AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION AGREEMENT UNDER LORAL SPACE & COMMUNICATIONS INC. 2005 STOCK INCENTIVE PLAN
Exhibit 10.21
Execution Copy
Senior Management
Senior Management
AMENDED AND RESTATED
NON-QUALIFIED
STOCK OPTION AGREEMENT
NON-QUALIFIED
STOCK OPTION AGREEMENT
UNDER
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
2005 STOCK INCENTIVE PLAN
THIS AGREEMENT is made as of the 21st day of December 2005 (the “Grant Date”) by and
between Loral Space & Communications Inc., a Delaware corporation (the “Company”), and
____________ (the “Optionee”), and is amended and restated as of the 10th day of
November 2008.
WHEREAS, the Optionee is employed by or providing services to the Company or an Affiliate in a
key capacity, and the Company desires to have Optionee remain in such employment or service and to
afford Optionee the opportunity to acquire, or enlarge, Optionee’s stock ownership of the Company’s
Common Stock, par value $.01 per share (the “Stock”), so that Optionee may have a direct
proprietary interest in the Company’s success; and
WHEREAS, all capitalized terms not otherwise defined herein shall have the same meaning as set
forth in Company’s 2005 Stock Incentive Plan (the “Plan”).
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties
hereto hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein and in the
Plan, the Company hereby grants to the Optionee, during the period commencing on the Grant Date and
ending on the date that is seven years from the Grant Date (the “Option Period”), the right
and option (the right to purchase any one share of Stock hereunder being an “Option”) to
purchase from the Company, at an exercise price of $28.441 per share (the “Option Price”), an
aggregate of ______ shares of Stock (the “Share Number”). The Options are not intended to
be “incentive stock options”, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).
2. Deferred Compensation Account. As of the Grant Date, the Company shall establish
a deferred compensation bookkeeping account for the Optionee (the “Deferred Compensation
Account”) and shall credit to the Deferred Compensation Account a dollar amount equal to (A)
the difference between the Option Price and $19.00 (the “Target Exercise Price”),
multiplied by (B) the Share Number. The Deferred Compensation Account shall become vested in the
same proportion as the Options vest and become exercisable, including any accelerated vesting upon
(A) a termination of the Optionee’s employment or service by the Company or an Affiliate without
Cause, (B) a termination of the Optionee’s employment or
service with the Company and all Affiliates by the Optionee for Good Reason, (C) a Change in
Control (as defined in the Plan), (D) a New Skynet Sale Event (as defined in the Plan), but only to
the extent that the Optionee is an employee or service provider of New Skynet, or (E) a New SS/L
Sale Event (as defined in the Plan), but only to the extent that the Optionee is an employee or
service provider of New SS/L.
(a) The vested portion of the Deferred Compensation Account shall be distributed to the
Optionee upon the earliest to occur of (i) the Optionee’s “separation from service” (as such term
is defined in Treasury Regulation §1.409A-1(h)) with the Company; provided,
however, that the Optionee shall be deemed to have suffered a “separation from service” as
of a given date for purposes of Treas. Reg. § 1.409A-1(h) to the extent that it is reasonably
anticipated that the Optionee’s level of bona fide services to the Company, as an employee,
independent contractor, or otherwise, will permanently decrease to less than 50% of the average
level of services performed by the Optionee for the Company in the 36-month period immediately
preceding such date, (ii) a Change in Control, (iii) a New Skynet Sale Event, but only to the
extent that the Optionee is an employee or service provider of New Skynet, (iv) a New SS/L Sale
Event, but only to the extent that the Optionee is an employee or service provider of New SS/L, and
(v) the date which is the seventh anniversary of the Grant Date; provided, however,
that in the event the Optionee is determined to be a “specified employee” (as such term is defined
in Treasury Regulation §1.409A-1(i)), as of the date of the Optionee’s separation from service with
the Company, the distribution of the vested portion of the Deferred Compensation Account scheduled
to be made upon such separation from service shall be delayed for six months and instead shall be
made upon the six-month anniversary of such separation from service; and further
provided, however, that there shall be no distribution upon a Change in Control, a
New Skynet Sale Event or a New SS/L Sale Event unless such event also constitutes a “change in
control event” with respect to the Optionee under Treasury Regulation §1.409A-3(i)(5), or such
distribution is otherwise an allowable distribution under Section 409A of the Code.
(b) Amounts in the Deferred Compensation Account shall be subject to forfeiture upon
termination of the Optionee’s employment with the Company to the same extent as the Option is
subject to forfeiture pursuant to Section 4 herein.
(c) Except as provided below, the value of the Deferred Compensation Account shall not be
credited with interest or be subject to any rate of return. Upon any exercise of all or a portion
of the Options, the corresponding portion of the Deferred Compensation Account shall automatically
be converted into an interest-bearing account from the date of such exercise through the date of
distribution. For example, if 50% of the Options are exercised, 50% of the Deferred Compensation
Account shall be converted into an interest-bearing account. Once converted, the amounts credited
to this interest-bearing Deferred Compensation Account shall receive a rate of return equal to the
highest rate of return then available to the Company in an interest-bearing account. To the extent
possible, the Company will seek to avoid or, if not avoidable, to minimize any administrative
expense incurred in maintaining the interest-bearing Deferred Compensation Account. However, the
balance in the interest-bearing Deferred Compensation Account attributable to the rate of return on
the interest-bearing Deferred Compensation Account shall be reduced, but not below the principal
amount, by any administrative expense incurred by the Company in maintaining the interest-bearing
Deferred Compensation Account.
-2-
(d) While all or a portion of the Options remain unexercised and outstanding, the
corresponding portion of the Deferred Compensation Account shall be linked to the value of the
Stock as follows. To the extent the value of the Stock declines to a level between the Option
Price and the Target Exercise Price (the “Spread Value Zone”), the corresponding portion of
the Deferred Compensation Account shall also decline in the same percentage as the Stock declines
as measured against the Target Exercise Price and the value of the corresponding portion of the
Deferred Compensation Account shall track the percentage increase or decrease in the value of the
Stock while its value remains in the Spread Value Zone such that if the value of the Stock declines
to the Target Exercise Price or below, the value of the corresponding portion of the Deferred
Compensation Account shall decline to zero and if the value of the Stock rebounds to the Option
Price, the corresponding portion of the Deferred Compensation Account shall regain its proportional
full value. To the extent the Stock rises above the Option Price the corresponding portion of the
Deferred Compensation Account shall not rise above its proportional full value.
(e) The amounts credited to the Deferred Compensation Account will be subject to all
applicable legally required tax withholding as determined by the Company, unless such determination
is unreasonable.
(f) It is intended that the provisions of this Section 2 and the distribution of the Deferred
Compensation Account hereunder to the Optionee shall comply with the requirements of Section 409A
of the Code. To the extent that the Optionee has reason to believe that the Deferred Compensation
Account will subject the Optionee to a tax under Section 409A of the Code, the Optionee may request
that this Agreement be amended in a manner that is compliant with Section 409A in order to avoid or
reduce such tax. To the extent the Optionee requests any such amendment, the Company agrees to
enter into good faith negotiations with the Optionee to accommodate such request to the extent
possible so as to avoid or reduce any such tax.
(g) In no event shall this Agreement and any amendment thereof result in the Company
incurring any cost or expense to a greater extent than the Company would have incurred had the
Option been granted with an Option Price equal to the Target Exercise Price.
3. Exercise of Options.
(a) Subject to the terms and conditions set forth herein and provided the Optionee’s
employment continues, the Options shall vest and become exercisable in accordance with the
following schedule:
(i) one-fourth of the Options shall vest and become exercisable on the
one-year anniversary of the Effective Date;
(ii) an additional one-fourth of the Options shall vest and become exercisable
on the two-year anniversary of the Effective Date;
(iii) an additional one-fourth of the Options shall vest and become
exercisable on the three-year anniversary of the Effective Date; and
-3-
(iv) the remainder of the Options shall vest and become exercisable on the
four-year anniversary of the Effective Date (each such anniversary date shall
hereafter be referred to as a “Vesting Date” and the period between the date
hereof and the first Vesting Date and the subsequent periods between Vesting Dates
shall hereafter be referred to as “Vesting Periods”).
(b) The Options shall vest only as to full shares of Stock rounded down to the nearest full
share during the first three vesting dates and all fractions shall be amalgamated and become
exercisable on the last vesting date. Except as otherwise stated in this Agreement, the Options
shall expire on the seven-year anniversary of the Effective Date.
4. Termination of Employment.
(a) If the Optionee’s employment or service with the Company and all Affiliates is terminated
for Cause, all Options and the full value of the Deferred Compensation Account (whether vested or
not) shall immediately expire.
(b) If the Optionee resigns from employment or service with the Company and all Affiliates
other than for “Good Reason,” all unvested Options and the unvested portion of the Deferred
Compensation Account shall expire and all vested Options shall remain exercisable for the shorter
of (i) three months following the date of termination or (ii) the remainder of the Option Period.
(c) If the Optionee’s employment or service with the Company and all Affiliates is terminated
by the Company or an Affiliate other than for Cause or the Optionee resigns for “Good Reason”
during the time that the Optionee’s employment with the Company is subject to an employment
agreement between the Optionee and the Company and such employment agreement so provides, all
unvested Options and the unvested portion of the Deferred Compensation Account shall vest
immediately. If the Optionee’s employment with the Company and all Affiliates is terminated by the
Company or an Affiliate other than for Cause or the Optionee resigns for “Good Reason” during the
time that the Optionee’s employment with the Company is no longer subject to an employment
agreement between the Optionee and the Company and such employment is on an “at-will” basis, the
unvested Options that are scheduled to vest on the next Vesting Date immediately following such
termination date and the corresponding portion of the Deferred Compensation Account shall vest on a
pro rata basis where the number of Options subject to pro rata vesting is equal to the number of
Options subject to vesting on such Vesting Date multiplied by a fraction, the numerator of which
shall be equal to the number of days the Optionee was employed during the applicable Vesting Period
and the denominator of which shall be equal to 365 (the “Pro Rata Fraction”), and the portion of
the Deferred Compensation Account subject to pro rata vesting is that portion subject to vesting on
such Vesting Date multiplied by the Pro Rata Fraction and all other unvested Options and the
unvested portion of the Deferred Compensation Account remaining at the time of such termination
after application of such pro rata vesting shall expire. In the event that the Optionee’s
employment with the Company and all Affiliates is terminated by the Company or an Affiliate other
than for Cause or the Optionee resigns for “Good Reason” (regardless of whether the Optionee’s
employment is then subject to an employment agreement), all vested Options (including those that
vest upon such termination) shall remain exercisable for the shorter of (i)
-4-
the Post Termination Exercise Period (as defined below) or (ii) the remainder of the Option
Period. The Post Termination Exercise Period shall mean (x) the period that is two years following
the date of termination, if the termination occurs prior to the third anniversary of the Grant
Date, (y) the period that is one year following the date of termination, if the termination occurs
on or following the third anniversary of the Grant Date but prior to the fifth anniversary of the
Grant Date, or (z) the period that is three months following the date of termination, if the
termination occurs on or following the fifth anniversary of the Grant Date; provided, however, that
if the Optionee’s employment is terminated on account of death or Disability, the Post Termination
Exercise Period shall not be shorter than one year following the date of the Optionee’s termination
of employment.
(d) If the Optionee’s employment or service with the Company and all Affiliates terminates on
account of the Optionee’s death or Disability all unvested Options and the unvested portion of the
Deferred Compensation Account shall immediately expire and all vested Options will remain
exercisable for the shorter of (i) the Post Termination Exercise Period or (ii) the Option Period.
(e) For purposes of clarification, neither a New FSS Sale Event nor a New SS/L Sale Event,
shall in and of itself, be considered a termination of the Optionee’s employment with the Company
and all Affiliates without Cause or an event constituting “Good Reason.”
5. Method of Exercising Option.
(a) Options which have become exercisable may be exercised by delivery of written notice of
exercise to the Committee accompanied by payment of the Option Price. Payment for shares of Stock
acquired pursuant to Options shall be made in full, upon exercise of the Options in immediately
available funds in United States dollars, by certified or bank cashier’s check or, in the
discretion of the Committee, (i) by surrender to the Company of Mature Shares held by the
Participant; (ii) by delivering to the Committee a copy of irrevocable instructions to a
stockbroker to deliver promptly to the Company an amount of sale or loan proceeds sufficient to pay
the aggregate Option exercise price; (iii) through a net exercise of the Options whereby the
Participant instructs the Company to withhold that number of shares of Stock having a fair market
value equal to the aggregate Option Price of the Options being exercised and deliver to the
Participant the remainder of the shares subject to exercise or (iv) by any other means approved by
the Committee. For purposes of this paragraph, the term “Mature Shares” shall mean shares
of Stock for which the Optionee has good title, free and clear of all liens and encumbrances, and
which the Optionee either (i) has held for at least six months or (ii) has purchased on the open
market.
(b) At the time of exercise, (i) the Company shall have the right to withhold from the number
of shares of Stock to be issued upon exercise, the minimum number of shares necessary or (ii) at
the discretion of the Committee, the Optionee shall be obligated to pay to the Company such amount
as the Company deems necessary, in either event, to satisfy its obligation to withhold Federal,
state or local income or other taxes incurred by reason of the exercise or the transfer of shares
thereupon.
-5-
6. Issuance of Shares. As promptly as practical after receipt by the Company of a
written notice of exercise and full payment to the Company of the aggregate Option Price and any
required income tax withholding amount, the Company shall issue or transfer to the Optionee the
number of shares of Stock with respect to which Options have been so exercised, or the net number
of shares of Stock in the event of an exercise pursuant to Section 5(a)(iii), or to the extent
applicable in Section 5(a)(iv), or after application of Section 5(b), or both, and shall deliver to
the Optionee (or the Optionee’s estate or beneficiary, if applicable) a certificate or certificates
therefore, registered in the name of the Optionee (or such estate or beneficiary).
7. Non-Transferability. The Options are not transferable by the Optionee otherwise
than by will or the laws of descent and distribution and are exercisable during the Optionee’s
lifetime only by Optionee. No assignment or transfer of the Options, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise (except by will or the
laws of descent and distribution), shall vest in the assignee or transferee any interest or right
herein whatsoever, but immediately upon such assignment or transfer the Options shall terminate and
become of no further effect.
8. Rights as Stockholder. Neither the Optionee nor a permitted transferee of the
Options shall have any rights as a stockholder with respect to any share of Stock covered by the
Options until the Optionee or any transferee shall have become the holder of record of such share,
and no adjustment shall be made for dividends or distributions or other rights in respect of such
share for which the record date is prior to the date upon which the Optionee or any transferee
shall become the holder of record thereof.
9. Compliance with Law. Notwithstanding any of the provisions hereof, the Optionee
hereby agrees that Optionee will not exercise the Options, and that the Company will not be
obligated to issue or transfer any shares of Stock to the Optionee hereunder, if the exercise
hereof or the issuance or transfer of such shares shall constitute a violation by the Optionee or
the Company of any provisions of any law or regulation of any governmental authority. Any
determination in this connection by the Committee shall be final, binding and conclusive. The
Company shall in no event be obliged to register any securities pursuant to the Securities Act of
1933 (as now in effect or as hereafter amended) or to take any other affirmative action in order to
cause the exercise of the Options or the issuance or transfer of shares of Stock pursuant thereto
to comply with any law or regulation of any governmental authority. The Deferred Compensation
Account is intended to comply with the provisions of Section 409A of the Code, and the Options are
intended to be exempt from Section 409A of the Code. To the extent that there are any ambiguities
in this document, they shall be interpreted and administered consistent with such intent.
Notwithstanding the immediately prior sentence, (i) if any term or provision of this Agreement
relating to the Deferred Compensation Account is found to be noncompliant with Section 409A of the
Code or to cause the Deferred Compensation Account to be noncompliant with Section 409A of the Code
or (ii) any term or provision of this Agreement relating to the Options is found to cause the
Options to be subject to and not to be exempt from Section 409A of the Code, in each case, in any
jurisdiction, such provision shall be struck as void ab initio, and a compliant or exempt term or
provision, as applicable, shall be deemed substituted for such noncompliant or nonexempt provision,
as applicable, that preserves, to the maximum lawful extent, the intent of the Agreement, and any
court or arbitrator so holding shall have authority
-6-
and shall be instructed to substitute such compliant or exempt provision; provided,
however, that if any such noncompliance or nonexemption, as applicable, is due to a
deficiency of one or more terms or provisions, such appropriate terms or provisions shall be deemed
to be added to cure such noncompliance or nonexemption, as applicable, that preserves, to the
maximum lawful extent, the intent of the Agreement, and any such court or arbitrator shall have
authority and shall be instructed to supplement the Agreement with such compliant or exempt terms
or provisions, as applicable.
10. Notice. Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the party for whom it is intended at such
address as may from time to time be designated by it in a notice mailed or delivered to the other
party as herein provided, provided that, unless and until some other address be so designated, all
notices or communications by the Optionee to the Company shall be mailed or delivered to the
Company at its principal executive office, and all notices or communications by the Company to the
Optionee may be given to the Optionee personally or may be mailed to Optionee at the Optionee’s
last known address, as reflected in the Company’s records.
11. Binding Effect. Subject to Section 7 hereof, this Agreement shall be binding
upon the heirs, executors, administrators and successors of the parties hereto.
12. Governing Law. This Agreement shall be construed and interpreted in accordance
with the laws of the state of Delaware, without regard to the principles of conflicts of law
thereof.
13. Plan. The terms and provisions of the Plan are incorporated herein by reference.
In the event of a conflict or inconsistency between discretionary terms and provisions of the Plan
and the express provisions of this Agreement, this Agreement shall govern and control. In all
other instances of conflicts or inconsistencies or omissions, the terms and provisions of the Plan
shall govern and control.
-7-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| LORAL SPACE & COMMUNICATIONS INC. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | CEO and President | |||||||
Accepted: |
||||||||
-8-
