acquirable and receivable
prior to the Organic Change), without payment of additional consideration
therefor (except as would otherwise have been required by the terms of the
Series B Preferred Stock as in effect prior to such Organic Change), such
securities, cash and other property as such Holder would have received if such
Holder had converted such shares of Series B Preferred Stock into Class B Common
Stock or Common Stock, as the case may be, immediately prior to such Organic
Change, and (ii) so that all other terms (including the rights, preferences,
privileges and powers of the Series B Preferred Stock and the holders thereof
and the rights, preferences, privileges and powers of the Common Stock and Class
B Common Stock issuable upon the conversion thereof and the holders thereof)
hereof shall remain in full force and effect following such an Organic Change.
The provisions of this subsection (a) shall similarly apply to successive
Organic Changes of the character described in this subsection (a); or
(b) enter into an Organic Change that is a transaction in which the
Corporation is not the surviving entity unless lawful provision shall be made as
part of the terms of such transaction whereby the surviving entity shall issue
new securities (the "New Securities") to each Holder, without payment of any
additional consideration by such Holder, with terms that provide that upon the
conversion of the New Securities, the holder of such securities shall have the
right to acquire and receive (in lieu of or in addition to the shares of Class B
Common Stock
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or Common Stock, as the case may be, acquirable and receivable prior to the
Organic Change), without payment of additional consideration therefor (except as
would otherwise have been required by the terms of the Series B Preferred Stock
as in effect prior to such Organic Change), such securities, cash and other
property as such Holder would have received if such Holder had converted such
shares of Series B Preferred Stock into Class B Common Stock or Common Stock, as
the case may be, immediately prior to such Organic Change. The certificate or
articles of incorporation or other constituent document of the surviving entity
shall provide for such adjustments which, for events subsequent to the effective
date of such Organic Change, shall be equivalent to the adjustments provided for
in Section B of this Article VII. All other terms of such New Securities shall
be substantially equivalent to the terms provided herein (including the rights,
preferences, privileges and powers of the Series B Preferred Stock and the
holders thereof and the rights, preferences, privileges and powers of the common
stock and the holders thereof issuable upon the conversion thereof). The
provisions of this subsection (b) shall similarly apply to successive Organic
Changes of the character described in this subsection (b).
D. Certain Events. If any event similar to or of the type contemplated
by the provisions of Section B or Section C of this Article VII, but not
expressly provided for by such provisions, occurs, then the Board of Directors
shall make an appropriate and equitable adjustment in the Conversion Price so as
to protect the rights, preferences, privileges and powers of the Series B
Preferred Stock and the Holders thereof; provided, that no such adjustment shall
decrease the number of shares of Class B Common Stock or Common Stock, as the
case may be, issuable upon conversion of the Series B Preferred Stock.
VIII. Additional Definitions
For the purposes of this Certificate of Designation, the following
terms have the meanings indicated:
"Adjusted Consolidated Net Income" means, for any period, the excess,
if any, of (a) Consolidated Net Income, over (b) the sum of (i) Extraordinary
Gains minus Extraordinary Losses, (ii) equity income (losses) in Unconsolidated
Entities as set forth on the Income Statement using the equity method of
accounting, (iii) Dividend Expenses, (iv) Interest Expenses, and (v) to the
extent included in Consolidated Net Income, and not already accounted for in
clauses (i)-(iv) above, Net Asset Sale Proceeds.
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate Transaction" has the meaning set forth in Section VI.E of
this Certificate of Designation.
"Arrearage" has the meaning set forth in Section III.C of this
Certificate of Designation.
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"Asset Disposition" means a sale, lease or sub-lease (as lessor or
sublessor), sale and leaseback, assignment, contribution, conveyance, transfer
or other disposition to or for the benefit of, or any exchange of property with,
any Person (other than the Corporation or any of its Consolidated Entities),
directly or indirectly, in one transaction or a series of transactions, of all
or any part of the Corporation's or any of its Consolidated Entities'
businesses, assets or properties of any kind, whether real, personal, or mixed
and whether tangible or intangible, whether now owned or hereafter acquired,
including, without limitation, the Capital Stock of, or owned by, any of the
Corporation's Consolidated Entities, other than (i) Accounts Receivable, Net,
Inventories and Property, Plant and Equipment, Net sold or leased in the
ordinary course of business, and (ii) the book value of Property, Plant and
Equipment, Net, in each case, sold or leased other than in the ordinary course
of business.
"Asset Disposition Proceeds" means, with respect to any Asset
Disposition during any period, an amount equal to any payments, in cash,
securities or otherwise (including any payments received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise)
received by or paid on account or for the benefit of the Corporation or any of
its Consolidated Entities from such Asset Disposition.
"Asset Sale" has the meaning set forth in paragraph (d) of the
definition of "Change of Control."
"Asset Sale Covenant" has the meaning set forth in Section V.F of this
Certificate of Designation.
"Asset Sale Default" means the occurrence of the Corporation's failure
to comply with any Asset Sale Covenant.
"Associate" has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act.
"Balance Sheet" means the Consolidated Balance Sheets of the
Corporation included within the Corporation's periodic reports filed pursuant to
the Exchange Act.
"Beneficial Owner" has the meaning as defined in Rules 13d-3 and 13d-5
under the Exchange Act.
"Business Day" means any day, other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Bylaws" means the Bylaws of the Corporation, as amended from time to
time.
"Capital Lease" means, for any Person, a lease of any interest in any
kind of property (whether real, personal or mixed) or asset by such Person as
lessee that is, should be or should have been recorded as a "capital lease" on
the balance sheet of such Person in accordance with GAAP.
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"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company interests, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such Capital Stock, whether existing now or at any time in the
future.
"Cash Dividend" has the meaning set forth in Section III.B of this
Certificate of Designation.
"Cash Flow Statement" means the Consolidated Statements of Cash Flows
of the Corporation included within the Corporation's periodic reports filed
pursuant to the Exchange Act.
"Change of Control" means the occurrence of any of the following
events:
(a) any Person (which, in the case of a merger, consolidation,
business combination, reclassification, joint venture, partnership, exchange,
recapitalization or other similar transaction, may include more than one Person
and such term in this clause shall be adjusted to be read in plural accordingly)
is or becomes pursuant to a transaction the Beneficial Owner (except that for
purposes of this clause (a) such Person (the "specified person") shall be deemed
to be the Beneficial Owner of all shares that such specified person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of either (i) more than 50%, or
(ii) 90% or more of the aggregate voting power of the then outstanding capital
stock of the Corporation (including any successor to the Corporation), each of
which events (i) or (ii) shall be a Change of Control (for the purposes of this
clause (a), such specified person shall be deemed to be the Beneficial Owner of
any Common Stock of the Corporation or any other Person held by any entity (a
"parent entity") if such specified person is the Beneficial Owner (as defined in
this clause (a)), directly or indirectly, of more than 50% of the voting power
of the then outstanding capital stock of such parent entity), including, without
limitation, in either event through merger or consolidation of the Corporation
with or into another Person or any Person consolidates or merges with or into
the Corporation and as a result of such transaction the Beneficial Owners of
Common Stock immediately prior to such transaction hold less than 50% in the
case of clause (i) above or 10% or less in the case of clause (ii) above, of the
aggregate voting power of the then outstanding capital stock of the surviving
entity or other acquisition of securities of the Corporation;
(b) individuals who on the Closing Date constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Corporation was approved by (i) a vote of a majority of the directors of the
Corporation then still in office who were either directors on the Closing Date
or whose election or nomination for election was previously so approved or (ii)
a vote of the holders of a majority of the outstanding shares of Series B
Preferred Stock and Series A Preferred Stock, voting together as a single class)
cease for any reason to constitute a majority of such Board of Directors then in
office;
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(c) the Corporation commences a voluntary case under Title 11 of the
United States Code (the "Bankruptcy Code"), or any similar federal or state law
for the relief of debtors, or adopts a plan under the Bankruptcy Code, that
could result in the liquidation or dissolution of the Corporation;
(d) the consummation of any Sale or multiple Sales of any assets of
the Corporation or any of its Subsidiaries for consideration which, in the
aggregate, is received or is valued in excess of Twenty-Five Million Dollars
($25,000,000) that is not otherwise a Change of Control as defined in section
(e) below (an "Asset Sale"), provided, however, that such Asset Sale shall not
be deemed to constitute a Change of Control unless and until there has occurred
an Asset Sale Default, at which time such Asset Sale shall be deemed to be a
Change of Control; or
(e) the Sale of all or substantially all of the assets of the
Corporation (determined on a consolidated basis); provided, however, that any
one single Sale of only SkyNet or only SS/L (including any of their respective
Subsidiaries), or any of their respective assets, whether now owned or hereafter
acquired, other than inventory sold or leased in the ordinary course of
business, shall be deemed not to be a Sale of all or substantially all of the
assets of the Corporation (determined on a consolidated basis). Notwithstanding
the foregoing, any Sale of (i) SS/L or substantially all of SS/L's assets
subsequent to any Significant Sale, (ii) SkyNet or substantially all of SkyNet's
assets subsequent to any Significant Sale, or (iii) the Investment Interest, in
any case, shall be a Sale of all or substantially all of the assets of the
Corporation (determined on a consolidated basis) if so determined pursuant to
and in accordance with applicable law on the date of the consummation of such
Sale.
"Change of Control Redemption Price" means the consideration to be
paid to a Holder pursuant to Section V.B(a) hereof.
"Changes in Operating Assets and Liabilities" means, for any period,
(a) the sum of the amounts identified as changes in operating assets under the
caption "Changes in Operating Assets and Liabilities" on the Cash Flow Statement
(including, without limitation, Accounts Receivable, Net, Contracts-in-Process,
Inventories, Long-Term Receivables (including Principal Orbital Receivables),
Deposits, Other Current Assets and Other Assets and deferred income taxes), over
(b) the sum of the amounts identified as changes in operating liabilities under
the caption "Changes in Operating Assets and Liabilities" on the Cash Flow
Statement (including, without limitation, Accounts Payable, Accrued Expenses and
other Current Liabilities, Customer Advances, Income Taxes Payable, Pension and
Other Postretirement Liabilities, Long-Term Liabilities, and Other).
Notwithstanding anything to the contrary set forth in this Certificate of
Designation, capitalized terms used but not defined in the definition of
"Changes in Operating Assets and Liabilities" means the amounts ascribed to such
capitalized terms on the Cash Flow Statement.
"Class B Common Stock Authorization" means the filing of an amendment
to the Certificate of Incorporation with the Secretary of State of the State of
Delaware authorizing the creation of the Class B Common Stock and the subsequent
reservation of all such shares for issuance upon the conversion of all
outstanding shares of Series B Preferred Stock and all shares of Series B
Preferred Stock issuable upon payment of dividends in respect thereof.
B-31
"Closing" has the meaning assigned to such term in the Securities
Purchase Agreement.
"Closing Date" has the meaning assigned to such term in the Securities
Purchase Agreement.
"Closing Price" with respect to the per share price of Common Stock on
any day means the last reported bid price regular way on NASDAQ (or the New York
Stock Exchange, NASDAQ Small Cap Market or American Stock Exchange, in the event
any such market or exchange constitutes the principal market on which the Common
Stock is quoted or listed or admitted to trading) (such four markets and
exchanges, the "Approved Markets") or, if not quoted or listed or admitted to
trading on any such Approved Market, the closing bid price in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Corporation for that purpose. In the
case of a dispute as to the calculation of the Conversion Price or if the
Closing Price cannot be calculated for such security as of either of such dates
on any of the foregoing bases, the Closing Price of such security on such date
shall be the fair market value as reasonably determined by an investment banking
firm selected by the Corporation and reasonably acceptable to the holders of a
majority of the then outstanding shares of Series B Preferred Stock.
"Consolidated Entities" means those entities that are consolidated
into the Consolidated Financial Statements of the Corporation in accordance with
GAAP.
"Consolidated Free Cash Flow" means, for any period, the excess, if
any, of (a) the sum of (i) Net Income (Loss), (ii) Depreciation and
Amortization, (iii) amortization of goodwill to the extent not reflected in
Depreciation and Amortization, (iv) depreciation of property, plant and
equipment to the extent not reflected in Depreciation and Amortization, (v)
Amortization of Stock Option Compensation, (vi) to the extent included in Net
Income (Loss), any cash legal expenses incurred in connection with ongoing
litigation, (vii) cash dividends from Unconsolidated Entities, (viii) any
write-down minus any write-up of any item included in the Balance Sheet (other
than any write-down or write-up of any debt or Shareholders' Equity) to the
extent not included in Changes in Operating Assets and Liabilities, and (ix) any
decrease in goodwill, other than to the extent included in (ii), (iii) or (viii)
of this subclause (a), that results in an accounting reclassification, over (b)
the sum of (i) Extraordinary Gains minus Extraordinary Losses, (ii) cash,
securities, assets or other property received in connection with or pursuant to
any legal settlements entered into by the Corporation or any of its Consolidated
Entities, (iii) Changes in Operating Assets and Liabilities, (iv) Asset
Disposition Proceeds to the extent that such Asset Disposition Proceeds exceed
$100,000 in any single transaction or series of related transactions, (v)
Capital Expenditures minus (A) any Indebtedness incurred in connection with any
such Capital Expenditures, and (B) any Capital Expenditures to the extent such
Capital Expenditures were made with any Insurance Proceeds Received, (vi)
Repurchase Expenses, (vii) scheduled principal payments on Indebtedness of the
Corporation and its Consolidated Entities during such period, including the
principal portion of scheduled payments under any Capital Lease, other than in
connection with a refinancing of such Indebtedness, (viii) payments on
Indebtedness of any other Person during such period, other than in connection
with a refinancing of such Indebtedness, (ix) Dividend Expenses, (x) Insurance
Proceeds Received that are not used in such period for Capital Expenditures,
(xi) Investments In and Advances To Affiliates minus
B-32
any Indebtedness incurred in connection with any such Investments In and
Advances To Affiliates, (xii) to the extent not reflected in Changes in
Operating Assets and Liabilities, any increase in deferred tax asset minus any
decrease in deferred tax asset, (xiii) to the extent not reflected in Changes in
Operating Assets and Liabilities, any decrease in deferred tax liability minus
any increase in deferred tax liability, and (xiv) (A) any gains minus (B) any
losses, in either case, (1) recognized on any foreign exchange transaction not
hedging a contract entered into in the ordinary course of business consistent
with past practice, and (2) in connection with (I) the repurchase of any debt or
equity of the Corporation or any of its Consolidated Entities, (II) Discontinued
Operations, (III) inventory sales/obsolescence, (IV) sales of orbital slots and
any other assets, (V) equity income (losses) in Unconsolidated Entities as set
forth on the Income Statement using the equity method of accounting, and (VI)
legal settlements to the extent not included in Net Income (Loss) or Changes in
Operating Assets and Liabilities, in each case, for such period.
All of the terms contained within the definition of "Consolidated Free Cash
Flow" (including such terms contained within any defined terms) shall be
determined in accordance with GAAP consistent with the Corporation's practice as
of the date hereof. Capitalized terms used in the definition of "Consolidated
Free Cash Flow" but not defined in this Certificate of Designation mean the
amounts ascribed to such capitalized terms in the Consolidated Financial
Statements of the Corporation included within the Corporation's periodic reports
filed pursuant to the Exchange Act.
"Consolidated Net Income" means the amount ascribed to the term "Net
Income (Loss)" in the Income Statement.
"Conversion Price" equals (x) 0.1 multiplied by (y) Share Purchase
Price, as adjusted from time to time pursuant to Article VII hereof. With
respect to any share of Series B Preferred Stock issued after the date of the
original issuance of the Series B Preferred Stock, the Conversion Price of such
share shall be determined as if such share were issued on the date of the
original issuance of the Series B Preferred Stock.
"DGCL" means the General Corporation Law of the State of Delaware.
"Dividend Determination" has the meaning set forth in Section III.B of
this Certificate of Designation.
"Dividend Expenses" means, to the extent not included in Net Income
(Loss), any dividends paid in cash, Capital Stock, in kind or otherwise, in
respect of any Capital Stock issued at any time by the Corporation or any of its
Consolidated Entities.
"Eligible Joint Venture" means a Joint Venture the entire equity
interest of which (other than that held by the third party Joint Venture
partner(s)) is held by the Corporation or a wholly-owned Subsidiary thereof.
"Equity Securities" of any Person, means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company
B-33
interests in, such Person or any other similar interests of any Person that is
not a corporation, partnership or limited liability company.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, from time to
time.
"Extraordinary Gains" means the amount ascribed to such term in the
Income Statement.
"Extraordinary Losses" means the amount ascribed to such term in the
Income Statement.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in: (1) the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants; (2) statements and
pronouncements of the Financial Accounting Standards Board; (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession; and (4) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Governmental Entity" means any government or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether federal, state, local or foreign.
"Group" has the meaning set forth in Rule 13d-5 under the Exchange
Act.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Indebtedness of any other Person (the "Primary Obligor") in
any manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person: (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness; (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness; or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Hedge Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into by the Corporation or any of
its Consolidated Entities which provide for an interest rate, credit, commodity
or equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination of,
or option with respect to, these or similar transactions, for the purpose of
B-34
hedging exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security or currency valuations or commodity prices.
"Income Statement" means the Consolidated Statements of Operations of
the Corporation included within the Corporation's periodic reports filed
pursuant to the Exchange Act.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments and
all reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, xxxxxx, derivatives or other financial
products; (iii) all obligations of such Person as a lessee under Capital Leases;
(iv) all obligations or liabilities of others secured by a Lien on any asset of
such Person, irrespective of whether such obligation or liability is assumed;
(v) all obligations of such Person to pay the deferred purchase price of assets;
(vi) all obligations of such Person owing under Hedge Agreements; and (vii) any
obligations of such Person Guaranteeing or intended to Guarantee (whether
directly or indirectly Guaranteed, endorsed, co-made, discounted, or sold with
recourse) any obligation of any other Person that constitutes Indebtedness of
such other Person under any of clauses (i) through (vi) above.
"Interest Expenses" means, to the extent not included in Net Income
(Loss), for any period, the total interest expense of the Corporation and its
Consolidated Entities, plus, to the extent not included in such total interest
expense, and to the extent incurred by the Corporation or its Consolidated
Entities, without duplication, (1) non-cash interest expense, and (2) interest
expense in connection with vendor financing activities during such period.
"Investors" has the meaning set forth in the Securities Purchase
Agreement.
"Law" means any law, treaty, statute, ordinance, code, rule,
regulation, judgment, decree, order, writ, award, injunction or determination of
any Governmental Entity.
"Lien" means any mortgage, pledge, lien , security interest, claim,
voting agreement, conditional sale agreement, title retention agreement,
restriction, option or encumbrance of any kind, character or description
whatsoever.
"Majority Ownership Date" means the earlier of the date that (i) MHR
becomes the Beneficial Owner, directly or indirectly, of more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
(excluding any shares of Series A Preferred Stock issued on the Closing Date or
Common Stock issued upon the conversion thereof), and (ii) a Person unrelated to
MHR becomes the Beneficial Owner, directly or indirectly, of shares of capital
stock of the Corporation (other than any shares acquired in violation of the
Transfer Restriction) constituting, upon exercise or conversion into Common
Stock of all in-the-money convertible securities, options and warrants that such
person has the immediate right to so exercise or exchange, more than 50% of the
Common Stock of the Corporation (including any successor to the Corporation)
that would be outstanding following the exercise or conversion of all
in-the-money convertible securities, options and warrants of the Corporation
then outstanding; provided that the Majority Ownership Date shall not be deemed
to
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have occurred pursuant to clause (ii) above if at such time MHR would, upon
conversion of any shares of Series A Preferred Stock or Class B Common Stock
then held by it into Common Stock and upon conversion of any shares of Series B
Preferred Stock then held by it into Series A Preferred Stock or Common Stock,
become the Beneficial Owner of more than 50% of the Common Stock of the
Corporation (including any successor to the Corporation), that would be
outstanding following the exercise or conversion of all in-the-money convertible
securities, options and warrants of the Corporation then outstanding.
"Make-Whole Amount" means an amount equal to all dividends that would
have accrued and accumulated on each share of Series B Preferred Stock (assuming
payment of all accrued dividends on each Dividend Payment Date) from the date of
a Change of Control (and assuming the Change of Control did not occur) through
the date that is sixty-six (66) months after the original issuance of the Series
B Preferred Stock.
"MHR" means MHR Fund Management LLC and any successor thereto ("Fund
Management") and any investment fund or other entity controlled by, or under
common control with, Fund Management or any Person that controls or is
controlled by Fund Management.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, an
amount equal to (i) cash payments (including any cash received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received by the Corporation or any
of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs,
including all fees and expenses, incurred in connection with such Asset Sale.
"Organic Change" means, with respect to the Corporation, any
transaction other than a Change of Control (including without limitation any
recapitalization, capital reorganization or reclassification of any class of
capital stock (other than a change in par value, or from par value to no par
value, or from no par value to par value), any consolidation or amalgamation of
the Corporation with, or merger of the Corporation into, any other Person, any
merger of another Person into the Corporation (other than a merger in which the
Corporation survives and which does not result in any change of the capital
structure of the Corporation at that time, including a reclassification,
conversion, exchange or cancellation of outstanding shares of capital stock of
the Corporation), any sale or transfer or lease of all or substantially all of
the property or assets of the Corporation or any compulsory share exchange)
pursuant to which any class of capital stock of the Corporation is converted
into the right to receive other securities, cash or other property.
"Person" means any individual, corporation, company, association,
partnership, limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
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"Principal Orbital Receivables" means any deferred receivable of
principal amounts due with respect to any satellite manufactured by SS/L, the
receipt of which is contingent upon the continued performance of SS/L's
obligations in connection with such satellite.
"Prior Twelve Month Period" has the meaning set forth in Section III.B
of this Certificate of Designation.
"Qualified Transferee" means a Person other than a Disqualified
Transferee.
"Regulatory Approval" means any consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any regulatory body, commission, board, bureau, agency or
instrumentality, in each case whether federal, state, local or foreign.
"Repurchase Expenses" means, with respect to any redemption,
retirement, sinking fund or similar payment, purchase, repurchase, exchange or
other acquisition for value, direct or indirect, of any shares of Capital Stock
or Indebtedness of the Corporation or any of its Consolidated Entities other
than in connection with any refinancing during any period, an amount equal to
any payments, in cash or otherwise (including any cash payments made by way of
deferred payment pursuant to, or by monetization of, a note payable or
otherwise), paid by or on behalf or for the account of the Corporation or any of
its Consolidated Entities, directly or indirectly relating thereto.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Corporation, any of its Subsidiaries or any Joint Venture now or hereafter
outstanding (other than (x) by wholly-owned Subsidiaries (including, without
limitation, SkyNet, so long as SkyNet remains a wholly-owned Subsidiary), (y) by
XTAR, L.L.C. pursuant to the provisions of its applicable governing agreements
and related documents as in effect as of the Closing Date without any amendment,
restatement or any other change thereto, or (z) by an Eligible Joint Venture
formed by the Corporation or by a wholly-owned Subsidiary of the Corporation on
and after the Closing Date to the Corporation or any of its wholly-owned
Subsidiaries pursuant to such Eligible Joint Venture's applicable governing
documents); or (ii) any redemption, retirement, sinking fund or similar payment,
purchase, repurchase, exchange or other acquisition for value, direct or
indirect, of any shares of Capital Stock of the Corporation, any of its
Subsidiaries or any Joint Venture now or hereafter outstanding; in each case,
including any payment in connection with any merger or consolidation involving
the Corporation, any of its Subsidiaries or any Joint Venture (each, a
"Repurchase"); provided, however, that such Repurchase shall not constitute a
Restricted Payment if the Repurchase (v) is of convertible debt securities of
the Corporation or any of its Subsidiaries and such Repurchase is effected at
not greater than the stated value of such convertible debt securities plus
accrued interest, if any; (w) is by any wholly-owned Subsidiary of its own
Capital Stock; (x) is effected solely with the proceeds from a sale of Junior
Securities; (y) if approved pursuant to and in accordance with Section E(vi) of
Article VI hereunder by a majority of the Series A Preferred Stock and Series B
Preferred Stock voting together as a single class; or (z) is of an equity
interest of an Eligible Joint Venture.
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"Restricted Transferee" has the meaning ascribed to such term in the
Securities Purchase Agreement.
"Sale" means any sale, lease or sub-lease (as lessor or sublessor),
sale and leaseback, assignment, contribution, conveyance, transfer or other
disposition to or for the benefit of, or any exchange of property with, any
Person (other than the Corporation and any of its Subsidiaries), directly or
indirectly, in one transaction or a series of transactions (whether through
merger, consolidation, reclassification, business combination, joint venture,
partnership, tender offer, exchange offer, share exchange, recapitalization,
sale of the Capital Stock of any of the Corporation's Subsidiaries or other
similar transaction or otherwise) other than in the ordinary course of business
consistent with past practice; provided, however, that any one single
transaction or one single series of related transactions (the "Exempted
Transaction") in which (i) the Corporation receives, in consideration for such
property, an equity interest (the "Investment Interest") of an entity that will
own, directly or indirectly, such property upon the consummation of such one
single transaction or one single series of related transactions, (ii) the
consideration other than the Investment Interest received by the Corporation in
connection with such Exempted Transaction constitutes not more than either (a)
25% of the total consideration received by the Corporation or (b) Twenty-Five
Million Dollars ($25,000,000) cash, and (iii) the Investment Interest has a fair
market value substantially equivalent to at least the fair market value of such
property, then such one single transaction or one single series of related
transactions shall be deemed not to constitute a "Sale" hereunder.
"Securities Act" means the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, from time to time.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of October 17, 2006, by and between the Investors and the
Corporation, as amended, supplemented or otherwise modified from time to time.
"Share Purchase Price" has the meaning set forth in the Securities
Purchase Agreement.
"Significant Sale" means a Sale of either SS/L or SkyNet or all or
substantially all of their respective assets (determined on a consolidated basis
of each of SS/L or SkyNet, as applicable).
"Significant Sale Election Notice" has the meaning set forth in
Section VI.G of this Certificate of Designation.
"Significant Sale Notice" has the meaning set forth in Section VI.G of
this Certificate of Designation.
"Significant Sale Redemption Price" has the meaning set forth in
Section VI.E of this Certificate of Designation.
"SkyNet" means Loral SkyNet Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Corporation.
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"SkyNet Preferred Stock" means the Series A 12% Non-Convertible
Preferred Stock of SkyNet.
"Subsidiary" means as to any Person, any other Person of which more
than 50% of the shares of the voting stock or other voting interests are owned
or controlled, or the ability to select or elect more than 50% of the directors
or similar managers is held, directly or indirectly, by such first Person or one
or more of its Subsidiaries or by such first Person and one or more of its
Subsidiaries; provided, however, that no Joint Venture (as such term is defined
in the Securities Purchase Agreement) shall be considered (i) a "Subsidiary" of
the Corporation or (ii) a "Subsidiary" of any Subsidiary of the Corporation.
"30-Trading Day Reference Period" means any period of thirty (30)
consecutive Trading Days (including the last Trading Day of such period).
"Threshold" means 39.999% of the aggregate voting power of all
outstanding securities issued by the Corporation at any time and from time to
time (assuming the conversion of all outstanding shares of Series A Preferred
Stock).
"Trading Day" means any day on which NASDAQ is open for trading, or if
the shares of Common Stock are not quoted on the NASDAQ, any day on which the
principal national securities exchange or national quotation system on which the
shares of Common Stock are listed, admitted to trading or quoted is open for
trading, or if the shares of Common Stock are not so listed, admitted to trading
or quoted, any Business Day.
"Transfer Restriction" has the meaning as set forth in the Securities
Purchase Agreement.
"Unconsolidated Entities" means those entities in which the
Corporation or any of its Consolidated Entities hold an equity interest, other
than any Consolidated Entities.
IX. Miscellaneous
A. Notices. Any notice referred to herein shall be in writing and,
unless first-class mail shall be specifically permitted for such notices under
the terms hereof, shall be deemed to have been given upon (i) personal delivery
thereof, (ii) transmittal of such notice by telecopy (with confirmation of
receipt by telecopy), (iii) five days after transmittal by first-class,
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one day after transmittal by next-day or overnight mail or delivery, return
receipt requested, addressed as follows:
(a) if to the Corporation, to its office at 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000 (Attention: General Counsel) with a copy to the transfer agent
for the Series B Preferred Stock;
(b) if to a Holder, to such holder at the address of such Holder as
listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the Series B Preferred Stock); or
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(c) to such other address as the Corporation or such Holder, as the
case may be, shall have designated by notice similarly given.
B. Reacquired Shares. Any shares of Series B Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation, directly or indirectly, in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof (and shall not be deemed to be outstanding for any purpose)
and, if necessary to provide for the lawful redemption or purchase of such
shares, the capital represented by such shares shall be reduced in accordance
with the DGCL. All such shares of Series B Preferred Stock shall upon their
cancellation and upon the filing of an appropriate certificate with the
Secretary of State of the State of Delaware, become authorized but unissued
shares of Preferred Stock of the Corporation and may be reissued as part of
another series of Preferred Stock of the Corporation subject to the conditions
or restrictions on issuance set forth herein.
C. Enforcement. Any registered Holder may proceed to protect and
enforce its rights and the rights of such Holders by any available remedy by
proceeding at law or in equity to protect and enforce any such rights, whether
for the specific enforcement of any provision in this Certificate of Designation
or in aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
D. Transfer Taxes. Except as otherwise agreed upon pursuant to the
terms of this Certificate of Designation, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Common Stock on conversion or exchange of, or other
securities or property issued on account of, shares of Series B Preferred Stock
pursuant hereto or certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such tax or other charge
that may be imposed in connection with any transfer involved in the issue or
transfer and delivery of any certificate for Common Stock or other securities or
property in a name other than that in which the shares of Series B Preferred
Stock so converted, or on account of which such securities were issued, were
registered and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Corporation the amount of any such
tax or has established to the satisfaction of the Corporation that such tax has
been paid or is not payable.
E. Transfer Agent. The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series B Preferred Stock. Upon
any such appointment or discharge of a transfer agent, the Corporation shall
send notice thereof by first-class mail, postage prepaid, to each Holder of
record.
F. Record Dates. In the event that the Series B Preferred Stock shall
be registered under either the Securities Act or the Exchange Act, the
Corporation shall establish appropriate record dates with respect to payments
and other actions to be made with respect to the Series B Preferred Stock.
G. Schedule 13D Filings Conclusive. The information contained in the
Schedule 13D filed by MHR with the United States Securities and Exchange
Commission with
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respect to its beneficial ownership of securities of the Corporation as stated
therein, as amended from time to time, shall be conclusive for the purposes of
the Corporation's compliance with its obligations under Section III.D hereunder,
absent manifest error, unless MHR has delivered written notice to the
Corporation relating to the information contained in such Schedule 13D to the
Corporation as provided in Section IX.A.
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IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its _________________, this ___ day of ___________,
________.
LORAL SPACE & COMMUNICATIONS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT C
FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT D
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
LORAL SPACE & COMMUNICATIONS INC.
LORAL SKYNET CORPORATION
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES HEREOF
DATED AS OF [________]
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1 Defined Terms ..................................................... 2
1.2 General Interpretive Principles ................................... 8
ARTICLE II
DEMAND REGISTRATION
2.1 Request for Registration .......................................... 8
2.2 Joining Holders ................................................... 15
2.3 Effective Registration ............................................ 16
2.4 Underwritten Offerings ............................................ 16
2.5 Priority on Demand Registrations .................................. 16
2.6 Withdrawal and Cancellation of Registration ....................... 17
2.7 Registration Statement Form ....................................... 17
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 Holder Piggyback Registration ..................................... 17
3.2 Priority on Piggyback Registrations ............................... 18
3.3 Withdrawals ....................................................... 20
3.4 Underwritten Offerings ............................................ 20
ARTICLE IV
SHELF REGISTRATION
4.1 Shelf Registration Filing ......................................... 20
4.2 Required Period and Shelf Registration Procedures ................. 23
ARTICLE V
STANDSTILL AND SUSPENSION PERIODS
5.1 Company Standstill Period ......................................... 23
5.2 Suspension Period ................................................. 24
5.3 Holder Standstill Period .......................................... 25
ARTICLE VI
REGISTRATION PROCEDURES
6.1 Company Obligations ............................................... 25
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TABLE OF CONTENTS
(continued)
Page
----
6.2 Holder Obligations ................................................ 29
6.3 Subsequent Registration Rights .................................... 29
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Company .................................... 30
7.2 Indemnification by the Holders .................................... 31
7.3 Notice of Claims, Etc ............................................. 32
7.4 Contribution ...................................................... 32
7.5 Indemnification Payments; Other Remedies .......................... 32
ARTICLE VIII
REGISTRATION EXPENSES
ARTICLE IX
RULE 144
ARTICLE X
MISCELLANEOUS
10.1 Notice Generally .................................................. 34
10.2 Successors and Assigns ............................................ 35
10.3 Amendments; Waivers ............................................... 35
10.4 Injunctive Relief ................................................. 36
10.5 Attorney's Fees ................................................... 36
10.6 Termination Of Registration Rights; Survival ...................... 36
10.7 Severability ...................................................... 36
10.8 Headings .......................................................... 36
10.9 Governing Law; Jurisdiction ....................................... 36
10.10 Loral Class B Common Stock ........................................ 37
10.11 Counterparts and Facsimile Execution .............................. 37
10.12 Entire Agreement .................................................. 37
10.13 Further Assurances ................................................ 37
ii
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated as of [________], by and among Loral Space & Communications Inc., a
Delaware corporation ("Loral"), Loral Skynet Corporation, a Delaware corporation
("Skynet"), and the Holders (as hereinafter defined) of Registrable Securities
(as hereinafter defined).
RECITALS
A. Subject to and on the terms and conditions set forth in that certain
Fourth Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code, dated as of June 3, 2005 (the "Plan"), which Plan was confirmed on August
1, 2005 by order of the United States Bankruptcy Court for the Southern District
of New York, as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof, the Holders received, on the
effective date of the Plan, from (i) Loral shares of the Loral Common Stock (as
hereinafter defined), and (ii) Skynet (a) shares of Skynet Preferred Stock (as
hereinafter defined), and (b) Skynet Notes (as hereinafter defined), pursuant to
a rights offering by Skynet under the Plan (the "Rights Offering") and/or the
Backstop Commitment Agreement (as defined in the Plan);
B. Pursuant to and as authorized by the Bankruptcy Court order confirming
the Plan, Loral, Skynet and the holders signatory thereto entered into that
certain Registration Rights Agreement, dated as of November 21, 2005, as amended
by those certain letter agreements, dated as of April 3, 2006, June 14, 2006,
June 29, 2006, August 2, 2006, August 24, 2006 and September 21, 2006 (the
"Registration Rights Agreement"), which provided the holders thereto with
certain rights relating to the registration of the Loral Common Stock, the
Skynet Preferred Stock and the Skynet Notes;
C. Loral and MHR Fund Management LLC entered into that certain Securities
Purchase Agreement, dated as of October 17, 2006 (the "Securities Purchase
Agreement"), pursuant to which Loral will issue and sell shares of (i) Series A
Cumulative 7.50% PIK Convertible Preferred Stock, par value $0.01 per share, of
Loral (the "Loral Series A Preferred Stock"), convertible into shares of Loral
Common Stock and having the rights, preferences, privileges and powers set forth
in the certificate of designation attached as Exhibit A to the Securities
Purchase Agreement, and (ii) Series B Cumulative 7.50% PIK Preferred Stock, par
value $.01 per share, of Loral (the "Loral Series B Preferred Stock")
convertible, upon the Class B Common Stock Authorization (as hereinafter
defined), into shares of Loral Class B Common Stock (as hereinafter defined) and
having the rights, preferences, privileges and powers set forth in the
certificate of designation attached as Exhibit B to the Securities Purchase
Agreement; and
D. In connection with the consummation of the transactions contemplated by
the Securities Purchase Agreement, Loral, Skynet and the Holders desire to amend
and restate the Registration Rights Agreement to provide the Holders with
certain rights relating to the registration of the Loral Series A Preferred
Stock, Loral Series B Preferred Stock and Loral Class B Common Stock (or any
Common Stock issued upon the conversion or exchange thereof) owned as of the
date hereof or that may be owned from time to time after the date hereof by the
Holders or their Affiliates (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and the agreements set
forth below, the parties hereby agree with each other as follows:
ARTICLE I
DEFINITIONS.
1.1 DEFINED TERMS.
As used in this Agreement, the following capitalized terms (in their
singular and plural forms, as applicable) have the following meanings:
"Action" has the meaning assigned to such term in Section 7.3 hereof.
"Additional Holders" means the Permitted Assignees of Registrable
Securities who, from time to time, acquire Registrable Securities and own
Registrable Securities at the relevant time, agree to be bound by the terms
hereof and become Holders for purposes of this Agreement.
"Adverse Effect" has the meaning assigned to such term in Section 2.5
hereof.
"Affiliate" of a Person means any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, such other Person. For purposes of this definition, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning assigned to such term in the introductory
paragraph to this Agreement, as the same may be amended, supplemented or
restated from time to time.
"Auditor Consent" means the consent of the independent public
accountants of Loral to use the report of such independent public accountants
relating to Loral's financial statements and to refer to such independent public
accountants under the heading "Experts" in the Loral Universal Shelf
Registration Statement.
"Backstop Commitment Agreement" has the meaning assigned to such term
in the Recitals to this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York are authorized or obligated by law or executive
order to close.
"Class B Common Stock Authorization" shall have the meaning assigned
to such term in the Securities Purchase Agreement.
"Commission" means the United States Securities and Exchange
Commission and any successor United States federal agency or governmental
authority having similar powers.
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"Company" means, as applicable to the situation at hand, either Loral
or Skynet.
"Company Indemnified Person" has the meaning assigned to such term in
Section 7.2 hereof.
"Company Standstill Period" has the meaning assigned to such term in
Section 5.1 hereof.
"Demand Registration" means, as applicable to the situation at hand, a
Loral Common Stock Demand Registration, a Loral Class B Common Stock Demand
Registration, a Loral Series A Preferred Stock Demand Registration, a Loral
Series B Preferred Stock Demand Registration, a Skynet Preferred Stock Demand
Registration or a Skynet Notes Demand Registration.
"Demand Request" has the meaning assigned to such term in Section
2.1(a) hereof.
"DTC" means The Depository Trust Company, or any successor thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations of the Commission
thereunder.
"Holder" means any (i) Person who owns Registrable Securities at the
relevant time and is a party to this Agreement or (ii) any Additional Holder.
"Indemnified Person" has the meaning assigned to such term in Section
7.1 hereof.
"Indemnitee" has the meaning assigned to such term in Section 7.3
hereof.
"Inspectors" has the meaning assigned to such term in Section 6.1(k)
hereof.
"Joining Holder" has the meaning assigned to such term in Section 2.2
hereof.
"Loral" has the meaning assigned to such term in the introductory
paragraph to this Agreement.
"Loral Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of Loral.
"Loral Class B Common Stock Demand Registration" has the meaning
assigned to such term in Section 2.1(b) hereof.
"Loral Common Stock" means the authorized common stock, par value
$0.01 per share, of Loral.
"Loral Common Stock Demand Registration" has the meaning assigned to
such term in Section 2.1(a) hereof.
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"Loral Series A Preferred Stock" has the meaning assigned to such term
in the Recitals to this Agreement.
"Loral Series A Preferred Stock Demand Registration" has the meaning
assigned to such term in Section 2.1(c) hereof.
"Loral Series B Preferred Stock" has the meaning assigned to such term
in the Recitals to this Agreement.
"Loral Series B Preferred Stock Demand Registration" has the meaning
assigned to such term in Section 2.1(d) hereof.
"Loral Shelf Filing Deadline" has the meaning assigned to such term in
Section 4.1(a) hereof.
"Loral Universal Shelf Registration Statement" has the meaning
assigned to such term in Section 4.1(a) hereof.
"Loss" and "Losses" have the meanings assigned to such terms in
Section 7.1 hereof.
"Major Holder" means, with respect to a class of Registrable
Securities, any Person or group of Affiliated Persons that holds a minimum of
25% of such class of Registrable Securities as of the date hereof or any
Additional Holder that acquires the rights of such Person or group of Affiliated
Persons in accordance with the terms of this Agreement; provided however, that
any Person who holds a minimum of 25% of the Loral Series B Preferred Stock as
of the date hereof shall be deemed to be a Major Holder with respect to the
Loral Class B Common Stock.
"Majority Participating Holders" means, with respect to any
registration of Registrable Securities under this Agreement, the Holder or
Holders at the relevant time of at least a majority of the Registrable
Securities of all Holders to be included in the Registration Statement in
question.
"Material Disclosure Event" means, as of any date of determination,
any pending or imminent event relating to the Company or any of its
subsidiaries, which, in the good faith determination of the Board of Directors
of the Company after consultation with counsel to the Company (i) requires
disclosure of material, non-public information relating to such event in any
Registration Statement or related Prospectus (including documents incorporated
by reference therein) so that such Registration Statement would not be
materially misleading, (ii) is otherwise not required to be publicly disclosed
at that time (e.g., on Forms 10-K, 8-K, or 10-Q) under applicable federal or
state securities laws but for the filing of such Registration Statement or
related Prospectus and (iii) if publicly disclosed at the time of such event,
could reasonably be expected to have a material adverse effect on the business,
financial condition or prospects of the Company and its subsidiaries or would
materially adversely affect a pending or proposed acquisition, merger,
recapitalization, consolidation, reorganization, financing or similar
transaction, or negotiations with respect thereto.
-4-
"NASD" has the meaning assigned to such term in Section 6.1(n) hereof.
"Participating Holder" means any Holder on whose behalf Registrable
Securities are registered pursuant to Articles II, III or IV hereof.
"Permitted Assignee" means (a) any Affiliate of any Holder who
acquires Registrable Securities from such Holder or its Affiliates; or (b) any
other Person who (i) acquires any Holder's Registrable Securities in an amount
of at least 2% of the total number or amount, as applicable, of outstanding
securities of the applicable class of Registrable Securities calculated as of
the date hereof; and (ii) shall have been designated as a Permitted Assignee by
such Holder in a written notice to the Company; provided, however, that the
rights of any Person designated as a Permitted Assignee referred to in the
foregoing clause (b) shall be limited if, and to the extent, provided in such
notice.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Piggyback Registration" has the meaning assigned to such term in
Section 3.1 hereof.
"Plan" has the meaning assigned to such term in the Recitals to this
Agreement.
"Prospectus" means the prospectus included in any Registration
Statement, all amendments and supplements to such prospectus and all material
incorporated by reference in such prospectus.
"Records" has the meaning assigned to such term in Section 6.1(k)
hereof.
The terms "register," "registered" and "registration" mean a
registration effected by preparing and filing with the Commission a Registration
Statement on an appropriate form in compliance with the Securities Act, and the
declaration or order of the Commission of the effectiveness of such Registration
Statement under the Securities Act.
"Registrable Securities" means (i) the shares of Loral Common Stock
held by any of the Holders (or their respective Affiliates and successors or
Permitted Assignees) now or at any time in the future, including shares of Loral
Common Stock issued upon the conversion or exchange of any shares of Loral
Series A Preferred Stock, Loral Series B Preferred Stock or Loral Class B Common
Stock ("Registrable Loral Common Stock"), (ii) the shares of Loral Class B
Common Stock held by any of the Holders (or their respective Affiliates and
successors or Permitted Assignees) at any time in the future ("Registrable Loral
Class B Common Stock"), (iii) the shares of Loral Series A Preferred Stock held
by any of the Holders (or their respective Affiliates and successors or
Permitted Assignees) now or at any time in the future ("Registrable Loral Series
A Preferred Stock"), (iv) the shares of Loral Series B Preferred Stock held by
any of the Holders (or their respective Affiliates and successors or Permitted
Assignees) now or at any time in the future ("Registrable Loral Series B
Preferred Stock"), (v) the shares of Skynet Preferred Stock held by any of the
Holders (or their respective Affiliates and successors or Permitted Assignees)
now or at any time in the future ("Registrable Skynet Preferred Stock"),
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(vi) any Skynet Notes held by any of the Holders (or their respective Affiliates
and successors or Permitted Assignees) now or at any time in the future
("Registrable Skynet Notes"), and (vii) any securities that may be issued or
distributed or be issuable in respect thereof, including by way of stock
dividend, stock split or other similar distribution, payment in kind with
respect to any interest payment, merger, consolidation, exchange offer,
recapitalization or reclassification or similar transaction or exercise or
conversion of any of the foregoing; provided, however, that as to any
Registrable Securities, such securities shall cease to constitute "Registrable
Securities" for purposes of this Agreement if and when (i) a Registration
Statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of pursuant such Registration Statement, (ii) such securities are distributed
pursuant to Rule 144, (iii) such securities are otherwise sold or transferred
(other than in a transaction under clause (i) or (ii) above) by a Person in a
transaction in which such Person's rights under this Agreement are not assigned,
(iv) such securities are no longer outstanding, (v) such securities are sold or
transferred by the beneficial owner of such securities pursuant to Rule 144(k)
and new certificates for such securities not bearing a legend restricting
transfer under the Securities Act shall have been delivered to the Holder
thereof by the Company, or (vi) such securities are, in the reasonable
determination of the Holder thereof, otherwise freely-transferable by such
Holder without any restriction under the Securities Act at the time such Holder
desires to sell or transfer such securities. For purposes of this Agreement, a
"class" of Registrable Securities shall mean all securities with the same terms
and a "percentage" (or a "majority") of the Registrable Securities (or, where
applicable, of any other securities) shall be determined (x) based on the number
of shares of such securities, in the case of Registrable Securities which are
equity securities, and (y) based on the principal amount of such securities, in
the case of Registrable Securities which are debt securities.
"Registration Statement" means any registration statement of the
Company filed with, or to be filed with, the Commission under the rules and
regulations promulgated under the Securities Act, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such registration statement.
"Requesting Holder" has the meaning assigned to such term in Section
2.1(f) hereof.
"Requesting Loral Class B Common Stockholder" has the meaning assigned
to such term in Section 2.1(b) hereof.
"Requesting Loral Common Stockholder" has the meaning assigned to such
term in Section 2.1(a) hereof.
"Requesting Loral Series A Preferred Stockholder" has the meaning
assigned to such term in Section 2.1(c) hereof.
"Requesting Loral Series B Preferred Stockholder" has the meaning
assigned to such term in Section 2.1(d) hereof.
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"Requesting Skynet Noteholder" has the meaning assigned to such term
in Section 2.1(f) hereof.
"Requesting Skynet Preferred Stockholder" has the meaning assigned to
such term in Section 2.1(e) hereof.
"Required Filing Date" has the meaning assigned to such term in
Section 2.1(a) hereof.
"Required Period" has the meaning assigned to such term in Section 4.2
hereof.
"Rights Offering" has the meaning assigned to such term in the
Recitals to this Agreement.
"Rule 144" means Rule 144 (or any similar provision then in force)
promulgated under the Securities Act.
"Rule 144(k)" means Rule 144(k) (or any similar provision then in
force) promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations of the Commission thereunder.
"Securities Purchase Agreement" has the meaning assigned to such term
in the Recitals to this Agreement.
"Shelf Registration Statement" means, as applicable to the situation
at hand, a Loral Universal Shelf Registration Statement, a Skynet Preferred
Stock Shelf Registration Statement or a Skynet Notes Shelf Registration
Statement.
"Skynet" has the meaning assigned to such term in the introductory
paragraph to this Agreement.
"Skynet Notes" means the senior secured notes issued by Skynet in
connection with the Rights Offering and the Backstop Commitment Agreement.
"Skynet Notes Demand Registration" has the meaning assigned to such
term in Section 2.1(f) hereof.
"Skynet Notes Shelf Registration Statement" has the meaning assigned
to such term in Section 4.1(b) hereof.
"Skynet Notes Shelf Request" has the meaning assigned to such term in
Section 4.1(b) hereof.
"Skynet Preferred Stock" means the authorized non-convertible
preferred stock, par value $0.01 per share, of Skynet.
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"Skynet Preferred Stock Demand Registration" has the meaning assigned
to such term in Section 2.1(e) hereof.
"Skynet Preferred Stock Shelf Registration Statement" has the meaning
assigned to such term in Section 4.1(b) hereof.
"Skynet Preferred Stock Shelf Request" has the meaning assigned to
such term in Section 4.1(b) hereof.
"Suspension Notice" has the meaning assigned to such term in Section
5.2 hereof.
"Suspension Period" has the meaning assigned to such term in Section
5.2 hereof.
"Underwritten Offering" means a registration in which securities of
the Company are sold to an underwriter or underwriters on a firm commitment
basis for reoffering to the public.
"Underwritten Offering Standstill Period" has the meaning assigned to
such term in Section 3.2(c) hereof.
1.2 GENERAL INTERPRETIVE PRINCIPLES. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
be construed to affect the meaning, construction or effect hereof. Unless
otherwise specified, the terms "hereof," "herein," "hereunder" and similar terms
refer to this Agreement as a whole (including the exhibits and schedules
hereto), and references herein to Sections refer to Sections of this Agreement.
The words "include," "includes" and "including," when used in this Agreement,
shall be deemed to be followed by the words "without limitation."
ARTICLE II
DEMAND REGISTRATION
2.1 REQUEST FOR REGISTRATION.
(a) Loral Common Stock. Subject to the provisions contained in this
Section 2.1(a) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from
time to time (each, a "Requesting Loral Common Stockholder"), make a request in
writing (a "Demand Request") that Loral effect the registration under the
Securities Act of any specified number of shares of Registrable Loral Common
Stock held by the Requesting Loral Common Stockholders (a "Loral Common Stock
Demand Registration"); provided, however, that Loral shall in no event be
required to effect:
(i) subject to subsection (g) below, more than three (3) Loral
Common Stock Demand Registrations in total;
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(ii) more than two (2) Loral Common Stock Demand Registrations in
any 12-month period;
(iii) subject to Loral's compliance with its obligations under
Article III hereof, any Loral Common Stock Demand Registration during the period
commencing with Loral's issuance of a notice to the Holders pursuant to Section
3.1 hereof of a proposed registration of an Underwritten Offering of equity
securities of Loral for its own account (except pursuant to registrations on
Form S-4 or any successor form or on Form S-8 or any successor form relating
solely to securities issued pursuant to any benefit plan), continuing while
Loral uses reasonable efforts to pursue such registered Underwritten Offering,
and ending upon the earliest to occur of: (A) forty five (45) days immediately
following Loral's issuance of the notice of such proposed registered
Underwritten Offering pursuant to Section 3.1 hereof, unless, within such 45-day
period, Loral shall have (x) filed the Registration Statement for such proposed
Underwritten Offering, or (y) issued a press release disclosing such proposed
Underwritten Offering pursuant to Rule 135 (or its successor) promulgated under
the Securities Act thereby enabling the Holders to sell their Registrable Loral
Common Stock pursuant to the Loral Universal Shelf Registration Statement; (B)
the abandonment, cessation or withdrawal of such proposed registered
Underwritten Offering; or (C) 90 days immediately following the effective date
of the Registration Statement pertaining to such Underwritten Offering; and
(iv) any Loral Common Stock Demand Registration if the Loral
Universal Shelf Registration Statement is then effective, and such Loral
Universal Shelf Registration Statement may be utilized by the Requesting Loral
Common Stockholder for the offering and sale of any of its Registrable Loral
Common Stock without a requirement under the Commission's rules and regulations
for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(a) and in Sections
5.2 and 5.3 hereof, upon receipt of a Demand Request, Loral shall cause to be
included in a Registration Statement on an appropriate form under the Securities
Act, filed with the Commission as promptly as practicable but in any event not
later than 60 days after receiving a Demand Request (the "Required Filing
Date"), such shares of Registrable Loral Common Stock as may be requested by
such Requesting Loral Common Stockholders in their Demand Request together with
any other Registrable Loral Common Stock as requested by Joining Holders joining
in such request pursuant to Section 2.2 hereof. Loral shall use its reasonable
efforts to cause any such Registration Statement to be declared effective under
the Securities Act as promptly as possible after such filing. If Loral issues a
notice of a proposed Underwritten Offering of equity securities of Loral for its
own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or
withdraws such offering, Loral shall not issue a notice of a subsequent proposed
registration of an Underwritten Offering of equity securities of Loral for its
own account pursuant to Section 3.1 hereof until the Loral Universal Shelf
Registration Statement is first declared effective.
(b) Loral Class B Common Stock. Subject to the provisions contained in
this Section 2.1(b) and in Sections 5.2 and 5.3 hereof, any Major Holder may,
from time to time (each, a "Requesting Loral Class B Common Stockholder"), make
a Demand Request that Loral effect the registration under the Securities Act of
any specified number of shares of Registrable Loral Class B Common Stock held by
the Requesting Loral Class B Common Stockholders (a
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"Loral Class B Common Stock Demand Registration"); provided, however, that Loral
shall in no event be required to effect:
(i) subject to subsection (g) below, more than three (3) Loral
Class B Common Stock Demand Registrations in total;
(ii) more than two (2) Loral Class B Common Stock Demand
Registrations in any 12-month period;
(iii) subject to Loral's compliance with its obligations under
Article III hereof, any Loral Class B Common Stock Demand Registration during
the period commencing with Loral's issuance of a notice to the Holders pursuant
to Section 3.1 hereof of a proposed registration of an Underwritten Offering of
equity securities of Loral for its own account (except pursuant to registrations
on Form S-4 or any successor form or on Form S-8 or any successor form relating
solely to securities issued pursuant to any benefit plan), continuing while
Loral uses reasonable efforts to pursue such registered Underwritten Offering,
and ending upon the earliest to occur of: (A) forty five (45) days immediately
following Loral's issuance of the notice of such proposed registered
Underwritten Offering pursuant to Section 3.1 hereof, unless, within such 45-day
period, Loral shall have (x) filed the Registration Statement for such proposed
Underwritten Offering, or (y) issued a press release disclosing such proposed
Underwritten Offering pursuant to Rule 135 (or its successor) promulgated under
the Securities Act thereby enabling the Holders to sell their Registrable Loral
Class B Common Stock pursuant to the Loral Universal Shelf Registration
Statement; (B) the abandonment, cessation or withdrawal of such proposed
registered Underwritten Offering; or (C) 90 days immediately following the
effective date of the Registration Statement pertaining to such Underwritten
Offering; and
(iv) any Loral Class B Common Stock Demand Registration if the
Loral Universal Shelf Registration Statement is then effective, and such Loral
Class B Universal Registration Statement may be utilized by the Requesting Loral
Class B Common Stockholder for the offering and sale of any of its Registrable
Loral Class B Common Stock without a requirement under the Commission's rules
and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(b) and in Sections
5.2 and 5.3 hereof, upon receipt of a Demand Request, Loral shall cause to be
included in a Registration Statement on an appropriate form under the Securities
Act, filed with the Commission as promptly as practicable but in any event not
later than the Required Filing Date, such shares of Registrable Loral Class B
Common Stock as may be requested by such Requesting Loral Class B Common
Stockholders in their Demand Request together with any other Registrable Loral
Class B Common Stock as requested by Joining Holders joining in such request
pursuant to Section 2.2 hereof. Loral shall use its reasonable efforts to cause
any such Registration Statement to be declared effective under the Securities
Act as promptly as possible after such filing. If Loral issues a notice of a
proposed Underwritten Offering of equity securities of Loral for its own account
pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws
such offering, Loral shall not issue a notice of a subsequent proposed
registration of an Underwritten Offering of equity securities of Loral for its
own account pursuant to Section 3.1 hereof until the Loral Universal Shelf
Registration Statement is first declared effective.
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(c) Loral Series A Preferred Stock. Subject to the provisions
contained in this Section 2.1(c) and in Sections 5.2 and 5.3 hereof, any Major
Holder may, from time to time (each, a "Requesting Loral Series A Preferred
Stockholder"), make a Demand Request that Loral effect the registration under
the Securities Act of any specified number of shares of Registrable Loral Series
A Preferred Stock held by the Requesting Loral Series A Preferred Stockholders
(a "Loral Series A Preferred Stock Demand Registration"); provided, however,
that Loral shall in no event be required to effect:
(i) subject to subsection (g) below, more than three (3) Loral
Series A Preferred Stock Demand Registrations in total;
(ii) more than two (2) Loral Series A Preferred Stock Demand
Registrations in any 12-month period;
(iii) subject to Loral's compliance with its obligations under
Article III hereof, any Loral Series A Preferred Stock Demand Registration
during the period commencing with Loral's issuance of a notice to the Holders
pursuant to Section 3.1 hereof of a proposed registration of an Underwritten
Offering of equity securities of Loral for its own account (except pursuant to
registrations on Form S-4 or any successor form or on Form S-8 or any successor
form relating solely to securities issued pursuant to any benefit plan),
continuing while Loral uses reasonable efforts to pursue such registered
Underwritten Offering, and ending upon the earliest to occur of: (A) forty five
(45) days immediately following Loral's issuance of the notice of such proposed
registered Underwritten Offering pursuant to Section 3.1 hereof, unless, within
such 45-day period, Loral shall have (x) filed the Registration Statement for
such proposed Underwritten Offering, or (y) issued a press release disclosing
such proposed Underwritten Offering pursuant to Rule 135 (or its successor)
promulgated under the Securities Act thereby enabling the Holders to sell their
Registrable Loral Series A Preferred Stock pursuant to the Loral Universal Shelf
Registration Statement; (B) the abandonment, cessation or withdrawal of such
proposed registered Underwritten Offering; or (C) 90 days immediately following
the effective date of the Registration Statement pertaining to such Underwritten
Offering; and
(iv) any Loral Series A Preferred Stock Demand Registration if
the Loral Universal Shelf Registration Statement is then effective, and such
Loral Universal Shelf Registration Statement may be utilized by the Requesting
Loral Series A Preferred Stockholder for the offering and sale of any of its
Registrable Loral Series A Preferred Stock without a requirement under the
Commission's rules and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(c) and in Sections
5.2 and 5.3 hereof, upon receipt of a Demand Request, Loral shall cause to be
included in a Registration Statement on an appropriate form under the Securities
Act, filed with the Commission by the Required Filing Date, such shares of
Registrable Loral Series A Preferred Stock as may be requested by such
Requesting Loral Series A Preferred Stockholders in their Demand Request
together with any other Registrable Loral Series A Preferred Stock as requested
by Joining Holders joining in such request pursuant to Section 2.2 hereof. Loral
shall use its reasonable efforts to cause any such Registration Statement to be
declared effective under the Securities Act as promptly as possible after such
filing. If Loral issues a notice of a proposed Underwritten
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Offering of equity securities of Loral for its own account pursuant to Section
3.1 hereof and subsequently abandons, ceases or withdraws such offering, Loral
shall not issue a notice of a subsequent proposed registration of an
Underwritten Offering of equity securities of Loral for its own account pursuant
to Section 3.1 hereof until the Loral Universal Shelf Registration Statement is
first declared effective.
(d) Loral Series B Preferred Stock. Subject to the provisions
contained in this Section 2.1(d) and in Sections 5.2 and 5.3 hereof, any Major
Holder may, from time to time (each, a "Requesting Loral Series B Preferred
Stockholder"), make a Demand Request that Loral effect the registration under
the Securities Act of any specified number of shares of Registrable Loral Series
B Preferred Stock held by the Requesting Loral Series B Preferred Stockholders
(a "Loral Series B Preferred Stock Demand Registration"); provided, however,
that Loral shall in no event be required to effect:
(i) subject to subsection (g) below, more than three (3) Loral
Series B Preferred Stock Demand Registrations in total;
(ii) more than two (2) Loral Series B Preferred Stock Demand
Registrations in any 12-month period;
(iii) subject to Loral's compliance with its obligations under
Article III hereof, any Loral Series B Preferred Stock Demand Registration
during the period commencing with Loral's issuance of a notice to the Holders
pursuant to Section 3.1 hereof of a proposed registration of an Underwritten
Offering of equity securities of Loral for its own account (except pursuant to
registrations on Form S-4 or any successor form or on Form S-8 or any successor
form relating solely to securities issued pursuant to any benefit plan),
continuing while Loral uses reasonable efforts to pursue such registered
Underwritten Offering, and ending upon the earliest to occur of: (A) forty five
(45) days immediately following Loral's issuance of the notice of such proposed
registered Underwritten Offering pursuant to Section 3.1 hereof, unless, within
such 45-day period, Loral shall have (x) filed the Registration Statement for
such proposed Underwritten Offering, or (y) issued a press release disclosing
such proposed Underwritten Offering pursuant to Rule 135 (or its successor)
promulgated under the Securities Act thereby enabling the Holders to sell their
Registrable Loral Series B Preferred Stock pursuant to the Loral Universal Shelf
Registration Statement; (B) the abandonment, cessation or withdrawal of such
proposed registered Underwritten Offering; or (C) 90 days immediately following
the effective date of the Registration Statement pertaining to such Underwritten
Offering; and
(iv) any Loral Series B Preferred Stock Demand Registration if
the Loral Universal Shelf Registration Statement is then effective, and such
Loral Universal Shelf Registration Statement may be utilized by the Requesting
Loral Series B Preferred Stockholder for the offering and sale of any of its
Registrable Loral Series B Preferred Stock without a requirement under the
Commission's rules and regulations for a post-effective amendment thereto.
Subject to the provisions contained in this Section 2.1(d) and in
Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, Loral shall cause
to be included in a Registration Statement on an appropriate form under the
Securities Act, filed with the Commission by the
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Required Filing Date, such shares of Registrable Loral Series B Preferred Stock
as may be requested by such Requesting Loral Series B Preferred Stockholders in
their Demand Request together with any other Registrable Loral Series B
Preferred Stock as requested by Joining Holders joining in such request pursuant
to Section 2.2 hereof. Loral shall use its reasonable efforts to cause any such
Registration Statement to be declared effective under the Securities Act as
promptly as possible after such filing. If Loral issues a notice of a proposed
Underwritten Offering of equity securities of Loral for its own account pursuant
to Section 3.1 hereof and subsequently abandons, ceases or withdraws such
offering, Loral shall not issue a notice of a subsequent proposed registration
of an Underwritten Offering of equity securities of Loral for its own account
pursuant to Section 3.1 hereof until the Loral Universal Shelf Registration
Statement is first declared effective.
(e) Skynet Preferred Stock. Subject to the provisions contained in
this Section 2.1(e) and in Sections 5.2 and 5.3 hereof, any Major Holder may,
from time to time (each, a "Requesting Skynet Preferred Stockholder"), make a
Demand Request that Skynet effect the registration under the Securities Act of
any specified number of shares of Registrable Skynet Preferred Stock held by the
Requesting Skynet Preferred Stockholders (a "Skynet Preferred Stock Demand
Registration"); provided, however, that Skynet shall in no event be required to
effect:
(i) subject to subsection (g) below, more than three (3) Skynet
Preferred Stock Demand Registrations in total;
(ii) more than two (2) Skynet Preferred Stock Demand
Registrations in any 12-month period;
(iii) subject to Skynet's compliance with its obligations under
Article III hereof, any Skynet Preferred Stock Demand Registration during the
period commencing with Skynet's issuance of a notice to the Holders pursuant to
Section 3.1 hereof of a proposed registration of an Underwritten Offering of
equity securities of Skynet for its own account (except pursuant to
registrations on Form S-4 or any successor form or on Form S-8 or any successor
form relating solely to securities issued pursuant to any benefit plan),
continuing while Skynet uses reasonable efforts to pursue such registered
Underwritten Offering, and ending upon the earliest to occur of: (A) forty five
(45) days immediately following Skynet's issuance of the notice of such proposed
registered Underwritten Offering pursuant to Section 3.1 hereof, unless, within
such 45-day period, Skynet shall have (x) filed the Registration Statement for
such proposed Underwritten Offering, or (y) issued a press release disclosing
such proposed Underwritten Offering pursuant to Rule 135 (or its successor)
promulgated under the Securities Act thereby enabling the Holders to sell their
Registrable Skynet Preferred Stock pursuant to the Skynet Preferred Stock Shelf
Registration Statement (if any); (B) the abandonment, cessation or withdrawal of
such proposed registered Underwritten Offering; or (C) 90 days immediately
following the effective date of the Registration Statement pertaining to such
Underwritten Offering; and
(iv) any Skynet Preferred Stock Demand Registration if the Skynet
Preferred Stock Shelf Registration Statement is then effective, and such Skynet
Preferred Stock Shelf Registration Statement may be utilized by the Requesting
Skynet Preferred Stockholder for
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the offering and sale of any of its Registrable Skynet Preferred Stock without a
requirement under the Commission's rules and regulations for a post-effective
amendment thereto.
Subject to the provisions contained in this Section 2.1(e) and in Sections
5.2 and 5.3 hereof, upon receipt of a Demand Request, Skynet shall cause to be
included in a Registration Statement on an appropriate form under the Securities
Act, filed with the Commission by the Required Filing Date, such shares of
Registrable Skynet Preferred Stock as may be requested by such Requesting Skynet
Preferred Stockholders in their Demand Request together with any other
Registrable Skynet Preferred Stock as requested by Joining Holders joining in
such request pursuant to Section 2.2 hereof. Skynet shall use its reasonable
efforts to cause any such Registration Statement to be declared effective under
the Securities Act as promptly as possible after such filing. Notwithstanding
anything to the contrary contained herein, a Major Holder may make a Demand
Request that Skynet effect the registration of Skynet Preferred Stock and Skynet
Notes in a single Registration Statement and such Demand Request shall be
counted, in the sole discretion of such Major Holder, as either a Skynet
Preferred Stock Demand Registration or a Skynet Notes Demand Registration.
(f) Skynet Notes. Subject to the provisions contained in this Section
2.1(f) and in Sections 5.2 and 5.3 hereof, any Major Holder may, from time to
time (each, a "Requesting Skynet Noteholder," and collectively with a Requesting
Loral Common Stockholder, a Requesting Loral Class B Common Stockholder, a
Requesting Loral Series A Preferred Stockholder, a Requesting Loral Series B
Preferred Stockholder and a Requesting Skynet Preferred Stockholder, as the case
may be, a "Requesting Holder"), make a Demand Request that Skynet effect the
registration under the Securities Act of any specified principal amount of
Registrable Skynet Notes held by the Requesting Skynet Noteholders (a "Skynet
Notes Demand Registration," and collectively with a Loral Common Stock Demand
Registration, a Loral Class B Common Stock Demand Registration, a Loral Series A
Preferred Stock Demand Registration, a Loral Series B Preferred Stock Demand
Registration and a Skynet Preferred Stock Demand Registration, as the case may
be, a "Demand Registration"); provided, however, that Skynet shall in no event
be required to effect:
(i) subject to subsection (g) below, more than three (3) Skynet
Notes Demand Registrations in total;
(ii) more than two (2) Skynet Notes Demand Registrations in any
12-month period;
(iii) subject to Skynet's compliance with its obligations under
Article III hereof, any Skynet Notes Demand Registration during the period
commencing with Skynet's issuance of a notice to the Holders pursuant to Section
3.1 hereof of a proposed registration of an Underwritten Offering of debt
securities of Skynet for its own account (except pursuant to registrations on
Form S-4 or any successor form or on Form S-8 or any successor form relating
solely to securities issued pursuant to any benefit plan), continuing while
Skynet uses reasonable efforts to pursue such registered Underwritten Offering,
and ending upon the earliest to occur of: (A) forty five (45) days immediately
following Skynet's issuance of the notice of such proposed registered
Underwritten Offering pursuant to Section 3.1 hereof, unless, within such 45-day
period, Skynet shall have (x) filed the Registration Statement for such proposed
Underwritten
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Offering, or (y) issued a press release disclosing such proposed Underwritten
Offering pursuant to Rule 135 (or its successor) promulgated under the
Securities Act thereby enabling the Holders to sell their Registrable Skynet
Notes pursuant to the Skynet Notes Shelf Registration Statement; (B) the
abandonment, cessation or withdrawal of such proposed registered Underwritten
Offering; or (C) 90 days immediately following the effective date of the
Registration Statement pertaining to such Underwritten Offering; and
(iv) any Skynet Notes Demand Registration if the Skynet Notes
Shelf Registration Statement is then effective, and such Skynet Notes Shelf
Registration Statement may be utilized by the Requesting Skynet Noteholder for
the offering and sale of any of its Registrable Skynet Notes without a
requirement under the Commission's rules and regulations for a post-effective
amendment thereto.
Subject to the provisions contained in this Section 2.1(f) and in Sections
5.2 and 5.3 hereof, upon receipt of a Demand Request, Skynet shall cause to be
included in a Registration Statement on an appropriate form under the Securities
Act, filed with the Commission by the Required Filing Date, such principal
amount of Registrable Skynet Notes as may be requested by such Requesting Skynet
Noteholders in their Demand Request together with any other Registrable Skynet
Notes as requested by Joining Holders joining in such request pursuant to
Section 2.2 hereof. Skynet shall use its reasonable efforts to cause any such
Registration Statement to be declared effective under the Securities Act as
promptly as possible after such filing. Notwithstanding anything to the contrary
contained herein, a Major Holder may make a Demand Request that Skynet effect
the registration of Skynet Preferred Stock and Skynet Notes in a single
Registration Statement and such Demand Request shall be counted, in the sole
discretion of such Major Holder, as a Skynet Preferred Stock Demand Registration
or a Skynet Notes Demand Registration.
(g) Additional Demand Registration Rights. Notwithstanding and without
prejudice to the provisions of subsections (a)(i), (b)(i), (c)(i), (d)(i),
(e)(i) and (f)(1) above, in addition to the Demand Requests permitted under such
subsections, any Major Holder may make at any time and the Company shall effect
an aggregate of two (2), but not more than two (2), additional Demand Requests
for any of a Loral Common Stock Demand Registration, a Loral Class B Common
Stock Demand Registration, a Loral Series A Preferred Stock Demand Registration,
a Loral Series B Preferred Stock Demand Registration, a Skynet Preferred Stock
Demand Registration or a Skynet Notes Demand Registration.
2.2 JOINING HOLDERS. If at any time the Company proposes to register
Registrable Securities for the account of the Requesting Holders pursuant to
Section 2.1 hereof, then (i) the Company shall give, or cause to be given,
written notice of such proposed filing to all the Holders of such class of
Registrable Securities as soon as practicable (but in no event less than 30 days
before the anticipated filing date). Upon the written request of any Holder,
received by the Company no later than the 10th Business Day after receipt by
such Holder of the notice sent by the Company (each such Holder, a "Joining
Holder"), to register, on the same terms and conditions as the securities
otherwise being sold pursuant to such Demand Registration, any of its
Registrable Securities of the same class as the securities otherwise being sold
pursuant to such Demand Registration, the Company shall use its reasonable
efforts to cause such Registrable Securities to be included in the Registration
Statement proposed to be filed by the Company on
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the same terms and conditions as any securities of the same class included
therein. All such requests by Joining Holders shall specify the aggregate amount
and class of Registrable Securities to be registered and the intended method of
distribution of the same.
2.3 EFFECTIVE REGISTRATION. A registration shall not count as a Demand
Registration under this Agreement (i) unless the related Registration Statement
has been declared effective under the Securities Act and has remained effective
until such time as all of such Registrable Securities covered thereby have been
disposed of in accordance with the intended methods of disposition by the
Participating Holders (but in no event for a period of more than 180 days after
such Registration Statement becomes effective not including any Suspension
Period) and if, after it has become effective, an offering of Registrable
Securities pursuant to a Registration Statement is not terminated by any stop
order, injunction, or other order of the Commission or other governmental agency
or court, or (ii) if pursuant to Section 2.5 hereof, the Requesting Holders and
Joining Holders are cut back to fewer than 75% of the Registrable Securities
requested to be registered and at the time of the request there was not in
effect a Shelf Registration Statement.
2.4 UNDERWRITTEN OFFERINGS. If the Majority Participating Holders who are
included in any offering pursuant to a Demand Registration so elect, such
offering shall be in the form of an Underwritten Offering. With respect to any
such Underwritten Offering pursuant to a Demand Registration, the Company shall
select an investment banking firm of national standing to be the managing
underwriter for the offering, which firm shall be reasonably acceptable to the
Majority Participating Holders.
2.5 PRIORITY ON DEMAND REGISTRATIONS. With respect to any Underwritten
Offering of Registrable Securities pursuant to a Demand Registration, no
securities to be sold for the account of any Person (including the Company)
other than the Requesting Holders and Joining Holders shall be included in a
Demand Registration unless the managing underwriter advises the Requesting
Holders in writing (or, in the case of a Demand Registration not being
underwritten, the Majority Participating Holders determine) that the inclusion
of such securities shall not adversely affect the price or success of the
offering (an "Adverse Effect") and the Majority Holder making such Demand
Request reasonably agrees. Furthermore, in the event that the managing
underwriter advises the Requesting Holders in writing (or the Majority
Participating Holders determine) that the amount of Registrable Securities
proposed to be included in such Demand Registration by Requesting Holders and
Joining Holders is sufficiently large (even after exclusion of all securities of
any other Person pursuant to the immediately preceding sentence) to cause an
Adverse Effect, the number of Registrable Securities to be included in such
Demand Registration shall be allocated among all such Requesting Holders and
Joining Holders pro rata for each Holder based on the percentage derived by
dividing (i) the number of Registrable Securities that each such Holder
requested to be included in such Demand Registration by (ii) the aggregate
number of Registrable Securities that all Requesting Holders and Joining Holders
requested to be included in such Demand Registration; provided, however, that
if, as a result of such proration, any Requesting Holder or Joining Holder shall
not be entitled to include in a registration all Registrable Securities of the
class that such Holder had requested to be included, such Holder may elect to
withdraw its request to include such Registrable Securities in such registration
or may reduce the number requested to be included; provided, however, that (a)
such request must be made in writing prior to the earlier of the execution of
the underwriting
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agreement, if any, or the execution of the custody agreement with respect to
such registration, if any, and (b) such withdrawal or reduction shall be
irrevocable.
2.6 WITHDRAWAL AND CANCELLATION OF REGISTRATION. Any Participating Holder
may withdraw its Registrable Securities from a Demand Registration at any time
and any Majority Participating Holders shall have the right to cancel a proposed
Demand Registration of Registrable Securities pursuant to this Article II in
accordance with Section 3.3 hereof when the request for cancellation is based
upon material adverse information relating to the Company that is different from
the information known to the Participating Holders at the time of the Demand
Request. Upon such cancellation, the Company shall cease all efforts to secure
registration and such Demand Registration shall not be counted as a Demand
Registration under this Agreement for any purpose; provided, however that
notwithstanding anything to the contrary in this Agreement, the Company shall be
responsible for the expenses of the Participating Holders incurred in connection
with such cancelled registration through the date that is seven days after the
time such information became known to the Participating Holders, to the extent
such expenses are as described in clauses (i) through (x) of the first sentence
of Article VIII hereof.
2.7 REGISTRATION STATEMENT FORM. Registrations under this Article II shall
be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Holders of
a majority of each class of Registrable Securities requesting participation in
the Demand Registration and (ii) as shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods of
disposition specified in the applicable Holders' requests for such registration.
Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the
Company proposes to effect registration by filing a registration statement on
Form S-3 (or any successor or similar short-form registration statement), (y)
such registration is in connection with an Underwritten Offering and (z) the
managing underwriter or underwriters shall advise the Company in writing that,
in its or their opinion, the use of another form of registration statement (or
the inclusion, rather than the incorporation by reference, of information in the
Prospectus related to a registration statement on Form S-3 (or other short-form
registration statement)) is of material importance to the success of such
proposed offering, then such registration shall be effected on such other form
(or such information shall be so included in such Prospectus).
ARTICLE III
PIGGYBACK REGISTRATIONS.
3.1 HOLDER PIGGYBACK REGISTRATION. If the Company proposes to file a
Registration Statement with respect to an offering of its securities (except
pursuant to registrations on Form S-4 or any successor form or on Form S-8 or
any successor form relating solely to securities issued pursuant to any benefit
plan) on a form that would permit registration of Registrable Securities for
sale to the public under the Securities Act, then the Company shall give written
notice of such proposed filing to the Holders not less than 21 days before the
anticipated filing date, describing in reasonable detail the proposed
registration (including the number and class of securities proposed to be
registered, the proposed date of filing of such Registration Statement, any
proposed means of distribution of such securities, any proposed managing
underwriter of such securities and a good faith estimate by the Company of the
proposed maximum offering
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price of such securities as such price is proposed to appear on the facing page
of such Registration Statement), and offering such Holders the opportunity to
register such number of Registrable Securities of the same class as those being
registered by the Company as each such Holder may request in writing (each a
"Piggyback Registration"). Upon the written request of any Holder, received by
the Company no later than ten (10) Business Days after receipt by such Holder of
the notice sent by the Company, to register, on the same terms and conditions as
the securities otherwise being sold pursuant to such registration, any of such
Holder's Registrable Securities of the same class as those being registered
(which request shall state the intended method of disposition thereof if the
securities otherwise being sold are being sold by more than one method of
disposition), the Company shall use its reasonable efforts to cause such
Registrable Securities as to which registration shall have been so requested to
be included in the Registration Statement proposed to be filed by the Company on
the same terms and conditions as the securities otherwise being sold pursuant to
such registration; provided, however, that, notwithstanding the foregoing, the
Company may at any time, in its sole discretion, without the consent of any
other Holder, delay or abandon the proposed offering in which any Holder had
requested to participate pursuant to this Section 3.1 or cease the filing (or
obtaining or maintaining the effectiveness) of or withdraw the related
Registration Statement or other governmental approvals, registrations or
qualifications. In such event, the Company shall so notify each Holder that had
notified the Company in accordance with this Section 3.1 of its intention to
participate in such offering and the Company shall incur no liability for its
failure to complete any such offering.
3.2 PRIORITY ON PIGGYBACK REGISTRATIONS.
(a) If the managing underwriter or underwriters for the related
Piggyback Registration Underwritten Offering (or in the case of a Piggyback
Registration not being underwritten, the Company, in good faith) advises the
Holders in writing that the inclusion of such Registrable Securities would cause
an Adverse Effect, then the Company shall be obligated to include in such
Registration Statement only that number of Registrable Securities which, in the
judgment of the managing underwriter (or the Company in good faith, as
applicable), would not have an Adverse Effect; provided, however, that no such
reduction shall reduce the aggregate amount of Registrable Securities included
in such Registration Statement for the benefit of the requesting Holders to less
than:
(i) in the case of Loral Common Stock, Loral Class B Common
Stock, Loral Series A Preferred Stock, and Loral Series B Preferred Stock (A)
any time that the Loral Universal Shelf Registration Statement is not effective
or the Holders may not otherwise utilize the Loral Universal Shelf Registration
Statement for the offering and sale of their Registrable Loral Common Stock,
Registrable Loral Class B Common Stock, Registrable Loral Series A Preferred
Stock or Registrable Loral Series B Preferred Stock, all of the shares of
Registrable Loral Common Stock, Registrable Loral Class B Common Stock,
Registrable Loral Series A Preferred Stock or Registrable Loral Series B
Preferred Stock, respectively, requested by the Holders to be included in such
Registration Statement (but up to the maximum amount of the securities to be
sold in the related Underwritten Offering), and (B) any time that the Loral
Universal Shelf Registration Statement is effective and the Holders may utilize
the Loral Universal Shelf Registration Statement for the offering and sale of
their Registrable Loral Common Stock, Registrable Loral Class B Common Stock,
Registrable Loral Series A Preferred
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Stock or Registrable Loral Series B Preferred Stock, fifty percent (50%) of the
total number of securities that are included in each such Registration Statement
thereafter;
(ii) in the case of Skynet Preferred Stock (A) any time that the
Skynet Preferred Stock Shelf Registration Statement is not effective or the
Holders may not otherwise utilize the Skynet Preferred Stock Shelf Registration
Statement for the offering and sale of their Registrable Skynet Preferred Stock,
all of the shares of Registrable Skynet Preferred Stock requested by the Holders
to be included in such Registration Statement (but up to the maximum amount of
the securities to be sold in the related Underwritten Offering), and (B) any
time that the Skynet Preferred Stock Shelf Registration Statement is effective
and the Holders may utilize the Skynet Preferred Stock Shelf Registration
Statement for the offering and sale of their Registrable Skynet Preferred Stock,
fifty percent (50%) of the total number of securities that are included in each
such Registration Statement thereafter, and
(iii) in the case of Skynet Notes (A) any time that the Skynet
Notes Shelf Registration Statement is not effective or the Holders may not
otherwise utilize the Skynet Notes Shelf Registration Statement for the offering
and sale of their Registrable Skynet Notes, all of the principal amount of
Registrable Skynet Notes requested by the Holders to be included in such
Registration Statement (but up to the maximum amount of the securities to be
sold in the related Underwritten Offering), and (B) any time that the Skynet
Notes Shelf Registration Statement is effective and the Holders may utilize the
Skynet Notes Shelf Registration Statement for the offering and sale of their
Registrable Skynet Notes, fifty percent (50%) of the total number of securities
that are included in each such Registration Statement thereafter.
(iv) Any partial reduction in the number of Registrable
Securities to be included in a Registration Statement pursuant to the
immediately preceding sentence shall be affected by allocating the number of
Registrable Securities to be included in such Registration Statement, among all
the Holders requesting to be included in such Registration Statement pursuant to
Section 3.1 hereof, pro rata based for each Holder on the percentage derived by
dividing (i) the number of Registrable Securities that each such Holder
requested to be included in such Registration Statement by (ii) the aggregate
number of Registrable Securities that all Holders requested to be included in
such Registration Statement; provided, however, that if, as a result of such
proration, any Holder requesting to be included in such Registration Statement
pursuant to Section 3.1 hereof shall not be entitled to include in a
registration all Registrable Securities of the class that such Holder had
requested to be included, such Holder may elect to withdraw its request to
include such Registrable Securities in such registration or may reduce the
number requested to be included in accordance with Section 3.3 hereof.
(b) In the case of Loral Common Stock only, subject to Loral's
compliance with its obligations under this Article III, if prior to the filing
or effectiveness of the Loral Universal Shelf Registration Statement, Loral
initiates a proposal to register an Underwritten Offering of securities for its
own account pursuant to this Article III and the Holders shall be afforded the
right (whether or not exercised by the Holders) to include Registrable
Securities in such Underwritten Offering in accordance with and subject to the
provisions of this Article III, then the proposed registration for the account
of Loral pursuant to this Article III shall be given priority in all respects.
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(c) Notwithstanding the foregoing, during the Underwritten Offering
Standstill Period, Loral shall not initiate a proposal to register or otherwise
conduct an Underwritten Offering of equity securities of the Company for its own
account. The "Underwritten Offering Standstill Period" shall mean the period
commencing on June 1, 2006 and terminating on March 1, 2007; provided, however,
that in the event that Loral files the Loral Universal Shelf Registration
Statement at any time prior to March 1, 2007, the Underwritten Offering
Standstill Period shall be extended by such number of days equal to the number
of days between the date of the filing and the date of the declaration by the
Commission of effectiveness of the Loral Universal Stock Shelf Registration
Statement.
3.3 WITHDRAWALS. Each Holder shall have the right to withdraw its request
for inclusion of all or any of its Registrable Securities in any Registration
Statement pursuant to this Article III by giving written notice to the Company
of its request to withdraw; provided, however, that (i) such request must be
made in writing prior to the earlier of the execution of the underwriting
agreement or the execution of the custody agreement with respect to such
registration and (ii) such withdrawal shall be irrevocable.
3.4 UNDERWRITTEN OFFERINGS.
(a) In connection with the exercise of any registration rights granted
to Holders pursuant to this Article III, if the registration is to be effected
by means of an Underwritten Offering, the Company may condition participation in
such registration by any such Holder upon inclusion of the Registrable
Securities being so registered in such underwriting and such Holder's entering
into an underwriting agreement pursuant to Section 6.2(d) hereof.
(b) With respect to any offering of Registrable Securities pursuant to
this Article III in the form of an Underwritten Offering, the Company shall
select an investment banking firm of national standing to be the managing
underwriter for the offering.
ARTICLE IV
SHELF REGISTRATION
4.1 SHELF REGISTRATION FILING.
(a) Loral Common Stock, Loral Class B Common Stock, Loral Series A
Preferred Stock and Loral Series B Preferred Stock. Subject to the provisions
contained in this Section 4.1(a) and in Sections 3.2(b), 5.2 and 5.3 hereof,
upon the earlier of the first Business Day occurring seven (7) days following
(i) receipt of a written request from any Major Holder to file with the
Commission a Registration Statement (the "Loral Universal Shelf Registration
Statement") relating to the offer and sale of all of the shares of Registrable
Loral Common Stock, Registrable Loral Class B Common Stock, Registrable Loral
Series A Preferred Stock and Registrable Loral Series B Preferred Stock by the
Holders to the public, from time to time, on a delayed or continuous basis, and
(ii) any determination by the Board of Directors of Loral to file the Loral
Universal Shelf Registration Statement (the "Loral Shelf Filing Deadline"),
Loral shall file with the Commission the Loral Universal Shelf Registration
Statement; provided, however, that in either case, if Loral is unable to obtain
the Auditor Consent within such seven (7) day
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period, such seven (7) day period shall be extended until two (2) days after
receipt by Loral of the Auditor Consent. Loral shall use its reasonable best
efforts to obtain the Auditor Consent as promptly as practicable after the
earlier of receipt of the written request pursuant to clause (i) or the
determination of the Board of Directors pursuant to clause (ii). Subject to the
provisions contained in this Section 4.1(a) and in Sections 3.2(b), 5.2 and 5.3
hereof, Loral shall use its reasonable efforts to cause the Loral Universal
Shelf Registration Statement to be declared effective under the Securities Act
as soon as practicable after the filing thereof with the Commission. Any
registration effected pursuant to clause (i) above shall not be deemed to
constitute a Loral Common Stock Demand Registration, a Loral Class B Common
Stock Demand Registration, a Loral Series A Preferred Stock Demand Registration
or a Loral Series B Preferred Stock Demand Registration. The Loral Universal
Shelf Registration Statement shall specify the intended method of distribution
of the subject Registrable Loral Common Stock, Registrable Loral Class B Common
Stock, Registrable Loral Series A Preferred Stock and Registrable Loral Series B
Preferred Stock substantially in the form of Exhibit A attached hereto. Loral
shall file the Loral Universal Shelf Registration Statement on Form S-3 or, if
Loral or the offering of the Registrable Loral Common Stock, Registrable Loral
Class B Common Stock, Registrable Loral Series A Preferred Stock or Registrable
Loral Series B Preferred Stock does not satisfy the requirements for use of such
form, such other form as may be appropriate; provided, however, that if the
Loral Universal Shelf Registration Statement is not filed on Form S-3, Loral
shall, promptly upon meeting the requirements for use of such form, file an
appropriate amendment to the Loral Universal Shelf Registration Statement to
convert it to Form S-3. Notwithstanding the foregoing, subject to Loral's
compliance with its obligations under Article III hereof, Loral shall not be
obligated to take any action to effect the Loral Universal Shelf Registration
Statement or any amendment thereto during the following periods commencing:
(i) with Loral's issuance of a notice to the Holders pursuant to
Section 3.1 hereof of a proposed registration of an Underwritten Offering of
equity securities of Loral for its own account (except pursuant to registrations
on Form S-4 or any successor form or on Form S-8 or any successor form relating
solely to securities issued pursuant to any benefit plan), continuing while
Loral uses reasonable efforts to pursue such registered Underwritten Offering,
and ending upon the earliest to occur of: (A) forty five (45) days immediately
following Loral's issuance of the notice of such proposed registered
Underwritten Offering pursuant to Section 3.1 hereof, unless, within such 45-day
period, Loral shall have (x) filed the Registration Statement for such proposed
Underwritten Offering, or (y) issued a press release disclosing such proposed
Underwritten Offering pursuant to Rule 135 (or its successor) promulgated under
the Securities Act thereby enabling the Holders to sell their Registrable Loral
Common Stock, Registrable Loral Class B Common Stock, Registrable Loral Series A
Preferred Stock and Registrable Loral Series B Preferred Stock pursuant to the
Loral Universal Shelf Registration Statement; (B) the abandonment, cessation or
withdrawal of such proposed registered Underwritten Offering; or (C) 90 days
immediately following the effective date of the Registration Statement
pertaining to such Underwritten Offering; and
(ii) on the effective date of a Registration Statement for an
Underwritten Offering of equity securities of Loral for its own account (except
pursuant to registrations on Form S-4 or any successor form or on Form S-8 or
any successor form relating solely to securities issued pursuant to any benefit
plan) and ending 90 days immediately
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following the effective date of the Registration Statement pertaining to such
Underwritten Offering.
If Loral issues a notice of a proposed Underwritten Offering of equity
securities of Loral for its own account pursuant to Section 3.1 hereof and
subsequently abandons, ceases or withdraws such offering, Loral shall not issue
a notice of a subsequent proposed registration of an Underwritten Offering of
equity securities of Loral for its own account pursuant to Section 3.1 hereof
until the Loral Universal Shelf Registration Statement is first declared
effective.
(b) Skynet. Subject to the provisions contained in this Section 4.1(b)
and in Sections 5.2 and 5.3 hereof, any Major Holder may, from time to time,
request in writing (each a "Skynet Preferred Stock Shelf Request," or a "Skynet
Notes Shelf Request," as applicable) that Skynet file with the Commission a
Registration Statement (the "Skynet Preferred Stock Shelf Registration
Statement," or the "Skynet Notes Shelf Registration Statement," as applicable)
relating to the offer and sale of all of the shares of Registrable Skynet
Preferred Stock or all of the Registrable Skynet Notes, as applicable, by the
Holders to the public, from time to time, on a delayed or continuous basis;
provided, however, that Skynet shall in no event be required to effect more than
one (1) Skynet Preferred Stock Shelf Registration Statement and more than one
(1) Skynet Notes Shelf Registration Statement. Subject to the provisions
contained in this Section 4.1(b) and in Sections 5.2 and 5.3 hereof, upon
receipt of a Skynet Preferred Stock Shelf Request or a Skynet Notes Shelf
Request, as applicable, Skynet shall cause such applicable Shelf Registration
Statement to be filed with the Commission by the Required Filing Date. Skynet
shall use its reasonable efforts to cause any such Shelf Registration Statement
to be declared effective under the Securities Act as soon as practicable after
the filing thereof with the Commission. Such Shelf Registration Statement shall
specify the intended method of distribution of the subject Registrable Skynet
Preferred Stock or Registrable Skynet Notes, as applicable, substantially in the
form of Exhibit A attached hereto. Skynet shall file the applicable Shelf
Registration Statement on Form S-3 or, if Skynet or the offering of the
Registrable Skynet Preferred Stock or the Registrable Skynet Notes, as
applicable, does not satisfy the requirements for use of such form, such other
form as may be appropriate; provided, however, that if such Shelf Registration
Statement is not filed on Form X-0, Xxxxxx shall, promptly upon meeting the
requirements for use of such form, file an appropriate amendment to such Shelf
Registration Statement to convert it to Form S-3. Notwithstanding the foregoing,
subject to Skynet's compliance with its obligations under Article III hereof,
Skynet shall not be obligated to take any action to effect the applicable Shelf
Registration Statement or any amendment thereto during the following periods
commencing:
(i) with Skynet's issuance of a notice to the Holders pursuant to
Section 3.1 hereof of a proposed registration of an Underwritten Offering of
equity securities or debt securities, as applicable, of Skynet for its own
account (except pursuant to registrations on Form S-4 or any successor form or
on Form S-8 or any successor form relating solely to securities issued pursuant
to any benefit plan), continuing while Skynet uses reasonable efforts to pursue
such registered Underwritten Offering, and ending upon the earliest to occur of:
(A) forty five (45) days immediately following Skynet's issuance of the notice
of such proposed registered Underwritten Offering pursuant to Section 3.1
hereof, unless, within such 45-day period, Skynet shall have (x) filed the
Registration Statement for such proposed Underwritten Offering, or (y) issued a
press release disclosing such proposed Underwritten Offering pursuant to Rule
135 (or
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its successor) promulgated under the Securities Act thereby enabling the Holders
to sell their Registrable Skynet Preferred Stock or Registrable Skynet Notes, as
applicable, pursuant to the applicable Shelf Registration Statement; (B) the
abandonment, cessation or withdrawal of such proposed registered Underwritten
Offering; or (C) 90 days immediately following the effective date of the
Registration Statement pertaining to such Underwritten Offering; and
(ii) on the effective date of a Registration Statement for an
Underwritten Offering of equity securities or debt securities, as applicable, of
Skynet for its own account (except pursuant to registrations on Form S-4 or any
successor form or on Form S-8 or any successor form relating solely to
securities issued pursuant to any benefit plan) and ending 90 days immediately
following the effective date of the Registration Statement pertaining to such
Underwritten Offering.
If, following the receipt of a Skynet Preferred Stock Shelf Request or
Skynet Notes Shelf Request, as applicable, Skynet issues a notice of a proposed
Underwritten Offering of equity securities or debt securities, as applicable, of
Skynet for its own account pursuant to Section 3.1 hereof and subsequently
abandons, ceases or withdraws such offering, Skynet shall not issue a notice of
a subsequent proposed registration of an Underwritten Offering of equity
securities or debt securities, as applicable, of Skynet for its own account
pursuant to Section 3.1 hereof until the applicable Shelf Registration Statement
is first declared effective. Registrations effected pursuant to this Section
4.1(b) shall not be counted as Skynet Preferred Stock Demand Registrations
effected pursuant to Section 2.1(e) hereof or as Skynet Notes Demand
Registrations effected pursuant to Section 2.1(f) hereof, as applicable.
4.2 REQUIRED PERIOD AND SHELF REGISTRATION PROCEDURES. The Company shall
(i) cause each Shelf Registration Statement to include a resale Prospectus
intended to permit each Holder to sell, at such Holder's election, all or part
of the applicable class of Registrable Securities held by such Holder without
restriction, (ii) use its reasonable efforts to prepare and file with the
Commission such supplements, amendments and post-effective amendments to such
Shelf Registration Statement as may be necessary to keep such Shelf Registration
Statement continuously effective (subject to Section 3.2(b) hereof and to any
Suspension Period(s) referred to below) for so long as the securities registered
thereunder constitute Registrable Securities (the "Required Period"), and (iii)
use its reasonable efforts to cause the resale Prospectus to be supplemented by
any required Prospectus supplement (subject to Section 3.2(b) hereof and to any
Suspension Period(s) referred to below) and permit such Prospectus to be usable
by the Holders during the Required Period.
ARTICLE V
STANDSTILL AND SUSPENSION PERIODS
5.1 COMPANY STANDSTILL PERIOD. In the event of an Underwritten Offering of
Registrable Securities pursuant to Section 2.1 hereof, the Company agrees not
to, without the prior written consent of the managing underwriter and the
Majority Participating Holders, offer, pledge, sell, contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any securities that are the same as, or similar to, such
Registrable Securities, or any securities convertible into, or exchangeable or
exercisable for, any
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securities of the Company that are the same as, or similar to, such Registrable
Securities (except pursuant to registrations on Form S-4 or any successor form,
or otherwise in connection with the acquisition of a business or assets of a
business, a merger, or an exchange offer for the securities of the issuer or
another entity, or pursuant to a Company dividend reinvestment plan, or for
issuances of securities pursuant to the conversion, exchange or exercise of
then-outstanding convertible or exchangeable securities, options, rights or
warrants, or pursuant to registrations on Form S-8 or any successor form or
otherwise relating solely to securities offered pursuant to any benefit plan),
during the period commencing 14 days prior to the effective date of the
Registration Statement relating to such Registrable Securities (to the extent
timely notified in writing by the Majority Participating Holders or the managing
underwriter of such distribution) and ending on the 90th day after such
effective date (the "Company Standstill Period").
5.2 SUSPENSION PERIOD. The Company may, by notice in writing to each
Holder, postpone the filing or effectiveness of a Shelf Registration Statement
or any other registration requested pursuant to this Agreement, or otherwise
suspend the Demand Registration rights of the Holders and/or require the Holders
to suspend use of any resale Prospectus included in a Shelf Registration
Statement for any period of time reasonably determined by the Company if there
shall occur a Material Disclosure Event (such period, a "Suspension Period").
Notwithstanding anything herein to the contrary, neither Loral nor Skynet shall
be entitled to more than an aggregate of four (4) Suspension Periods each, with
respect to all Registrable Securities issued by either of them, as applicable,
which Suspension Periods shall have durations of not more than thirty (30) days
each (but may at the Company's reasonable determination run consecutively for a
given Material Disclosure Event), during any consecutive 12 month period, and
which Suspension Periods shall not exceed more than ninety (90) days in the
aggregate in any consecutive 12-month period; provided, however, that if the
Company deems in good faith that it is necessary to file a post-effective
amendment to the Shelf Registration Statement in order to comply with Section 4
hereof, then such period of time from the date of filing such post-effective
amendment until the date on which the applicable Shelf Registration Statement is
declared effective under the Securities Act shall not be treated as a Suspension
Period and the Company shall use its reasonable efforts to cause such
post-effective amendment to be declared effective as promptly as possible. Each
Holder agrees that, upon receipt of notice from the Company of the occurrence of
a Material Disclosure Event (a "Suspension Notice"), such Holder shall forthwith
discontinue any disposition of Registrable Securities pursuant to the applicable
Shelf Registration Statement or any public sale or distribution, including
pursuant to Rule 144, until the earlier of (i) the expiration of the Suspension
Period and (ii) such Holder's receipt of a notice from the Company to the effect
that such suspension has terminated. Any Suspension Notice shall be accompanied
by a certificate of the Chief Executive Officer, Chief Financial Officer,
President or any Vice President of the Company confirming the existence of the
Material Disclosure Event. If so directed by the Company, such Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession, of the most recent
Prospectus covering such Registrable Securities at the time of receipt of such
Suspension Notice. The Company covenants and agrees that it shall not deliver a
Suspension Notice with respect to a Suspension Period unless Company employees,
officers and directors are also prohibited by the Company for the duration of
such Suspension Period from effecting any public sales of securities of the
Company beneficially owned by them. In the event of a Suspension Notice, the
Company shall, promptly after such time as the related Material Disclosure Event
no longer exists, provide notice to all Holders that the Suspension
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Period has ended, and take any and all actions necessary or desirable to give
effect to any Holders' rights under this Agreement that may have been affected
by such notice, including the Holders' Demand Registration rights and rights
with respect to any Shelf Registration Statement.
5.3 HOLDER STANDSTILL PERIOD. Each Holder of Registrable Securities
(whether or not such Registrable Securities are covered by a Shelf Registration
Statement or by a Registration Statement filed pursuant to Section 2.1 or 3.1
hereof) agrees to enter into a customary lock-up agreement with the managing
underwriter for any Underwritten Offering of the Company's securities for its
own account with respect to the same class of securities being registered
pursuant to such Registration Statement, containing terms reasonably acceptable
to such managing underwriter, covering the period commencing 15 days prior to
the effective date of any Registration Statement relating to such securities of
the Company and ending on the 90th day after such effective date (or such
shorter period as shall have been agreed to by the Company's executive officers
and directors in their respective lock-up agreements); provided, however, that
the obligations of each Holder under this Section 5.3 shall apply only if: (i)
such Holder shall be afforded the right (whether or not exercised by the Holder)
to include Registrable Securities in such Underwritten Offering in accordance
with and subject to the provisions of Article III hereof; (ii) each of the
Company's executive officers and directors enter into lock-up agreements with
such managing underwriter, which agreements shall not contain terms more
favorable to such executive officers or directors than those contained in the
lock-up agreement entered into by such Holder; and (iii) the aggregate
restriction periods in such Holder's lock-up agreements entered into pursuant to
this Section 5.3 shall not exceed an aggregate of 180 days during any 365-day
period.
ARTICLE VI
REGISTRATION PROCEDURES
6.1 COMPANY OBLIGATIONS. Whenever the Company is required pursuant to this
Agreement to register Registrable Securities, it shall (it being understood and
agreed that except as otherwise expressly set forth in this Article VI, if any
other provision of this Agreement is more favorable to the Holders than the
provisions of this Article VI, such other provision shall apply):
(a) provide the Participating Holders and their respective counsel
with a reasonable opportunity to review, and comment on, any Registration
Statement to be prepared and filed pursuant to this Agreement prior to the
filing thereof with the Commission, and make all changes thereto as any
Participating Holder may request in writing to the extent such changes are
required, in the reasonable judgment of the Company's counsel, by the Securities
Act and, except in the case of a registration under Article III, not file any
Registration Statement or Prospectus or amendments or supplements thereto to
which the holders of a majority of the class of Registrable Securities covered
by the same or the underwriter or underwriters, if any, shall reasonably object;
(b) cause any such Registration Statement and the related Prospectus
and any amendment or supplement thereto, as of the effective date of such
Registration Statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements
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of the Securities Act and the rules and regulations of the Commission
promulgated thereunder and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, (in the case of the Prospectus and any
preliminary Prospectus in light of the circumstances under which they were made)
not misleading, or, if for any other reason it shall be necessary to amend or
supplement such Registration Statement or Prospectus in order to comply with the
Securities Act and, in either case as promptly as reasonably practicable
thereafter, prepare and file with the Commission an amendment or supplement to
such Registration Statement or Prospectus which will correct such statement or
omission or effect such compliance;
(c) furnish, at its expense, to the Participating Holders such number
of conformed copies of such Registration Statement and of each such amendment
thereto (in each case including all exhibits thereto, except that the Company
shall not be obligated to furnish to any such Participating Holder more than two
(2) copies of such exhibits), such number of copies of the Prospectus included
in such Registration Statement (including each preliminary Prospectus and each
supplement thereto), and such number of the documents, if any, incorporated by
reference in such Registration Statement or Prospectus, as the Participating
Holders reasonably may request;
(d) use its reasonable efforts to register or qualify the Registrable
Securities covered by such Registration Statement under such securities or "blue
sky" laws of the states of the United States as the Participating Holders
reasonably shall request, to keep such registration or qualification in effect
for so long as such Registration Statement remains in effect, and to do any and
all other acts and things that may be necessary or advisable to enable the
Participating Holders to consummate the disposition in such jurisdictions of the
Registrable Securities covered by such Registration Statement, except that the
Company shall not, for any such purpose, be required to qualify generally to do
business as a foreign corporation in any jurisdiction in which it is not
obligated to be so qualified, or to subject itself to material taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction; and use its reasonable efforts to obtain all other approvals,
consents, exemptions or authorizations from such securities regulatory
authorities or governmental agencies as may be necessary to enable such
Participating Holders to consummate the disposition of such Registrable
Securities;
(e) promptly notify the Participating Holders, at any time when a
Prospectus or Prospectus supplement relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the occurrence of any
event as a result of which, the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, which untrue statement or omission requires amendment
of the Registration Statement or supplementing of the Prospectus, and, as
promptly as practicable (subject to Sections 3.2 and 5.2 hereof), prepare and
furnish, at its expense, to the Participating Holders a reasonable number of
copies of a supplement to such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that with respect to Registrable
Securities
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registered pursuant to such Registration Statement, each Holder agrees that it
shall not enter into any transaction for the sale of any Registrable Securities
pursuant to such Registration Statement during the time after the furnishing of
the Company's notice that the Company is preparing a supplement to or an
amendment of such Prospectus or Registration Statement and until the filing and
effectiveness thereof;
(f) use its reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to holders of its securities,
as soon as practicable, an earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the first month of the first
fiscal quarter after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(g) provide, and cause to be maintained, a transfer agent and
registrar for the Registrable Securities covered by such Registration Statement
(which transfer agent and registrar shall, at the Company's option, be the
Company's existing transfer agent and registrar) from and after a date not later
than the effective date of such Registration Statement;
(h) notify the Participating Holders and the managing underwriter, if
any, promptly, and (if requested by any such Person) confirm such notice in
writing, (i) when a Registration Statement, Prospectus, Prospectus supplement or
post-effective amendment related to such Registration Statement has been filed,
and, with respect to such Registration Statement or any post-effective amendment
thereto, when the same has become effective, (ii) of any request by the
Commission or any other federal or state governmental authority for amendments
or supplements to such Registration Statement or related Prospectus, (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of such Registration
Statement or the initiation of any proceedings for that purpose and (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(i) use its reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such Registration Statement, or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, as soon as practicable;
(j) in the event of an Underwritten Offering of Registrable Securities
pursuant to Section 2.1 hereof, enter into customary agreements (including
underwriting agreements in customary form, which may include, in the case of an
Underwritten Offering on a firm commitment basis, "lock-up" obligations
substantially similar to Section 5.1 hereof) and take such other actions
(including using its reasonable efforts to make such road show presentations and
otherwise engaging in such reasonable marketing support in connection with any
such Underwritten Offering, including the obligation to make its executive
officers available for such purpose if so requested by the managing underwriter
for such offering) as are reasonably requested by the managing underwriter in
order to expedite or facilitate the sale of such Registrable Securities;
-27-
(k) make available for inspection by each Participating Holder, any
underwriter participating in any disposition pursuant to such registration, and
any attorney, accountant or other agent retained by such Participating Holder or
any such underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company and any of
its subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise their due diligence responsibility, and cause the
officers, directors and employees of the Company to supply all information
reasonably requested by any such Inspector in connection with such registration,
provided, however, that (i) in connection with any such inspection, any such
Inspectors shall cooperate to the extent reasonably practicable to minimize any
disruption to the operation by the Company of its business and shall comply with
all Company site safety rules, (ii) Records and information obtained hereunder
shall be used by such Inspectors only to exercise their due diligence
responsibility and (iii) Records or information furnished or made available
hereunder shall be kept confidential and shall not be disclosed by such
Participating Holder, underwriter or Inspectors unless (A) the disclosing party
advises the other party that the disclosure of such Records or information is
necessary to avoid or correct a misstatement or omission in a Registration
Statement or is otherwise required by law, (B) the release of such Records or
information is ordered pursuant to a subpoena or other order from a court or
governmental authority of competent jurisdiction (provided, however, that such
Person shall use its reasonable efforts to provide the Company with prior
written notice of such requirement to afford the Company with an opportunity to
seek a protective order or other appropriate remedy in response) or (C) such
Records or information otherwise become generally available to the public other
than through disclosure by such Participating Holder, underwriter or Inspector
in breach hereof or by any Person in breach of any other confidentiality
arrangement;
(l) in connection with any registration of an Underwritten Offering of
Registrable Securities hereunder, use all reasonable efforts to furnish to each
Participating Holder and to the managing underwriter, if any, a signed
counterpart, addressed to such Participating Holder and the managing
underwriter, if any, of (i) an opinion or opinions of counsel to the Company and
(ii) a comfort letter or comfort letters from the Company's independent public
accountants pursuant to Statement on Auditing Standards No. 72 (or any successor
thereto), each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as each
such Participating Holder and the managing underwriter, if any, reasonably
requests;
(m) in connection with any registration of an Underwritten Offering of
Registrable Securities hereunder, provide officers' certificates and other
customary closing documents;
(n) reasonably cooperate with each seller of Registrable Securities
and any underwriter in the disposition of such Registrable Securities and with
underwriters' counsel, if any, in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the "NASD");
(o) use its reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which securities of the
same class issued by the Company are then listed;
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(p) cooperate with the Participating Holders and the managing
underwriter, underwriters or agent, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends;
(q) use its reasonable efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriter or underwriters, if
any, to consummate the disposition of such Registrable Securities; and
(r) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agent with printed certificates for the Registrable
Securities which certificates shall be in a form eligible for deposit with DTC
(provided that such Registrable Securities are so eligible for deposit with DTC
and, if not so eligible, the Company shall use reasonable efforts to cause such
Registrable Securities to be so eligible for deposit with DTC).
6.2 HOLDER OBLIGATIONS. Each Holder agrees:
(a) that it shall furnish to the Company such information regarding
such Holder and the plan and method of distribution of Registrable Securities
intended by such Holder (i) as the Company may, from time to time, reasonably
request in writing and (ii) as shall be required by law or by the Commission in
connection therewith;
(b) that information obtained by it or by its Inspectors shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public;
(c) to use its reasonable efforts, prior to making any disclosure
allowed by Section 6.1(k)(iii)(A) or (B) hereof, to inform the Company that such
disclosure is necessary to avoid or correct a misstatement or omission in the
Registration Statement or ordered pursuant to a subpoena or other order from a
court or governmental authority of competent jurisdiction or otherwise required
by law; and
(d) in the case of an Underwritten Offering of Registrable Securities
pursuant to this Agreement, if requested by the managing underwriter, to enter
into an underwriting agreement with the underwriters for such offering
containing such representations and warranties by each Holder and such other
terms and provisions as are customarily contained in such underwriting
agreements, including customary indemnity and contribution provisions and
"lock-up" obligations substantially similar to Section 5.3 hereof.
6.3 SUBSEQUENT REGISTRATION RIGHTS. The Company is not currently a party
to, any agreement which is, or could be, inconsistent with the rights granted to
the holders of Registrable Securities by this Agreement. For as long as any
Major Holder of any class of Registrable Securities holds at least 50% of such
class of Registrable Securities issued to such Major Holder on the effective
date of the Plan, the Company shall not grant any Person any registration rights
other than registration rights that are no more favorable than those being
granted hereunder and
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that shall not be in conflict with, inconsistent with, or otherwise adverse to
or lessen the rights of the Holders hereunder in any respect, including, without
limitation, priority of registration or ability to transfer or otherwise dispose
of Registrable Securities.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. In the event of any registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company shall indemnify and hold harmless to the full extent permitted by law
(i) each Holder, such Holder's Affiliates and their respective officers,
directors, managers, partners, stockholders, employees, advisors, agents and
other representatives of the foregoing, and each of their respective successors
and assigns, and each Person who controls any of the foregoing, within the
meaning of the Securities Act and the Exchange Act, and (ii) any selling agent
selected by the Holders or their affiliates with respect to such Registrable
Securities (each such Person being sometimes referred to as an "Indemnified
Person"), against any and all losses, claims, damages, liabilities (or actions
or proceedings in respect thereof, whether or not such Indemnified Person is a
party thereto) and expenses (including reasonable costs of investigations and
legal expenses), joint or several (each a "Loss" and collectively "Losses"), to
which such Indemnified Person may become subject, to the extent that such Losses
(or related actions or proceedings) arise out of or are based upon (A) any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement in which such Registrable Securities were included
for registration under the Securities Act, including any preliminary or summary
Prospectus or any final Prospectus included in such Registration Statement (or
any amendment or supplement to such Registration Statement or Prospectus) or any
document incorporated by reference therein or (B) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, (in the case of the Prospectus and any
preliminary Prospectus in light of the circumstances under which they were made)
not misleading; and the Company agrees to reimburse such Indemnified Person for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall have no obligation to
provide any indemnification or reimbursement hereunder (i) to the extent that
any such Losses (or actions or proceedings in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary Prospectus,
final Prospectus, amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by the Holder, or on the
Holder's behalf, specifically for inclusion, respectively, in such Registration
Statement, preliminary Prospectus, final Prospectus, amendment or supplement, or
(ii) in the case of a sale directly by a Holder of Registrable Securities
(including a sale of such Registrable Securities through any underwriter
retained by such Holder engaging in a distribution solely on behalf of such
Holder), to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was contained in a preliminary Prospectus and
corrected in a final, amended or supplemented Prospectus provided to such Holder
prior to the confirmation of the sale of the Registrable Securities to the
Person asserting any such Loss, and such Holder failed to deliver a copy of the
final, amended or supplemented Prospectus at or prior to such confirmation of
sale in any case in which such delivery is required by the Securities Act, or
(iii) in the case of a sale
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directly by a Holder of Registrable Securities (including a sale of such
Registrable Securities through any underwriter retained by such Holder engaging
in a distribution solely on behalf of such Holder), to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
contained in a final Prospectus but was corrected in an amended or supplemented
final Prospectus provided to such Holder prior to the confirmation of the sale
of the Registrable Securities to the Person asserting any such Loss, and such
Holder failed to deliver a copy of the amended or supplemented final Prospectus
at or prior to such confirmation of sale in any case in which such delivery is
required by the Securities Act. The indemnity provided in this Section 7.1 shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Holder or any Indemnified Person and shall survive the transfer
or disposal of the Registrable Securities by the Holder or any such other
Persons. The Company will also indemnify, if applicable and if requested,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution pursuant hereto, their officers
and directors and each Person who controls such Persons (within the meaning of
the Securities Act and the Exchange Act) to the same extent as provided above
with respect to the indemnification of the Indemnified Persons. This indemnity
shall be in addition to any liability the Company may otherwise have.
7.2 INDEMNIFICATION BY THE HOLDERS. In the event of any registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, each
Holder shall, severally and not jointly, indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 7.1 hereof) the
Company, each director and officer of the Company and each other Person, if any,
who controls the Company within the meaning of the Securities Act and the
Exchange Act (each such Person being sometimes referred to as a "Company
Indemnified Person"), against Losses to which the Company or any such Persons
may become subject under the Securities Act or otherwise, to the extent that
such Losses (or related actions or proceedings) arise out of or are based upon
(A) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement in which Registrable Securities were
included for registration under the Securities Act, or any preliminary
Prospectus or any final Prospectus included in such Registration Statement (or
any amendment or supplement to such Registration Statement or Prospectus), or
(B) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, (in the case
of the Prospectus and any preliminary Prospectus in light of the circumstances
under which they were made) not misleading, in each case, only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary Prospectus, final
Prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Holder, or on such Holder's
behalf, specifically for inclusion, respectively, in such Registration
Statement, preliminary Prospectus, final Prospectus, amendment or supplement;
and each Holder agrees to reimburse such Company Indemnified Person for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that a Holder's aggregate liability under this
Agreement shall be limited to an amount equal to the net proceeds (after
deducting the underwriter's discount and expenses) received by such Holder from
the sale of such Holder's Registrable Securities pursuant to such registration.
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7.3 NOTICE OF CLAIMS, ETC. Promptly after receipt by any Person entitled to
indemnity under Section 7.1 or 7.2 hereof (an "Indemnitee") of notice of the
commencement of any action or proceeding (an "Action") involving a claim
referred to in such Sections, such Indemnitee shall, if indemnification is
sought against an indemnifying party, give written notice to such indemnifying
party of the commencement of such Action; provided, however, that the failure of
any Indemnitee to give said notice shall not relieve the indemnifying party of
its obligations under Sections 7.1 or 7.2 hereof, except to the extent that the
indemnifying party is actually prejudiced by such failure. In case an Action is
brought against any Indemnitee, and such Indemnitee notifies the indemnifying
party of the commencement thereof, each indemnifying party shall be entitled to
participate therein and, to the extent it elects to do so by written notice
delivered to the Indemnitee promptly after receiving the aforesaid notice, to
assume the defense thereof with counsel selected by such Indemnitee and
reasonably satisfactory to such indemnifying party. Notwithstanding the
foregoing, the Indemnitee shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such Indemnitee, unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall not have employed counsel to take charge of the defense of such Action,
reasonably promptly after notice of the commencement thereof or (iii) such
Indemnitee reasonably shall have concluded that there may be defenses available
to it which are different from or additional to those available to the
indemnifying party which, if the indemnifying party and the Indemnitee were to
be represented by the same counsel, could result in a conflict of interest for
such counsel or materially prejudice the prosecution of the defenses available
to such Indemnitee. If any of the events specified in clauses (i), (ii) or (iii)
of the preceding sentence shall have occurred or otherwise shall be applicable,
then the fees and expenses of counsel for the Indemnitee shall be borne by the
indemnifying party; it being understood, however, that the indemnifying party
shall not, in connection with any one such claim or proceeding, or separate but
substantially similar or related claims or proceedings arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all Indemnitees hereunder, or for fees and expenses
that are not reasonable. Anything in this Section 7.3 to the contrary
notwithstanding, an indemnifying party shall not be liable for the settlement of
any action effected without its prior written consent (which consent shall not
unreasonably be withheld or delayed), but if settled with the prior written
consent of the indemnifying party, or if there shall be a final judgment adverse
to the Indemnitee, the indemnifying party agrees to indemnify the Indemnitee
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior consent of the Indemnitee (which
consent shall not be unreasonably withheld or delayed), consent to entry of any
judgment or enter into any settlement or compromise, with respect to any pending
or threatened action or claim in respect of which the Indemnitee would be
entitled to indemnification or contribution hereunder (whether or not the
Indemnitee is an actual party to such action or claim), which (i) does not
include as a term thereof the unconditional release of the Indemnitee from all
liability in respect of such action or claim or (ii) includes an admission of
fault, culpability or a failure to act by or on behalf of the Indemnitee.
7.4 CONTRIBUTION. If the indemnification provided for in this Article VII
is unavailable or insufficient to hold harmless an Indemnitee in respect of any
Losses, then each indemnifying party shall, in lieu of indemnifying such
Indemnitee, contribute to the amount paid or payable by such Indemnitee as a
result of such Losses in such proportion as appropriate to
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reflect the relative fault of the indemnifying party, on the one hand, and the
Indemnitee, on the other hand, which relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such Indemnitee or indemnifying party, and
such parties' relative intent, knowledge, access to information and opportunity
to correct or mitigate the damage in respect of or prevent the untrue statement
or omission giving rise to such indemnification obligation; provided, however,
that a Holder's aggregate liability under this Section 7.4 shall be limited to
an amount equal to the net proceeds (after deducting the underwriter's discount
but before deducting expenses) received by such Holder from the sale of such
Holder's Registrable Securities pursuant to such registration. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 7.4 were determined solely by pro rata allocation or by any
other method of allocation which did not take account of the equitable
considerations referred to above. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who is not guilty of such
fraudulent misrepresentation.
7.5 INDEMNIFICATION PAYMENTS; OTHER REMEDIES.
(a) Periodic payments of amounts required to be paid pursuant to this
Article VII shall be made during the course of the investigation or defense, as
and when reasonably itemized bills therefor are delivered to the indemnifying
party in respect of any particular Loss as incurred.
(b) The remedies provided in this Article VII are not exclusive and
shall not limit any rights or remedies that may otherwise be available to an
Indemnitee at law or in equity.
ARTICLE VIII
REGISTRATION EXPENSES.
In connection with any offerings pursuant to a Registration Statement
hereunder, the Company shall pay (i) all registration and filing fees, (ii) all
fees and expenses of compliance with state securities or "blue sky" laws
(including reasonable fees and disbursements of counsel in connection with "blue
sky" laws qualifications of the Registrable Securities), (iii) printing and
duplicating expenses, (iv) internal expenses of the Company (including all
salaries and expenses of its officers and employees performing legal or
accounting duties), (v) fees and disbursements of counsel for the Company and
fees and expenses of independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs associated with
the delivery by independent certified public accountants of a comfort letter or
comfort letters or with any required special audits), (vi) the reasonable fees
and expenses of any special experts retained by the Company, (vii) fees and
expenses in connection with any review of underwriting arrangements by the NASD,
including fees and expenses of any "qualified independent underwriter" in
connection with an Underwritten Offering, (viii) reasonable fees and expenses of
not more than one counsel for the Participating Holders (as a group), (ix) fees
and expenses in connection with listing, if applicable, the Registrable
Securities on a securities exchange or the Nasdaq National Market, and (x) all
duplicating, distribution and delivery expenses. In connection any offerings
pursuant to a Registration Statement, each Participating Holder shall
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pay (i) any underwriting fees, discounts or commissions attributable to the sale
of Registrable Securities by such Participating Holder in connection with an
Underwritten Offering; (ii) any out-of-pocket expenses of such Participating
Holder including any fees and expenses of counsel to such Participating Holder
(other than as set forth in clause (viii) of the immediately preceding
sentence); and (iii) any applicable transfer taxes.
ARTICLE IX
RULE 144
With a view to making available to the Holders the benefits of Rule 144 and
any other similar rule or regulation of the Commission that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, (i) Loral covenants
that, from and after the time that and for so long as it is subject to Section
13 or 15(d) of the Exchange Act thereafter, and (ii) Skynet covenants that, from
and after the time that and for so long as it is subject to Section 13 or 15(d)
of the Exchange Act, it shall use its reasonable efforts to file in a timely
manner all reports required to be filed by it under the Exchange Act, and that
it shall comply with the requirements of Rule 144(c), as such Rule may be
amended from time to time (or any similar rule or regulation hereafter adopted
by the Commission), regarding the availability of current public information to
the extent required to enable any Holder to sell Registrable Securities without
registration under the Securities Act pursuant to the resale provisions of Rule
144 (or any similar rule or regulation). Upon the request of any Holder, the
Company shall promptly deliver to such Holder a written statement as to whether
it has complied with such requirements and, upon such Holder's compliance with
the applicable provisions of Rule 144 and its delivery of such documents and
certificates as the Company's transfer agent may reasonably request in
connection therewith, shall take such reasonable action as may be required
(including using its reasonable efforts to cause legal counsel to issue an
appropriate opinion) to cause its transfer agent to effectuate any transfer of
Registrable Securities properly requested by such Holder, in accordance with the
terms and conditions of Rule 144.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be deemed sufficiently given or made if
in writing and signed by the party making the same, and either delivered in
person with receipt acknowledged or sent by registered or certified mail, return
receipt requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
if to any Holder, at the address of such Holder as set forth on Exhibit B
hereto,
with copies to:
-00-
Xxxxxxx & Xxxxxxx & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and if to Loral or Skynet, at:
Loral Space & Communications Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with copies to:
Loral Space & Communications Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three (3) Business Days after the same shall have been deposited
in the United States mail (by registered or certified mail, return receipt
requested, postage prepaid), whichever is earlier.
10.2 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by any
Holder other than to a Permitted Assignee (provided, however, that such
Permitted Assignee agrees in writing to be bound by the terms of this
Agreement), whereupon such Permitted Assignee shall be deemed to be a Holder for
all purposes of this Agreement. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and all successors to Loral, Skynet and the Holders.
10.3 AMENDMENTS; WAIVERS. Any provision of this Agreement affecting a party
may be amended or modified only by a written agreement signed by each such
affected party; provided, however that any approval required by the Holders of a
specified class of Registrable Securities shall be effected by the Holders of a
majority of the applicable class of Registrable Securities then outstanding. No
provision of this Agreement affecting a party may be waived except pursuant to a
writing signed by each such affected party; provided, however that any
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approval required by the Holders of a specified class of Registrable Securities
shall be effected by the Holders of a majority of the applicable class of
Registrable Securities then outstanding.
10.4 INJUNCTIVE RELIEF. It is hereby agreed and acknowledged that it will
be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved Person will be irreparably
damaged and will not have an adequate remedy at law. Any such Person shall,
therefore, be entitled (in addition to any other remedy to which it may be
entitled in law or in equity) to injunctive relief, including, without
limitation, specific performance, to enforce such obligations, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.
10.5 ATTORNEY'S FEES. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall, to the extent permitted by applicable
law, be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
10.6 TERMINATION OF REGISTRATION RIGHTS; SURVIVAL. All rights granted under
this Agreement shall terminate with respect to any Holder at such time as such
Holder ceases to own any Registrable Securities and this entire Agreement shall
terminate when all Holders cease to own any Registrable Securities. The
provisions of Articles VII, VIII and X shall survive any termination of this
Agreement.
10.7 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable 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 Agreement.
10.8 HEADINGS. The headings used in this Agreement are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Agreement.
10.9 GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. Each party to this Agreement hereby irrevocably agrees that any
legal action or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in the courts of
the State of New York or of the United States of America for the Southern
District of New York and hereby expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and expressly waives any claim
of improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 10.1 hereof, such service to become effective ten (10) days
after such mailing.
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10.10 LORAL CLASS B COMMON STOCK. The parties acknowledge and agree that
notwithstanding anything to the contrary in this Agreement, the Loral Class B
Common Stock does not exist on the date hereof and that for the purposes of and
unless otherwise provided in this Agreement, the Loral Class B Common Stock
shall be deemed to be issued and outstanding, and all provisions herein related
thereto shall be applicable and effective and Loral shall be required to comply
with any and all of its covenants and other obligations with respect to such
Loral Class B Common Stock as of and from the date of the Class B Common Stock
Authorization.
10.11 COUNTERPARTS AND FACSIMILE EXECUTION. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute one and the same instrument. This Agreement may be executed by
facsimile signatures.
10.12 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between Loral, Skynet and the Holders in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter of this
Agreement.
10.13 FURTHER ASSURANCES. Each of the parties hereto shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed and delivered as of the date first above written.
LORAL SPACE & COMMUNICATIONS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LORAL SKYNET CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[MHR FUNDS]
By:
------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT A
PLAN OF DISTRIBUTION
The selling securityholders, or their pledgees, donees, transferees, or any
of their successors in interest selling shares received from a named selling
securityholder as a gift, partnership distribution or other non-sale-related
transfer after the date of this prospectus (all of whom may be selling
securityholders), may sell the securities from time to time on any stock
exchange or automated interdealer quotation system on which the securities are
listed, in the over-the-counter market, in privately negotiated transactions or
otherwise, at fixed prices that may be changed, at market prices prevailing at
the time of sale, at prices related to prevailing market prices or at prices
otherwise negotiated. The selling securityholders may sell the securities by one
or more of the following methods, without limitation:
(a) block trades in which the broker or dealer so engaged shall attempt to
sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by the broker
or dealer for its own account pursuant to this prospectus;
(c) an exchange distribution in accordance with the rules of any stock
exchange on which the securities are listed;
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchases;
(e) privately negotiated transactions;
(f) short sales;
(g) through the writing of options on the securities, whether or not the
options are listed on an options exchange;
(h) through the distribution of the securities by any selling
securityholder to its partners, members or stockholders;
(i) one or more underwritten offerings on a firm commitment or best
efforts basis; and
(j) any combination of any of these methods of sale.
The selling securityholders may also transfer the securities by gift. The
issuer does not know of any arrangements by the selling securityholders for the
sale of any of the securities.
The selling securityholders may engage brokers and dealers, and any brokers
or dealers may arrange for other brokers or dealers to participate in effecting
sales of the securities. These
A-1
brokers, dealers or underwriters may act as principals, or as an agent of a
selling securityholder. Broker-dealers may agree with a selling securityholder
to sell a specified number of the securities at a stipulated price per security.
If the broker-dealer is unable to sell securities acting as agent for a selling
securityholder, it may purchase as principal any unsold securities at the
stipulated price. Broker-dealers who acquire securities as principals may
thereafter resell the securities from time to time in transactions on any stock
exchange or automated interdealer quotation system on which the securities are
then listed, at prices and on terms then prevailing at the time of sale, at
prices related to the then-current market price or in negotiated transactions.
Broker-dealers may use block transactions and sales to and through
broker-dealers, including transactions of the nature described above. The
selling securityholders may also sell the securities in accordance with Rule 144
under the Securities Act of 1933, as amended, rather than pursuant to this
prospectus, regardless of whether the securities are covered by this prospectus.
From time to time, one or more of the selling securityholders may pledge,
hypothecate or grant a security interest in some or all of the securities owned
by them. The pledgees, secured parties or persons to whom the securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be selling securityholders. As and when a selling securityholder takes such
actions, the number of securities offered under this prospectus on behalf of
such selling securityholder shall decrease. The plan of distribution for that
selling securityholder's securities shall otherwise remain unchanged. In
addition, a selling securityholder may, from time to time, sell the securities
short, and, in those instances, this prospectus may be delivered in connection
with the short sales and the securities offered under this prospectus may be
used to cover short sales.
To the extent required under the Securities Act of 1933, as amended, the
aggregate amount of selling securityholders' securities being offered and the
terms of the offering, the names of any agents, brokers, dealers or underwriters
and any applicable commission with respect to a particular offer shall be set
forth in an accompanying prospectus supplement. Any underwriters, dealers,
brokers or agents participating in the distribution of the securities may
receive compensation in the form of underwriting discounts, concessions,
commissions or fees from a selling securityholder and/or purchasers of selling
securityholders' securities for whom they may act (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
The selling securityholders and any underwriters, brokers, dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, as amended,
and any discounts, concessions, commissions or fees received by them and any
profit on the resale of the securities sold by them may be deemed to be
underwriting discounts and commissions.
A selling securityholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the
securities in the course of hedging the positions they assume with that selling
securityholder, including, without limitation, in connection with distributions
of the securities by those broker-dealers. A selling securityholder may enter
into option or other transactions with broker-dealers that involve the delivery
of the securities offered hereby to the broker-dealers, who may then resell or
otherwise transfer those securities. A selling securityholder may also loan or
pledge the securities offered hereby to a broker-dealer
A-2
and the broker-dealer may sell the securities offered hereby so loaned or upon a
default may sell or otherwise transfer the pledged securities offered hereby.
A selling securityholder may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement
indicates, in connection with those derivatives, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may use securities
pledged by the selling securityholder or borrowed from the selling
securityholder or others to settle those sales or to close out any related open
borrowings of stock, and may use securities received from the selling
securityholder in settlement of those derivatives to close out any related open
borrowings of stock. The third party in such sale transactions shall be an
underwriter and, if not identified in this prospectus, shall be identified in
the applicable prospectus supplement (or a post-effective amendment).
The selling securityholders and other persons participating in the sale or
distribution of the securities shall be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, including Regulation M. This regulation may limit the timing of
purchases and sales of any of the securities by the selling securityholders and
any other person. The anti-manipulation rules under the Securities Exchange Act
of 1934 may apply to sales of securities in the market and to the activities of
the selling securityholders and their affiliates. Furthermore, Regulation M may
restrict the ability of any person engaged in the distribution of the securities
to engage in market-making activities with respect to the particular securities
being distributed for a period of up to five business days before the
distribution. These restrictions may affect the marketability of the securities
and the ability of any person or entity to engage in market-making activities
with respect to the securities.
The issuer has agreed to indemnify in certain circumstances the selling
securityholders and any brokers, dealers and agents (who may be deemed to be
underwriters), if any, of the securities covered by the registration statement,
against certain liabilities, including liabilities under the Securities Act of
1933, as amended. The selling securityholders have agreed to indemnify us in
certain circumstances against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
The securities offered hereby were originally issued to the selling
securityholders pursuant to an exemption from the registration requirements of
the Securities Act of 1933, as amended. The issuer agreed to register the
securities under the Securities Act of 1933, as amended, and to keep the
registration statement of which this prospectus is a part effective for a
specified period of time. The issuer has agreed to pay all expenses in
connection with this offering, including the fees and expenses of counsel to the
selling securityholders, but not including underwriting discounts, concessions,
commissions or fees of the selling securityholders.
The issuer shall not receive any proceeds from sales of any securities by
the selling securityholders.
A-3
The issuer cannot assure you that the selling securityholders shall sell
all or any portion of the securities offered hereby.
A-4
EXHIBIT B
HOLDERS NOTICE INFORMATION
MHR Capital Partners LP
MHR Capital Partner (100) LP
MHR Institutional Partners LP
MHR Institutional Partners II LP
MHR Institutional Partners IIA LP
MHRM LP
MHRA LP
c/o MHR Fund Management LLC
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
B-1
EXHIBIT E
CORPORATION SCHEDULE OF EXCEPTIONS
EXHIBIT F
INTENTIONALLY OMITTED
EXHIBIT G
FORM OF OPINION OF XXXXXXX XXXX & XXXXXXXXX LLP
EXHIBIT H
FORM OF AMENDMENT TO AMENDED AND RESTATED BYLAWS
EXHIBIT I
FORM OF BRING-DOWN CERTIFICATE
EXHIBIT J
FORM OF BRING-DOWN OPINION
EXHIBIT K
FORM OF THRESHOLD CONVERSION NOTICE
EXHIBIT L
FORM OF NOTICE OF CONFIRMATION
EXHIBIT M
FORM OF NOTICE OF DISAGREEMENT
EXHIBIT N
FORM OF JOINDER AGREEMENT
