EXHIBIT 99.3
LORAL SPACE & COMMUNICATIONS LTD.
SUBORDINATED GUARANTY
This SUBORDINATED GUARANTY dated as of December , 2001 (this "Guaranty"
or this "Agreement"), is made by LORAL SPACE & COMMUNICATIONS LTD., a Bermuda
company (the "Loral Space" or the "Guarantor"), in favor of the Holders (as
defined below) from time to time of the Subordinated Notes (as defined below).
RECITALS
WHEREAS, pursuant to the Indenture dated as of December , 2001 (as
modified, supplemented or amended from time to time, the "Indenture"), among the
Trustee, Loral Cyberstar, Inc., a Delaware corporation (the "Company") and the
Subsidiary Guarantors party from time to time thereto, the Company will issue up
to $675,000,000 aggregate principal amount of its 10% Senior Notes due 2006
(such notes, together with any notes issued in exchange for such notes or in
replacement of such notes pursuant to the exchange and replacement provisions of
the Indenture, being herein called the "Senior Notes");
WHEREAS, the Company will also issue, at the time of its issuance of the
Senior Notes, $29,700,000 aggregate principal amount of 10% Subordinated Notes
due July 30, 2006 (such notes, together with any notes issued in exchange for
such notes or in replacement of such notes pursuant to the exchange and
replacement provisions therefore, being herein called the "Subordinated Notes");
WHEREAS, the Senior Notes are guaranteed by Loral Space pursuant to the
terms of the Guaranty dated as of the date hereof (the "Senior Guaranty") in
favor of Bankers Trust Company, as trustee, under the Indenture;
WHEREAS, the Company is an indirectly wholly owned subsidiary of Loral
Space;
WHEREAS, it is a condition to the issuance of the Subordinated Notes that
Loral Space provide its unconditional guarantee of the payment of the principal
of, premium, if any and interest on the Subordinated Notes;
WHEREAS, the obligations of the Guarantor hereunder are junior and
subordinate to the obligations of the Guarantor under the Senior Guaranty;
WHEREAS, the Subordinated Notes will be issued initially to Loral SpaceCom
Corporation, an indirect wholly owned subsidiary of the Guarantor;
WHEREAS, Loral Space has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of Loral Space to execute this
Guaranty inasmuch as Loral Space will derive substantial direct and indirect
benefits from the issuance of the Subordinated Notes and the Senior Notes;
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NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, Loral Space agrees, for the benefit of the Holders (as
defined below), as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Restricted Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Asset Sale" means:
(1) the sale, lease, transfer, conveyance or other disposition of any
assets or rights, other than sales of inventory in the ordinary course of
business consistent with past practices; provided that the sale, lease,
transfer, conveyance or other disposition of all or substantially all of
the assets of Loral Space and its Restricted Subsidiaries taken as a whole
will be governed by Article V;
(2) the issuance of Equity Interests in any of Loral Space's
Restricted Subsidiaries or the sale of Equity Interests in any of its
Restricted Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that: (a)
involves assets having a fair market value of less than $5 million; or (b)
results in net proceeds to Loral Space and its Restricted Subsidiaries of
less than $5 million;
(2) a transfer of assets between or among Loral Space and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to
Loral Space or to another Restricted Subsidiary;
(4) the sale or lease of satellites, transponders or other equipment,
inventory, accounts receivable or other assets in the ordinary course of
business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted
under Section 4.04; and
(7) the issuance of partnership interests by CyberStar, L.P. pursuant
to participation bonuses in accordance with Section 4.3 of the CyberStar
partnership agreement.
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"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The term
"beneficially owns" shall have a corresponding meaning.
"Board of Directors" means the Board of Directors of Loral Space.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than one year from the date
of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or
with any domestic commercial bank having capital and surplus in excess of
$500 million and a Xxxxxxxx Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having one of the two highest ratings obtainable
from Xxxxx'x Investors Service, Inc. or Standard & Poor's Rating Services
and in each case maturing within six months after the date of acquisition;
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition; and
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(7) the Xxxxxxx Xxxxx US$ Liquid Reserves Fund and other funds with
substantially similar investment policies.
"Consolidated Capital Ratio" of any Person as of any date means the ratio
of
(1) the Total Indebtedness of such Person then outstanding to
(2) the stockholders' equity as of such date as shown on the
consolidated balance sheet of such Person in accordance with GAAP (which,
in the case of Loral Space, shall include the Series C Preferred Stock)
after giving pro forma effect to
(a) the incurrence of any Indebtedness proposed to be incurred or the
issuance of any Disqualified Stock proposed to be issued and the receipt
and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or retirement of
any of the foregoing since such balance sheet date and the receipt and
application of the proceeds thereof,
(c) any asset dispositions or asset acquisitions (including giving pro
forma effect to the application of proceeds of any asset disposition) that
has occurred since such balance sheet date, in each case as if they had
occurred and such proceeds had been applied on the date of such balance
sheet.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in connection
with an Asset Sale, to the extent such losses were deducted in computing
such Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income;
plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of
all payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received pursuant
to Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a prepaid
cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, amounts in respect of items (1), (2) and (4)
for a Restricted Subsidiary of Loral Space shall be added to Consolidated Net
Income to compute Consolidated Cash Flow of Loral Space only to the extent that
a corresponding percentage of the Consolidated Net Income of
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such Restricted Subsidiary would be permitted at the date of determination to be
dividended to Loral Space by such Restricted Subsidiary without prior approval
(that has not been obtained) pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Leverage Ratio" means the ratio of
(1) the Total Indebtedness of Loral Space outstanding as of the most
recent available quarterly or annual balance sheet to
(2) the Consolidated Cash Flow of Loral Space for the four full fiscal
quarters next preceding the incurrence of such Indebtedness or the issuance
of such Disqualified Stock for which consolidated financial statements are
available; provided that pro forma effect shall be given to
(a) the incurrence of any Indebtedness proposed to be incurred or
the issuance of any Disqualified Stock proposed to be issued and the
receipt and application of the proceeds thereof,
(b) any other Indebtedness incurred, Disqualified Stock issued or
preferred stock of any Subsidiary issued or the repayment or retirement
of any of the foregoing since the beginning of such four fiscal quarter
period and the receipt and application of the proceeds thereof and
(c) any asset dispositions or asset acquisitions (including giving
pro forma effect to the application of proceeds of any asset
disposition) that has occurred during such four fiscal quarter period,
in each case as if they had occurred and such proceeds had been applied
on the first day of such four fiscal quarter period.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends
or distributions paid in cash to the specified Person or a Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(4) the Net Income (but not loss) of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the specified person or one of
its Subsidiaries; and
(5) the cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of:
(1) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date; plus
(2) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of Preferred Stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
Preferred Stock.
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"Consolidated Tangible Assets" of any Person means the total amount of
assets (less applicable reserves and any other properly deductible items) which
under GAAP would be included on a consolidated balance sheet of such Person and
its Subsidiaries after deducting therefrom all goodwill (but not any other
intangible assets) which under GAAP would be included on such consolidated
balance sheet.
"Credit Agreement" means that certain Amended and Restated Credit and
Participation Agreement among Loral SpaceCom Corporation, Space Systems/Loral,
Inc., certain lending banks, Bank of America National Trust and Savings
Association, as Administrative Agent, and Istituto Bancario San Paolo Di Torino
S.P.A., individually and as Italian Export Financing Arranger and as Selling
Bank, dated as of November 14, 1997, providing for up to $850 million of credit
extensions, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"Credit Facilities" means one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Designated Other Permitted Consideration" means the fair market value of
non-cash consideration received by Loral Space or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Other Permitted Consideration pursuant to an Officers' Certificate,
setting forth the basis of such valuation, less the amount of cash or Cash
Equivalents received in connection with a sale of such Designated Other
Permitted Consideration.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require Loral Space to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that Loral Space may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.04.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of Loral Space and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date, until such amounts are repaid.
"Exchange Act" means the Securities & Exchange Act of 1934, as amended (or
any successor act) and to rules and regulations thereunder.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by any such other entity as have been approved by a significant
segment of the accounting profession, which are in effect from time to time.
"Globalstar" means Globalstar, L.P., a Delaware limited partnership.
"GTL" means Globalstar Telecommunications Limited, a Bermuda Company.
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"Guarantee" means a guaranty other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements entered into in the ordinary
course of business and consistent with past practices designed to protect
such Person against fluctuations in interest rates or currency exchange
rates.
"Holder" means each owner from time to time of the Subordinated Notes.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit, excluding letters of credit supporting obligations under
customer contracts until such letters of credit are drawn;
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable; or
(6) Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount;
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness;
and
(3) in the case of an obligation under a Hedging Obligation
(a) zero if such obligation has been incurred pursuant to clause (7)
of the second paragraph of Section 4.05; or
(b) the notional amount of such obligation if not incurred pursuant to
such clause.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided,
however, that Investments
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shall not include any commercially reasonable (as determined in good faith by
either the Board of Directors of Loral Space or senior management of Loral
Space) extensions of credit to, or Investments made in, any Person in connection
with the purchase or sale of satellites or satellite services. If Loral Space or
any Restricted Subsidiary of Loral Space sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of Loral Space
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of Loral Space and is not a Permitted Venture,
Loral Space shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 4.04.
"Issue Date" means the date on which notes were originally issued under the
Loral Space Indenture, which was January 21, 1999.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Loral Space Default" means any event that is, or with the passage of time
or the giving of notice or both would be, a Loral Space Event of Default.
"Loral Space Event of Default": A Loral Space Event of Default occurs if:
(1) [Intentionally omitted];
(2) [Intentionally omitted];
(3) Loral Space fails to comply with Section 5.01;
(4) Loral Space fails to comply Section 4.04, Section 4.05, Section
4.13 or Section 4.14 and such failure continues for 30 days after
the notice specified below;
(5) Loral Space or any of its Restricted Subsidiaries fails to comply
with any of their agreements in this Guaranty (other than those
referred to in clause (1), (2), (3) or (4) above) and such
failure continues for 60 days after the notice specified below;
(6) Loral Space or any of its Restricted Subsidiaries defaults under
any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Loral Space or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by
Loral Space or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the
Issue Date, if such default: (A) is caused by a failure to pay
principal at maturity of such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on
the date of such default (a "Payment Default"); or (B) results in
the acceleration of such Indebtedness prior to its express
maturity, and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $25
million or more;
(7) any judgment or decree for the payment of money in excess of $25
million or its foreign currency equivalent at the time is entered
against Loral Space or any of its Subsidiaries, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below;
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(8) Loral Space or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency; or
(9) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against Loral Space or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of Loral Space or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of Loral Space or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days.
The foregoing will constitute Loral Space Events of Default whatever the
reason for any such Loral Space Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body. The term "Bankruptcy Law" means Xxxxx 00,
Xxxxxx Xxxxxx Code, or any similar Federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law. A Loral Space Default
under clauses (4), (5), or (7) is not a Loral Space Event of Default until
Holders of at least 25% in principal amount of the outstanding Subordinated
Notes notify Loral Space of the Loral Space Default and Loral Space does not
cure such Loral Space Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
"Loral Space Indenture" means the indenture dated as of January 15, 1999
between Loral Space and The Bank of New York, as trustee, relating to Loral
Space's 9 1/2% Senior Subordinated Notes due 2006.
"Marketable Securities" means, with respect to any Asset Sale, any readily
marketable equity securities that are
(1) traded on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market and
(2) issued by a corporation having a total equity market
capitalization of not less than $250 million; provided that the
excess of
(a) the aggregate amount of securities of any one such corporation
held by Loral Space and any Restricted Subsidiary over
(b) ten times the average daily trading volume of such securities
during the 20 immediately preceding trading days shall be
deemed not to be Marketable Securities, as determined on the
date of the contract relating to such Asset Sale.
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"Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with:
(a) any Asset Sale or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted
Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by Loral Space or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness (other than Indebtedness under any one or more Credit Facilities)
secured by a lien on the asset or assets that were the subject of such Asset
Sale, and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness as to which neither Loral Space nor
any of its Restricted Subsidiaries (other than the Restricted Subsidiary that is
the primary obligor and its Subsidiaries so long as no Capital Stock of such
Subsidiaries is owned by Loral Space or any other Restricted Subsidiary),
(1) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness),
(2) is directly or indirectly liable as a guarantor or otherwise, or
(3) constitutes the lender.
"Obligations" means any principal, premium if any, interest, penalties,
fees, indemnifications, guarantees, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offer To Purchase" means a written offer (the "Offer") sent by Loral Space
by first class mail, postage prepaid, to each Holder at his address appearing in
the register for the Subordinated Notes on the date of the Offer offering to
purchase up to the principal amount of Subordinated Notes specified in such
Offer at the purchase price specified in such Offer (as determined pursuant to
this Guaranty). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 60 days after the date of such Offer and a settlement
date for purchase of Securities within five Business Days after the Expiration
Date. Loral Space shall notify the Holders of the Subordinated Notes at least 15
Business Days (or such shorter period as is acceptable to the Holders of the
Subordinated Notes) prior to the mailing of the Offer of Loral Space s
obligation to make an Offer to Purchase, and the Offer shall be mailed by Loral
Space or, at Loral Space's request, by the Holders of the Subordinated Notes in
the name and at the expense of Loral Space. The Offer shall contain information
concerning the business of Loral Space and its Subsidiaries which Loral Space in
good faith believes will enable such Holders to make an informed decision with
respect to the Offer to Purchase (which at a minimum shall include (1) the most
recent annual and quarterly financial statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in the
documents
10
required to be filed with the Holders of the Subordinated Notes pursuant to this
Guaranty (which requirements may be satisfied by delivery of such documents
together with the Offer), (2) a description of material developments in Loral
Space's business subsequent to the date of the latest of such financial
statements referred to in clause (1) (including a description of the events
requiring Loral Space to make the Offer to Purchase), (3) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase and
the events requiring Loral Space to make the Offer to Purchase and (4) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Subordinated Notes pursuant to the Offer to Purchase.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of Loral Space.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means an opinion from legal counsel who is acceptable
to the Holders of the Subordinated Notes. The counsel may be an employee of, or
counsel to, the Company, Loral Space or the Holders of the Subordinated Notes.
"Permitted Business" means any of the lines of business conducted by Loral
Space and its Restricted Subsidiaries or its existing Permitted Ventures on the
Issue Date and any other space or communication businesses and any business
reasonably related thereto.
"Permitted Investments" means:
(1) any Investment in Loral Space or in a Restricted Subsidiary of
Loral Space;
(2) any Investment in Cash Equivalents;
(3) any Investment by Loral Space or any Restricted Subsidiary of
Loral Space in a Person engaged in a Permitted Business, if as a
result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Loral Space; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, Loral Space or a Restricted Subsidiary of Loral Space;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.14;
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Loral Space;
(6) Hedging Obligations;
(7) Investments in Permitted Ventures;
(8) Investments existing on the Issue Date;
(9) Investments in Skybridge, L.P. that are either
(a) required pursuant to the partnership agreement in existence on
the Issue Date, or
(b) required to avoid disproportionate dilution to Loral Space's
equity interest therein pursuant to such partnership agreement or to
avoid financial penalties; and
(10) other Investments in any Person principally engaged in Permitted
Businesses having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to
this clause (10) at any time outstanding not to exceed 5% of Loral Space's
Consolidated Tangible Assets.
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"Permitted Liens" means:
(1) Liens on assets of Loral Space or its Restricted Subsidiaries
securing Indebtedness and other Obligations under Credit Facilities that
were permitted by the Loral Space Guaranty to be incurred;
(2) Liens in favor of Loral Space or any of its Restricted
Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Loral Space or any Restricted
Subsidiary of Loral Space; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to
any assets other than those of the Person merged into or consolidated with
Loral Space or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by
Loral Space or any Restricted Subsidiary of Loral Space; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (4) of the second paragraph (b) of Section
4.05;
(7) Liens existing on the Issue Date and Liens Loral Space or any
Restricted Subsidiary are or may be obligated to create pursuant to
agreements in existence on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens incurred in the ordinary course of business of Loral Space
or any Restricted Subsidiary of Loral Space with respect to obligations
that do not exceed $50 million at any one time outstanding;
(10) other Liens incidental to the conduct of Loral Space's and its
Restricted Subsidiaries' businesses or the ownership of their respective
property not securing any Indebtedness, and which do not in the aggregate
materially detract from the value of Loral Space's and its Restricted
Subsidiaries' property when taken as a whole, or materially impair the use
thereof in the operation of their respective businesses;
(11) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; and
(12) Liens on materials and work-in-progress in favor of customers of
Loral Space and its Restricted Subsidiaries for amounts paid to Loral Space
or any of its Restricted Subsidiaries as progress payments, milestones,
advances or similar arrangements under any provision of any security issued
by Loral Space or such Restricted Subsidiary or of any agreement,
instrument or other undertaking to which such Person or any of its property
is bound, in each case entered into by Loral Space or such Restricted
Subsidiary with respect to such materials or work-in-progress.
"Permitted Refinancing Indebtedness" means any Indebtedness of Loral Space
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Loral Space or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable), of the
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Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus all accrued interest thereon and the amount of all customary
expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is junior in right of payment to the Loral
Space Guaranty of the new notes, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and is
junior in right of payment to, the Loral Space Guaranty of the new notes on
terms at least as favorable to the Holders of the Loral Space Guaranty of
the new notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by Loral Space or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Venture" means:
(1) a corporation, partnership or other entity, other than a
Subsidiary engaged in one or more Permitted Businesses in respect of which
Loral Space or a Restricted Subsidiary
(a) beneficially owns at least 20% of the Capital Stock of such
entity, and
(b) either is a party to an agreement providing for one or more
parties to such agreement (which may or may not be Loral Space or a
Subsidiary), or is a member of a group that, pursuant to the constituent
documents of the applicable corporation, partnership or other entity,
has the power, to direct the policies, management and affairs of such
entity; or
(2) Globalstar Telecommunications Limited ("Globalstar
Telecommunications Limited"), so long as Globalstar, L.P. is a Permitted
Venture and Globalstar Telecommunications Limited's principal asset
consists of Equity Interests in Globalstar.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Series C Preferred Stock" means Loral Space's 6% Series C Convertible
Redeemable Preferred Stock due 2007.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated by
the SEC, as such Regulation is in effect on the Issue Date, using a percentage
of 5% for such calculations instead of the percentage set forth therein.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
13
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordination Provisions" means the intercreditor and subordination
provisions set forth on Schedule 2.05 hereto.
"Subsidiary" means, with respect to any specified Person, any corporation,
partnership, association or other business entity that would be required under
GAAP to be consolidated in the financial statements of such Person or one or
more of the other Subsidiaries of that Person (or a combination thereof).
"Total Indebtedness" means, at any time of determination, without
duplication, the sum of
(1) all Indebtedness of Loral Space and its Restricted Subsidiaries
at such time,
(2) the aggregate redemption price of any Disqualified Stock, and
(3) the aggregate liquidation preference of any Preferred Stock of
Loral Space's Restricted Subsidiaries, in each case as determined on a
consolidated basis in accordance with GAAP.
"Unrestricted Subsidiary" means any Subsidiary of Loral Space that is
designated by the Board of Directors of Loral Space as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only to the extent that such
Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Loral Space or any Restricted Subsidiary of Loral Space
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Loral Space or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of Loral Space;
(3) is a Person with respect to which neither Loral Space nor any of
its Restricted Subsidiaries has any direct or indirect obligation
(a) to subscribe for additional Equity Interests, or
(b) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating
results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Loral Space or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Loral Space or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of Loral Space or any of its Restricted Subsidiaries.
Section 1.02. Subordinated Notes Definitions. The term "Legal Holiday" is
defined in Section 6.07. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Subordinated Notes.
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
14
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of Loral Space dated such date prepared in
accordance with GAAP but accretion of principal on such security shall not
be deemed to be the incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater;
(9) [intentionally omitted]; and
(10) the terms "redemption" and "redeemable" shall not be deemed to
refer to Offers to Purchase or to repurchases pursuant to Section 4.12 of
the Loral Space Indenture or similar offers or repurchases.
ARTICLE II
SUBORDINATED GUARANTEE OF NOTES
Section 2.01. Guarantee. (a) Subject to the provisions of this Article
Two, Loral Space hereby, fully, unconditionally and irrevocably guarantees on a
subordinated basis (as set forth in the Subordination Provisions) to each
Holder: (i) the due and punctual payment of the principal of, premium, if any,
and accrued interest on each Subordinated Note, when and as the same shall
become due and payable, whether at maturity, by acceleration or otherwise, the
due and punctual payment of interest on the overdue principal of and interest,
if any, on the Subordinated Notes, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders, all
in accordance with the terms of such Subordinated Note and this Guaranty and
(ii) in the case of any extension of time of payment or renewal of any
Subordinated Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, at Stated Maturity, by acceleration or otherwise. Loral
Space hereby waives diligence, presentment, demand of payment, filing of claims
with a court in the event of merger or bankruptcy of the Company, any right to
require a proceeding first against the Company, the benefit of discussion,
protest or notice with respect to any such Subordinated Note or the debt
evidenced thereby and all demands whatsoever, and covenants that this Guarantee
will not be discharged as to any such Subordinated Note except by payment in
full of the principal thereof, premium, if any, and interest thereon. The
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article Six of the Subordinated Notes for the purposes of this Article Two. In
the event of any declaration of acceleration of such obligations as provided in
Article Six of the Subordinated Notes such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor jointly and
severally, for the purpose of this Article Two.
(b) If the Holder of any Subordinated Note is required by any court or
otherwise to return to the Company or any Guarantor, or any custodian, receiver,
liquidator, trustee, bequestrator or other similar official acting in relation
to the Company or any Guarantor, any amount paid to such Holder in respect of a
Subordinated Note, any Guarantee of the Subordinated Notes, to the extent
theretofore discharged, shall be reinstated in full force and effect. Loral
Space further agrees, to the fullest extent that it may lawfully do so, that, as
between it, on the one hand, and the Holders, on the other hand, the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article Six
of the Subordinated Notes of the purposes of the Guarantee hereunder,
notwithstanding any stay, injunction or other prohibition extant under any
applicable bankruptcy law preventing such acceleration in respect of the
obligations guaranteed hereby.
(c) Loral Space hereby further agrees that its obligations under this
Guaranty and the Subordinated Notes shall be unconditional, regardless of the
validity, regularity or enforceability of this Guaranty or the Subordinated
Notes, the absence of any action to enforce this Guaranty or the Subordinated
Notes, any modification or amendment of, or supplement to, this Guaranty, the
Indenture or the Subordinated Notes,
15
the recovery of any judgment against the Company or any action to enforce any
such judgment, or any other circumstance that might otherwise constitute a legal
or equitable discharge or defense of a guarantor.
(d) If Loral Space makes or is required to make any payment in respect of
its Guarantee hereunder, it shall be entitled to seek contribution from any
other Guarantors to the extent permitted by applicable law; provided that Loral
Space agrees that any such claim for contribution that Loral Space may have
against any other Guarantor shall be subrogated to the prior payment in full, in
cash, of all obligations owed to Holders under or in respect of the Subordinated
Notes.
(e) Loral Space hereby irrevocably defers, until the principal of,
premium, if any, and interest on the Subordinated Notes shall have been paid in
full, any claim or other rights which it may now or hereafter acquire against
the Company that arise from the existence, payment, performance or enforcement
of its obligations under this Guarantee and the Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the Holders
against the Company or any collateral which any such Holder hereafter acquires,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from the company, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such claim
or other rights. If any amount shall be paid to Loral Space in violation of the
preceding sentence and the principal of, premium, if any, and accrued interest
on the Subordinated Notes shall not have been paid in full, such amount shall be
deemed to have been paid to Loral Space for the benefit of, and held in trust
for the benefit of, the Holders, and shall forthwith be paid to the Holders to
be credited and applied upon the principal of, premium, if any, and accrued
interest on the Subordinated Notes. Loral Space acknowledges that it will
receive direct and indirect benefits from the issuance of the Subordinated Notes
pursuant to this Guaranty and that the waivers set forth in this Section 2.01
are knowingly made in contemplation of such benefits.
(f) [Intentionally Omitted]
(g) Loral Space consents to the terms of the Subordinated Notes.
Section 2.02. Obligations Unconditional. Nothing contained in this Article
Two or elsewhere in the Guaranty, the Indenture or in the Subordinated Notes is
intended to or shall impair, as among Loral Space and the Holders, the
obligation of Loral Space, which is absolute and unconditional, upon failure by
the Company, to pay to the Holders the principal of, premium, if any, and
interest on the Subordinated Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of Loral Space, nor shall anything
herein or therein prevent any Holder of the Subordinated Notes from exercising
all remedies otherwise permitted by applicable law upon default under the
Indenture.
Without limiting the foregoing, nothing contained in this Article Two will
restrict the right of the Holders to take any action to declare the Guarantee
hereunder to be due and payable prior to the Stated Maturity of the Subordinated
Notes pursuant to Section 6.02 of the Subordinated Notes or to pursue any rights
or remedies hereunder.
Section 2.03. Notice to Trustee. Loral Space shall give prompt written
notice to the Holders of any fact known to it which would prohibit the making of
any payment to or by the Holders in respect of its Guarantee pursuant to the
provisions of this Article Two.
Section 2.04. This Article Not to Prevent Loral Space Event of
Default. The failure to make a payment on account of principal of, premium, if
any, or accrued interest on the Subordinated Notes by reason of any provision of
this Article Two will not be construed as preventing the occurrence of a Loral
Space Event of Default.
Section 2.05. Subordination. Notwithstanding anything contained in this
Guaranty to the contrary, the obligations of Loral Space under this Guaranty are
subordinate and junior to the extent and in the
16
manner set forth in the Subordination Provisions. Each Holder, by acceptance of
this Guaranty, agrees to the Subordination Provisions.
ARTICLE III
[INTENTIONALLY OMITTED]
Section 3.01. [Intentionally Omitted]
Section 3.02. [Intentionally Omitted]
ARTICLE IV
COVENANTS
Loral Space shall comply with the covenants contained in this Article IV
from and after the date requested in writing by the Holders of the Subordinated
Notes to do so and then only to the extent requested by the Holders of the
Subordinated Notes. No action taken by Loral Space (or any action taken after
such written notice pursuant to an agreement entered into prior to receipt of
such written notice) prior to any such written request shall constitute a breach
of this Guaranty by Loral Space.
Section 4.01. [Intentionally Omitted]
Section 4.02. [Intentionally Omitted]
Section 4.03. Reports. Whether or not required by the SEC, so long as any
Subordinated Notes are outstanding, if requested by the Holders of the
Subordinated Notes, Loral Space shall furnish to the Holders of Subordinated
Notes, within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K
(or any successor forms) if Loral Space were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and
results of operations of Loral Space and its Subsidiaries and, with respect
to the annual information only, a report on the annual financial statements
by Loral Space's certified independent accountants; and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K (or any successor form) if Loral Space were required to
file such reports.
(b) If Loral Space has designated any of its Subsidiaries as Unrestricted
Subsidiaries, if requested by the Holders of the Subordinated Notes, then the
quarterly and annual financial information required by this Section 4.03 shall
include selected financial information, either on the face of the financial
statements or in the footnotes thereto, regarding the financial condition and
results of operations of Loral Space and its Restricted Subsidiaries separate
from the financial condition and results of operations of the Unrestricted
Subsidiaries of Loral Space.
(c) In addition, whether or not required by the SEC, if requested by the
Holders of the Subordinated Notes, Loral Space shall file a copy of all
information and reports referred to in clauses (1) and (2) of paragraph (a) of
this Section 4.03 with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.
(d) [Intentionally Omitted].
Section 4.04. Restricted Payments. Loral Space will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Loral Space's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
17
distribution, dividend or payment in connection with any merger or
consolidation involving Loral Space or any of its Restricted Subsidiaries)
or to the direct or indirect holders of Loral Space's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of Loral Space or to Loral Space or a Restricted
Subsidiary or Loral Space);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Loral Space) any Equity Interests of Loral Space,
any Restricted Subsidiary of Loral Space or any direct or indirect parent
of Loral Space;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
junior in right of payment to this Guaranty of the Subordinated Notes,
except the scheduled payment of interest or principal at the Stated
Maturity thereof; or
(4) make any Restricted Investment
(all such payments and other actions set forth in clauses (1) through (4) above
being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Loral Space Default or Event of Loral Space shall have occurred
and be continuing or would occur as a consequence thereof; and
(2) Loral Space would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
either test set forth in the proviso to paragraph (a) of Section 4.05; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Loral Space and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (2), (3), (4) and (6) of paragraph (b) of this Section 4.04) is
less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of Loral Space for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the Issue Date to the end of Loral
Space's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit); plus
(B) 100% of the aggregate net cash proceeds received by Loral Space
since the Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of Loral Space (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or
debt securities of Loral Space that have been converted into or
exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary
of Loral Space), except to the extent such net cash proceeds are used to
increase the amount of dividends on Preferred Stock of Loral Space or
the amount of Restricted Investments that may be made pursuant to clause
(7) of paragraph (b) of this Section 4.04; plus
(C) 100% of the fair market value (as determined by the Board of
Directors and evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Holders of the
Subordinated Notes) of assets used or useful in a Permitted Business
received by Loral Space since the Issue Date as a contribution to its
common equity capital or from the issue or sale of Equity Interests of
Loral Space (other than Disqualified Stock); plus
(D) to the extent not already included in Consolidated Net Income
of Loral Space for such period, if any Restricted Investment that was
made by Loral Space or any Restricted Subsidiary after the Issue Date is
sold for cash or otherwise liquidated or repaid for cash, the lesser of
18
(i) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (ii) the initial
amount of such Restricted Investment or designated amount of
Unrestricted Subsidiary; plus
(E) to the extent that any Unrestricted Subsidiary is designated by
Loral Space as a Restricted Subsidiary after the Issue Date, an amount
equal to the lesser of (i) the net book value of Loral Space's
Investment in such Unrestricted Subsidiary at the time of such
designation and (ii) the fair market value of Loral Space's Investment
in such Unrestricted Subsidiary at the time of such designation.
(b) The preceding paragraph (a) shall not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the foregoing paragraph (a) of this Section
4.04;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Loral Space or of any
Equity Interests of Loral Space or any Restricted Subsidiary in exchange
for, or out of the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of Loral Space) of, Equity Interests of Loral
Space (other than Disqualified Stock); provided that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(3)(B) of paragraph (a) of this Section 4.04;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated indebtedness of Loral Space with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend or distribution by a Restricted
Subsidiary of Loral Space to the holders of its common Equity Interests so
long as Loral Space or such Restricted Subsidiary receives at least its pro
rata share (and in like form) of such dividend or distribution in
accordance with its common Equity Interests;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Loral Space or any Restricted Subsidiary
of Loral Space held by any employee of Loral Space or a Restricted
Subsidiary or member of Loral Space's (or any of its Restricted
Subsidiaries') management pursuant to any equity subscription agreement or
stock option agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $10 million;
(6) the purchase by a Restricted Subsidiary of shares of Capital Stock
of Loral Space from Loral Space or the deemed repurchase of Capital Stock
by Loral Space or a Restricted Subsidiary on the exercise of stock options;
(7) payments of dividends by Loral Space on Preferred Stock of the
Guarantor or the making of Restricted Investments by Loral Space or any
Restricted Subsidiary in an aggregate amount not to exceed 100% of the
aggregate net cash proceeds received by Loral Space since the Issue Date
from the issue or sale of Equity Interests of Loral Space (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such dividend payment or Restricted Investment
shall be excluded from clause (3)(B) of paragraph (a) of this Section 4.04;
(8) the purchase by Loral Space or a Restricted Subsidiary of Equity
Interests in a Restricted Subsidiary from another Person;
(9) scheduled dividends payable on the Series C Preferred Stock;
(10) payment of dividends on Preferred Stock of a Restricted
Subsidiary; and
(11) other Restricted Payments in an aggregate principal amount not to
exceed $25 million;
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provided that Loral Space shall not and shall not permit any of its Restricted
Subsidiaries to make any Restricted Payment contemplated by clauses (2) through
(10) above so long as a Loral Space Default has occurred and is continuing.
(c) The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the assets or
securities proposed to be transferred or issued to or by Loral Space or a
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this Section 4.04 shall be either (1) determined by the Board of Directors,
whose resolution with respect thereto shall be delivered to the Holders of the
Subordinated Notes or (2) based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of international standing if
the fair market value exceeds $25 million. Not later than the date of making any
Restricted Payment, Loral Space shall deliver to the Holders of the Subordinated
Notes an Officers' Certificate stating that such Restricted Payment is permitted
and setting forth the basis upon which the calculations required by this Section
4.04 were computed, together with a copy of any fairness opinion or appraisal
required by this Section 4.04.
Section 4.05. Incurrence of Indebtedness and Issuance of Preferred Stock.
(a) Loral Space shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), and Loral Space shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of Preferred
Stock; provided, however, that Loral Space or any Restricted Subsidiary may
incur Indebtedness (including Acquired Debt), and Loral Space may issue
Disqualified Stock, and any Restricted Subsidiary may issue Preferred Stock, if,
after giving effect to the incurrence of such Indebtedness or the issuance of
such Disqualified Stock or Preferred Stock and the application of the proceeds
thereof, no Loral Space Default would occur as a consequence of such incurrence
or issuance or be continuing following such incurrence or issuance and either
(1) the Consolidated Leverage Ratio of Loral Space would be less than 5.0 to
1.0, or (2) Loral Space's Consolidated Capital Ratio as of the most recent
available quarterly or annual balance sheet is less than 2.0 to 1.0.
(b) Nothing contained in paragraph (a) of this Section 4.05 shall prohibit
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by Loral Space and its Restricted Subsidiaries of
additional Indebtedness and letters of credit pursuant to Credit Facilities
in an aggregate principal amount at any one time outstanding under this
clause (1) not to exceed $850 million as of such date of incurrence less
the aggregate amount of all Net Proceeds of Asset Sales applied to repay
term Indebtedness outstanding under one or more Credit Facilities pursuant
to clause (1) of paragraph (b) of Section 4.14;
(2) the incurrence by Loral Space and its Restricted Subsidiaries of
the Existing Indebtedness;
(3) the incurrence by Loral Space of Indebtedness represented by the
Subordinated Notes and Loral Space's 9 1/2% Senior Subordinated Notes due
2006;
(4) the issuance by a Subsidiary of Preferred Stock or the incurrence
by Loral Space's Subsidiaries of Non-Recourse Debt (including Acquired Debt
that constitutes Non-Recourse Debt); provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of a Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Loral Space that was not permitted by this clause (4);
(5) the incurrence by Loral Space or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness)that was permitted by this Guaranty
to be incurred under paragraph (a) of this Section 4.05 or clauses (2), (3)
or this clause (5) of this paragraph (b);
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(6) the incurrence by Loral Space or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Loral Space and
any of its Restricted Subsidiaries; provided, however, that:
(A) if Loral Space is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to all Obligations with
respect to this Guaranty of the Subordinated Notes; and
(B) (i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
Loral Space or a Restricted Subsidiary thereof and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not either
Loral Space or a Restricted Subsidiary thereof shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by Loral Space or
such Restricted Subsidiary, as the case may be, that was not permitted
by this clause (6);
(7) the incurrence by Loral Space or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk or currency exchange rate risk;
(8) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock or Preferred Stock in the form of additional shares
of the same class of Disqualified Stock or Preferred Stock, as the case may
be, will not be deemed to be an incurrence of Indebtedness or an issuance
of Disqualified Stock or Preferred Stock for purposes of this Section 4.05;
(9) the incurrence by Loral Space or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (9), not to exceed $50
million; or
(10) the incurrence by Restricted Subsidiaries of Guarantees of
Indebtedness of Loral Space or any Restricted Subsidiary that is not
subordinated to the Guaranty of the Subordinated Notes.
(c) Loral Space shall not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of Loral Space unless such Indebtedness is also contractually subordinated in
right of payment to the Loral Space Guaranty of the Subordinated Notes on
substantially identical terms; provided, however, that no Indebtedness of Loral
Space shall be deemed to be contractually subordinated in right of payment to
any other Indebtedness of Loral Space solely by virtue of being unsecured.
(d) For purposes of determining compliance with this Section 4.05, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (10) of
paragraph (b) of this Section 4.05, or is entitled to be incurred pursuant to
paragraph (a) of this Section 4.05, Loral Space shall be permitted to classify
such item of Indebtedness on the date of its incurrence in any manner that
complies with this Section 4.05.
Section 4.06. Liens. Loral Space shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind on any asset now owned or hereafter
acquired, except Permitted Liens.
Section 4.07. Sale and Leaseback Transactions. Loral Space shall not, and
shall not permit any of its Restricted Subsidiaries to, enter into any Sale and
Leaseback Transaction; provided that Loral Space or any Restricted Subsidiary
may enter into a Sale and Leaseback Transaction if:
(1) Loral Space or such Restricted Subsidiary, as applicable, could
have (A) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction under Section 4.05 and (B)
incurred a Lien to secure such Indebtedness pursuant to Section 4.06;
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(2) the gross cash proceeds of such Sale and Leaseback Transaction are
at least equal to the fair market value, as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to
the Holders of the Subordinated Notes, of the property that is the subject
of such Sale and Leaseback Transaction; and
(3) the transaction complies with Section 4.14.
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. (a) Loral Space shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
to Loral Space or any of its Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or pay
any indebtedness owed to Loral Space or any of its Restricted Subsidiaries;
(2) make loans or advances to Loral Space or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Loral Space or any of
its Restricted Subsidiaries.
(b) The restrictions set forth in paragraph (a) of this Section 4.08 shall
not apply to encumbrances or restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than
those contained in such Existing Indebtedness, as in effect on the Issue
Date;
(2) any customary (as conclusively determined in good faith by the
Chief Financial Officer of Loral Space) encumbrance or restriction
applicable to Loral Space or a Restricted Subsidiary that is contained in
an agreement or instrument governing or relating to Indebtedness of Loral
Space or Indebtedness contained in any Credit Facilities or Indebtedness
incurred pursuant to clause (4) of paragraph (b) of Section 4.05; provided
that, other than with respect to Preferred Stock of a Subsidiary or
Non-Recourse Debt of a Subsidiary (including Non-Recourse Debt that is
Acquired Debt), such encumbrances and restrictions permit the distribution
of funds to the Guarantor in an amount sufficient for Loral Space to make
the timely payment of interest, premium, if any, and principal (whether at
stated maturity, by way of a sinking fund applicable thereto, by way of any
mandatory redemption, defeasance, retirement or repurchase thereof,
including upon the occurrence of designated events or circumstances or by
virtue of acceleration upon an event of default, or by way of redemption or
retirement at the option of the holder of the Indebtedness, including
pursuant to offers to purchase) according to the terms of this Guaranty and
other Indebtedness that is solely an obligation of Loral Space, but
provided further that such agreement may nevertheless contain customary (as
so determined) net worth, leverage, invested capital and other financial
covenants, customary (as so determined) covenants regarding the merger of
or sale of all or any substantial part of the assets of Loral Space or any
Restricted Subsidiary, customary (as so determined) restrictions on
transactions with affiliates and customary (as so determined) subordination
provisions governing Indebtedness owed to Loral Space or any Restricted
Subsidiary;
(3) the Credit Agreement as in effect on the Issue Date and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof; provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than
those contained in such Credit Agreement, as in effect on the Issue Date;
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(4) the Loral Space Indenture and the notes issued thereunder, this
Guaranty and the Subordinated Notes and the Guarantees of the Subordinated
Notes by the Subsidiary Guarantors;
(5) applicable law;
(6) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Loral Space or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired; provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Guaranty
to be incurred;
(7) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(8) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of paragraph (a) of this Section 4.08;
(9) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(10) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced;
(11) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(12) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business; and
(13) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Section 4.09. Designation of Restricted and Unrestricted
Subsidiaries. The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if that designation would not cause a Loral Space
Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary,
the aggregate fair market value of all outstanding Investments owned by Loral
Space and its Restricted Subsidiaries in the Subsidiary so designated will be
deemed to be an Investment made as of the time of such designation and will
reduce the amount available for Restricted Payments under paragraph (a) of
Section 4.04 or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments set forth in Section
1.01, as Loral Space shall determine. That designation will only be permitted if
such Investment would be permitted at that time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary set
forth in Section 1.01. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Loral Space Default.
Section 4.10. Transactions with Affiliates. (a) Loral Space shall not,
and shall not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each, an "AFFILIATE TRANSACTION"),
unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to Loral Space or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by Loral Space or such
Restricted Subsidiary with an unrelated Person; and
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(2) Loral Space delivers to the Holders of the Subordinated Notes with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $15 million,
either (A) a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with this
Section 4.10 and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors or (B) an
opinion as to the fairness to the Holders of such Affiliate Transaction
from a financial point of view issued by an accounting, appraisal or
investment banking firm of international standing.
(b) The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject, except as set forth below, to the
provisions of paragraph (a) of this Section 4.10:
(1) any employment agreement entered into by Loral Space or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of Loral Space or such Restricted Subsidiary, as the
case may be;
(2) transactions between or among Loral Space and/or its Restricted
Subsidiaries;
(3) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of Loral Space;
(4) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of Loral Space;
(5) Restricted Payments that are permitted by, and Permitted
Investments that are not prohibited by, Section 4.04; and
(6) transactions between the Company and/or its Restricted
Subsidiaries, on the one hand, and a Permitted Venture, on the other hand,
provided that the condition set forth in clause (1) of paragraph (a) of
this Section 4.10 is satisfied.
Section 4.11. Limitation on Issuances of Guarantees of
Indebtedness. (a) Loral Space shall not permit any of its Restricted
Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to
secure the payment of any other Indebtedness of Loral Space unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture or a supplemental agreement to this Guaranty or a
separate Guarantee providing for the Guarantee of the payment of the
Subordinated Notes by such Restricted Subsidiary (a "GUARANTOR"), which
Guarantee shall (1) be senior to or pari passu with such Restricted Subsidiary's
Guarantee of or pledge to secure such other Indebtedness and (2) remain in
effect for so long as the Guarantee or pledge to secure such other Indebtedness
remains in effect.
(b) No Guarantor shall incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of such Guarantor unless such Indebtedness is also contractually subordinated in
right of payment to such Guarantor's Guarantee of the Subordinated Notes on
substantially identical terms; provided, however, that no Indebtedness of a
Guarantor shall be deemed to be contractually subordinated in right of payment
to any other Indebtedness of such Guarantor solely by virtue of being unsecured.
Section 4.12. Business Activities. Loral Space shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than Permitted
Businesses, except to the extent as would not be material to Loral Space and its
Restricted Subsidiaries, taken as a whole.
Section 4.13. Intentionally Omitted.
Section 4.14. Asset Sales. (a) Loral Space shall not, and shall not
permit any Restricted Subsidiary to, consummate an Asset Sale unless:
(1) Loral Space (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of;
24
(2) such fair market value is (A) determined by two Officers of Loral
Space if the fair market value is less than $25 million or (B) determined
by the Board of Directors and evidenced by a resolution of the Board of
Directors if the fair market value is $25 million or greater, and, in each
case, such fair market value is set forth in an Officers' Certificate
delivered to the Holders of the Subordinated Notes; and
(3) at least 75% of the consideration therefor received by Loral Space
or such Restricted Subsidiary is in the form of cash or Cash Equivalents.
Only for purposes of this clause (3), each of the following shall be deemed
to be cash:
(A) any liabilities (as shown on Loral Space's or such Restricted
Subsidiary's most recent balance sheet), of Loral Space or any
Restricted Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Securities) that are assumed
by the transferee of any such assets pursuant to a customary novation
agreement that releases Loral Space or such Restricted Subsidiary from
further liability;
(B) any securities, notes or other obligations received by the
Guarantor or any such Restricted Subsidiary from such transferee that
are contemporaneously (subject to ordinary settlement periods) converted
by Loral Space or such Restricted Subsidiary into cash (to the extent of
the cash received in that conversion);
(C) any assets described in clause (2) or (4) of paragraph (b) of
this Section 4.14;
(D) Marketable Securities; and
(E) Designated Other Permitted Consideration; provided that the
aggregate fair market value (as determined pursuant to clause (2) above)
of such Designated Other Permitted Consideration, taken together with
the fair market value at the time of receipt of all other designated
Other Permitted Consideration received pursuant to this clause (E), less
the amount of net cash proceeds previously realized in cash from prior
Designated Other Permitted Consideration is less than 5% of Loral
Space's Consolidated Tangible Assets at the time of the receipt of such
Designated Other Permitted Consideration (with the fair market value of
each item of Designated Other Permitted Consideration being measured at
the time received and without giving effect to subsequent changes in
value).
(b) Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, Loral Space may apply (or, in the case of clause (2), (3) or (4) below,
enter into a binding commitment to apply) such Net Proceeds:
(1) to repay Indebtedness of Loral Space or any Restricted Subsidiary
which is not subordinated to this Guaranty;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business or to purchase
Equity Interests of a Restricted Subsidiary from another Person;
(3) to make a capital expenditure in a Permitted Business or to make
an Investment in a Permitted Venture; or
(4) to acquire or to acquire the right to use other long-term assets
that are used or useful in a Permitted Business.
(c) Pending the final application of any such Net Proceeds, Loral Space may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Guaranty.
(d) Any Net Proceeds from Asset Sales that are not applied or invested as
provided in paragraph (b) of this Section 4.14 shall constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $15 million,
Loral Space shall make, or shall cause the Company to make, an Offer to Purchase
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to all Holders of Subordinated Notes and all holders of other Indebtedness that
is pari passu with the Guaranty of the Subordinated Notes containing provisions
similar to those set forth in this Guaranty with respect to offers to purchase
or redeem with the proceeds of sales of assets to purchase the maximum principal
amount of Subordinated Notes and such other pari passu Indebtedness that may be
purchased out of the Excess Proceeds. The offer price in any Offer to Purchase
shall be equal to 101% of principal amount plus accrued and unpaid interest to
the date of purchase, and shall be payable in cash. If any Excess Proceeds
remain after consummation of an Offer to Purchase, Loral Space may use such
Excess Proceeds for any purpose not otherwise prohibited by this Guaranty. If
the aggregate principal amount of Subordinated Notes and such other pari passu
Indebtedness tendered into such Offer to Purchase exceeds the amount of Excess
Proceeds, the Holders of the Subordinated Notes shall select the Subordinated
Notes and such other pari passu Indebtedness to be purchased on a pro rata basis
based on the principal amount of Subordinated Notes and such other pari passu
Indebtedness tendered. Upon completion of each Offer to Purchase required by
this Section 4.14, the amount of Excess Proceeds shall be reset at zero.
(e) Loral Space shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Subordinated Notes required by this Section 4.14. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.14 or the definition of the Offer to Purchase,
Loral Space shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the provisions of
this Section 4.14 or such definition by virtue of such conflict.
Section 4.15. Additional Amounts. (a) All payments in respect of this
Guaranty will be made free and clear of, and without withholding or deduction
for, any present or future taxes, duties, assessments or governmental charges of
whatever nature (collectively, "TAXES") imposed, levied, collected, withheld or
assessed by or within any jurisdiction in which Loral Space is then incorporated
(or the jurisdiction of incorporation of any successor of Loral Space) or any
other jurisdiction in which Loral Space (or such successor) is resident for tax
purposes or any political subdivision or taxing authority thereof or therein
(hereinafter, a "RELEVANT JURISDICTION"), unless such withholding or deduction
is required by law or by regulation or governmental policy having the force of
law. In the event that any such withholding or deduction in respect of such
payment is so required, Loral Space, or any successor, shall pay such additional
amounts ("ADDITIONAL AMOUNTS") as will result in receipt by each Holder of a
Subordinated Note of such gross amount as would have been received by such
Holder or the beneficial owner with respect to such Subordinated Note, as
applicable, had no such withholding or deduction (including any withholding or
deduction applicable to Additional Amounts payable) been required, except that
no Additional Amounts will be payable for or on account of:
(1) Taxes that would not have been imposed but for
(A) the existence of any present or former connection between such
Holder or such beneficial owner (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over,
such Holder, if such Holder is an estate, trust, partnership or
corporation) and the Relevant Jurisdiction, including such Holder (or
such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a national, domiciliary or resident of or treated
as a resident thereof or being or having been present or engaged in a
trade or business therein or having had a permanent establishment
therein; or
(B) Section 881(c)(3)(A) of the Code (or any successor provision);
(2) any estate, inheritance, gift, sale, transfer or similar tax,
assessment or other governmental charge;
(3) any Tax that is imposed or withheld by reason of the failure of
the Holder or beneficial owner of a Security to timely comply with a
request of Loral Space, addressed to the Holder (A) to provide reasonably
required or requested information concerning the nationality, residence or
identity of the Holder or such beneficial owner or (B) to make any
reasonably required or requested
26
declaration, filing or claim or satisfy any reasonably required or
requested information or reporting requirement, which, in the case of (A)
or (B), is required or imposed by statute, treaty, regulation or
administrative practice of the taxing jurisdiction as a precondition to
exemption from all or part of such Tax; provided, however, that (i)
providing information required by Internal Revenue Service Forms W-8, W-9,
1001 and 4224 and any successors thereto and (ii) the execution and
delivery of such forms is deemed to be reasonably required or requested; or
(4) any combination of (1), (2) and (3);
nor shall Additional Amounts be paid with respect to payment of the principal of
or any premium or interest on any such Subordinated Note, to any Holder
(including any fiduciary or partnership) to the extent that the beneficial owner
would not have been entitled to such Additional Amounts had it been the Holder
of the Subordinated Note.
(b) Where required by applicable law, Loral Space or any Paying Agent, as
the case may be, shall also (1) make such withholding or deduction in respect of
any Taxes and (2) remit the full amount withheld or deducted to the relevant
authority in accordance with applicable law. Loral Space shall furnish to each
Holder of Subordinated Notes, within 30 days after the date the payment of any
Taxes is due pursuant to applicable law, certified copies of tax receipts
satisfactory to the Holders of the Subordinated Notes evidencing such payment by
Loral Space.
(c) Whenever there is mentioned in any context the payment of principal of
or any premium or interest on, or in respect of, a Subordinated Note, or the net
proceeds received from Loral Space on the sale or exchange of any Subordinated
Note, such mention shall be deemed to include mention of the payment of
Additional Amounts provided for in this Section 4.15 to the extent that, in such
context, Additional Amounts are, were, or would be payable in respect thereof
pursuant to this Section 4.15.
(d) Loral Space shall pay any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges, or similar levies that
arise in any jurisdiction from the execution, delivery, enforcement or
registration of this Guaranty or any other document or instrument relating
thereto, or the receipt of any payments with respect to the Subordinated Notes,
excluding such taxes, charges, or similar levies imposed by any jurisdiction
outside of any jurisdiction in which Loral Space or the Paying Agent is located
or incorporated (except those resulting from or required to be paid in
connection with, the enforcement of Subordinated Notes or any other such
document or instrument following the occurrence of any Loral Space Event of
Default with respect to the Subordinated Notes), and shall indemnify the Holders
for any such taxes paid by such Holders.
(e) The foregoing obligations shall survive any termination, defeasance or
discharge of this Guaranty.
Section 4.16. Intentionally Omitted.
Section 4.17. Further Instruments and Acts. Upon request of the Holders
of the Subordinated Notes, Loral Space will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Guaranty and the Indenture.
Section 4.18. Payments for Consent. Loral Space shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, pay or
cause to be paid any consideration to or for the benefit of any Holder of
Subordinated Notes for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Guaranty or the Subordinated Notes
unless such consideration is offered to be paid to all Holders of Subordinated
Notes that consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
27
ARTICLE V
MERGER, CONSOLIDATION OR SALE OF ASSETS
Loral Space shall comply with the covenants contained in this Article V
from and after the date requested in writing by the Holders of the Subordinated
Notes to do so and then only to the extent requested by the Holders of the
Subordinated Notes. No action taken by Loral Space (or any action taken after
such written notice pursuant to an agreement entered into prior to receipt of
such written notice) prior to any such written request shall constitute a breach
of this Guaranty by Loral Space.
Section 5.01. When Loral Space May Merge, Consolidate or Sell Assets.
(a) Loral Space shall not, directly or indirectly: (x) consolidate or merge
with or into another Person (whether or not Loral Space is the surviving
corporation); or (y) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of Loral Space and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions,
to another Person, unless:
(1) either: (A) Loral Space is the surviving corporation; or (B) the
Person formed by or surviving any such consolidation or merger (if other
than Loral Space) or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made is a corporation organized or
existing under the laws of Bermuda, the United States, any state thereof or
the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than Loral Space) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of Loral Space under this Guaranty pursuant to agreements
reasonably satisfactory to the Holders of the Subordinated Notes;
(3) immediately after such transaction no Loral Space Default exists;
and
(4) Loral Space or the Person formed by or surviving any such
consolidation or merger or to which such sale, assignment, transfer,
conveyance or other disposition shall have been made (if other than Loral
Space):
(A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of Loral
Space immediately preceding the transaction; and
(B) will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period or
balance sheet date, as applicable, be permitted to incur at least $1.00
of additional Indebtedness pursuant to at least one of the tests set
forth in the proviso to paragraph (a) of Section 4.05.
(b) In addition, Loral Space shall not, directly or indirectly, lease all
or substantially all of its properties or assets in one or more related
transactions, to any other Person.
(c) When a successor corporation, trustee, paying agent or registrar
assumes all of the obligations of its predecessor under the Subordinated Notes,
the Indenture and this Guaranty, the predecessor shall be released from those
obligations.
(d) This Section 5.01 shall not apply to a sale, assignment, transfer,
conveyance or other disposition of assets between or among Loral Space and any
of its Restricted Subsidiaries.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, etc. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by Loral Space herefrom, shall in
any event be effective unless the same shall be
28
in writing and signed by the Holders of the Subordinated Notes, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
Section 6.02. Addresses for Notices to Loral Space. All notices and other
communications provided to Loral Space under this Guaranty shall be in writing
or by facsimile and addressed, delivered or transmitted to Loral Space at its
address or facsimile number set forth on Schedule 1 hereto or at such other
address or facsimile number as may be designated by Loral Space in a notice to
the Holders of the Subordinated Notes. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted.
Section 6.03. No Waiver; Remedies. No failure on the part of any Holder of
a Subordinated Note to exercise, and no delay in exercise, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 6.04. Joint and Several. The obligations of Loral Space under this
Guaranty are joint and several with the obligations of any other Guarantor of
the Subordinated Notes.
Section 6.05. Section Captions. Section captions used in this Guaranty are
for convenience of reference only, and shall not affect the construction of this
Guaranty.
Section 6.06. Severability and Counterparts. Wherever possible each
provision of this Guaranty shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Guaranty
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty. This Guaranty may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement. This Guaranty shall
become effective when a counterpart hereof executed on behalf of Loral Space
shall have been received by the Holders of the Subordinated Notes.
Section 6.07. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday, payment shall be made on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
Section 6.08. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
Section 6.09. No Recourse Against Others. No past, present or future
director, officer, partner (including any general partner) employee,
incorporator or stockholder, as such, of Loral Space shall have any liability
for any obligations of Loral Space under this Guaranty or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Subordinated Note, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Subordinated Notes.
Section 6.10. Successors. All agreements of Loral Space in this Guaranty
shall bind their successors. All agreements of the Holders of the Subordinated
Notes in this Guaranty shall bind their respective successors.
Section 6.11. [Intentionally Omitted].
Section 6.12. Jurisdiction; Consent to Service of Process. LORAL SPACE
HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE XXXXX XX XXX XXXX XXX XX XXX XXXXXX XXXXXX
29
DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK FOR ANY LAWSUITS, CLAIMS OR
OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES NOT TO
COMMENCE ANY SUCH LAWSUIT, CLAIM OR OTHER PROCEEDING EXCEPT IN SUCH COURTS.
LORAL SPACE HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE
LAYING OF VENUE OF ANY LAWSUIT, CLAIM, OR OTHER PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED
STATES DISTRICT COURTS LOCATED IN THE CITY OF NEW YORK, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH LAWSUIT, CLAIM OR OTHER PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. LORAL SPACE HAS APPOINTED XXX
XXXX, ESQ. AT 000 XXXXX XXXXXX, XXX XXXX, XXX XXXX 00000, X.X.X. (HEREINAFTER
REFERRED TO IN SUCH CAPACITY AS THE "PROCESS AGENT"), AS ITS AUTHORIZED AGENT
UPON WHOM PROCESS MAY BE SERVED IN ANY SUCH SUIT OR PROCEEDING. LORAL SPACE
REPRESENTS TO THE TRUSTEE THAT IT HAS NOTIFIED THE PROCESS AGENT OF SUCH
DESIGNATION AND APPOINTMENT AND THAT THE PROCESS AGENT HAS ACCEPTED THE SAME IN
WRITING. LORAL SPACE HAS AUTHORIZED AND DIRECTED THE PROCESS AGENT TO ACCEPT
SUCH SERVICE. IF THE PROCESS AGENT SHALL CEASE TO ACT AS LORAL SPACE'S AGENT FOR
SERVICE OF PROCESS, LORAL SPACE SHALL APPOINT WITHOUT DELAY ANOTHER SUCH AGENT
AND NOTIFY THE TRUSTEE OF SUCH APPOINTMENT. LORAL SPACE FURTHER AGREES THAT
SERVICE OF PROCESS UPON THE PROCESS AGENT AND WRITTEN NOTICE OF SAID SERVICE TO
LORAL SPACE MAILED BY FIRST CLASS MAIL OR DELIVERED TO THE PROCESS AGENT SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT
OR PROCEEDING. NOTHING HEREIN SHALL AFFECT THE TRUSTEE'S RIGHT OR THE RIGHT OF
ANY PERSON CONTROLLING THE TRUSTEE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. LORAL SPACE AGREES THAT A FINAL ACTION IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
30
IN WITNESS WHEREOF, Loral Space has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
LORAL SPACE & COMMUNICATIONS LTD.
By:
--------------------------------------
Name:
Title:
Accepted:
LORAL SPACECOM CORPORATION
By:
--------------------------------------
Name:
Title:
31
SCHEDULE 1
ADDRESSES FOR NOTICE
LORAL SPACE & COMMUNICATIONS LTD.
C/O LORAL SPACECOM CORPORATION
000 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
ATTENTION: XXX XXXX, ESQ.
TELEPHONE NO.: (000) 000-0000
FACSIMILE NO.: (000) 000-0000
32
SCHEDULE 2.05
SUBORDINATION PROVISIONS
1. Subordination. Payments of the indebtedness evidenced by this Guaranty
shall be junior and subordinate and subject in right of payment to all Senior
Debt as provided herein. Unless otherwise defined in this Schedule 2.05, (a) all
capitalized terms not otherwise defined have the meanings given to them in the
Guaranty (or the Subordinated Notes, as defined therein) to which this Schedule
2.05 is attached and (b) all references to Sections are to Sections of this
Schedule 2.05.
2. Payments on Account of Subordinated Debt.
(a) Except as set forth in this Section 2 or in Section 3 hereof, unless
and until all Senior Debt shall have been Paid In Full, Loral Space will not
make, and no Holder will demand, accept, or receive, any direct or indirect
payment (in cash, property, by setoff, or otherwise) of or on account of this
Guaranty and the Holder shall not be entitled to declare this Guaranty to be in
default, accelerate any payment date of this Guaranty, file a petition or claim
under any Bankruptcy Law or take any other action with respect to Loral Space or
this Guaranty as a consequence of the failure of Loral Space to make any payment
or perform any of its other obligations in respect of this Guaranty.
(b) Notwithstanding the provisions of Section 2(a), the Holder shall have
the right to (i) in the event of the acceleration of the Subordinated Notes,
accelerate pursuant to Section 2.01 of this Guaranty the payment of all amounts
owed to the Holders under this Guaranty and (ii) commence any action to enforce
or collect such obligations and take any action otherwise prohibited by Section
2(a); provided, however, that if and so long as an Indenture Default or
Indenture Event of Default exists or would exist after giving effect to the
payment of such amount the Holder shall not be entitled to receive and retain
any amounts owed to it in respect of this Guaranty until all Senior Debt has
been Paid In Full.
3. Insolvency, etc. If an Event of Bankruptcy occurs, then and in any such
event:
(a) all Senior Debt (including any interest thereon and any other
obligation with respect to such Senior Debt accruing after the commencement
of such proceedings and any additional interest that would have accrued
thereon but for the commencement of such proceedings, whether or not such
interest is a claim or is collectible) shall first be Paid In Full before
any payment or distribution of any character, whether in cash, securities
or other property, shall be made by Loral Space in respect of this
Guaranty;
(b) any payment or distribution of any character, whether in cash,
securities, or other property, which would otherwise (but for the terms
hereof) be payable or deliverable by Loral Space in respect of this
Guaranty, shall be paid or delivered directly to the holders of Senior Debt
at the time outstanding (or the Trustee), ratably according to the
respective aggregate amounts remaining unpaid thereon, until all Senior
Debt (including any interest thereon and any other obligation with respect
to such Senior Debt accruing after the commencement of such proceedings and
any additional interest that would have accrued thereon but for the
commencement of such proceedings, whether or not such interest is a claim
or is collectible) shall have been Paid In Full, and the Holder at the time
outstanding irrevocably authorizes, empowers and directs all receivers,
trustees, liquidators, conservators and others having authority in the
premises to effect all such payments and deliveries; and
(c) the Holder will at the request of the Trustee file any claim,
proof of claim or other instrument of similar character necessary to
enforce the obligations of Loral Space in respect of this Guaranty. In the
event that the Holder shall fail to take such action requested by the
Trustee, the Trustee may, as attorney-in-fact for the Holder, take such
action on behalf of the Holder and the Holder hereby appoints the Trustee
as its attorney-in-fact to demand, xxx for, collect and receive any and all
such moneys, dividends or other assets and give acquittance therefor and to
file any claim, proof of claim or other instrument of similar character and
to take such other action (excluding acceptance or rejection of any plan of
reorganization or arrangement) in such Trustee's own name or in the name of
the Holder as such Trustee may deem necessary or advisable for the
enforcement of
33
the terms hereof and the Holder will execute and deliver to each Trustee
such other and further powers of attorney or other instruments as such
Trustee may request in order to accomplish the foregoing. Notwithstanding
the foregoing, the Holder, not the Trustee, shall be entitled to accept or
reject any plan of reorganization or arrangement.
4. Payments and Distributions Received. If any payment or distribution of
any character (whether in cash, securities or other property) or any security
shall be received by the Holder in contravention of any of the terms hereof and
before all Senior Debt shall have been Paid In Full, such payment or
distribution or security shall be held in trust for the benefit of, and shall be
paid over or delivered and transferred to, the Trustee for the benefit of the
holders of the Senior Debt at the time outstanding for application to the
payment of all Senior Debt remaining unpaid, ratably according to the respective
aggregate amounts remaining unpaid thereon, to the extent necessary for all such
Senior Debt to be Paid In Full. In the event of the failure of the Holder to
endorse or assign any such payment, distribution or security, the Trustee is
hereby irrevocably authorized to endorse or assign the same.
5. Subrogation. Upon the Payment In Full of all Senior Debt, the Holder
shall be subrogated to any rights of the holders of Senior Debt to receive all
further payments or distributions applicable to the Senior Debt, and until this
Guaranty shall have been Paid In Full, and for purposes of such subrogation, any
payment or distribution applicable to Senior Debt of cash, securities, or other
property, to which the Holder would have been entitled except for these
subordination provisions, shall not, as between the Company and its creditors
(other than the holders of the Senior Debt), on the one hand, and the Holder, on
the other hand, be deemed to be a payment or distribution by Loral Space to or
on account of Senior Debt.
6. Obligations Not Impaired. Except to the extent this Guaranty provides
that (i) this Guaranty may not become due and payable or be paid, and (ii) the
Holder may not commence or join in any proceeding under any Bankruptcy Law
unless the holders of Senior Debt shall also join in bringing such proceeding,
nothing contained in this Guaranty shall impair, as between Loral Space and the
Holder, the obligation of Loral Space, which is absolute and unconditional, to
pay to the Holder the principal hereof and interest hereon as and when the same
shall become due and payable in accordance with the terms hereof.
7. Subordination Not Affected, etc. The terms of this Guaranty, the
subordination effected hereby and the rights of the holders of the Senior Debt,
shall not be affected by (i) any amendment of or addition or supplement to any
Senior Debt or any instrument or agreement relating thereto, (ii) any exercise
or nonexercise of any right, power or remedy under or in respect of any Senior
Debt or any instrument or agreement relating thereto, (iii) any sale, exchange,
release or other transaction affecting all or any part of any property at any
time pledged or mortgaged to secure, or however securing, Senior Debt, or (iv)
any waiver, consent, release, indulgence, extension, renewal, modification,
delay or other action, inaction or omission, in respect of any Senior Debt or
any instrument or agreement relating thereto, whether or not the Holder shall
have had notice or knowledge of any of the foregoing.
8. Amendments, Waiver, etc. Neither this Guaranty nor any term hereof may
be amended, modified or waived, except with the prior written consent of the
holders owning a majority of the outstanding principal amount of the Senior
Debt; provided, however, that any consent delivered by the Trustee shall be
deemed to have been so authorized.
9. Subordination a Condition to Consent of Holders of Senior Debt. The
Holder, by its acceptance hereof, agrees that the consent of the holders of the
Senior Debt to the incurrence by the Company of such indebtedness has been given
in reliance upon the subordination of such indebtedness to the Senior Debt.
10. Definitions, etc. As used in Schedule 4.2, the following terms shall
have the following respective meanings:
"Bankruptcy Law" shall mean any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or
insolvency law or statute of the Federal or any state government.
34
"Event of Bankruptcy" shall mean (i) any insolvency or bankruptcy
proceeding under any Bankruptcy Law, or any receivership, liquidation,
reorganization or other similar proceeding in connection therewith,
relative to the Company or its property, or (ii) any proceeding for
voluntary liquidation, dissolution or other winding-up of the Company, and
whether or not involving insolvency or bankruptcy, or (iii) any assignment
for the benefit of creditors by the Company, or (iv) any distribution,
division, marshalling or application of any of the properties or assets
(including, without limitation, properties or assets securing this
Guaranty) of the Company or the proceeds thereof, to creditors, voluntary
or involuntary, and whether or not involving legal proceedings, in
connection with the dissolution, winding-up, liquidation, reorganization or
other proceeding relating to the Company.
"Paid In Full" means the payment in full in cash or cash equivalents.
"Indenture Event of Default" means an Event of Default under the
Indenture.
"Indenture Unmatured Event of Default" means a Default under the
Indenture.
"Senior Debt" means the due and punctual payment of all obligations,
indebtedness, and liabilities of Loral Space to the Senior Noteholders
arising pursuant to the Senior Guaranty, including, without limitation, the
obligations, indebtedness, and liabilities of Loral Space in respect of
principal of, premium, if any, and interest accruing (including interest in
respect of the other Senior Debt Documents accruing after the date of any
bankruptcy petition whether or not stayed or enforceable and whether or not
constituting a claim) and all attorneys' fees and other expenses incurred
in the enforcement or collection thereof.
"Senior Debt Documents" means all instruments, agreements and/or
documents evidencing and/or securing or guaranteeing the Senior Debt.
"Trustee" means the trustee under the Indenture.
35
[FORM OF SUBORDINATED NOTE RELATED TO FORM OF SUBORDINATED GUARANTEE]
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES. THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. EACH HOLDER OF THIS SECURITY SHOULD BE AWARE THAT IT MAY BE REQUIRED
TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THIS SECURITY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OF THIS SECURITY TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
10% SUBORDINATED NOTE DUE 2006
$29,700,000 December , 2001
FOR VALUE RECEIVED, the undersigned, LORAL CYBERSTAR, INC. a Delaware
corporation (the "Borrower" or the "Company"), promises to pay to LORAL SPACECOM
CORPORATION, or its registered assigns (the "Holder" or the "Investor"), the
principal sum of TWENTY NINE MILLION SEVEN HUNDRED THOUSAND DOLLARS
($29,700,000) on July 30, 2006. This Note is subject to optional and mandatory
prepayment and shall bear interest at such rates and payable at such times as
are set forth herein.
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. As used in this Note, the following terms have
the following meanings:
"Default" means any event which, upon the giving of notice or the
lapse of time or both, would become an Event of Default.
"Event of Default" means any event listed as an Event of Default in
Section 6.1.
"Indenture" means the Indenture dated as of , 2001, between
the Borrower, as issuer, and Bankers Trust Company, as trustee, under which
the Borrower will issue the Senior Notes. Unless otherwise specified,
references herein are to the Indenture as modified, supplemented or amended
from time to time.
"Interest Payment Date" shall have the meaning set forth in Section
2.2.
"Investor" has the meaning specified in preamble.
"Loral Space" means Loral Space & Communications Ltd., a Bermuda
company, and its successors and assigns.
"Notes" means this Note and other Notes issued in connection with
assignments hereof and such other Notes.
"Obligations" means all obligations, indebtedness, and liabilities of
the Borrower to the Investor arising pursuant to this Note, including,
without limitation, the obligations, indebtedness, and liabilities of the
Borrower for principal under this Note and all interest accruing hereon and
all attorneys' fees and other expenses incurred in the enforcement or
collection hereof.
"Person" means any individual, corporation, limited liability company,
business trust, association, company, partnership, joint venture,
governmental authority, or other entity.
973872
1
"Principal Office" means the principal office of the Holder, presently
located at the location set forth on Schedule 3.1.
"Restricted Subsidiary" shall mean each Subsidiary of the Borrower
that is a Restricted Subsidiary under the Indenture, as in effect on the
date hereof.
"Senior Debt" means the due and punctual payment of all obligations,
indebtedness, and liabilities of the Borrower to the Senior Noteholders
arising pursuant to the Indenture or the Senior Notes, including, without
limitation, the obligations, indebtedness, and liabilities of the Borrower
for principal of, premium, if any, and interest accruing (including
interest accruing after the date of any bankruptcy petition whether or not
stayed or enforceable) and all attorneys' fees and other expenses incurred
in the enforcement or collection thereof.
"Senior Debt Documents" means all instruments, agreements and/or
documents evidencing and/or securing or guaranteeing the Senior Debt.
"Senior Notes" means the 10% Senior Notes due 2006 issued by the
Company under the Indenture.
"Senior Noteholders" means the holders from time to time of the Senior
Notes under the Indenture.
"Senior Lenders" means the holders of the Senior Notes.
"Subordinated Loral Space Guaranty" means the Subordinated Guaranty
Agreement dated as of the date hereof executed by Loral Space in favor of
the Holders from time to time of the Notes, as it may be modified,
supplemented or amended from time to time.
"Subordinated Note Documents" means this Note and all promissory
notes, security agreements, deeds of trust, assignments, guaranties, and
other instruments, documents, mortgages and agreements executed and
delivered pursuant to or in connection with this Note, as such instruments,
documents, and agreements may be amended, modified, restated, renewed,
extended, or supplemented from time to time.
"Subordination Provisions" means the intercreditor and subordination
provisions set forth on Schedule 4.1 hereto.
"Subsidiary" shall have the meaning given to it in the Indenture as in
effect on the date hereof.
"Trustee" means Bankers Trust Company, as trustee under the Indenture,
or any successor thereto as trustee under the Indenture.
Section 1.2. Other Definitional Provisions; Accounting
Determinations. All definitions contained in this Note are equally applicable
to the singular and plural forms of the terms defined. The words "hereof,"
"herein," and "hereunder" and words of similar import referring to this Note
refer to this Note as a whole and not to any particular provision of this Note.
Unless otherwise specified, all Article and Section references pertain to this
Note.
ARTICLE II.
PAYMENT TERMS OF NOTE
Section 2.1. Mandatory Repayment of Principal. Subject to any other
terms of this Note requiring additional repayments, the principal balance of
this Note shall be paid on July 30, 2006, together with all unpaid interest
accrued thereon.
Section 2.2. Interest. This Note shall bear interest at 10% per annum,
payable semiannually in arrears. The Company promises to pay interest on this
Note, or any portion thereof outstanding, in arrears, on last day of each
January 30 and July 30 (each, a "Interest Payment Date"), commencing January 30,
2002, and at maturity, subject to the last sentence of this Section 2.2. During
an Event of Default this
2
Note shall bear interest at 12% per annum. Notwithstanding the foregoing, so
long as any Senior Debt is outstanding, interest hereon shall not be payable in
cash but instead shall accrue and be added to the unpaid principal amount hereof
(and itself bear interest) at the rate and on the dates set forth above.
Section 2.3. No Offset, etc. All payments by the Borrower under this Note
shall be made without setoff or counterclaim.
ARTICLE III.
PAYMENTS
Section 3.1. Method of Payment. Subject to the Subordination Provisions,
all payments of principal, interest, and other amounts to be made by the
Borrower under this Note shall be made to the Holder as set forth on Schedule
3.1 or as otherwise indicated by the Holder to the Borrower in writing in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim, not later than 11:00 a.m., New York City time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
The Borrower shall, at the time of making each such payment, specify to the
Holder the sums payable by the Borrower under this Note and the other
Subordinated Note Documents to which such payment is to be applied (and in the
event that the Borrower fails to so specify, or if an Event of Default has
occurred and is continuing, the Investor may apply such payment to the
Obligations in such order and manner as it may elect in its sole discretion).
Each payment received by the Borrower under this Note or any other Subordinated
Note Document for the account of the Holder shall be paid promptly to Holder, in
immediately available funds. Whenever any payment under this Note or any other
Subordinated Note Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of the
payment of interest.
Section 3.2. Optional Prepayment of this Note. Subject to the
prohibitions contained in the Subordination Provisions, the Company shall have
the right at any time after the issuance and from time to time thereafter to
prepay the Notes, as a whole, or in part, upon not less than five (5) Business
Days prior written notice to the Holders, without premium or penalty.
ARTICLE IV.
SUBORDINATION
Section 4.1. Subordination. The payment of the principal of and interest
on this Note are subordinate and junior to the extent and in the manner set
forth in the Subordination Provisions. Each Holder, by acceptance of this Note,
agrees to the Subordination Provisions.
ARTICLE V.
COVENANTS
The Borrower covenants and agrees with the Holders that, as long as the
Obligations or any part thereof are outstanding, the Borrower will, and will
cause each Restricted Subsidiary to, perform and observe the following
covenants:
(a) Reporting Requirements. The Borrower will furnish to each Holder
the same reports the Borrower is required to deliver to the Senior
Noteholders or the Trustee under the Indenture as in effect on the date
hereof at such times as the Indenture requires such reports to be delivered
to the such persons.
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(b) Notice of Default. As soon as possible and in any event within
twenty (20) days after the occurrence of each Default or Event of Default,
a written notice setting forth the details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto.
Section 5.2. Compliance with Indenture Covenants. The Borrower will, and
will cause each Restricted Subsidiary, to comply with each of the covenants,
mutatis mutandis, set forth in Articles IV (other than Section 4.02) and V
(subject to the override provisions of Section 4.24 of the Indenture as in
effect on the date hereof) of the Indenture as in effect on the date hereof. If
requested by any Holder of a Note, the Borrower will enter into such amendments
to this Note to set forth herein such covenants in complete terms rather than
through this incorporation by reference.
ARTICLE VI.
EVENTS OF DEFAULT
Section 6.1. Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) The Borrower shall fail to pay when due (i) any principal amount
of the Note or (ii) any interest on this Note and such failure to pay
interest continues for a period of 30 days.
(b) (i) The Borrower defaults in the performance of or breaches any
other covenant or agreement of the Company in this Note (other than a
default specified in clause (a) above) and such default or breach continues
for a period of 30 consecutive days after Holders of at 25% or more in
aggregate principal amount of the Notes; or (ii) an Event of Default occurs
under clause (e) or (f) of Section 6.01 of the Indenture as in effect on
the date hereof, or (iii) an Event of Default shall occur under clause (g)
or (h) of the Indenture as in effect on the date hereof.
(c) The Subordinated Loral Space Guaranty shall cease to be, or shall
be asserted in writing by the Borrower or Loral Space not to be, in full
force and effect or enforceable in accordance with its terms.
(d) The occurrence of an Event of Default under the Subordinated Loral
Space Guaranty.
Section 6.2. Remedies. If any Event of Default shall occur and be
continuing, the Investor may, subject to the Subordination Provisions, do any
one or more of the following:
(a) Acceleration. declare this Note to be immediately due and
payable, and declare all outstanding principal of and accrued and unpaid
interest on this Note and all other obligations of the Borrower under the
Subordinated Note Documents immediately due and payable, and the same shall
thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent
to accelerate, protest, or other formalities of any kind, all of which are
hereby expressly waived by the Borrower;
(b) Judgment. reduce any claim to judgment; and
(c) Rights. exercise any and all rights and remedies afforded by the
laws of the State of New York or any other jurisdiction, by any of the
Subordinated Note Documents, by equity, or otherwise;
provided, however, that upon the occurrence of an Event of Default under Section
6.01(g) or (h) of the Indenture as in effect on the date hereof constituting an
Event of Default under Section 6.1(b)(iii), the outstanding principal of and
accrued and unpaid interest on this Note and all other obligations of the
Borrower under the Subordinated Note Documents shall thereupon become
immediately due and payable without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest, or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section 6.3. Performance by the Holder. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of this Note, the
Holder may, perform or attempt to perform such covenant or agreement on behalf
of the Borrower. In such event, the Borrower shall, at the request of the
4
Holder, promptly pay any amount expended by the Holder in connection with such
performance or attempted performance to the Holder at the Principal Office,
together with interest thereon at the interest rate set forth in Section 2.2.
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Investor shall not have any liability or responsibility for the
performance of any obligation of the Borrower under this Note or any of the
other Subordinated Note Documents.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Expenses. The Borrower hereby agrees to pay on demand: (a)
all costs and expenses of the Investor in connection with the preparation,
negotiation, execution, and delivery of this Note and the other Subordinated
Note Documents and any and all amendments, modifications, renewals, extensions,
and supplements thereof and thereto, including, without limitation, the
reasonable fees and expenses of legal counsel for the Investor, (b) all costs
and expenses of the Holders in connection with any Default and the enforcement
of this Note or any other Subordinated Note Document, including, without
limitation, the fees and expenses of legal counsel for the Holders, and (c) all
transfer, stamp, documentary, or other similar taxes, assessments, or charges
levied by any Governmental Authority in respect of this Note or any of the other
Subordinated Note Documents.
Section 7.2. Indemnification. THE BORROWER SHALL INDEMNIFY EACH HOLDER
AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) TO WHICH
ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE SUBORDINATED NOTE DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS NOTE, (C) ANY BREACH BY THE BORROWER OF ANY
REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
SUBORDINATED NOTE DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE,
DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT,
WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY
SUBSIDIARY, OR RESULTING FROM THE OPERATION OF THE BUSINESS OF THE COMPANY OR
ANY SUBSIDIARY OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY
PROVISION OF THIS NOTE OR OF ANY OTHER SUBORDINATED NOTE DOCUMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER
THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) ARISING OUT
OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON BUT
EXCLUDING ANY OF THE FOREGOING RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH PERSON.
Section 7.3. Limitation of Liability. Neither any Holder nor any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and the Borrower hereby waives, releases, and
agrees not to xxx any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Note or any of
the other Subordinated Note Documents, or any of the transactions
5
contemplated by this Note or any of the other Subordinated Note Documents. The
Borrower hereby waives, releases, and agrees not to xxx the Holder or any of its
respective Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Note or any of the other Subordinated Note
Documents, or any of the transactions contemplated by this Note or any of the
other Subordinated Note Documents.
Section 7.4. No Waiver; Cumulative Remedies. No failure on the part of
the Investor to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Note preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Note and the other Subordinated Note Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 7.5. Successors and Assigns.
(a) Conditions to Assignment by any Holder. Any Holder may assign all or a
portion of its interests, rights and obligations under this Note (including all
or a portion of this Note(s) held by it); provided, however, that assignment
shall be in an amount of not less than $500,000, and the parties to such
assignment shall execute and deliver to the Company, for recording in the
Register (as such capitalized term is defined in subparagraph (c) of this
Section 7.5), an assignment and acceptance (an "Assignment and Acceptance"),
together with any Subordinated Note(s) subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Holder
hereunder.
(b) Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assignor makes no representation or warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Note or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Note, the other Subordinated Note Documents or any other instrument or
document furnished pursuant hereto; (b) the assigning Holder makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance by
the Company or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Note or any of the
other Subordinated Note Documents or any other instrument or document furnished
pursuant hereto or thereto; (c) such assignee confirms that it has received a
copy of this Note, together with copies of the most recent financial statements
delivered to the assigning Holder by the Company pursuant to the provisions of
ARTICLE V(a) hereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (d) such assignee will, independently and without
reliance upon the assigning Holder, the Investor or any other Holder and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Note; (f) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Note are required
to be performed by it as a Holder; and (g) such assignee represents and warrants
that it is legally authorized to enter into such Assignment and Acceptance.
(c) Register. The Company shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Holders and the principal
amount of this Note(s) owing to the Holder(s) from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Company may treat each Person whose name is recorded in the Register as a Holder
hereunder for all purposes of this Note. The
6
Register shall be available for inspection by the Company and the Holder(s) at
any reasonable time and from time to time upon reasonable prior notice.
(d) New Note(s). Upon its receipt of an assignment executed by the parties
to such assignment, together with each Note subject to such assignment, the
Company shall (a) record the information contained therein in the Register, and
(b) give prompt notice thereof to the Holder(s) (other than the assigning
Holder). Within five (5) Business Days after receipt of such notice, the
Company, at its own expense, shall execute and deliver to the assignee, in
exchange for each surrendered Note, a new Note to the order of such assignee in
an amount equal to the amount assumed by such assignee pursuant to such
Assignment and Acceptance and, if the assigning Holder has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Holder in
an amount equal to the amount retained by it hereunder. Such new Note shall
provide that they are replacements for the surrendered Note(s), shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Note(s), shall be dated the effective date of such assignment and
shall otherwise be in substantially the form of the assigned Note(s). The
surrendered Note(s) shall be canceled and returned to the Company.
(e) Assignment by Company. The Company shall not assign or transfer any of
its rights or obligations under this Note without the prior written consent of
the Holder(s).
Section 7.6. Survival. All representations and warranties made in any
document, statement, or certificate furnished in connection with this Note shall
survive the execution and delivery of this Note and the other Subordinated Note
Documents, and no investigation by the Investor or any closing shall affect the
representations and warranties or the right of the Investor to rely upon them.
Without prejudice to the survival of any other obligation of the Borrower
hereunder, the obligations of the Borrower under Sections 7.1 and 7.2 shall
survive repayment of the Notes.
Section 7.7. Entire Agreement. THIS NOTE AND THE OTHER SUBORDINATED NOTE
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE NOTE AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, NOTES, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL NOTES OR DISCUSSIONS THE PARTIES HERETO. THERE ARE NO ORAL NOTES
AMONG THE BORROWER AND THE INVESTOR.
Section 7.8. Amendments, Etc. No amendment or waiver of any provision of
this Note or any other Subordinated Note Document to which the Borrower is a
party, nor any consent to any departure by the Borrower or any Subsidiary
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Holders and the Borrower in writing, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section 7.9. Maximum Interest Rate. No provision of this Note or of any
other Subordinated Note Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Subordinated Note Document or otherwise in
connection with the transactions contemplated hereby, the provisions of this
Section shall govern and prevail and neither the Borrower nor the sureties,
guarantors, successors, or assigns of the Borrower shall be obligated to pay the
excess amount of such interest or any other excess sum paid for the use,
forbearance, or detention of sums loaned pursuant hereto. In the event any
Holder ever receives, collects, or applies as interest any such sum, such amount
which would be in excess of the maximum amount permitted by applicable law shall
be applied as a payment and reduction of the principal of the indebtedness
evidenced by this Note; and, if the principal of this Note has been paid in
full, any remaining excess shall forthwith be paid to the Borrower. In
determining whether or not the interest paid or payable exceeds the maximum
rate, the Borrower and the Holders shall, to the extent permitted by applicable
law, (a) characterize any non-principal payment as an expense, fee, or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of
7
interest throughout the entire contemplated term of the indebtedness evidenced
by this Note so that interest for the entire term does not exceed the maximum
rate.
Section 7.10. Notices. All notices and other communications provided for
in this Note and the other Subordinated Note Documents to which the Borrower is
a party shall be given or made by telex, telegraph, telecopy, or in writing and
telexed, telecopied, telegraphed, mailed by certified mail return receipt
requested, or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof in the case of the
Borrower, to the address set forth in Schedule 3.1 in the case of the Investor;
or, as to the Borrower, the Investor or any Holder at such other address as
shall be designated by such Person in a notice to the Borrower or such other
Person given in accordance with this Section. Except as otherwise provided in
this Note, all such communications shall be deemed to have been duly given when
transmitted by telex or telecopy, subject to telephone confirmation of receipt,
or delivered to the telegraph, subject to telephone confirmation of receipt, or
when personally delivered or, in the case of a mailed notice, when duly
deposited in the mails, in each case given or addressed as aforesaid; provided,
however, notices to a Holder shall not be effective until received by such
Holder.
Section 7.11. Governing Law; Venue; Service of Process. This Note shall
be governed by and construed in accordance with the laws of the State of New
York and the applicable laws of the United States of America (without reference
to principles of conflicts of laws). This Note has been entered into in New York
County, New York, and it shall be performable for all purposes in New York
County, New York. Any action or proceeding against the Borrower under or in
connection with any of this Note Documents may be brought in any state or
federal court in New York County, New York. The Borrower hereby irrevocably (a)
submits to the nonexclusive jurisdiction of such courts, and (b) waives any
objection it may now or hereafter have as to the venue of any such action or
proceeding brought in any such court or that any such court is an inconvenient
forum. The Borrower agrees that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions of Section 7.10. Nothing herein
or in any of the other Subordinated Note Documents shall affect the right of a
Holder to serve process in any other manner permitted by law or shall limit the
right of a Holder to bring any action or proceeding against the Borrower or with
respect to any of its property in courts in other jurisdictions.
Section 7.12. Severability. Any provision of this Note held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Note and the effect thereof shall be confined
to the provision held to be invalid or illegal.
Section 7.13. Headings. The headings, captions, and arrangements used in
this Note are for convenience only and shall not affect the interpretation of
this Note.
Section 7.14. Construction. The Borrower acknowledges, by accepting this
Note the Investor acknowledges, that it has had the benefit of legal counsel of
its own choice and has been afforded an opportunity to review this Note and the
other Subordinated Note Documents with its legal counsel and that this Note and
the other Subordinated Note Documents shall be construed as if jointly drafted
by the parties hereto.
Section 7.15. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 7.16. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER, AND EACH HOLDER, BY ITS ACCEPTANCE OF THIS NOTE,
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THIS NOTE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE
8
ACTIONS OF THE INVESTOR IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
Section 7.17. Conflict. In the event of a conflict between the express
terms hereof and any other Subordinated Note Document, the terms hereof shall
control. Notwithstanding the foregoing, such additional and supplemental terms
and conditions of the Subordinate Loan Documents shall not be limited by this
Section 7.17.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as of the
day and year first above written.
LORAL CYBERSTAR, INC.,
By:
--------------------------------------
Name:
Title:
Address for Notices:
Loral Cyberstar, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attn:
--------------------------------------
Facsimile:
9
SCHEDULE 3.1
PAYMENT INSTRUCTIONS AND ADDRESSES FOR NOTICES
PRINCIPAL OFFICE FOR PAYMENTS
Loral SpaceCom Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Facsimile:
ADDRESS FOR NOTICES:
Loral SpaceCom Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxx Xxxxxx
Facsimile:
10
SCHEDULE 4.1
SUBORDINATION PROVISIONS
1. Subordination. Payment of principal and interest in respect of the
indebtedness evidenced by this Note shall be junior and subordinate and subject
in right of payment to all Senior Debt. Unless otherwise defined in this
Schedule, (a) all capitalized terms not otherwise defined have the meanings
given to them in the Notes and (b) all references to Sections are to Sections of
this Schedule 4.1.
2. Payments on Account of Subordinated Debt.
(a) Except as set forth in this Section 2 or in Section 3 hereof, unless
and until all Senior Debt shall have been Paid In Full, the Company will not
make, and no holder of this Note will demand, accept, or receive, any direct or
indirect payment (in cash, property, by setoff, or otherwise) of or on account
of this Note and the holder of this Note shall not be entitled to declare this
Note to be in default, accelerate the payment date of this Note, file a petition
or claim under any Bankruptcy Law or take any other action with respect to the
Company or this Note as a consequence of the failure of the Company to make any
payment or perform any of its other obligations in respect of this Note.
(b) Notwithstanding the provisions of Section 2(a), the holder of this Note
shall have the right to (i) accelerate pursuant to Section 6.2 of the Note the
payment of all amounts owed to the holder of this Note and (ii) commence any
action to enforce or collect such obligations and take any action otherwise
prohibited by Section 2(a); provided, however, that if and so long as an
Indenture Default or Indenture Event of Default exists or would exist after
giving effect to the payment of such amount the holder of this Note shall not be
entitled to receive and retain any amounts owed to it in respect of this Note
until all Senior Debt has been Paid In Full.
3. Insolvency, etc. If an Event of Bankruptcy occurs, then and in any
such event:
(a) all Senior Debt (including any interest thereon and any other
obligation with respect to such Senior Debt accruing after the commencement
of such proceedings and any additional interest that would have accrued
thereon but for the commencement of such proceedings, whether or not such
interest is a claim or is collectible) shall first be Paid In Full before
any payment or distribution of any character, whether in cash, securities
or other property, shall be made by the Company in respect of this Note;
(b) any payment or distribution of any character, whether in cash,
securities, or other property, which would otherwise (but for the terms
hereof) be payable or deliverable by the Company in respect of this Note,
shall be paid or delivered directly to the holders of Senior Debt at the
time outstanding (or the Trustee), ratably according to the respective
aggregate amounts remaining unpaid thereon, until all Senior Debt
(including any interest thereon and any other obligation with respect to
such Senior Debt accruing after the commencement of such proceedings and
any additional interest that would have accrued thereon but for the
commencement of such proceedings, whether or not such interest is a claim
or is collectible) shall have been Paid In Full, and the holder of this
Note at the time outstanding irrevocably authorizes, empowers and directs
all receivers, trustees, liquidators, conservators and others having
authority in the premises to effect all such payments and deliveries; and
(c) the holder of this Note will at the request of the Trustee file
any claim, proof of claim or other instrument of similar character
necessary to enforce the obligations of the Company in respect of this
Note. In the event that the holder of this Note shall fail to take such
action requested by the Trustee, the Trustee may, as attorney-in-fact for
the holder of this Note, take such action on behalf of the holder of this
Note and the holder of this Note hereby appoints the Trustee as its
attorney-in-fact to demand, xxx for, collect and receive any and all such
moneys, dividends or other assets and give acquittance therefor and to file
any claim, proof of claim or other instrument of similar character and to
take such other action (excluding acceptance or rejection of any plan of
reorganization or
11
arrangement) in such Trustee's own name or in the name of the holder of
this Note as such Trustee may deem necessary or advisable for the
enforcement of the terms hereof and the holder of this Note will execute
and deliver to each Trustee such other and further powers of attorney or
other instruments as such Trustee may request in order to accomplish the
foregoing. Notwithstanding the foregoing, the Holder, not the Trustee,
shall be entitled to accept or reject any plan of reorganization or
arrangement.
4. Payments and Distributions Received. If any payment or distribution of
any character (whether in cash, securities or other property) or any security
shall be received by the holder of this Note in contravention of any of the
terms hereof and before all Senior Debt shall have been Paid In Full, such
payment or distribution or security shall be held in trust for the benefit of,
and shall be paid over or delivered and transferred to, the Trustee for the
benefit of the holders of the Senior Debt at the time outstanding for
application to the payment of all Senior Debt remaining unpaid, ratably
according to the respective aggregate amounts remaining unpaid thereon, to the
extent necessary for all such Senior Debt to be Paid In Full. In the event of
the failure of the holder of this Note to endorse or assign any such payment,
distribution or security, the Trustee is hereby irrevocably authorized to
endorse or assign the same.
5. Subrogation. Upon the Payment In Full of all Senior Debt, the holder
of this Note shall be subrogated to any rights of the holders of Senior Debt to
receive all further payments or distributions applicable to the Senior Debt,
until this Note shall have been Paid In Full, and for purposes of such
subrogation, any payment or distribution applicable to Senior Debt of cash,
securities, or other property, to which the holder of this Note would have been
entitled except for these subordination provisions, shall not, as between the
Company and its creditors (other than the holders of the Senior Debt), on the
one hand, and the holder of this Note, on the other hand, be deemed to be a
payment or distribution by the Company to or on account of Senior Debt.
6. Obligations Not Impaired. Except to the extent this Note provides that
(i) this Note may not become due and payable or be paid, and (ii) the holder of
this Note may not commence or join in any proceeding under any Bankruptcy Law
unless the holders of Senior Debt shall also join in bringing such proceeding,
nothing contained in this Note shall impair, as between the Company and the
holder of this Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of this Note the principal hereof and
interest hereon as and when the same shall become due and payable in accordance
with the terms hereof.
7. Subordination Not Affected, etc. The terms of this Note, the
subordination effected hereby and the rights of the holders of the Senior Debt,
shall not be affected by (i) any amendment of or addition or supplement to any
Senior Debt or any instrument or agreement relating thereto, (ii) any exercise
or nonexercise of any right, power or remedy under or in respect of any Senior
Debt or any instrument or agreement relating thereto, (iii) any sale, exchange,
release or other transaction affecting all or any part of any property at any
time pledged or mortgaged to secure, or however securing, Senior Debt, or (iv)
any waiver, consent, release, indulgence, extension, renewal, modification,
delay or other action, inaction or omission, in respect of any Senior Debt or
any instrument or agreement relating thereto, whether or not the holder of this
Note shall have had notice or knowledge of any of the foregoing.
8. Amendments, Waiver, etc. Neither this Note nor any term hereof may be
amended, modified or waived, except with the prior written consent of the
holders owning a majority of the outstanding principal amount of the Senior
Debt; provided, however, that any consent delivered by the Trustee shall be
deemed to have been so authorized.
9. Subordination a Condition to Consent of Holders of Senior Debt. The
Holder of this Note, by its acceptance hereof, agrees that the consent of the
holders of the Senior Debt to the incurrence by the Company of such indebtedness
has been given in reliance upon the subordination of such indebtedness to the
Senior Debt.
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10. Definitions, etc. As used in Schedule 4.1, the following terms shall
have the following respective meanings:
"Agreements" means the Senior Debt Documents and the Subordinated Note
Documents.
"Bankruptcy Law" shall mean any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or
insolvency law or statute of the Federal or any state government.
"Event of Bankruptcy" shall mean (i) any insolvency or bankruptcy
proceeding under any Bankruptcy Law, or any receivership, liquidation,
reorganization or other similar proceeding in connection therewith,
relative to the Company or its property, or (ii) any proceeding for
voluntary liquidation, dissolution or other winding-up of the Company, and
whether or not involving insolvency or bankruptcy, or (iii) any assignment
for the benefit of creditors by the Company, or (iv) any distribution,
division, marshalling or application of any of the properties or assets
(including, without limitation, properties or assets securing this Note) of
the Company or the proceeds thereof, to creditors, voluntary or
involuntary, and whether or not involving legal proceedings, in connection
with the dissolution, winding-up, liquidation, reorganization or other
proceeding relating to the Company.
"Paid In Full" means the payment in full in cash or cash equivalents.
"Indenture Event of Default" means an Event of Default under the
Indenture.
"Indenture Unmatured Event of Default" means a Default under the
Indenture.
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