EXECUTION COPY
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT dated as of March 31, 2003 (this "AMENDMENT") to
the Amended and Restated Credit Agreement dated as of December 21, 2001 (the
"CREDIT AGREEMENT") among LORAL SPACECOM CORPORATION, a Delaware corporation
(the "BORROWER"), the banks and other financial institutions party thereto (the
"BANKS") and BANK OF AMERICA, N.A., as administrative agent for the Banks (the
"ADMINISTRATIVE AGENT") and as Issuing Bank.
W I T N E S S E T H :
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement; and
WHEREAS, the Banks party hereto have agreed to the requested amendments
on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. (a) Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
(b) As used herein, the following additional terms have the following
meanings:
"CASH BALANCE" means, with respect to any Person at any time of
determination, the sum of the amount of all money, currency and Cash Equivalents
held or carried in any deposit, custody or other account maintained by such
Person and its Subsidiaries. As of any such time, an amount in a currency other
than Dollars shall be the Dollar equivalent thereof equal to the spot rate on
such date.
"EDS SATELLITE" means the satellite (currently known as Estrela do Sul)
being constructed by Space Systems/Loral, Inc. for the Borrower.
"E&Y" means Ernst & Young Corporate Finance LLC, in its capacity as
having been engaged by Xxxxx Xxxx & Xxxxxxxx, special counsel for the
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Administrative Agent, to provide financial advisory services in relation to the
Borrower and the Credit Agreement (such term also meaning any successor firm so
engaged to provide financial advisory services).
"INITIAL BUSINESS PLAN" means the business plan for Loral and its
Subsidiaries, including the Borrower and its Subsidiaries, attached for purposes
of identification to the Borrower's letter to the Administrative Agent dated
March 31, 2003.
"JOINT COLLATERAL AGENT" means Bank of America, N.A., as the collateral
agent for the Banks under the Credit Agreement and the lenders under the
Satellite Credit Agreement.
"SATELLITE CREDIT AGREEMENT" means the Credit Agreement dated as of
November 17, 2000, as amended, among Loral Satellite, Inc., the lenders named
therein and Bank of America, N.A., as administrative agent.
"SATELLITE PLEDGE AGREEMENT" means the Second Amended and Restated
Pledge Agreement dated as of the date hereof between the Parent and the Joint
Collateral Agent relating to the Satellite Stock.
"SATELLITE STOCK" means the shares of the capital stock of Loral
Satellite, Inc.
"SECOND INTERCREDITOR AGREEMENT" means the Second Intercreditor and
Subordination Agreement dated as of the date hereof among the Administrative
Agent, the administrative agent under the Satellite Credit Agreement, the Joint
Collateral Agent and Loral Satellite, Inc.
"SPECIFIED SUBSIDIARIES" means, collectively, the Borrower, Space
Systems/Loral, Inc., the Borrower's Loral Skynet division, Loral Satellite,
Inc., Loral Cyberstar Inc. and Loral Orion Inc.
"STEERING COMMITTEE" means the steering committee of the Banks that has
been organized to act in connection with matters arising in relation to the
Credit Agreement, as constituted by the Administrative Agent from time to time.
References to "a majority of" the Steering Committee means at any time a
majority by number of the Banks serving on the Steering Committee at such time.
"UPDATED BUSINESS PLAN" means the updated business plan referred to in
Section 6(d).
SECTION 2. Certain Financial Covenant Amendments; Certain Waivers. (a)
For purposes of calculating compliance with (i) the covenants contained in
Sections 9.1(a), 9.1(b) and 9.1(c) of the Credit Agreement and (ii) Section 5 of
this Amendment, Consolidated EBITDA for any period and Consolidated Net Worth as
at any date shall be calculated on a pro forma basis excluding (without
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duplication) each of the charges and other adjustments described on Schedule 1
hereto.
(b) The second table in Schedule 9.1 to the Credit Agreement
(Consolidated Leverage Ratio) is hereby amended to provide for each Test Period
set forth below a ratio as set forth opposite such Test Period below.
December 31, 2002 6.75
March 31, 2003 6.75
June 30, 2003 6.75
September 30, 2003 7.35
December 31, 2003 10.65
March 31, 2004 10.65
(c) The amendments set forth in Sections 2(a) and 2(b) shall be given
effect retroactively to January 1, 2002 and for purposes of any calculation made
as at or as of such date or any date thereafter. The Banks party hereto waive
any Event of Default that may have occurred as a result of the Borrower at any
time prior to the date hereof having made or been deemed to have made (i) the
representation and warranty set forth in the last sentence of Section 7.2 of the
Credit Agreement and such representation and warranty being incorrect, but only
to the extent that such representation and warranty would have been correct had
the amendments set forth in Sections 2(a) and 2(b) been in effect at such time
or (ii) the representation and warranty set forth in the last sentence of
Section 6.1(b) of the Credit Agreement and such representation and warranty
being incorrect, but only to the extent that such representation and warranty
was incorrect due to events that gave rise to the charges and other adjustments
described on Schedule 1 hereto.
SECTION 3. Commitments. On the Amendment Effective Date, the total
Revolving Credit Commitments shall be automatically reduced (applied pro rata
among the Banks), without the requirement of any action on the part of the
Borrower, the Administrative Agent or any Bank, to an amount equal to the sum of
the Revolving Credit Loans and Revolving Credit Letter of Credit Obligations
outstanding on such date. If any Letter of Credit outstanding on the Amendment
Effective Date expires or is otherwise terminated, or the amount available to be
drawn thereunder is reduced, then effective on the date of such expiration,
termination or reduction the total Revolving Credit Commitments shall be
automatically further reduced (applied pro rata among the Banks), without the
requirement of any action on the part of the Borrower, the Administrative Agent
or any Bank, by an amount equal to the amount of the Letter of Credit so
expiring or terminated or the amount of such reduction, as the case may be,
provided that (a) the foregoing provisions shall not preclude the Borrower from
requesting and obtaining the renewal or extension of any Letter of Credit
outstanding on the Amendment Effective Date (subject to the other applicable
requirements of the Credit Agreement) for the same purpose as originally issued
and in the same (or a lesser) amount as is outstanding on the Amendment
Effective Date and (b) in the
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case of any Letter of Credit that expires or is otherwise terminated, the
foregoing provisions shall not preclude the Borrower from requesting and
obtaining (subject to the other applicable requirements of the Credit Agreement)
the issuance of a new Letter of Credit to replace, for the same purpose (which
it is acknowledged may involve a new beneficiary) and in the same (or a lesser)
amount as, such expiring or terminated Letter of Credit, and if such replacement
Letter of Credit is issued concurrently with such expiration or termination, the
total Revolving Credit Commitments shall not be reduced on account of such
expiration or termination other than by an amount, if any, equal to the
difference between the amount of the expiring or terminated Letter of Credit and
the replacement Letter of Credit.
SECTION 4. Financial Advisor; Meetings and Other Communications. (a)
The Borrower confirms that Loral has engaged Xxxxxxxxx & Co., LLC (it or any
successor financial advisor engaged as contemplated hereby, the "FINANCIAL
ADVISOR") to assist Loral and its Subsidiaries, including the Borrower, in a
review of their businesses and finances and an assessment of strategic
alternatives, including asset sales and other actions to reduce indebtedness.
The Borrower covenants that Loral will maintain such engagement, with a scope of
work as set forth in the Xxxxxxxxx & Co., LLC engagement letter previously
delivered to the Administrative Agent, or, if for any reason Xxxxxxxxx & Co.,
LLC ceases to be engaged as the Financial Advisor, Loral will promptly engage a
successor Financial Advisor of recognized national standing, reasonably
satisfactory to a majority of the Steering Committee, with a similar scope of
work.
(b) The Borrower agrees that senior management of Loral will be
available, at such times and as often as reasonably requested by the
Administrative Agent (which may be monthly or more frequently), to attend
meetings or participate in conference calls with the Administrative Agent, E&Y,
the Steering Committee or the Banks (and will arrange for the Financial Advisor
to be present and available to answer questions at such times), during which
there will be reports in reasonable detail on the Borrower's recent results of
operations and current financial condition and the current status of its
business and affairs and the status and any results to date or conclusions (even
if preliminary and subject to change or encompassing a range of alternatives) of
the strategic review referred to in Section 4(a). Without limiting the
generality of the foregoing, the Borrower agrees that it will have a meeting in
New York City to which all of the Banks are invited no later than July 1, 2003,
on a date to be mutually agreed with the Administrative Agent, at which senior
management of Loral and the Financial Advisor will make a detailed presentation
concerning (i) the Updated Business Plan, including a description in reasonable
detail of the assumptions and other basis for the budget and financial
projections included therein and an explanation in reasonable detail of any
variances from the Initial Business Plan, and (ii) the status and any results to
date or conclusions (even if preliminary and subject to change or encompassing a
range of alternatives) of the review referred to in Section 4(a). A written
report setting forth the details of such presentation will be
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delivered to the Administrative Agent for distribution to the Banks no later
than three Business Days prior to the date of such meeting.
(c) The Borrower also agrees that within 45 days after the Amendment
Effective Date Loral will hire a new senior financial officer. The new senior
financial officer shall be a person with significant senior financial management
experience, and specifically shall have experience in situations involving an
assessment of strategic alternatives, including asset sales and other actions to
reduce indebtedness. Loral will consult with the Steering Committee during the
process of selecting this officer and will review the proposed candidate with
the Steering Committee, and the person hired, as well as the responsibilities
and authority he will be given shall be subject to the reasonable approval of a
majority of the Steering Committee. The new senior financial officer shall work
closely with and support the Financial Advisor. The new senior financial officer
shall also participate in reporting to and communicating with the Administrative
Agent, the Steering Committee and the Banks. The new senior financial officer
will work closely with other senior management of Loral, including the Chief
Executive Officer, but will report directly to the Board of Directors of Loral.
SECTION 5. Additional Financial Covenants. The Borrower agrees that:
(a) Minimum Cumulative EBITDA. Consolidated EBITDA for each period
specified below shall be not less than the amount set forth opposite such
period:
PERIOD AMOUNT
------ ------
January 1, 2003 - June 30, 2003 $19,200,000
January 1, 2003 - September 30, 2003 $33,900,000
January 1, 2003 - December 31, 2003 $51,200,000
(b) Minimum Cash/Cash Equivalents Balance. The Borrower's Cash Balance
as at the last day of each fiscal quarter specified below shall not be less than
the amount set forth opposite such quarter:
FISCAL QUARTER ENDING AMOUNT
--------------------- ------
March 31, 2003 $5,000,000
June 30, 2003 $5,000,000
September 30, 2003 $5,000,000
December 31, 2003 $5,000,000
SECTION 6. Additional Reporting. The Borrower agrees that it will
deliver the following information to the Administrative Agent for distribution
to the Banks (with a copy to E&Y):
(a) no later than 30 days after the end of each month, beginning with
the first delivery on July 30, 2003 for the month of June 2003, (i) consolidated
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statements of income and cash flows of the Borrower and its Subsidiaries for
such month and for the year to date and a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such month and (ii) consolidated
and consolidating statements of income and cash flows of Loral and its
Subsidiaries for such month and for the year to date and a consolidated and
consolidating balance sheets of Loral and its Subsidiaries as at the end of such
month (provided that such consolidating information is required only for the
Specified Subsidiaries), in each case (iii) also including a calculation in
reasonable detail of Consolidated EBITDA for such month and for the year to date
and (iv) compared in reasonable detail to the projections contained in the
Updated Business Plan and accompanied by an explanation of any significant
variances;
(b) on the second Business Day of April and May, and starting with the
week of May 19, 2003, on the second Business Day of each week, a weekly
consolidated cash forecast, in scope and form reasonably satisfactory to the
Administrative Agent in consultation with E&Y, for (i) the Borrower and its
Subsidiaries and (ii) Loral and its Subsidiaries (including also, in the case of
Loral, such consolidating detail for the Specified Subsidiaries as is reasonably
requested by the Administrative Agent) for the following 13-week period;
(c) no later than two Business Days after the end of each quarter,
starting with the quarter ended March 31, 2003, a report of the Borrower's Cash
Balance as at the last day of such quarter;
(d) on the second Business Day of each week, a statement of the
Borrower's Cash Balance and of Loral's Cash Balance (including also, in the case
of Loral, such consolidating detail for the Specified Subsidiaries as is
reasonably requested by the Administrative Agent) as at the last Business Day of
the immediately preceding week, and beginning on May 19, 2003 accompanied by a
comparison to the weekly consolidated cash forecast for such week previously
provided pursuant to Section 6(b) above and an explanation of any significant
variances, all in scope and form reasonably satisfactory to the Administrative
Agent in consultation with E&Y;
(e) no later than June 15, 2003, an updated business plan for
2003-2006, providing information on a monthly basis for 2003 (beginning with
July), on a quarterly basis for 2004 and on an annual basis for 2005 and 2006,
in scope and form reasonably satisfactory to the Administrative Agent in
consultation with E&Y, including a comparison to the comparable information in
the Initial Business Plan (to the extent possible, in the case of 2003, given
that the Initial Business Plan provides information on a quarterly basis for
2003) and an explanation of any significant variances;
(f) no later than 30 days after the end of each month, beginning with
April 2003, a report on (i) changes in the backlog at the Borrower's Fixed
Satellite Services business during such month and (ii) the status of significant
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potential satellite orders for the Borrower's Space Systems/Loral business as of
the end of such month; and
(g) on the second Business Day of each week, beginning April 8, 2003, a
report of the status of the proposed Orbitals Transaction and Sirius Radio
capital stock sales described in Section 7(k)(vi).
SECTION 7. Other Modifications of the Credit Agreement. The Borrower
agrees that the provisions of the Credit Agreement are modified or added to as
follows:
(a) The definition of "Consolidated EBITDA" in the Credit Agreement is
amended to replace clause (ii) to read as follows: "(ii) any management fee
(other than the management fee or reimbursement of management expenses due to
the Borrower from the Parent and/or Loral Satellite, Inc.) or lease income from
other Affiliates not paid in cash within 90 days".
(b) The following definition for "Net Cash Proceeds" is hereby added to
Section 1.1 of the Credit Agreement, and all references in the Credit Agreement
to "net cash proceeds" and "net after-tax cash proceeds" shall be replaced with
this defined term:
"NET CASH PROCEEDS": (a) with respect to any Indebtedness, the gross
cash proceeds from the incurrence, issuance or sale by the Borrower or any
Subsidiary of such Indebtedness, net of all taxes (including taxes estimated by
the Borrower to be payable as a result thereof or as a result of such
transactions) and fees (including investment banking fees), commissions, costs
and other expenses incurred in connection with such issuance or sale and (b)
with respect to any asset sale, the gross proceeds thereof in the form of cash
and Cash Equivalents (including any such proceeds received by way of purchase
price adjustment receivable or otherwise, but only as and when received) of such
asset sale, net of attorneys' fees, accountants' fees, investment banking fees,
and other customary fees and expenses actually incurred in connection therewith
and net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements).
(c) Notwithstanding the provisions of Section 1.2(b) of the Credit
Agreement, all calculations made for the purposes of determining compliance with
the Credit Agreement shall be made by application of GAAP as in effect for and
applied in the preparation of the Borrower's financial statements dated as of
and for the period ended September 30, 2001.
(d) The provisions of Section 5.3(c) of the Credit Agreement are
superceded by the following sentence. If and for so long as any Event of Default
has occurred and is continuing, all Loans, and reimbursement obligations and all
fees and other amounts payable by the Borrower or any Guarantor not paid when
due, shall bear interest at, after as well as before judgment, and all fees in
respect
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of Letters of Credit shall be equal to, a rate per annum equal to (i) in the
case of principal of any Loan or reimbursement obligation or any fee in respect
of a Letter of Credit, 2% plus the rate otherwise applicable to such Loan,
reimbursement obligation or Letter of Credit and (ii) in the case of any other
amount, 2% plus the rate applicable to Base Rate Loans.
(e) In Section 5.4(a) of the Credit Agreement, when the applicable Base
Rate is based on the Federal Funds Rate, interest will be calculated on the
basis of a 360-day year for the actual days elapsed.
(f) In Section 5.13 of the Credit Agreement, the following provisions
shall apply, and to the extent inconsistent the provisions of Section 5.13 shall
be superceded:
(i) In Section 5.13(c)(III), clause (iii) of the proviso is
deleted. But if the aggregate principal amount of Loans required to be
repaid on any date pursuant to Section 5.13(c)(III) is less than
$1,000,000, such prepayment shall be deferred until the aggregate
principal amount of Loans required to be prepaid pursuant thereto
(including such deferred amount) is not less than $1,000,000 or, if
earlier, the date any other prepayment of Loans is required to be made
pursuant to Section 5.13.
(ii) In Section 5.13(e), all net insurance proceeds
(including, subject to the second sentence of this Section 7(f)(ii),
net of payments out of such proceeds used to pay required warranty
claims pursuant to existing agreements with third parties) in excess of
$3,000,000 received on account of any claim or related group of claims
that is based on the same event with respect to any satellite or
transponder owned by the Borrower or its Subsidiaries in respect of its
fixed satellite services business (including without limitation, for
any launch failure, any in-orbit failure (whether total or partial) or
any anomaly or degradation) shall be used to prepay the Term Loans and
reduce the Revolving Credit Commitments in accordance with Section
5.13, and the proviso in Section 5.13(e) shall not apply to any such
proceeds. It is understood and agreed by the Borrower that the
insurance proceeds to be used to pay the required warranty claims
described in the previous sentence shall be placed in an escrow account
established on terms satisfactory to the Administrative Agent
immediately upon receipt of such insurance proceeds and kept in such
account until payment is made on such warranty claims, and any such
amounts not applied to such warranty claims within 60 days after
receipt of such proceeds shall no longer be excluded for purposes of
this Section 7(f)(ii), and shall be immediately applied to prepay the
Term Loans and reduce the Revolving Credit Commitments in accordance
with Section 5.13.
If any such prepayment is made and involves circumstances in which any
satellite or transponder has been destroyed or permanently failed or as
to which there is an anomaly as to a portion thereof, the Borrower, by
notice
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to the Administrative Agent with a copy to each Bank, may request that
thereafter the requirements of any financial covenant that includes
Consolidated EBITDA be re-calculated on a pro forma basis excluding the
projected revenues (net of any related cost savings) that would have
been derived from such satellite or transponder. Such notice shall
include in reasonable detail the basis for, and the computations
underlying, the re-calculation requested by the Borrower. The
Administrative Agent and E&Y, in consultation with the Steering
Committee, shall promptly review such request and advise the Borrower
whether there are any disagreements with the proposed re-calculation,
setting forth in reasonable detail the basis for any such disagreement.
The Administrative Agent agrees to promptly negotiate in good faith
with the Borrower to resolve any such disagreement, but no such
re-calculation shall be given effect for purposes of determining the
Borrower's compliance with any financial covenant until approved by a
majority of the Steering Committee (it being acknowledged and agreed
(x) by all parties hereto that any such recalculations approved by a
majority of the Steering Committee shall be binding on all the Banks
and effective for all purposes of the Credit Agreement and (y) by the
Borrower that the Administrative Agent or the Steering Committee may
consult with the Banks, and may take their views into account). The
Administrative Agent shall promptly notify the Banks of any such
re-calculation approved by the Steering Committee.
Notwithstanding the foregoing, it is agreed that insurance proceeds of
$7,000,000 received by the Borrower on a conditional basis in respect
of a claim submitted prior to the Amendment Effective Date regarding
certain anomalies on Telstar 5 (the unconditional receipt of which is
included in the Initial Business Plan) are not required to be used to
prepay Loans or reduce the Revolving Credit Commitments, provided that
(A) if the Borrower receives any additional insurance proceeds for such
claim, 100% of such additional proceeds shall be used to prepay the
Term Loans and reduce the Revolving Credit Commitments and,
notwithstanding the immediately preceding paragraph, no re-calculation
of the financial covenant calculations shall be allowed and (B) if any
or all of such $7,000,000 of insurance proceeds is required to be
repaid to the insurance company, no re-calculation or other adjustments
of the financial covenant calculations is contemplated or will be
allowed.
(iii) In Section 5.13(g), all mandatory prepayments applied to
the Term Loans pursuant to Sections 5.13(c)(II) and (III), shall be
applied pro rata to the remaining installments on the Term Loans (which
for these and comparable applications includes the final installment at
maturity).
(g) Notwithstanding the provisions of Section 8.1(a) of the Credit
Agreement, the financial statements for 2002 delivered pursuant to Section
8.1(a) need not set forth in comparative form the figures for the previous year.
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(h) As for Section 8.2(e) of the Credit Agreement, it is agreed that
the updated appraisals referred to therein for Telstar 4 and Telstar 5 may be
delivered at any time on or before April 30 of each year, notwithstanding the
date on which the Borrower delivers the financial statements referred to in
Section 8.1(a) and that the updated appraisals referred to therein for Telstar 8
and Telstar 13 may be delivered at any time on or before May 10, 2003.
(i) Instead of the provisions of Section 9.1(d) and Schedule 9.1 of the
Credit Agreement, the Borrower and its Subsidiaries will be subject to the
following limitations on Capital Expenditures (it being agreed that for purposes
of this Section 7(i), Capital Expenditures shall not include any capitalized
interest):
(i) Capital Expenditures to complete construction of Telstar
13, the EDS Satellite, Telstar 18 and Telstar 8 (all of which may be
expended in 2003) are permitted in an aggregate amount for each such
satellite not exceeding 105% of the projected amount therefor set forth
in the Initial Business Plan, provided that cash Capital Expenditures
for Telstar 18 are permitted only to the extent funded by a cash amount
received from third parties in connection with the pre-funded launch
deposits contributed by the Borrower.
(ii) Capital Expenditures for the launch and insurance of
Telstar 13, the EDS Satellite and Telstar 18 (all of which may be
expended in 2003) are permitted in an aggregate amount for each such
satellite not exceeding 105% of the projected amount therefor set forth
in the Initial Business Plan, provided that cash Capital Expenditures
for the launch and insurance of Telstar 18 are permitted only to the
extent funded by a cash amount received from third parties in
connection with the pre-funded launch deposits contributed by the
Borrower. No Capital Expenditures for the launch and insurance of
Telstar 8 are permitted.
(iii) Capital Expenditures during fiscal year 2003 for all
other purposes are limited to $20,000,000.
Notwithstanding the foregoing, if the Orbitals Transaction (as defined in
Section 7(k)(vi)) does not close by June 30, 2003 with Net Cash Proceeds of at
least $55,000,000 to the Borrower and its Subsidiaries, no further Capital
Expenditures shall be permitted after such time without the approval of the
Required Banks, other than (x) Capital Expenditures of no more than $100,000 in
each month and (y) cash Capital Expenditures for Telstar 18 to the extent funded
by a cash amount received from third parties in connection with the pre-funded
launch deposits contributed by the Borrower.
(j) Notwithstanding the provisions of Section 9.2(h) and Section 9.2(i)
of the Credit Agreement, the Borrower agrees that on and after the Amendment
Effective Date it will not incur additional Indebtedness pursuant to Section
9.2(h) or Section 9.2(i) if, after giving effect thereto and to the repayment of
any other
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Indebtedness incurred pursuant to Section 9.2(h) or 9.2(i) on or after the
Amendment Effective Date, the aggregate outstanding principal amount of
Indebtedness incurred pursuant to Section 9.2(h) or 9.2(i) on or after the
Amendment Effective Date would exceed $3,000,000, provided that any extension,
renewal, or replacement on or after the Amendment Effective Date of Indebtedness
incurred pursuant to Section 9.2(h) or 9.2(i) and outstanding on the Amendment
Effective Date shall be excluded from such calculation so long as the principal
amount of such Indebtedness is not increased.
In addition, neither the Borrower nor any of its Subsidiaries will
incur any indebtedness relating to vendor financing ("VENDOR INDEBTEDNESS") on
or after the Amendment Effective Date unless, after giving effect thereto and
any repayment of any Vendor Indebtedness incurred on or after the Amendment
Effective Date the aggregate outstanding principal amount of Vendor Indebtedness
incurred on or after the Amendment Effective Date does not exceed (a)
$10,000,000 owing to any Person plus (b) $30,000,000 owing to subcontractors.
(k) In Section 9.6 of the Credit Agreement, the following provisions
shall apply, and to the extent inconsistent the provisions of Section 9.6 shall
be superceded:
(i) Dispositions of obsolete, replaced, worn out or
discontinued property shall be permitted pursuant to Section 9.6(b) (as
distinct from being permitted pursuant to Section 9.6(k)) only to the
extent done in the ordinary course of business.
(ii) For purposes of Sections 9.6(a), (b) or (d), any
transaction or series of related transactions involving gross proceeds
in excess of $5,000,000, other than sales or leases of inventory, will
be deemed not in the ordinary course of business (it being understood
and agreed that merely because any transaction or series of related
transactions involves gross proceeds of $5,000,000 or less does not
create a presumption that they are in the ordinary course of business).
(iii) Dispositions will be permitted pursuant to Section
9.6(c) only if the replacement equipment is of similar use, provided
that transactions in which launch deposits are directly or indirectly
exchanged or otherwise applied to the acquisition of transponders will
also be permitted pursuant to Section 9.6(c).
(iv) In Section 9.6(k), 100% rather than 80% of the sales
proceeds must be paid in cash on the date of sale and clause (iii) is
modified to read in its entirety as follows:
"the Term Loans are repaid and the Revolving Credit
Commitments are permanently reduced by an amount equal to the
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Net Cash Proceeds of such sales in accordance with Section
5.13(c);".
(v) Pursuant to Section 9.6(l), the Borrower or the relevant
Subsidiary may sell the assets of Loral Ecuador (renamed Earth Station
Ecuador Cia Ltda.) as well as the Capital Stock of Loral Ecuador.
(vi) Notwithstanding the provisions of the Credit Agreement
and this Amendment, the Borrower and its Subsidiaries may effect the
monetization of certain Intelsat orbital receivables (the "ORBITALS
TRANSACTION") and sell (publicly or privately) capital stock of Sirius
Radio, Inc., in each case in transactions with substantially the same
substance as previously described to the Administrative Agent but only
if the proceeds of such transactions, in the good faith judgment of the
Borrower, are fair market value. No prepayment of the Term Loans or
permanent reduction of the Revolving Credit Commitments shall be
required in connection with such transactions. It is acknowledged and
agreed that (A) the cash escrow contemplated to be created in
connection with the Orbitals Transaction to secure the Borrower's
performance of its ongoing obligations to the purchaser of the related
satellites is permitted by Section 9.3(d) and (B) notwithstanding that
in accordance with GAAP the Borrower may be required to record
Indebtedness on account of the Orbitals Transaction, such Indebtedness
will be permitted to be incurred and will be disregarded for purposes
of calculating compliance with any financial covenants, but only if
under the terms of the Orbitals Transaction there is no recourse by the
purchaser of such receivables (or any transferee) against the Borrower
or any of its Subsidiaries in respect of any principal or interest
element of the Orbitals Transaction (but there may be recourse with
respect to usual and customary matters concerning ownership and
transfer of the assets transferred and turnover of payments mistakenly
paid to the Borrower after giving effect to the sale).
(l) In Section 9.8 of the Credit Agreement, the following provisions
shall apply, and to the extent inconsistent the provisions of Section 9.8 shall
be superceded:
(i) Notwithstanding the provisions of Section 9.8(a), the
following restrictions shall apply to extensions of trade credit that
are vendor financing (namely, extensions of credit to vendors that are
not current trade liabilities incurred to the Borrower and its
Subsidiaries on customary terms consistent with past practice, referred
to as "VENDOR CREDIT"). Neither the Borrower nor any of its
Subsidiaries will extend any Vendor Credit on or after the Amendment
Effective Date (it being understood that the Vendor Credit to be
provided to WildBlue Communications, Inc. ("WILDBLUE") pursuant to the
Memorandum of Understanding dated March 7, 2003 between Space
Systems/Loral, Inc. and WildBlue shall be treated as having been
incurred prior to the
12
Amendment Effective Date) unless such Vendor Credit arises in
connection with new contracts for the manufacture of satellites and
only if, after giving effect thereto and to the reduction of any other
Vendor Credit extended on or after the Amendment Effective Date, the
aggregate outstanding amount of Vendor Credit extended on or after the
Amendment Effective Date would not exceed $150,000,000, no more than
$50,000,000 of which is extended to any vendors that are not Investment
Grade Vendors.
(ii) The reference to $5,000,000 in Section 9.8(c) is changed
to $500,000.
(iii) The reference to $20 million in Section 9.8(j) of the
Credit Agreement is changed to $2 million.
(iv) In addition to investments permitted to be made by the
Borrower and its Subsidiaries pursuant to Section 9.8 as amended
hereby, the Borrower and its Subsidiaries may directly or indirectly
make advances, loans or other extensions of credit to, or investments
in, Loral Skynet do Brasil Ltda. in an aggregate outstanding amount not
exceeding $3,000,000 to fund the operating costs of such Affiliate in
connection with the EDS Satellite.
(v) In addition to investments permitted to be made by the
Borrower and its Subsidiaries pursuant to Section 9.8 as amended
hereby, the Borrower may create a Domestic Subsidiary (which may be a
special purpose, so-called bankruptcy remote entity) and transfer to it
(or an existing Domestic Subsidiary) an amount of money not exceeding
the amount included in the budget reflected in the Initial Business
Plan for 2003 renewal premiums for officers' and directors' insurance
for Loral and its Subsidiaries (which amount the Borrower hereby
confirms is $2,700,000), with such moneys to be used solely for payment
of amounts that would otherwise have been covered by such insurance
(ignoring deductibles), it being agreed by the Borrower that if it
makes such transfer it will be doing so in lieu of paying such
premiums, unless subsequent thereto such transfer is reversed. The
Borrower shall not be required to cause such Domestic Subsidiary to
become a Guarantor (and its Consolidated Net Worth shall be excluded
from any calculation pursuant to Section 8.9(a) of the Credit
Agreement) and such Domestic Subsidiary shall not be required to pledge
collateral interests in its property pursuant to Section 8.10 of the
Credit Agreement, but the Borrower agrees that within 45 days following
any such transfer it will cause all of the capital stock of such
Domestic Subsidiary to be pledged to the Joint Collateral Agent
pursuant to the Collateral Documents as contemplated by Section 8.9(a)
of the Credit Agreement. It is also agreed that the transactions
contemplated by this clause (v) shall not be a violation of Section 9.9
of the Credit Agreement.
13
(m) Notwithstanding the provisions of Sections 9.6 and 9.9 of the
Credit Agreement and any other applicable provisions of the Credit Agreement,
the Borrower and its Subsidiaries will be permitted (i) to enter into a
settlement agreement with Globalstar, L.P. and certain other parties
substantially on the terms set forth in the Loral/Globalstar Settlement Term
Sheet dated as of March 14, 2003 previously delivered to the Administrative
Agent, and (ii) to perform its obligations thereunder.
(n) Neither the Borrower nor any of its Subsidiaries will agree to or
make transponder lease payments to Loral CyberStar, Inc. other than at rates and
on other terms consistent with historical practice.
(o) Neither the Borrower nor any of its Subsidiaries will (i) make any
optional prepayment, retirement or redemption of, or other optional purchase,
payment or defeasance in respect of, any of their Funded Debt, other than the
Obligations and any such prepayment, retirement, redemption, purchase or payment
effected solely in exchange for issuance of shares of capital stock of Loral, no
portion of which matures or is subject to mandatory redemption or repurchase,
whether or not upon the happening of any event or the election of the holder, at
any time prior to July 7, 2005, or (ii) enter into or agree to any amendment to
the terms of any other Funded Debt that would (A) increase the rate of interest
or fees payable in respect thereof, (B) cause the principal thereof to be
repayable, defeased, redeemed or otherwise retired earlier or on stricter terms
or, in the case of any revolving facility, the commitments or availability
thereunder to be reduced, (C) require any additional collateral to be pledged or
(D) add additional events of default.
(p) In Sections 10(f) and 10(g) of the Credit Agreement, all references
to the Borrower or any of its Material Subsidiaries are expanded to include also
Loral, the Parent and Loral Satellite, Inc., provided that (i) in the case of
Loral Satellite, Inc., the reference to $15,000,000 shall be changed to
$1,000,000 and (ii) in the case of Loral, the limitation of 30 days on the grace
period provided in the applicable instrument or agreement shall be deleted.
(q) In Section 12.6(c) of the Credit Agreement, (i) the universe of
Purchasing Banks is expanded to any bank, finance company, insurance company or
other financial institution or fund that in the ordinary course of business
extends credit or buys loans of the type contemplated by the Credit Agreement,
(ii) the consent of the Borrower shall not be required for a sale to a
Purchasing Bank regardless of whether a Default or Event of Default exists at
the time of such sale, nor shall its execution of a Commitment Transfer
Supplement be required pursuant to Section 12.6(e) of the Credit Agreement, but
the Borrower shall still be entitled to receive notice of such sale pursuant to
Section 12.6(e) and (iii) in the case of a sale by a Revolving Credit Bank of
all or any part of its rights and obligations as a Revolving Credit Bank to a
Purchasing Bank that is already a Bank but is not a Revolving Credit Bank, the
consent of the Administrative Agent and the Issuing Bank shall be required, such
consents not to be unreasonably
14
withheld (it being understood that in any such instance the Purchasing Bank may
be required to demonstrate to the reasonable satisfaction of the Administrative
Agent and the Issuing Bank its legal and financial ability to timely perform its
obligations in respect of its Revolving Credit Commitment).
SECTION 8. Miscellaneous Provisions. (a) The Banks party hereto
acknowledge and agree that the Borrower will be agreeing for the benefit of the
lenders under the Satellite Credit Agreement that in sub-leasing transponders
pursuant to the Master Lease Agreement, it will continue to follow historical
practice in allocating business to particular satellites.
(b) The Borrower acknowledges that (i) Ernst & Young Corporate Finance
LLC has been engaged in connection with the Credit Agreement as contemplated by
the definition of "E&Y" and (ii) the Steering Committee has been formed. Without
limiting the generality of Section 12.5 of the Credit Agreement, the Borrower
agrees that it will pay, promptly after receipt, all statements for fees and
expenses (which may include amounts on account) of any financial, accounting or
valuation advisors or counsel retained by the Administrative Agent (or through
counsel to the Administrative Agent) in connection with matters arising in
relation to the Credit Agreement (including E&Y and Xxxxx Xxxx & Xxxxxxxx) and
all invoices from any member of the Steering Committee for reimbursement of its
out-of-pocket expenses (other than for legal counsel or other advisors) incurred
in connection with serving as a member of the Steering Committee. The Banks
party hereto agree that the Borrower's obligations under this provision and
Section 12.5 of the Credit Agreement may be, and the Borrower hereby agrees that
such obligations shall be, joint and several with the obligations of Loral
Satellite, Inc. to pay the same amounts.
(c) The Borrower agrees that this Amendment shall be considered a "Loan
Document" for all purposes of the Credit Agreement, including without limitation
Section 10(e).
(d) The Borrower understands and accepts that:
(i) except as expressly set forth herein, this Amendment shall
not constitute a waiver or amendment of any term or condition of the
Credit Agreement or any other Loan Document and all such terms and
conditions shall remain in full force and effect and are hereby
ratified and confirmed in all respects, and that no failure or delay by
the Banks or any one of them in exercising any right, power or
privilege under any Loan Document, or any other action taken or not
taken or statement made, during the period prior to the date hereof or
during the period thereafter shall operate as a waiver thereof or
obligate any Bank to agree to any further amendments to or waivers
under any Loan Document; and
15
(ii) the Banks have given no assurance that they will grant
any further amendments to the Credit Agreement or any other Loan
Document.
SECTION 9. Release of Bank Liability. The Borrower, for itself and on
behalf of its affiliated entities, successors, assigns and legal representatives
(the "BORROWER Parties"), jointly and severally releases, acquits and forever
discharges the Administrative Agent, the Collateral Agent and each Bank
(collectively, the "BANK PARTIES"), and their respective subsidiaries, parents,
affiliates, officers, directors, employees, agents, attorneys, successors and
assigns, both present and former (collectively, the "BANKS' AFFILIATES") from
any and all manner of actions, causes of action, suits, debts, controversies,
damages, judgments, executions, claims and demands whatsoever, asserted or
unasserted, in contract, tort, law or equity which the Borrower or any other
Borrower Party has or may have against any of the Bank Parties and/or the Banks'
Affiliates by reason of any action, failure to act, matter or thing whatsoever
arising from or based on facts occurring prior to the date hereof, including but
not limited to any claim or defense that relates to, in whole or in part,
directly or indirectly, (i) the making or administration of the Loans, including
without limitation, any such claims and defenses based on fraud, mistake,
duress, usury or misrepresentation, or any other claim based on so-called
"lender liability theories", (ii) any covenants, agreements, duties or
obligations set forth in the Loan Documents, (iii) any actions or omissions of
any of the Bank Parties and/or the Banks' Affiliates in connections with the
initiation or continuing exercise of any right or remedy contained in the Loan
Documents or at law or in equity, (iv) lost profits, (v) loss of business
opportunity, (vi) increased financing costs, (vii) increased legal or other
administrative fees or (viii) damages to business reputation.
SECTION 10. Interest and Additional Fees. (a) The Borrower agrees that
on and after the Amendment Effective Date, (i) the Applicable Eurodollar Rate
Margin for each day will be 3.75% and the Applicable Base Rate Margin for each
day will be 2.75% (including for purposes of any outstanding Interest Periods),
regardless of the Applicable Level, provided that both Applicable Margins are
subject to further increase as provided in the last sentence of the definition
of Applicable Margin in the Credit Agreement and (ii) the Eurodollar Rate used
to calculate the rate of interest applicable for any Interest Period (including,
as to any day on or after the Amendment Effective Date, for purposes of any
outstanding Interest Period) shall be the greater of (A) the rate otherwise
determined for such Interest Period pursuant to the definition of "Eurodollar
Rate" and (B) 1.50%. The Borrower agrees that on and after the Amendment
Effective Date it will not select any Interest Period that is longer than three
months.
(b) In addition to the fees payable by the Borrower to the Banks
pursuant to Section 14(b), the Borrower agrees that if the Amendment Effective
Date occurs the Banks will on the Amendment Effective Date have earned, and the
Company shall be obligated to pay to the Administrative Agent for the
16
account of the Banks ratably in proportion to their outstanding Loans and
Revolving Credit Letters of Credit Obligations determined as of the Amendment
Effective Date (the "AMENDMENT DATE AMOUNT"), additional fees (the "ADDITIONAL
FEES") in an aggregate amount equal to 0.75% of the Amendment Date Amount. The
Additional Fees shall be payable on January 10, 2004. If any Bank assigns any of
its rights in respect of its Loans and Revolving Credit Commitments, a
proportionate amount of the Additional Fees earned by and payable to such Bank
shall be payable to the assignee thereof as of the day the Additional Fees are
payable. The obligation of the Borrower to pay the Additional Fees has been
imposed as a condition to this Amendment by the Required Banks expressly on the
basis that, being required only by a vote of the Required Banks, it is not
intended to be and shall not be a fee for purposes of clause (a) of Section 12.1
of the Credit Agreement, and accordingly the amount thereof may be reduced and
the date for payment thereof may be extended with the consent of the Required
Banks.
SECTION 11. Representations of the Borrower. The Borrower represents
and warrants that, except as expressly waived hereby, (i) the representations
and warranties of the Borrower set forth in Article 6 of the Credit Agreement
will be true on and as of the Amendment Effective Date, except where such
representations and warranties expressly relate to an earlier date, in which
case such representation and warranty shall be true and correct as of such
earlier date and except as provided in Section 2(c) of the Amendment and (ii) no
Default will have occurred and be continuing on such date. The Borrower further
represents and warrants that:
(a) all information (other than projections) heretofore furnished by or
on behalf of the Borrower to the Administrative Agent or any Bank for purposes
of or in connection with this Amendment does not, and all such information
hereafter furnished by or on behalf of the Borrower to the Administrative Agent
or any Bank will not, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make statements therein, in light
of the circumstances under which they were or will be made, not misleading; and
(b) the projections upon which the Initial Business Plan was and the
Updated Business Plan will be based and any similar information provided in
writing to the Banks by or on behalf of the Borrower pursuant to the Credit
Agreement or this Amendment will in each case be based upon good faith estimates
and assumptions believed by the Borrower's and Loral's senior management to be
reasonable at the time delivered and at the time prepared and delivered
represent their reasonable best estimate of the future performance of the
Borrower and its Subsidiaries.
SECTION 12. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
17
SECTION 13. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 14. Effectiveness. (a) This Amendment shall become effective as
of the date hereof on the date when the following conditions are met (the
"AMENDMENT EFFECTIVE Date"):
(i) the Administrative Agent shall have received from each of
the Borrower, each Guarantor and the Required Banks a counterpart
hereof signed by such party or facsimile or other written confirmation
(in form satisfactory to the Administrative Agent) that such party has
signed a counterpart hereof;
(ii) confirmation that the Borrower has paid all statements of
Xxxxx Xxxx & Xxxxxxxx, special counsel for the Administrative Agent,
and of E&Y that have been rendered to the Borrower at least one
Business Day prior to the Amendment Effective Date in respect of this
Amendment or other Credit Agreement matters;
(iii) the Parent and the Joint Collateral Agent shall have
entered into the Satellite Pledge Agreement (which shall be, mutatis
mutandis, substantially in the form of the Pledge Agreement), pursuant
to which the Parent grants a pledge and security interest in the
Satellite Stock to the Joint Collateral Agent, subject to the Second
Intercreditor Agreement (which shall be, mutatis mutandis,
substantially in the form of the Intercreditor Agreement);
(iv) the Administrative Agent shall have received a letter
from the Borrower, in form and substance satisfactory to it, with
respect to its fees and expenses for acting as Administrative Agent in
connection with this Amendment and on and after the Amendment Effective
Date, together with payment of any amounts due thereunder on the
Amendment Effective Date.
(v) the Administrative Agent shall have received such opinions
of counsel, officer's and secretary's certificates and such other
documents relating to the Borrower, the Guarantors and the matters
contemplated hereby as it shall have reasonably requested.
The Banks party hereto and the Borrower acknowledge that the granting to the
Joint Collateral Agent of a lien on the Satellite Stock pursuant to the
Satellite Pledge Agreement requires the consent of the Majority Lenders (as such
term is defined in the Satellite Credit Agreement), and the Borrower
acknowledges that if such consent is not provided by such lenders under the
Satellite Credit Agreement, it will not be able to satisfy the condition set
forth in clause (iii) of this Section 14(a).
18
Promptly upon the occurrence of the Amendment Effective Date, the Administrative
Agent shall notify each of the parties hereto, and such notice shall be
conclusive and binding on all parties hereto.
(b) No later than the first Business Day after the Amendment Effective
Date the Borrower shall pay to the Administrative Agent, in immediately
available funds, for the account of each Bank that has evidenced its agreement
hereto as provided above by the later of (i) Noon (New York City time) on March
31, 2003 and (ii) 5:00 PM (New York City time) on the date the Administrative
Agent issues a notice to the Banks saying that the Amendment Effective Date has
occurred, a waiver fee in an amount equal to 0.25% of such Bank's Amendment Date
Amount; provided that the date and time by which a Bank's evidence of its
agreement must be made in order to be entitled to receive such fee may be
extended, on a uniform basis for all Banks, to such later date and time as the
Borrower may agree.
(c) Each Guarantor, by its signature below, hereby consents to this
Amendment and acknowledges that this Amendment shall not alter, release,
discharge or otherwise affect any of its obligations under the Credit Agreement
or any other Loan Document, and hereby ratifies and confirms all of the Loan
Documents to which it is a party.
[Signature Pages Follow]
19
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
BORROWER: LORAL SPACECOM CORPORATION,
a Delaware corporation
By:_____________________________________
Name:
Title:
[Signature Pages Continue]
GUARANTORS: LORAL SPACE & COMMUNICATIONS
CORPORATION, a Delaware corporation
By:_____________________________________
Name:
Title:
SPACE SYSTEMS/LORAL, INC., a Delaware
corporation
By:_____________________________________
Name:
Title:
LORAL COMMUNICATIONS SERVICES, INC., a
Delaware corporation
By:_____________________________________
Name:
Title:
LORAL GROUND SERVICES, L.L.C., a
Delaware limited liability company
By:_____________________________________
Name:
Title:
[Signature Pages Continue]
AGENT: BANK OF AMERICA, N.A., in its capacity
as Administrative Agent
By:_____________________________________
Name:
Title:
LENDERS: BANK OF AMERICA, N.A., individually in
its capacity as a Lender and Issuing
Bank
By:_____________________________________
Name:
Title:
BANK OF MONTREAL
By:_____________________________________
Name:
Title:
BNP PARIBAS
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
BARCLAYS BANK PLC
By:_____________________________________
Name:
Title:
BAYERISCHE LANDESBANK
By:_____________________________________
Name:
Title:
[Signature Pages Continue]
CIBC WORLD MARKETS CORP.
By:_____________________________________
Name:
Title:
CITIBANK, N.A.
By:_____________________________________
Name:
Title:
COMM INVESTORS LLC
By:_____________________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:_____________________________________
Name:
Title:
DB STRUCTURED PRODUCTS INC.
By:_____________________________________
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH
By:_____________________________________
Name:
Title:
DEUTSCHE BANK AG,
NEW YORK BRANCH
By:_____________________________________
Name:
Title:
[Signature Pages Continue]
DEUTSCHE BANK TRUST CO AMERICAS
By:_____________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:_____________________________________
Name:
Title:
GOLDENTREE HY OPPORTUNITIES II, L.P.
By:_____________________________________
Name:
Title:
GOLDENTREE HIGH YIELD MASTER FUND, LTD
By:_____________________________________
Name:
Title:
XXXXXXX SACHS CREDIT PARTNERS L.P.
By:_____________________________________
Name:
Title:
SANPAOLO IMI SPA
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
[Signature Pages Continue]
NATIONAL CITY BANK
By:_____________________________________
Name:
Title:
SOCIETE GENERALE
By:_____________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:_____________________________________
Name:
Title:
JPMORGAN CHASE BANK, FORMERLY KNOWN AS
THE CHASE MANHATTAN BANK
By:_____________________________________
Name:
Title:
SUMITOMO MITSUI BANKING CORPORATION
By:_____________________________________
Name:
Title:
PERRY PRINCIPALS LLC
By:_____________________________________
Name:
Title:
SCHEDULE 1 TO
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Adjustments to Consolidated EBITDA
- non-cash charges for the write-down of inventory, equipment
and receivables (including notes) up to $75 million on or
after April 1, 2002,
- non-cash charges for expenses resulting from pension and other
retiree medical expenses of up to $10 million in 2002, $25
million in 2003 and $10 million in 2004,
- cash charges for severance arrangements up to $10 million per
calendar year beginning January 1, 2002,
- the 2002 impact of up to $45 million G&A cost allocation, and
- non-cash charges for the gain or loss on sale of orbital
receivables of up to $10 million on or after March 31, 2003.
Adjustments to Consolidated Net Worth
- the write down of assets relating to Europe*Star up to $45
million commencing October 1, 2002,
- pension and retiree minimum liability charges up to $65
million commencing October 1, 2002,
- other charges excluded from Consolidated EBITDA listed above
and
- goodwill amortization of $10 million per calendar year
commencing January 1, 2002.
