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SHAREHOLDERS AGREEMENT
DATED AS OF MARCH 29, 2000
BY AND BETWEEN
LOCKHEED XXXXXX CORPORATION
AND
LORAL SPACE & COMMUNICATIONS LTD.
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SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT is entered into as of March 29, 2000 (this
"Agreement"), by and between Lockheed Xxxxxx Corporation, a Maryland Corporation
("LMC"), and Loral Space & Communications Ltd., a Bermuda Company (the
"Company"). LMC and those of its Affiliates (as defined in Section 1.1(a)
hereof), if any, that are transferees with respect to any of the Equity
Securities (as defined in Section 1.1(e)) are collectively referred to herein as
the "Shareholders."
RECITALS
WHEREAS, LMC owns 45,896,978 shares of Series A Convertible Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Company
(together with the shares of common stock of the Company into which the
Preferred Stock is convertible, the "Shares");
WHEREAS, the Company completed an offering of 8,000,000 shares of 6%
Series D Convertible Redeemable Preferred Stock due 2007 (with an underwriters'
overallotment option to purchase an additional 1,600,000 shares of Preferred
Stock) on February 18, 2000, at a price of $50.00 per share (the "Rule 144A
Offering") pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act");
WHEREAS, LMC desires to effect the sale of the Shares but has agreed to
withdraw its demand registration request and has agreed not to effect sales of
the Shares from the date of the Letter Agreement (as defined below) until the
earlier of (i) 90 days (or such shorter period as the Company shall advise is
required, upon the advice of its investment bankers) after the closing of the
Rule 144A Offering or (ii) May 31, 2000 (the "Lock Up Period"), subject to
certain terms and conditions contained in a letter agreement between LMC and the
Company dated February 11, 2000 (the "Letter Agreement");
WHEREAS, LMC, as the successor in interest to Loral Corporation, and
the Company entered into a Shareholders Agreement dated April 23, 1996 (the
"Original Shareholders Agreement"); and
WHEREAS, LMC and the Company wish to terminate the Original
Shareholders Agreement and replace it with this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
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I.
STANDSTILL AND VOTING PROVISIONS
1.1. Restrictions on Certain Actions by the Shareholders.
(a) During the Term (as defined in Article III below), each
Shareholder will not, and will cause each of its Affiliates (such term, as used
in this Agreement, as defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), not
to, singly or as part of a partnership, limited partnership, syndicate or other
group (as those terms are used in Section 13(d)(3) of the Exchange Act),
directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire,
by purchase, gift or otherwise, any Equity Securities, except pursuant
to a stock split, stock dividend, rights offering, recapitalization,
reclassification, merger, consolidation, corporate reorganization or
similar transaction; provided that at any time in which the
Shareholders hold, in the aggregate, less than twenty percent (20%) of
the Total Voting power, then the Shareholders may acquire Equity
Securities so that the Shareholders hold, in the aggregate, up to
twenty percent (20%) of the Total Voting Power;
(ii) make, or in any way actively participate in, any
"solicitation" of "proxies" to vote (as such terms are defined in Rule
14a-1 under the Exchange Act), solicit any consent or communicate with
or seek to advise or influence any third party with respect to the
voting of any Equity Securities or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11
under the Exchange Act), in each case with respect to the Company;
(iii) form, join or encourage the formation of, any
"person" or "group" within the meaning of Section 13(d) of the Exchange
Act with respect to any Equity Securities; provided that this Section
1.1(a)(iii) shall not prohibit any such arrangement solely among the
Shareholders and any of their respective Affiliates;
(iv) deposit any Equity Securities into a voting
trust or subject any such Equity Securities to any arrangement or
agreement with respect to the voting thereof; provided that this
Section 1.1(a)(iv) shall not prohibit any such arrangement solely among
the Shareholders and any of their respective Affiliates;
(v) initiate, propose or otherwise solicit
Shareholders for the approval of one or more shareholder proposals with
respect to the Company as described in Rule 14a-8 under the Exchange
Act, or induce or attempt to induce any other third party to initiate
any shareholder proposal;
(vi) seek to place a representative on the Board of
Directors of the Company or seek the removal of any member of the Board
of Directors of the Company, except with the approval of the Board of
Directors or management of the Company;
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(vii) except with the approval of the Board of
Directors or management of the Company, call or seek to have called any
meeting of the shareholders of the Company;
(viii) otherwise act to seek to control the
management or policies of the Company, except with the approval of the
Board of Directors or management of the Company;
(ix) sell or otherwise transfer in any manner any
Equity Securities to any "person" (within the meaning of Section
13(d)(3) of the Exchange Act) who, immediately following such sale or
transfer, would, to the best of the Shareholder's knowledge, own more
than four percent (4%) of any class of Equity Securities or who,
without the approval of the Board of Directors of the Company, (A) has
publicly proposed a business combination or similar transaction with,
or a change of control of, the Company or who has publicly proposed a
tender offer for Equity Securities or (B) who has discussed with the
Company or any of its respective Affiliates the possibility of
proposing a business combination or similar transaction with, or a
change in control of, the Company;
(x) sell or otherwise transfer in any manner to any
person (as defined in clause (ix) above) in any single transaction or
series of related transactions more than 2% of the outstanding Equity
Securities;
(xi) solicit, seek to effect, negotiate with or
provide any information to any other party with respect to, or make any
statement or proposal, whether written or oral, to the Board of
Directors of the Company or any director or officer of the Company or
otherwise make any public announcement or proposal whatsoever with
respect to, any form of business combination transaction involving the
Company, including, without limitation, a merger, exchange offer or
liquidation of the Company's assets, or any corporate reorganization or
similar transaction with respect to the Company, except in each case
with the approval of the Board of Directors or management of the
Company; or
(xii) instigate or encourage any third party to do
any of the foregoing.
Notwithstanding clauses (ix) and (x) of this Section 1.1(a), the
Shareholders (A) may effect any transaction under the Registration Statement (as
defined in Section 2.1 hereof) in a bona fide underwritten offering reasonably
calculated to achieve broad distribution, (B) also may effect any transaction
(other than an underwritten offering) under the Registration Statement so long
as it does not violate the provisions of clause (ix) of this Section 1.1(a), and
(C) also may sell any number of the Shares to an investment banking firm for
resale so long as such investment banking firm agrees that any resales of the
Shares will be made in a manner consistent with the restrictions of clauses (ix)
and (x) of this Section 1.1(a).
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(b) The parties agree that the provisions of Section 1.1(a)
(except clauses (ix) and (x) thereof) and Section 1.3 may not be amended to
expand the Shareholders' rights thereunder.
(c) In addition to the restrictions set forth in Section
1.1(a) hereof, the Shareholders agree not to sell or transfer or enter into any
agreement to sell or transfer any of the Shares during the Lock Up Period;
provided, however, that the Shareholders may sell or transfer or enter into an
agreement to sell or transfer all or any portion of the Shares during the Lock
Up Period if during the Lock Up Period the Company (i) effects a Conflicting
Sale (as defined in Section 2.1(c) hereof) or (ii) files any registration
statement (other than registration statements relating to the Shares, shares
issued in the Rule 144A Offering and the shares issuable in respect thereof, and
shares issued under registration statements relating solely to stock option,
executive compensation or benefit plans, and no other shares; provided, however,
that in any event, no securities other than the Shares shall be included in the
prospectus that covers the Shares) for the benefit of any party (including
itself) other than the Shareholders.
(d) Notwithstanding the provisions of this Section 1.1,
nothing herein shall apply with respect to any Equity Securities acquired from
any person other than a Shareholder (i) held by any pension, retirement or other
benefit plan managed by any Shareholder or any of its subsidiaries or other
Affiliates or (ii) held in any account managed for the benefit of another
person, by any subsidiary or other Affiliate of any of the Shareholders which is
engaged in the financial services business. In addition, notwithstanding the
provisions of this Section 1.1, nothing herein shall prohibit or restrict any
(i) transfer of Equity Securities to or among any of the subsidiaries or other
Affiliates of any of the Shareholders (provided that such subsidiary or
Affiliate agrees to be bound to the provisions of this Agreement, upon which
such subsidiary or Affiliate shall be entitled to all rights and benefits, and
shall be subject to all obligations, of a Shareholder under this Agreement);
(ii) assignment, pledge, mortgage, hypothecation, or other encumbrance or
transfer of all or any of a Shareholder's Equity Securities in connection with
any bona fide financing arrangement entered into by such person or otherwise in
connection with any indebtedness owed by such Shareholder; provided that in the
event that the Shareholder in question defaults, the creditor's rights and
obligations with respect to the voting and transfer of such Equity Securities
shall be the same as the Shareholder in question had under the provisions of
this Agreement and the creditor in question shall be deemed to be a Shareholder
under this Agreement for such purposes; or (iii) transfer of Equity Securities
pursuant to any merger, consolidation, corporate reorganization, restructuring
or any other similar transaction affecting the Company or pursuant to any
involuntary transfer.
(e) For the purposes of this Agreement, (i) the term "Equity
Securities" shall mean the Preferred Stock and any securities entitled to vote
generally in the election of directors of the Company, or any direct or indirect
rights or options to acquire any such securities or any securities convertible
or exercisable into or exchangeable for such securities; (ii) the term "Voting
Power" shall mean the voting power in the general election of directors of the
Company; (iii) the term "Total Voting Power" shall mean the total combined
Voting Power of all the Equity Securities then outstanding, including, without
limitation, the Preferred Stock, and, insofar as the Preferred Stock is
concerned, it is deemed to have Voting Power equal to that of the Common Stock
into which it is convertible; (iv) the term "Change of Control" shall mean the
occurrence
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of any of the following events: (A) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner of Equity Securities which represent at least forty percent
(40%) of the Total Voting Power, or (B) during any one-year period, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
was approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office; and (v) the term "beneficial owner," and terms having similar import,
shall mean any direct or indirect "beneficial owner," as such term is defined in
Rules 13d-3 and 13d-5 under the Exchange Act.
1.2. HSR Clearance.
(a) At any time after the date hereof (but subject to the
provisions of Section 1.2(b) hereof), following a written request by LMC to the
Company (such request, the "HSR Notice"), the Company and the Shareholders will
(i) take promptly all actions necessary to make the filings required of the
Shareholders, the Company or any of their respective Affiliates under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act") with respect to the right to convert
Preferred Stock and continue to own the securities so received, the ownership
and voting of Equity Securities by the Shareholders, any of the transactions
contemplated by this Agreement or any other similar matters (all such exercise,
ownership, voting, transaction and other similar matters, the "Filing Matters"),
(ii) comply at the earliest practicable date with any request for additional
information or documentary material received by the Company or the Shareholders
or any of their Affiliates from any of the Federal Trade Commission, the
Antitrust Division of the Department of Justice, state attorneys general, the
Securities and Exchange Commission ("SEC"), or other governmental or regulatory
authorities (all such authorities, the "Antitrust Authorities"), and (iii)
cooperate with each other in connection with any of the filings referred to in
clause (i) above and in connection with resolving any investigation or other
inquiry commenced by any of the Antitrust Authorities. To the extent reasonably
requested by LMC, the Company shall use all reasonable efforts to resolve such
objections, if any, as may be asserted with respect to the Filing Matters. If
any administrative, judicial or legislative action or proceeding is instituted
(or threatened to be instituted) challenging any aspect of the Filing Matters as
violative of any antitrust law, each of the Shareholders and the Company shall
cooperate with each other to contest and resist any such action or proceeding,
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or permanent) (an
"Action") that is in effect and that restricts, prevents or prohibits the
exercise by the Shareholders of the right to convert Preferred Stock and
continue to own the securities so received, or the exercise by LMC of its rights
with respect to the ownership and voting of Equity Securities or any of the
transactions contemplated by this Agreement (any such decree, judgment,
injunction or other order is hereafter referred to as an "Order"), including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal, provided that nothing contained in this Section 1.2(a) shall be
construed to require any party hereto to hold separate or divest any of their
respective assets or businesses or agree to any substantive
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restriction thereon or on the conduct thereof. Each of the Company and LMC shall
promptly inform the other party of any material communication received by such
party from any Antitrust Authority regarding any of the Filing Matters or any of
the other transactions contemplated hereby. For the purposes this Agreement, the
term "HSR Clearance Date" shall mean the first date on which (x) any applicable
waiting period under the HSR Act with respect to the Filing Matters shall have
expired or been terminated, (y) there shall not be pending any Action commenced
by any Antitrust Authority relating to any of the Filing Matters or any of the
other transactions contemplated hereby, and (z) there shall not be in effect any
Order.
(b) Notwithstanding the provisions of Section 1.2(a) above, in
the event that LMC delivers the HSR Notice to the Company, the Company shall be
entitled to postpone for a reasonable period of time (but in no event later than
45 days), any filing referred to in Section 1.2(a)(i) above if the Company
determines in its reasonable judgment and in good faith that such filing would
delay the obtaining of any approval from an Antitrust Authority with respect to
any announced or imminent material acquisition or disposition which would
require a filing by the Company under the HSR Act. In the event of such
postponement, the Company shall have the right to withdraw its HSR Notice and
may deliver any such HSR Notice at any time thereafter.
(c) LMC and the Company acknowledge that the waiting period
under the HSR Act expired on March 5, 2000.
1.3 Voting and Related Matters.
(a) General Voting Provisions. Prior to the HSR Clearance
Date, no Shareholder shall have the right to convert Preferred Stock into common
stock or the right to vote any Equity Securities with respect to the election of
directors of the Company. Following the HSR Clearance Date, each Shareholder
shall have the right to vote its Equity Securities to the extent permitted by
the terms thereof on any matters submitted to a vote of the shareholders of the
Company, provided that following the HSR Clearance Date any Shareholder shall
have the right to vote any Equity Securities to the extent permitted by the
terms thereof with respect to the election of directors of the Company without
restriction, provided that in the event of an "election contest" (as such term
is used in Rule 14a-11 under the Exchange Act) each Shareholder shall have the
right to vote in the election contest only (i) as recommended by the Board of
Directors or management of the Company or (ii) in the same proportions as the
holders of Equity Securities (other than Shareholders) vote their Equity
Securities. On each matter with respect to which a Shareholder is entitled to
vote pursuant to this Section 1.3, each such Shareholder shall be present, in
person or represented by proxy, at all such shareholder meetings of the Company
so that all Equity Securities beneficially owned by it shall be counted for the
purpose of determining the presence of a quorum at such meetings. For purposes
of this Section 1.3, all references to the term "vote" shall include the
execution and delivery of any written consent with respect to the taking of any
shareholder action in lieu of a meeting of shareholders.
(b) Special Limitation on Company Actions. The Company will
not propose, and will use its best efforts to prevent, the adoption of any
amendment to the charter documents of the Company that would adversely affect
the rights of the Shareholders under this Agreement.
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1.4 Certain Notices. Promptly, but in any event within 15 days
following any repurchase by the Company of any of its outstanding Equity
Securities, which repurchase has the effect of increasing the Total Voting Power
of all Shareholders to an amount in excess of 20% of the Total Voting Power of
all persons, the Company shall give written notice thereof to each Shareholder.
II.
REGISTRATION RIGHTS; SALES OF EQUITY SECURITIES
2.1 Registration and Blackout Period.
(a) On or before April 15, 2000, the Company shall prepare and
file on Form S-3 if permitted, or otherwise on the appropriate form, a
registration statement (the "Registration Statement") under the Securities Act
(the securities subject to such registration being referred to as the "Subject
Securities") to register the Shares or other securities of the Company held by
LMC or any Shareholder (any such Shareholder being referred to as a "Registering
Shareholder"). Such registration shall be effected in accordance with the
intended method or methods of disposition specified by the Registering
Shareholder (including, but not limited to, Rule 415 (or any successor rule to
similar effect) promulgated under the Securities Act). In connection therewith,
the Company (i) shall use its best efforts to cause such securities to be
registered under the Securities Act as soon as reasonably practicable with the
objective of having the Registration Statement declared effective on or before
the end of the Lock Up Period; (ii) shall prepare and timely file with the SEC
periodic reports required to be filed by the Company under the Exchange Act, and
such amendments and post-effective amendments, supplements and other filings
under the Securities Act, and otherwise use its best efforts to maintain the
effectiveness of the Registration Statement for a period of 12 months following
the end of the Lock Up Period (or any longer period as contemplated in this
Section 2.1(a)) and ensure that the Registration Statement and related
prospectus comply with the requirements of the securities laws; (iii) shall
arrange, in good faith consultation with LMC to accommodate prior commitments
and critical business needs, for senior management of the Company who generally
participate in "road shows" for the Company (including those individuals
participating in the road show for the Rule 144A Offering), to be available to
the Registering Shareholders and prospective investors for road show
presentations to substantially the same extent with respect to at least one
underwritten public offering (it being understood that the Company will in good
faith consider a request for a second road show, provided that the Company shall
not have an obligation for a second road show) consistent with those generally
conducted by the Company when it issues equity securities for its own account,
with all reasonable expenses (expenses customarily borne by the Company in
connection with the offering of securities for its own account being deemed
reasonable) to be borne by the Registering Shareholders; and (iv) covenants and
agrees not to make any Conflicting Sale (as defined in Section 2.1(c) hereof)
during the period commencing on the date of the Letter Agreement and ending on
the later of the six month anniversary of the end of the Lock Up Period or the
date that is six months after the Registration Statement is declared effective
(the "Loral Lock Up Period"). Notwithstanding the foregoing to the contrary, (x)
the Loral Lock Up Period will be extended for a period equal to any Blackout
Period (as defined below) occurring during the Loral Lock Up Period and (y) the
period during which the Company is required to use its best efforts in
maintaining the
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effectiveness of the Registration Statement in clause (ii) of the third sentence
will be extended for a period equal to any Blackout Period occurring during the
time the Registration Statement is to be effective.
Notwithstanding the restrictions in clauses (ii), (iii) and (iv) of
this Section 2.1(a), on the day that the Shareholders no longer beneficially own
at least 3,000,000 shares of the Company's common stock (including all shares
issuable upon conversion of any Preferred Stock that the Shareholders own) (the
"Early Termination Date"), clauses (ii), (iii) and (iv) of this Section 2.1(a)
shall be of no further force or effect, provided that if the Shareholders shall
have completed an underwritten public offering of the Company's common stock
within 90 days of the Early Termination Date and the managing underwriter of
that offering so requests in writing, the provisions of clause (iv) shall
nonetheless survive in accordance with their terms until the earliest of: (A)
the 90th day following the Early Termination Date, (B) the date such clause
would have otherwise expired, (C) if the Shareholders have any Shares remaining
after that offering, the date the lock-up period agreed to by the Shareholders
and their underwriters with respect to their remaining Shares terminates or is
earlier released, and (D) the date the Shareholders' managing underwriter
releases the Company from such lock-up provisions.
Each Registering Shareholder agrees to provide all such information and
materials and to take all such action as may be reasonably required in order to
permit the Company to comply with all applicable requirements of the Securities
Act and the SEC and to obtain any desired acceleration of the effective date of
the Registration Statement. If the offering is to be underwritten, the managing
underwriter or underwriters shall be selected by LMC and shall be reasonably
satisfactory to the Company.
(b) Following the Loral Lock Up Period and for so long as the
Company is required to use its best efforts to maintain the effectiveness of the
Registration Statement in accordance with Section 2.1(a) hereof, each of the
Shareholders and the Company will refrain from selling or transferring or
entering into an agreement to sell or transfer any shares of the Company's
common stock or any securities convertible into or exchangeable for shares of
the Company's common stock (other than sales or transfers pursuant to the terms
of securities outstanding on the date of receipt of the written request
contemplated by this Section 2.1(b) and sales or transfers pursuant to stock
option or other executive compensation or benefit plans) upon one (but not more
than one) written request (such written request to be made in accordance with
Section 4.4 hereof) made by the other party in connection with any offering of
the Company's common stock or securities convertible into or exchangeable for
the Company's common stock in a public offering or Rule 144A transaction until
after the close of business on the 21st day following receipt of such written
request.
(c) For the purposes of this Article II,
(i) the term "Blackout Period" means (A) any period
that the Registration Statement cannot be used by the Registering
Shareholders as a result of a stop order issued by the SEC or
developments in the business or affairs of the Company that the Company
advises LMC in writing must be reflected in an amendment or supplement
to the Registration Statement or the related prospectus and (B) with
respect
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solely to clause (ii) of the third sentence of Section 2.1(a), for any
period during which sales of Shares are prohibited by Section 2.1(b);
and
(ii) the term "Conflicting Sale" means any sale or
transfer, or entering into an agreement to sell or transfer, by the
Company of any shares of the Company's common stock or any securities
convertible into or exchangeable for shares of the Company's common
stock (other than a sale or transfer in the Rule 144A Offering, sales
or transfers pursuant to the terms of securities outstanding on the
date of the Letter Agreement (as such terms exist on the date thereof)
and sales or transfers pursuant to stock option or other executive
compensation or benefit plans) (A) in any offering registered under the
Securities Act of 1933, (B) in any offering pursuant to Rule 144A or
(C) in a private placement, unless the purchaser agrees (I) not to make
any offer or sale of, or to enter into any agreement to offer or sell,
any such shares or securities for at least one year or such longer
period as the Company is required to use its best efforts to maintain
the effectiveness of the Registration Statement, and (II) not to
otherwise sell or transfer or enter into any agreement to sell or
transfer any such shares or securities except to a person who agrees in
writing to the same restrictions. The Company warrants and agrees not
to waive or amend the agreements contemplated by clauses (I) and (II)
of the preceding sentence without LMC's prior written consent, which
may be given or withheld in LMC's sole discretion, (y) to take such
actions (including placing a restrictive legend on any certificates
representing any securities) as may be reasonable and customary in
connection with restrictions of the type set forth in clauses (I) and
(II), and (z) to direct the registrar and transfer agent for its
securities (including the Company itself if it is acting as its own
registrar or transfer agent) not to issue any securities upon transfer
without a written acknowledgement from the Company confirming that the
transfer is not in violation of clause (I) or (II). Notwithstanding the
foregoing, a "Conflicting Sale" shall not include the issuance in one
or more transactions by the Company of shares of its common stock to
holders of its 6% Series C Convertible Redeemable Preferred Stock (the
"Series C Preferred") in connection with the exchange by such holders
of their shares of Series C Preferred for the Company's common stock,
provided that the total number of shares of the Company's common stock
to be issued in such exchanges shall not exceed in the aggregate the
sum of (x) the shares of the Company's common stock issuable upon
conversion of the Series C Preferred and (y) three million shares of
the Company's common stock.
(d) The Company shall not grant to any other holder of its
securities, whether currently outstanding or issued in the future, any
incidental or piggyback registration rights with respect to the Registration
Statement, and without the prior consent of the Registering Shareholders, the
Company will not itself, and will not permit any other holder of its securities
to, participate in any offering made pursuant to the Registration Statement
(except as contemplated by Section 1.1(c)). If the Registering Shareholders
consent to the inclusion of offers and sales of any other securities in the
Registration Statement pursuant to this Section 2.1 and the underwriter(s)
retained in connection with such registration subsequently advise the
Registering Shareholders that such offering would be adversely affected by the
inclusion of such other securities, the Registering Shareholders may in their
sole discretion exclude all or some of such securities from such registration.
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(e) The registration contemplated by this Agreement shall not
be deemed to have been effected (and, therefore, not requested for purposes of
this Section 2.1), (i) unless it has become effective or (ii) if after it has
become effective such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason other than a misrepresentation or an omission by the
Registering Shareholders and, as a result thereof, the Subject Securities
requested to be registered cannot be completely distributed in accordance with
the plan of distribution set forth in the Registration Statement.
(f) Except for the pending transfer of the Shares by LMC to
its wholly owned subsidiary, Lockheed Xxxxxx Investments Inc., LMC represents to
the Company that, on or prior to the date hereof, LMC has not sold, assigned,
pledged, mortgaged, hypothecated or otherwise encumbered or transferred, and has
not entered into any agreements or arrangements with any third party to sell,
assign, pledge, mortgage, hypothecate or otherwise encumber or transfer any of
the Shares.
2.2 Non-Affiliate. The Company agrees to accept an opinion of LMC's
in-house counsel to the effect that neither LMC nor any other Shareholder is an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act, and covenants and agrees upon receipt of such opinion to (a) deliver a
letter or certificate to LMC or such other Shareholder for distribution to
potential purchasers confirming the foregoing, (b) direct the registrar and
transfer agent for its Shares to issue certificates without restrictive legends
to purchasers of the Shares, (c) acknowledge the ability under this Agreement of
LMC and such other Shareholders to sell the Shares without volume limitations
other than the limitations contemplated by clauses (ix) and (x) of Section
1.1(a), and (d) otherwise take no actions inconsistent with offers or sales of
Shares by the Shareholders in accordance with this Agreement.
2.3 Registration Mechanics.
(a) In connection with any offering of Subject Securities
registered pursuant to Section 2.1 herein, the Company shall (i) furnish to the
Registering Shareholders such number of copies of any prospectus (including
preliminary and summary prospectuses) and conformed copies of the Registration
Statement (including amendments or supplements thereto and, in each case, all
exhibits) and such other documents as any Registering Shareholder may reasonably
request; (ii) (A) use its best efforts to register or qualify the Subject
Securities covered by the Registration Statement under such blue sky or other
state securities laws for offer and sale as the Registering Shareholders shall
reasonably request and (B) keep such registration or qualification in effect for
so long as the Registration Statement remains in effect; provided that the
Company shall not be obligated to qualify to do business as a foreign
corporation under the laws of any jurisdiction in which it shall not then be
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed or subject
itself to taxation in any jurisdiction wherein it would not otherwise be subject
to tax but for the requirements of this Section 2.3; (iii) use its best efforts
to cause all Subject Securities covered by the Registration Statement to be
registered with or approved by such other federal or state government agencies
or authorities as may be necessary, in the opinion of counsel to the
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Registering Shareholders, to enable the Registering Shareholders to consummate
the disposition of such Subject Securities; (iv) notify the Registering
Shareholders any time when a prospectus relating thereto is required to be
delivered under the Securities Act upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in the 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 not misleading, in the light of the circumstances
under which they were made, and (subject to the good faith determination of the
Company's Board of Directors as to whether to permit sales under the
Registration Statement), at the request of any Registering Shareholder promptly
prepare and furnish to it a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such 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 not
misleading, in light of the circumstances under which they were made; (v)
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC; (vi) use its best efforts to list the Subject Securities
covered by such registration statement on the New York Stock Exchange or on any
other exchange on which the Subject Securities are then listed, if required by
the rules of any such exchange; (vii) use its best efforts to obtain a "cold
comfort" letter from the independent public accountants for the Company in
customary form and covering matters of the type customarily covered by such
letters as may be reasonably requested by the Registering Shareholders in the
event of a registration effected pursuant to Section 2.1 hereof; (viii) execute
and deliver all instruments and documents (including in an underwritten offering
an underwriting agreement in customary form) and take such other actions and
obtain such certificates and opinions as the Registering Shareholders reasonably
request in order to effect an underwritten public offering; and (ix) before
filing the Registration Statement or any amendment or supplement thereto, and as
far in advance as is reasonably practicable, furnish to each Registering
Shareholder and its counsel copies of such documents. In connection with any
offering of Subject Securities registered pursuant to Section 2.1, the Company
shall (x) furnish to the underwriter, if any, unlegended certificates
representing ownership of the Subject Securities being sold in such
denominations as requested and (y) instruct any transfer agent and registrar of
the Subject Securities to release any stop transfer orders with respect to such
Subject Securities.
(b) Before filing with the SEC the Registration Statement or
any amendments or supplements thereto, the Company shall furnish to the
Registering Shareholders or their respective counsel copies of all such
documents proposed to be filed, in order to give the Registering Shareholders or
their respective counsel sufficient time to review such documents, and such
documents may thereafter be filed subject to any timely and reasonable comments
of the Registering Shareholders or their respective counsel. The Company shall
(i) deliver promptly to the Registering Shareholders or their respective counsel
copies of all written communications between the Company and the SEC relating to
such registration statement, and (ii) advise the Registering Shareholders or
their respective counsel promptly of, and provide the Registering Shareholders
or their respective counsel with the opportunity to participate in (to the
extent reasonably practicable), all telephonic and other non-written
communications between the Company and the SEC relating to such registration
statement. The Company shall respond promptly to any comments from the SEC with
respect thereto, after consultation with the Registering Shareholders or their
respective counsel, and shall take such other actions as shall be
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reasonably required in order to have such registration statement declared
effective under the Securities Act as soon as reasonably practicable as set
forth in Section 2.1(a).
(c) Each Registering Shareholder agrees that upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (iv) of Section 2.3(a), it will forthwith discontinue its disposition
of Subject Securities pursuant to the Registration Statement relating to such
Subject Securities until its receipt of the copies of the supplemented or
amended prospectus contemplated by clause (iv) of Section 2.3(a) and, if so
directed by the Company, will deliver to the Company all copies (other than
permanent file copies) then in its possession of the prospectus relating to such
Subject Securities current at the time of receipt of such notice. If any
Registering Shareholder's disposition of Subject Securities is discontinued
pursuant to the foregoing sentence, unless the Company thereafter extends the
effectiveness of the Registration Statement to permit dispositions of Subject
Securities by the Registering Shareholder for an aggregate of 60 days (or 90
days, if the Company is eligible to use a Form S-3, or successor form), whether
or not consecutive, or, if longer, the period contemplated by Section 2.1(a),
the registration contemplated by this Agreement shall not be deemed to have been
effected.
2.4 Expenses. The Registering Shareholders shall pay all agent fees and
commissions and underwriting discounts and commissions related to Subject
Securities being sold by the Registering Shareholders and the fees and
disbursements of its counsel and accountants and the Company to the extent
permitted by applicable law shall pay all fees and disbursements of its counsel
and accountants in connection with the Registration Statement. All other fees
and expenses in connection with the Registration Statement (including, without
limitation, all registration and filing fees, all printing costs, all fees and
expenses of complying with securities or blue sky laws) shall to the extent
permitted by applicable law be borne equally by the Registering Shareholders and
the Company; provided that the Registering Shareholders shall not be obligated
to pay any expenses relating to work that would otherwise be incurred by the
Company including, but not limited to, the preparation and filing of periodic
reports with the SEC.
2.5 Indemnification and Contribution.
(a) In the case of any offering registered pursuant to this
Article II, the Company agrees to indemnify and hold each Registering
Shareholder, each underwriter, if any, of the Subject Securities under such
registration and each person who controls any of the foregoing within the
meaning of Section 15 of the Securities Act, and any officer, employee or
partner of the foregoing, harmless against any and all losses, claims, damages,
or liabilities (including reasonable legal fees and other reasonable expenses
incurred in the investigation and defense thereof) to which they or any of them
may become subject under the Securities Act or otherwise (collectively
"Losses"), insofar as any such Losses shall arise out of or shall be based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement relating to the sale of such Subject
Securities (as amended if the Company shall have filed with the SEC any
amendment thereof), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a
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material fact contained in the prospectus relating to the sale of such Subject
Securities (as amended or supplemented if the Company shall have filed with the
SEC any amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided that the indemnification contained in this Section 2.5
shall not apply to such Losses which shall arise primarily out of or shall be
based primarily upon any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, which shall have been made in reliance
upon and in conformity with information furnished in writing to the Company by
the Registering Shareholders or any such underwriter, as the case may be,
specifically for use in connection with the preparation of the Registration
Statement or prospectus contained in the registration statement or any such
amendment thereof or supplement therein.
(b) In the case of each offering registered pursuant to this
Article II, the Registering Shareholders and each underwriter, if any,
participating therein shall agree, substantially in the same manner and to the
same extent as set forth in the preceding paragraph, severally to indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, and the directors and
executive officers of the Company, with respect to any statement in or omission
from the Registration Statement or the prospectus contained in the Registration
Statement (as amended or as supplemented, if amended or supplemented as
aforesaid) if such statement or omission shall have been made in reliance upon
or in conformity with information furnished in writing to the Company by the
Registering Shareholders or such underwriter, as the case may be, specifically
for use in connection with the preparation of the Registration Statement or the
prospectus contained in the Registration Statement or any such amendment thereof
or supplement thereto.
(c) Each party indemnified under this Section 2.5 shall,
promptly after receipt of notice of the commencement of any claim ("Claim")
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The failure of any indemnified party to so notify an indemnifying party shall
not relieve the indemnifying party from any liability in respect of such Claim
which it may have to such indemnified party on account of the indemnity
contained in this Section 2.5, unless (and only in the event) the indemnifying
party was materially prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which it may
have to such indemnified party. In case any Claim in respect of which
indemnification may be sought hereunder shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may desire, jointly with any other indemnifying party similarly notified
to assume the defense thereof through counsel reasonably satisfactory to the
indemnified party by notifying the indemnified party in writing of such election
within 10 days after receipt of the indemnified party's initial notice of the
Claim, and after such notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.5 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation (unless such indemnified party reasonably objects to such
assumption on the grounds that there may be defenses available to it
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which are different from or in addition to those available to such indemnifying
party in which event the indemnified party shall be reimbursed by the
indemnifying party for the reasonable expenses incurred in connection with
retaining separate legal counsel). If the indemnifying party undertakes to
defend against such Claim within such 10-day period, the indemnifying party
shall control the investigation, defense and settlement thereof; provided that
(i) the indemnifying party shall use its reasonable efforts to defend and
protect the interests of the indemnified party with respect to such Claim, (ii)
the indemnified party, prior to or during the period in which the indemnifying
party assumes control of such matter, may take such reasonable actions as the
indemnified party deems necessary to preserve any and all rights with respect to
such matter, without such actions being construed as a waiver of the indemnified
party's rights to defense and indemnification pursuant to this Agreement, and
(iii) the indemnifying party shall not, without the prior written consent of the
indemnified party, consent to any settlement which (A) imposes any Losses on the
indemnified party (other than those Losses which the indemnifying party agrees
to promptly pay or discharge), and (B) with respect to any non-monetary
provision of such settlement, would be likely, in the indemnified party's
reasonable judgment, to have an adverse effect on the business operations,
assets, properties or prospects of any Shareholder (in the event that
Registering Shareholder or any of its Affiliates is the indemnified party), or
the Company (in the event that the Company is an indemnified party) or such
indemnified party. If the indemnifying party does not undertake within such
10-day period to defend against such Claim, then the indemnifying party shall
have the right to participate in any such defense at its sole costs and expense,
but the indemnified party shall control the investigation, defense and
settlement thereof (provided that the indemnified party may not settle any such
Claim without obtaining the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld by the indemnifying party;
provided that in the event that the indemnifying party is in material breach at
such time of the provisions of this Section 2.5, then the indemnified party
shall not be obligated to obtain such prior written consent of the indemnifying
party) at the reasonable cost and expense of the indemnifying party (which shall
be paid by the indemnifying party promptly upon presentation by the indemnified
party of invoices or other documentation evidencing the amounts to be
indemnified). In addition to the foregoing, no indemnifying party shall, without
the prior written consent of the indemnified party, affect any settlement of any
pending or threatened proceeding in respect of which the indemnified party could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such claim or
proceeding.
(d) If the indemnification provided for in this Section 2.5 is
unavailable to an indemnified party or is insufficient to hold such indemnified
party harmless from any Losses in respect of which this Section 2.5 would
otherwise apply by its terms (other than by reason of exceptions provided
herein), then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the amount paid or payable by such indemnified party as a result of such Losses,
in such proportion as is appropriate to reflect the relative benefits received
by and fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the offering to which such
contribution relates as well as any other relevant equitable considerations. The
relative benefit shall be determined by reference to, among other things, the
amount of proceeds received by each party from the offering to which such
contribution relates. The relative fault
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shall be determined by reference to, among other things, each party's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, and the opportunity to correct and prevent any statement
or omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or expenses incurred by such
party in connection with any investigation or proceeding, to the extent such
party would have been indemnified for such expenses if the indemnification
provided for in this Section 2.5 was available to such party.
(e) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.5 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. 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 was not guilty of such fraudulent misrepresentation.
2.6 Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Shareholder,
make publicly available other information), and it will take such further action
as any Shareholder may reasonably request, all to the extent required from time
to time to enable such Shareholder to sell Subject Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Shareholder, the Company will deliver to such
Shareholder a written statement as to whether it has complied with such
requirements.
III.
TERM
3.1 Term. The term (the "Term") of this Agreement shall commence on the
date hereof and shall continue, unless specifically provided otherwise in this
Agreement, until the earlier of (a) the date on which LMC and its Affiliates, on
a fully diluted basis, beneficially own no Equity Security, (b) April 23, 2006,
or (c) a Change in Control (as defined in Section 1.1(e) hereof). Upon
expiration of the Term, the provisions of this Agreement shall terminate, and be
of no further force or effect, automatically without any further action on the
part of any parties hereto, provided that the provisions of Article II and
Article IV shall continue without regard to the term limitation set forth in
this sentence; provided further that no such termination shall relieve any party
of any liability to the other party hereto, to the extent such liability is
incurred prior to the expiration of the Term.
IV.
MISCELLANEOUS
4.1 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
other prior negotiations,
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commitments, agreements and understandings, including the Letter Agreement, both
written and oral, between the parties or any of them with respect to the subject
matter hereof.
4.2 Fees and Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred by the Shareholders and the Company in
connection with consummating such party's obligations hereunder or otherwise
shall be paid by the party incurring such cost or expense.
4.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES THEREOF (EXCEPT IN THOSE
CIRCUMSTANCES WHERE THE CORPORATE LAW OF THE COMPANY'S JURISDICTION OF
ORGANIZATION REQUIRES THE APPLICATION OF THE LAW OF THE COMPANY'S JURISDICTION
OF ORGANIZATION WITH RESPECT TO A PARTICULAR MATTER).
4.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) If to any of the Shareholders, to:
c/o Lockheed Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
with a copy to:
King & Spalding
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to the Company, to:
Loral Space & Communications Ltd.
c/o Loral SpaceCom Corporation
000 Xxxxx Xxxxxx
00
00
Xxx Xxxx, XX
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
In addition to providing any notice required to be given by the Company pursuant
to its Certificate of Incorporation in the manner specified therein, the Company
shall send to each Shareholder by telecopy in accordance with this Section 4.4 a
copy of each such notice.
4.5 Successors and Assigns; Reclassifications; No Third Party
Beneficiaries. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties hereto (which consent may not be reasonably withheld), except that any
party shall have the right, without the consent of any other party hereto, to
assign all or a portion of its rights, interests, and obligations hereunder to
one or more direct or indirect subsidiaries, but no such assignment of
obligation shall relieve the assigning party from its responsibility therefor.
In the event of any recapitalization or reclassification of any Equity
Securities, or any merger, consolidation or other transaction with like effect,
the securities issued in replacement or exchange for such Equity Securities
shall be deemed Equity Securities hereunder. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement; provided that the indemnified parties referred to in
Section 2.5 hereof are intended to be third party beneficiaries of the
provisions of Section 2.5 hereof, and shall have the right to enforce such
provisions as if they were parties hereto.
4.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.7 Further Assurances. Each party hereto or person subject hereto
shall do and perform or cause to be done and performed all such further acts and
things and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and
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accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby.
4.8 Interpretation. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement. Unless otherwise specified in
this Agreement, all references in this Agreement to "days" shall be deemed to be
references to calendar days.
4.9 Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
affecting the validity or enforceability of the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
4.10 Consent to Jurisdiction. Each of the parties hereto irrevocably
and unconditionally (a) agrees that all suits, actions or other legal
proceedings arising out of this Agreement or any of the transactions
contemplated hereby (a "Suit") shall be brought and adjudicated solely in the
United States District Court for the District of Delaware, or, if such court
will not accept jurisdiction, in the Delaware Chancery Court or any court of
competent civil jurisdiction sitting in New Castle County, Delaware, (b) submits
to the non-exclusive jurisdiction of any such court for the purpose of any such
Suit and (c) waives and agrees not to assert by way of motion, as a defense or
otherwise in any such Suit, any claims that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum or that the venue of such Suit is improper. Each of the parties hereto
also irrevocably and unconditionally consents to the service of any process,
summons, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 4.4 hereof and agrees that any such form of service shall
be effective in connection with any such Suit; provided that nothing contained
in this Section 4.10 shall affect the right of any party to serve process,
pleadings, notices or other papers in any other manner permitted by applicable
law.
4.11 Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specified performance, the defense of adequacy of a
remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in any court referred to in Section
4.10 hereof.
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IN WITNESS WHEREOF, each of the parties has caused this Shareholders
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
LOCKHEED XXXXXX CORPORATION
By: /s/ Xxxxx XxXxxxxx
Name:
Title:
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Xxx Xxxx
Name:
Title:
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