Exhibit 10.1

GRANT AGREEMENT
(Non-Qualified Share Options/Tandem SARs)

THIS AGREEMENT (this “Agreement”), executed this 28th day of November 2018 by
and among Telesat Canada (the “Company”), Daniel Goldberg (the “Participant”),
and for the purposes of Sections 11, 12, 13, 15, 16  and 18 only, Loral Space &
Communications Inc. (“Loral”), and for the purposes of Sections 11, 12, and 13
only, the Public Sector Pension Investment Board (“PSP”), and only for the
purposes of Sections 16, 17(b) and 20, 4440480 Canada Inc. (the “Special
Purchaser”, collectively with the Company, the Participant, Loral and PSP, the
“Parties”).

WHEREAS, the Company has adopted and maintains the Telesat Holdings Inc. 2013
Management Stock Incentive Plan (the “Plan”) to promote the interests of the
Company and its Affiliates and shareholders by providing the Company and its
Affiliates’ key employees with an appropriate incentive to encourage them to
continue in the employ of and provide services for the Company or its Affiliates
and to improve the growth and profitability of the Company and its Affiliates;

WHEREAS, the Plan provides for the Grant to participants in the Plan of
Non-Qualified Share Options and Tandem SARs to purchase Shares of the Company;
and

WHEREAS, a Grant was awarded to the Participant,

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree, as follows:

1.Incorporation of Plan.  All terms, conditions and restrictions of the Plan,
including the Accession Agreement, and the Employment Agreement are incorporated
herein and made part hereof as if stated herein and the terms hereof are
incorporated in the Plan as it applies to the Participant. If there is any
express conflict between the terms and conditions of the Plan and this
Agreement, the terms and conditions of this Agreement shall govern. All
capitalized terms used and not defined herein shall have the meaning given to
such terms in the Plan.  For all purposes hereunder, an Initial Public Offering
(as defined at Section 2.29 of the Plan) shall also include a Roll Up
Transaction (as defined at Section 15(a), below).

2.Grant of Options.  Pursuant to, and subject to, the terms and conditions set
forth herein and in the Plan, the Company hereby grants to the Participant a
NON-QUALIFIED SHARE OPTION with respect to 780,000 Shares (the “Option”).

3.Grant of Tandem SARs.

(a)Each Option shall be accompanied by a Tandem SAR at the SAR Base Price (per
Share).  The Tandem SAR constitutes an unfunded and unsecured promise of the
Company to deliver (or cause to be delivered) to the Participant a combination
of Shares and cash (as determined by the Committee, in its discretion, subject
to the provisions of this Section 3) at the time such Tandem SAR is exercised,
equal in value to the excess, if any, of the Fair

 

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Market Value per Share over the SAR Base Price per Share of the Tandem SAR.  In
no event shall the amount of such excess that the Company shall deliver (or
cause to be delivered) to the Participant in cash exceed the minimum mandatory
statutory amount of withholding taxes due to the applicable Canadian federal and
provincial and applicable United States federal, state and local taxing
authorities with respect to the exercise of the Tandem SAR (the "Minimum
Withholding Amount").  In the event that the Participant exercises a Tandem SAR
and thereby disposes of his rights under the accompanying Option for cash, the
Company, and each of their respective Affiliates shall forego any related
deduction otherwise available in computing taxable income for Canadian income
tax purposes, to the extent that the Participant may claim the deduction under
paragraph 110(1)(d) of the Canadian Income Tax Act (the “Act”).  In this regard,
it is understood that the Company, as applicable, will make the required
election to forego such deduction, in prescribed form under the Canadian Income
Tax Act (the “Act”).  Furthermore, the Company will provide the Participant with
the documentation required under the Act to support the deduction claimed under
paragraph 110(1)(d) of the Act.

(b)The Participant may exercise the Tandem SAR, in whole or in part, pursuant to
the terms of the Plan and this Agreement provided that, if Section 3(c) below
applies no less than fifteen (15) business days (and no more than thirty (30)
business days) in advance of the effective date of the proposed exercise the
Participant shall give the Committee written notice of his intention to exercise
the Tandem SAR, in whole or in part, and the number of Shares underlying the
Option involved.  Upon receipt of such notice, the Committee shall promptly
notify the Participant whether the Company is prohibited by applicable law or
prohibited under any credit agreement (or other debt agreement) applicable to
the Company from (x) permitting such exercise of the Tandem SAR, in whole or in
part, or (y) from making the payment of the amounts in accordance with Section
3(c) below (an “Applicable Restriction”) at the time the Participant provides
the notice of an intent to exercise.  In the case of an Applicable Restriction,
the Participant shall not be permitted to exercise the Tandem SAR, in whole or
in part, to the extent restricted by the Applicable Restriction, but may, but
shall not be obligated to, exercise all or part of the Option and utilize the
Special Purchase Rights (as described in Section 17(b)) with regard to the
amounts necessary to pay the Exercise Price and the Minimum Withholding Amount
(provided that the Special Purchase Rights shall not be available if both (x)
the Company’s public common shares are publicly traded and (y) Participant is
otherwise free to sell the Shares acquired under the Option).  Any exercise of
all or part of the Tandem SAR or use of the Special Purchase Rights shall be
accomplished within thirty (30) business days after notification by the
Committee that exercise of the Tandem SAR is or is not permitted.  If the
exercise or utilization is to occur thereafter, a new notice of intent to
exercise shall be required.  

(c)Notwithstanding Section 3(a) but subject to Section 3(b), if exercise of a
Tandem SAR, in whole or in part, occurs during employment (while Cause does not
exist and there is no current intent to voluntarily resign without “Good Reason”
(as defined in the Participant’s Employment Agreement)) or following a
Termination of Employment other than a termination for Cause or a voluntary
termination without Good Reason, and is not prohibited by Section 3(b), the
Minimum Withholding Amount shall be delivered in cash.  The remainder of such
excess shall be delivered in Shares.  Fractional Shares will not be delivered
and the number of Shares to be delivered upon any exercise by the Participant of
the Tandem SAR, in whole or in part, granted herein shall be rounded up to the
nearest whole Share and the amount of cash to be delivered to the Participant
upon such exercise shall be rounded down.  Until such delivery,

 

 

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the Participant has only the rights of a general unsecured creditor and no
rights as a shareholder of the Company in respect to such Shares.

4.Option/Tandem SAR:  The Tandem SAR shall vest, become exercisable, and
terminate at the same times and under the same terms as the Option granted
herein.  The exercise of all or part of the Option shall cause the same
proportion of the Tandem SAR to automatically terminate and the exercise of all
or part of the Tandem SAR shall cause the same proportion of the Option to
automatically terminate.  Only the Option or the Tandem SAR, and not both, may
be exercised in whole or in part at any time.

5.Grant Date.  The Grant Date of the Award hereby granted is November 28, 2018.

6.Exercise Price. The Exercise Price of each Share underlying the Option hereby
granted is CAD $25.94.

7.Grant Term.  Subject to the terms of the Plan and Section 14 hereof as to
earlier termination of the exercise period of the Award, the exercise period of
the Award shall expire ten (10) years from the Grant Date.

8.Vesting.  Notwithstanding Section 5 of the Plan, the Option shall become
vested and exercisable as to one-third (1/3) of the Shares underlying the Option
on each of the first three (3) anniversaries of January 1, 2018, subject in all
cases to the Participant’s continued Employment as of such anniversary as
provided in the Plan, except as modified by Section 14 of this Agreement.

9.Delays or Omissions.  No delay or omission to exercise any right, power or
remedy accruing to any party hereto, upon any breach or default of any party
under this Agreement, shall impair any such right, power or remedy of such party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party or any provisions or conditions of this Agreement, shall be in
writing and shall be effective only to the extent specifically set forth in such
writing.

10.Limitation on Transfer.  No Shares obtained pursuant to the exercise of the
Award granted herein shall be transferred except subject to the terms set forth
in Schedule A hereto.  This Section 10 shall cease to apply upon the occurrence
of a Roll Up Transaction.

11.Drag-Along Rights in Respect of Shares Issuable Upon Exercise of the Award.

(a)Provided that Loral or PSP and their respective Affiliates and their
Permitted Transferees (as defined in the Unanimous Shareholder Agreement) (such
shareholders and their respective Affiliates and Permitted Transferees being
referred to in this Agreement as the “Relevant Shareholders”) collectively hold
a number of Equity Shares of the Company which

 

 

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is not less than 25% of the total number of Equity Shares then outstanding on a
fully diluted basis, if a Relevant Shareholder proposes to Transfer to any
person (the “Drag-Along Transferee”) at arm’s length from such Relevant
Shareholder (for purposes of this Section 11 only, any such Relevant Shareholder
that is proposing such Transfer, a “Selling Shareholder”) some or all of the
Equity Shares then held by the Selling Shareholder, in a bona fide transaction
(a “Drag-Along Sale”), then the Selling Shareholder(s) may elect (a “Drag-Along
Election”) to require the Participant (but provided that all Participants are
being similarly required with regard to their fully vested Shares but not
necessarily unvested Shares) to sell to the Drag-Along Transferee that number of
Shares issued upon exercise of the Award equal to the product of (x) a fraction,
the numerator of which is the number of Equity Shares (on a fully diluted basis)
as is proposed to be sold by the Selling Shareholder(s) and the denominator of
which is the aggregate number of Equity Shares (on a fully diluted basis) owned
as of the date of the Drag-Along Notice (as defined below) by all Relevant
Shareholder(s), and (y) the number of Shares then owned by the Participant and
issued upon the exercise of the Award plus the number of Shares issuable upon
the exercise of the Award whether or not vested, as of the date of the
Drag-Along Notice, at the purchase price and upon the other terms and subject to
the conditions of the Drag-Along Sale (including the kind and amount of
consideration to be paid for such Equity Shares), all of which shall be set
forth in the Drag-Along Notice.  To the extent that the number of Shares issued
upon exercise of any vested portion of the Award that is held by the Participant
is less than the number calculated pursuant to the preceding sentence, a portion
of the Award not otherwise vested and exercisable shall become vested and
exercisable based on the earliest thereafter vesting tranches being vested
before later vesting tranches and the Participant shall be required, conditioned
on the closing of the Drag-Along Sale, to exercise such portion of such Award
and Transfer the resulting Shares in the manner provided in the previous
sentence.  The Participant shall be responsible to the Selling Shareholders for
the Participant’s pro rata share of a reasonable estimate of the out-of-pocket
transactional expenses to be paid by the Selling Shareholders, as determined by
the Selling Shareholders, incurred in connection with the Drag-Along Sale.
Without limiting the foregoing liability, the Selling Shareholders shall be
entitled to agree with the purchaser for the payment of such pro rata share
directly, to the Selling Shareholders out of sale proceedings.

(b)The rights set forth in Section 11(a) shall be exercised by the Selling
Shareholder giving written notice by delivery of a true and complete copy of the
offer to purchase from the Drag-Along Transferee together with all relevant
agreements (the “Drag-Along Notice”) to each Participant which shall
specifically identify the identity of the proposed Drag-Along Transferee, the
number of Equity Shares proposed to be sold to the Drag-Along Transferee, the
purchase price therefor, the material terms and conditions of the proposed
Drag-Along Sale and the proposed closing date of the Drag-Along Sale.

(c)The Selling Shareholders may assign to the Drag-Along Transferee the rights
under this Section 11 and Section 12 hereof, and in such event, the Drag-Along
Transferee shall be treated as if it is the Selling Shareholder thereafter.  

(d)This Section 11 shall not apply to sales made in connection with an Initial
Public Offering or other sales made into the public market.

 

 

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(e)This Section 11 shall cease to apply upon the occurrence of a Roll Up
Transaction.

12.Tag Along Rights in respect of Shares Issuable Upon Exercise of the Award.

(a)No Relevant Shareholder shall sell, offer to sell or agree to sell any Equity
Shares (other than (i) sales of Equity Shares by a Relevant Shareholder to any
other Relevant Shareholder, (ii) sales made in connection with an Initial Public
Offering or other sales made into the public market, (iii) sales of Equity
Shares by a Relevant Shareholder(s) to its or their Affiliate, (iv) a sale by
PSP (or an Affiliate) of Equity Shares to a shareholder who through such sale
acquires a right to nominate directors of the Company but not a proportionate
share of PSP’s Equity Interest, (v) a transfer to a Permitted Transferee as
defined in Section 7.04(l) of the Unanimous Shareholder Agreement, (vi) in a PSP
Sell-Down (as defined in the Unanimous Shareholder Agreement) or (vii) sales
aggregated with all other Transfers by Relevant Shareholders of less than 5% of
Equity Shares collectively owned by all Relevant Shareholders as of the Grant
Date), unless the applicable offer is in writing and provides, as a condition
precedent to its completion, that the proposed purchaser grants to the
Participant the right to require the proposed purchaser to purchase, at the
discretion of the Participant, some or all of that proportion of the Shares
owned by the Participant and issued upon exercise of the Award, plus Shares of
the Participant issuable upon exercise of the Award whether or not vested, as is
equal to the product of (x) the Tag-Along Percentage, and (y) the number of
Shares then owned by the Participant and issued upon the exercise of the Award
plus the number of Shares issuable upon the exercise of the Award whether or not
vested, as of the date of the Tag-Along Notice, at a price per Share, and upon
the other terms and subject to the other conditions (including kind and amount
of consideration) as is set forth in the offer to the Selling Shareholder(s) (a
“Tag-Along Sale”); provided, however, that (without limiting the rights of Loral
or PSP under this Agreement, including, without limitation, Sections 11 and 15)
the obligations of each Relevant Shareholder set forth in this Section 12(a)
shall cease in the event that, subject to the prior written consent of Loral and
PSP, the Participant enters into a separate agreement or arrangement with the
proposed purchaser or the Company regarding the treatment of the Shares owned by
the Participant and issued upon exercise of the Award in connection with any
such sale (or proposed sale) by a Relevant Shareholder.  The “Tag-Along
Percentage“ means a fraction, the numerator of which is the number of Equity
Shares as is proposed to be sold by the Relevant Shareholder(s) who are
proposing such sale (for purposes of this Section 12 only, such Relevant
Shareholder, a “Selling Shareholder”) and the denominator of which is the
aggregate number of Equity Shares then owned by all Relevant Shareholders;
provided that if the Tag-Along Sale is for all of PSP’s and its Affiliates’
Equity Shares (a “Qualifying Tag-Along Sale”) and is entered into in connection
with, or contemporaneously with, a Loral Transaction (as defined herein), then
the Tag-Along Percentage shall equal 100%.  

(b)Notwithstanding Section 12(a) above, in the event of a Qualifying Tag-Along
Sale, with respect to the Applicable Percentage of the Participant’s Shares
(whether issued or issuable upon exercise of his Award and whether vested or
unvested):  (i) the purchase price per Share shall be the Implicit Loral
Purchase Price Per Telesat Share, and (ii) the consideration payable by the
buyer in the Qualifying Tag-Along Sale shall, except as otherwise consented to
by Loral and the Participant, be the same Non-Cash/Mixed Consideration as is
paid

 

 

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to the holders of Loral Common Stock in the Loral Transaction; provided that the
consent of the Participant shall not be required where some or all of the
Non-Cash/Mixed Consideration is replaced with cash consideration.  “Applicable
Percentage” means the number of Equity Shares owned by Loral immediately prior
to the Qualifying Tag-Along Sale, divided by the number of Equity Shares
outstanding immediately prior to the Qualifying Tag-Along Sale excluding Equity
Shares issued or issuable upon the exercise of the Award, such result expressed
as a percentage.  “Implicit Loral Purchase Price Per Telesat Share” means the
Loral Stake FMV divided by the number of Equity Shares owned by Loral
immediately prior to the transaction with respect to which the calculation is
being made.  In addition, if the Participant fails to exercise his tag along
rights in the event of a Qualifying Tag-Along Sale, Loral shall have a Loral
Call as provided in Section 15(f) and the Relevant Shareholders (as applicable)
shall have drag-along rights as provided in Section 11.

(c)The Selling Shareholder(s) shall give notice of any proposed sale to the
Participant (the “Tag-Along Notice”) and shall permit the Participant to have
not less than 20 days to accept such offer in a manner which permits the
Participant to specify the number of Shares which the Participant wishes to
sell.  To the extent necessary in order to effect the Tag-Along Sale (and only
to such extent), and conditional upon the closing of the Tag-Along Sale, any
portion of the Award of the Participant not vested and exercisable shall become
vested and exercisable to the extent that the Shares issuable upon such exercise
may be included in the Tag-Along Sale based on the earliest unvested tranches
vesting first.  The completion of the sale of such Shares by the Participant
shall be subject to completion of the sale of Equity Shares by the Selling
Shareholder(s) and vice versa.  If the Participant exercises tag-along rights
pursuant to this Section 12, the Participant shall be responsible to the Selling
Shareholders for his pro rata share of a reasonable estimate of the
transactional expenses of the Selling Shareholders, as determined by the Selling
Shareholders, in connection with the Tag-Along Sale, and the Selling
Shareholders shall be entitled to agree with the purchaser for the payment of
such pro rata share of the reasonable estimate of the transactional expenses, as
determined by the Selling Shareholders, to the Selling Shareholders.  

(d)If any transfer of Equity Shares to a Permitted Transferee or Affiliate is
exempt from this Section 12, as set forth above, as a condition of such
Transfer, the transferee shall agree that any subsequent Transfer of such Equity
Shares shall be subject to this Section 12.  

(e)In the case of any initial public offering (other than a Roll Up Transaction)
in which a Selling Shareholder transfers its Equity Shares, Participant shall be
entitled to the vesting acceleration described in this Section 12 as though such
transfer were subject to this Section 12, with regard to the unvested Awards
necessary to be vested and exercised to sell the Shares in the initial public
offering pursuant to item (iv) of Schedule A and Participant shall have no
rights to tag along on any public offering under this Section 12 (but shall have
the rights under item (iv) of Schedule A).

(f)This Section 12 shall cease to apply immediately following the occurrence of
a Roll Up Transaction.

 

 

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13.Sale Procedures

(a)In connection with any Drag-Along Sale, or any Tag-Along Sale which the
Participant agrees to accept, the Participant shall be obligated, if applicable
and if permitted by law, to vote (or consent in writing, as the case may be, in
respect of) all Shares held by him in favour of any Drag-Along Sale or Tag-Along
Sale being effected by merger, amalgamation, consolidation, plan of arrangement,
share sale, asset sale or other type of business combination requiring
shareholder approval and the Participant shall in all other respects support the
transaction contemplated by the Drag-Along Sale or Tag-Along Sale and shall be
obligated to take all reasonable actions and to reasonably cooperate in the
consummation of the transaction contemplated thereby and shall execute all
documents, including a sale, purchase, amalgamation, reorganization or merger
agreement, reasonably requested by the Selling Shareholder(s) containing the
terms and conditions of the Drag-Along Sale or Tag-Along Sale; provided,
however, that such terms and conditions shall include the following:  (i) any
representations and warranties from the Participant and other Participants shall
be on a several and not joint basis; and (ii) the maximum liability of the
Participant (other than for fraud or intentional misrepresentation as to
ownership or the existence of a lien) under such Drag-Along Sale or Tag-Along
Sale transaction shall be limited to the purchase price received by the
Participant.

(b)The Participant shall not exercise any rights of appraisal or dissent rights
that the Participant may have (whether under applicable law or otherwise) or
could potentially have or acquire in connection with any Drag-Along Sale or
Tag-Along Sale or any proposal that is necessary or desirable to consummate the
Drag-Along Sale or Tag-Along Sale.

(c)All Transfers of Shares, including Shares issuable upon exercise of the Award
to the Drag-Along Transferee pursuant to Section 11 or the Tag-Along Transferee
pursuant to Section 12, shall be consummated contemporaneously on the closing
date specified in the Drag-Along Notice or offer of Tag-Along Sale and, if the
Participant shall not have taken such steps as are necessary to Transfer Shares
and/or exercise the Award to be exercised as provided above in Section 11, in
order for the Shares to be so Transferred, the Participant shall be deemed to
have appointed each Selling Shareholder as his true and lawful attorney in fact
to take all such actions and to sign all such documents as are necessary or, in
the reasonable view of the Selling Shareholder, desirable in order to effect
such Transfer.  In such event, the Selling Shareholder shall hold the purchase
price for such Shares in trust for the Participant, pending acknowledgement in
writing of the Transfer by the Participant.

(d)This Section 13 shall cease to apply immediately following the occurrence of
a Roll Up Transaction.

14.Revised Vesting and Exercise Time Period.

(a)The Award will vest, in full, immediately prior to either a Change of Control
or a Loral Only Change of Control (as defined in Section 15).

(b)Instead of the provisions set forth in Section 5.4.2 of the Plan, the
following provisions will apply:  

 

 

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(i)upon termination of the Participant’s employment by the Company for Cause at
any time, the Award, whether vested and exercisable on or prior to the date of
such termination, or not, shall immediately as of such date of termination be
forfeited.

(ii)upon termination of the Participant’s Employment by the Company at any time
without Cause, or by the Participant for Good Reason, the Award shall
immediately become vested and exercisable, in full, and shall continue to be
exercisable for a period of 180 days following such date, and thereafter shall
be forfeited.

(iii)if the Participant’s Employment terminates as a result of death or
Disability of the Participant, the portion of the Award that would vest within
one year of the date of termination of employment shall immediately vest.

(iv)in the event of the death or Disability Termination of the Participant, the
vested portion of the Award shall continue to be exercisable for a period of one
year from the Participant’s termination of employment as a result of death or
Disability, and thereafter shall be forfeited.

(v)upon termination of the Participant’s Employment by the Participant without
Good Reason at any time, the vested portion of the Award shall be exercisable
for a period of 90 days following such date, and thereafter shall be forfeited.

(vi)upon a Non Fault Termination, there shall be no additional vesting and the
Award shall, subject to Section 14(c) below, remain exercisable until the
earliest of (x) the end of the original Grant Term, (y) two (2) years after an
Initial Public Offering, or (z) the date the Participant commences to provide
services to a Competitor (as defined in Schedule “A” hereto).

(c)The provisions of Section 14(b) above shall be subject to Section 5.8.2 of
the Plan as to termination of exercise periods to the extent not based on
termination of Employment.

15.Loral Transaction.

(a)Loral Only Change of Control Defined.  A “Loral Only Change of Control” shall
have occurred when, if prior to the occurrence of a Roll Up Transaction,  both
(i) the holders of 90% or more of the shares of each class of common stock (the
“Common Stock”) of Loral outstanding at the relevant time, sell, transfer,
exchange or otherwise dispose of such shares pursuant to a transaction or series
of related transactions as a result of which any person or group (as such terms
are defined in Section 13(d) or Section 14(d) of the Securities Exchange Act of
1934 (the “Exchange Act”) or any successor provision to either of the foregoing)
of persons (the “Acquiror”), acquires and becomes the beneficial owner (as the
term “beneficial owner” is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) directly or indirectly, of 90% or
more of each class of Common Stock; provided that such Acquiror is not and does
not include, or act in concert with, the MHR Fund (as defined

 

 

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in the Unanimous Shareholders Agreement) (a “Loral Transaction”); and (ii) a
Qualifying Tag-Along Sale is not entered into in connection with or
contemporaneous with, the Loral Transaction. For greater certainty, a Loral Only
Change of Control shall not include a Roll Up Transaction.  For the purposes of
this Agreement, a “Roll Up Transaction” means a transaction where the holders of
Loral shares sell, transfer, exchange or otherwise dispose of such shares
pursuant to a transaction or series of transactions where such holders receive
equity interests in an entity that holds, directly or indirectly, interests of
the Company or a successor thereto and thereafter common shares of such entity
are subject to an effective registration with applicable governmental
authorities for public trading and listed for trading on a stock exchange in
Canada or the United States of America.  The Board shall exercise its discretion
equitably in any Roll Up Transaction that is applicable under Section 7.3 of the
Plan.

(b)Initial Public Offering.  Subject to Section 15(k), if the Company completes
an Initial Public Offering, then, from and after the later of a Loral Only
Change of Control or the Initial Public Offering, the Sell Down Percentage shall
be deemed to be the greater of 64% or as calculated pursuant to Schedule A.  In
addition, following the completion of an Initial Public Offering,  the following
provisions of this Agreement shall be inapplicable:  the proviso in the last
sentence of Section 12(a), Section 12(b), and Sections 15(c), (d) and (e).

(c)Notice of Certain Transactions.  As soon as reasonably practicable following
such time as Loral enters into an agreement or arrangement that would reasonably
be expected to result in a Loral Only Change of Control, Loral shall inform the
Participant (the “Loral Notification”) of the following: (i) a description of
the consideration to be received by Loral shareholders holding Common Stock (the
“Loral Only Change of Control Consideration”) and (ii) the date by which
Participant must provide the Company, Loral and PSP with its LCC Put Notice (as
defined below) (which date shall be at least seven (7) days after the date of
the Loral Notification); provided, however, Loral shall not be obligated to
deliver the Loral Notification if doing so would violate any contractual
obligation of Loral or its Affiliates or applicable law (a “Loral Notification
Restriction”).  Loral agrees to take commercially reasonable efforts to overcome
or have waived any Loral Notification Restriction; however, should Loral be
unable to overcome or have waived a Loral Notification Restriction it shall
deliver the Loral Notification as soon as reasonably practicable after such
Loral Notification Restriction no longer restricts Loral from providing the
Loral Notification.  If there shall be a material change in the Loral Only
Change of Control Consideration (a “Material Change”) from that set forth in the
Loral Notification, Loral shall promptly give Participant notice of such change
and give him an opportunity to confirm or revoke his LCC Put Notice (such
notification being deemed to be a new Loral Notification and the date set forth
therein for confirmation or revocation of Participant’s LCC Put Notice, the new
and applicable date contained in the Loral Notification (which date shall not be
less than seven (7) days following the earlier of (i) the date of the new Loral
Notification and (ii) public disclosure of such change)).  In addition, as soon
as reasonably practicable following such time as Loral enters into an agreement
or arrangement that would reasonably be expected to result in a Loral
Transaction that is not a Loral Only Change of Control, Loral shall inform the
Participant of the existence of such Loral Transaction and a description of the
consideration to be received by Loral shareholders holding Common Stock in such
Loral Transaction.

 

 

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(d)LCC Put Right.  Upon a Loral Only Change of Control, Participant shall have
the right (the “LCC Put Right”) exercised by providing written notice (the “LCC
Put Notice”) to the Company, Loral and PSP, delivered within the timeframes set
forth in Section 15(c), to require that the Company cause the Special Purchaser
to purchase (pursuant to Section 17(b)) from Participant up to a number of
shares equal to the product of the Total Shares and the Loral Ownership Percent
(which number of shares shall be the “LCC Put Shares” and shall be specified in
the LCC Put Notice) for cash in an amount per Share equal to the Implicit Loral
Purchase Price per Telesat Share (the “Cash Consideration”).  “Total Shares” are
the Shares owned by the Participant and issued upon exercise of the Award, plus
Shares of the Participant issuable upon exercise of the Award whether or not
vested. The “Loral Ownership Percent” shall be a fraction the numerator of which
is the number of Equity Shares owned by Loral and its Affiliates as of the date
immediately preceding the Loral Only Change of Control and the denominator of
which is the aggregate number of all Equity Shares as of such date excluding
Equity Shares issued or issuable upon the exercise of the Award.  Participant’s
LCC Put Right shall expire unless Participant shall have delivered an LCC Put
Notice in accordance with the provisions of this Section 15.  Upon the
expiration of Participant’s LCC Put Right, neither the Company, the Special
Purchaser, Loral nor PSP shall have any further obligation to affect the
purchase or Exchange of the LCC Put Shares.  Participant acknowledges and agrees
that because of the nature of these matters and the transactions any LCC Put
Notice shall be, subject to the penultimate sentence of Section 15(c),
irrevocable and binding on the part of Participant.  

(e)Company Put Restriction.  Should the Company and/or the Special Purchaser be
prohibited by applicable law or prohibited under any credit agreement (or other
debt agreement) applicable to the Company from effecting the purchase pursuant
to Sections 15(d) and 17(b) (a “Company Put Restriction”) (provided that a
credit or other debt agreement shall not be considered to create a Company Put
Restriction if the payment of the Cash Consideration can be effected by
application of any provision, election or “basket” available under the
agreement, in which case the Company shall be required to cause the Special
Purchaser to effect the purchase of the LCC Put Shares to the extent permitted
under such agreement), then the Company shall notify Loral, PSP and the
Participant in writing (a “Company Restriction Notice”) and shall not be
obligated to cause the Special Purchaser to purchase the LCC Put Shares to the
extent prohibited by the Company Put Restriction.  The Company shall use
commercially reasonable efforts to overcome (or obtain a waiver of) any Company
Put Restriction and shall send a subsequent written notice (the “Company
Restriction Elimination Notice”) to Loral and PSP and, unless a Loral Call or
Shareholder Backstop with respect to all of the LCC Put Shares shall have
previously closed, the Participant, promptly after the Company determines that
the Company Put Restriction no longer applies.  In such event, Participant shall
once again have the right, within seven (7) days from the date of the Company
Restriction Elimination Notice to exercise the LCC Put Right by delivering a new
LCC Put Notice for the LCC Put Shares, less the Shares, if any, acquired by
Loral pursuant to the Loral Call, in which event the LCC Put Right shall be
effected subject to and in accordance with the provisions of this Section 15
(provided that if the Implicit Loral Purchase Price per Telesat Share has
already been determined in response to Participant’s original LCC Put Notice and
there has not been a subsequent Material Change, such determination shall remain
valid and the Implicit Loral Purchase Price per Telesat Share will not be
determined again in response to any subsequent LCC Put Notice given pursuant to
this sentence).  In the event of a Company Put Restriction or a default by the
Special Purchaser in purchasing the LCC Put Shares upon exercise of the LCC Put

 

 

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-11-

 

Right, then Loral shall purchase all of the LCC Put Shares; provided, however,
that PSP shall have the right, but not the obligation, exercisable upon written
notice to Loral and the Participant not more than five (5) days after PSP’s
receipt of the Company Restriction Notice, to purchase a percentage of the LCC
Put Shares determined by dividing the number of Equity Shares owned by PSP
immediately prior to the Loral Only Change of Control by the total number of
Equity Shares owned collectively by Loral and PSP at such time, in which case
upon any such exercise by PSP the number of LCC Put Shares to be purchased by
Loral shall be reduced accordingly (any such purchase of LCC Put Shares by Loral
and/or PSP, a “Shareholder Backstop”).  The consideration paid to the
Participant by Loral upon a Shareholder Backstop shall at the election of Loral,
be either (i) Cash Consideration or (ii) if in connection with the Loral Only
Change of Control the holders of Loral Common Stock receive consideration for
their shares in a form other than solely cash (“Non-Cash/Mixed Consideration”),
the Non-Cash/Mixed Consideration (to the extent the Non-Cash/Mixed Consideration
consists of more than one type of consideration (e.g. cash and notes), the
consideration paid to the Participant shall be the same types of consideration
in the same proportion as received by the holders of Loral Common Stock);
provided that Loral may, at its option, deliver cash to the Participant in place
of some or all of the Non-Cash/Mixed Consideration.  The consideration paid to
the Participant by PSP in the event that it elects to participate in a
Shareholder Backstop shall be in the form of cash.  Notwithstanding anything to
the contrary contained in this Section 15(e), the obligation of Loral to effect
a Shareholder Backstop, and PSP’s right to effect a Shareholder Backstop, shall
cease in the event that, subject to the prior written consent of Loral and PSP,
the Participant enters into a separate agreement or arrangement with the
purchaser under a Loral Only Change of Control or the Company regarding the
treatment of the LCC Put Shares owned by the Participant and issued upon
exercise of the Award in connection with any such Loral Only Change of Control.

(f)Exercise of the Loral Call.  Prior to a Roll Up Transaction, Loral shall have
the right to purchase from the Participant some or all of that number of Shares
equal to the product of the Total Shares and the Loral Ownership Percent upon
either (i) a Loral Only Change of Control, and whether or not Participant
exercises his LLC Put Right pursuant to this Section 15, or (ii) a Qualifying
Tag-Along Sale in which the Participant does not exercise his tag-along rights
pursuant to Section 12 in full (the “Loral Call”).  The Loral Call is
exercisable:  (i) in the case of a Loral Only Change of Control, by written
notice delivered to the Participant and PSP not more than seven (7) days after
the last day by which the Participant may exercise the LCC Put under Section
15(d) or (e) above or the Loral Restriction Elimination Call under Section
15(h), and (ii) in the case of a Qualifying Tag-Along Sale, by written notice
delivered to the Participant and PSP not more than seven (7) days after the last
day by which the Participant may exercise his tag along rights with respect to
the Qualifying Tag-Along Sale (the last day on which the written notice may be
delivered being, the “Call Notice Deadline”).  Loral may at its election, assign
some or all of the Loral Call to the Company. In the event that Loral exercises
a Loral Call, PSP shall have the right, exercisable at PSP’s written election
delivered to Loral and the Participant not more than five (5) days after PSP’s
receipt of Loral’s notice pursuant to the immediately preceding sentence, to
purchase from the Participant a percentage of the Shares that are subject to the
Loral Call determined by dividing the number of Equity Shares owned by PSP
immediately prior to the Loral Only Change of Control or Qualifying Tag-Along
Sale (as the case may be) pursuant to which the Loral Call shall have been
exercised by the total number of Equity Shares owned collectively by Loral and
PSP at such time, which Shares shall be purchased by PSP upon the same terms and
conditions as the Loral Call, except that the

 

 

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-12-

 

consideration paid by PSP for such Shares shall be in cash.  To the extent that
a Loral Call closes, the Company shall be discharged from satisfying the LCC Put
Right in respect of the Shares subject to the Loral Call.

(g)Closing of the Loral Call.  Upon closing of the Loral Call, Loral shall
exchange (x) Exchange Consideration (as defined below) equal to the Implicit
Loral Purchase Price Per Telesat Share multiplied by the number of Shares
subject to the Loral Call, for (y) the number of Shares subject to the Loral
Call.  The “Exchange Consideration” shall, at the election of Loral, be either
(i) Cash Consideration or (ii) if in connection with the Loral Only Change of
Control the holders of Loral Common Stock received Non-Cash/Mixed Consideration,
the Non-Cash/Mixed Consideration (to the extent the Non-Cash/Mixed Consideration
consists of more than one type of consideration (e.g. cash and notes), the
consideration paid to the Participant shall be the same types of consideration
in the same proportion as received by the holders of Loral Common Stock);
provided that Loral may, at its option, deliver cash to the Participant in place
of some or all of the Non-Cash/Mixed Consideration.  

(h)Loral Call Restriction.  Should Loral be prohibited by applicable law or
prohibited under any agreement (including any credit or other debt agreement)
applicable to Loral from paying the Exchange Consideration or acquiring the LCC
Put Shares (a “Loral Call Restriction”) (provided that a credit or other debt
agreement shall not be considered to create a Loral Call Restriction if the
payment of the Exchange Consideration can be effected by application of any
provision, election or “basket” available under the agreement, in which case
Loral shall be required to effect the exchange of the LCC Put Shares to the
extent permitted under such agreement), then Loral shall notify Participant in
writing (a “Loral Restriction Notice”) and Loral shall not be obligated to
exchange the number of Shares subject to the Loral Call or the Shareholder
Backstop to the extent prohibited by the Loral Call Restriction.  Until such
time, if any, as the LCC Put Right is closed, Loral shall use commercially
reasonable efforts to overcome (or obtain a waiver of) any Loral Call
Restriction and shall send a subsequent written notice (the “Loral Restriction
Elimination Notice”) to the Participant, promptly after Loral determines that
the Loral Call Restriction no longer applies.  In the case of a Shareholder
Backstop, Participant shall then have the right, within seven (7) days from the
date of the Loral Restriction Elimination Notice to require Loral to purchase
its pro rata share of the LCC Put Shares by delivering a written notice therefor
to Loral (the “Loral Restriction Elimination Call”).  Upon receipt of any such
notice, Loral shall close the Loral Call or its portion of the Shareholder
Backstop, as applicable, subject to and in accordance with the provisions of
this Section 15 (provided that if Implicit Loral Purchase Price per Telesat
Share has already been determined in response to Participant’s original LCC Put
Notice and there has not been a subsequent Material Change, such determination
shall remain valid and the Implicit Loral Purchase Price per Telesat Share will
not be determined again).

(i)Closing.  The closing of the purchase of the LCC Put Shares, Shareholder
Backstop or the Loral Call, as applicable, shall occur as close to
contemporaneously with the Loral Only Change of Control as is reasonably
practicable.  In the case of the Loral Call, Participant shall be deemed to have
appointed Loral as his true and lawful attorney in fact to take all such actions
and to sign all such documents as are necessary or, in the reasonable view of
Loral, desirable in order to effect the closing of the Loral Call, in which
case, Loral shall hold the

 

 

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-13-

 

purchase price for such Shares in trust for the Participant, pending
acknowledgement in writing of the exchange by the Participant.  

(j)Reservation of Rights; Confidentiality.  Participant acknowledges and agrees
that neither the provision of the Loral Notification nor any communications
related thereto between Loral and Participant, nor Participant’s delivery of an
Exchange Notice in response to the Loral Notification, may affect the right of
Loral or the holders of its Common Stock to subsequently determine not to pursue
or enter into any agreement or arrangement relating to a Loral Only Change of
Control on any terms, or to change the Loral Only Change of Control
Consideration.  Participant further agrees that Participant (i) will keep the
Loral Notification and the matters stated therein or related thereto strictly
confidential and not disclose them to any third party, and (ii) upon request
from Loral, enter into a customary confidentiality agreement with Loral relating
to any information provided in the Loral Notification or otherwise provided by
Loral that is related thereto.

(k)Termination of Section 15.  This Section 15 shall cease to apply upon the
occurrence of a Roll Up Transaction.

16.Special Exercise and Repurchase.  In the event that the Participant’s
employment terminates, other than for Cause or voluntarily without Good Reason,
at a time when the Company’s common equity securities are not publicly-traded,
if the Participant notifies the Company and Loral of his intent to exercise the
Tandem SAR at a specific date fifteen (15) to thirty (30) business days after
such notice of intent to exercise (with such exercise date being while the
Tandem SAR is still exercisable) and the estimated amount of Canadian and United
States taxes (with an estimated calculation) that would be due upon such
exercise is greater than the Minimum Withholding Amount, the Committee shall
promptly notify the Participant of its calculation of the Fair Market Value of
the underlying Shares and the number of Shares (the “Gap Shares”) that would be
necessary to be purchased by the Company or its Affiliate to enable a
Participant to pay additional taxes due in addition to the Minimum Withholding
Amount, assuming the date of the giving of the notice was the exercise date (the
amount of additional taxes being the “Gap Taxes” and the additional Options that
would be need to be exercised to obtain the Gap Shares being the “Gap Taxes
Options”).  The exercise period on the Gap Taxes Options shall be automatically
extended until the earliest of (w) the end of the exercise period for the Option
without regard to the termination of employment, (x) sixty (60) days after
Special Purchaser or Loral notifies the Participant that it will purchase the
underlying Shares of the Gap Taxes Option from the Participant on the date that
is six (6) months and one (1) day after the exercise of the Tandem SAR with
regard to the Gap Taxes Option (and provides a Confirmation (as defined below)
(y) nine (9) months after the Company’s common equity securities are
publicly-traded, and (z) the Participant’s commencement of employment with a
Competitor; provided that the foregoing extension shall not apply if, upon
receipt of the notice of intent to exercise from the Participant, either (i) the
Company confirms in writing (a “Company Confirmation”) that it will have the
ability (without creating a default) under its credit agreement (or other debt
agreements) to have the Gap Shares purchased (and the subsequent steps taken)
through the Special Purchase Right (as described below in Section 17(b)) six (6)
months and one (1) day after the date of the exercise or (ii) if it is then a
shareholder of the Company, Loral confirms in writing (a “Loral Confirmation”
together with a Company Confirmation, a “Confirmation” ) that, if the Gap Shares
cannot be timely purchased through the Special

 

 

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-14-

 

Purchase Right (as described below in Section 17(b)), it will purchase the Gap
Shares six (6) months and one (1) day after the exercise without violating
Canadian or other applicable laws regarding its securities ownership of the
Company and compliance with other relevant legal requirements or its credit
agreements (or other debt agreements).  Any Confirmation shall only be effective
if delivered by the Company or Loral to the Participant at least five (5) days
prior to the proposed exercise date.  If a Confirmation is so delivered, the Gap
Shares shall be purchased six (6) months and one (1) day after the exercise
pursuant to the Special Purchase Right (as described below in Section 17(b)) or
by Loral, as the case may be; provided that the Special Purchaser shall not be
required to effect such purchase if, as a result of a change in circumstances
beyond the reasonable control of the Company, the Special Purchaser is
prohibited from making such purchase (or subsequent steps specified in Section
17(b) hereof) by applicable law or such purchase (or subsequent steps) would
create a default under a credit agreement (or other debt agreements) of the
Special Purchaser or the Company (and Loral shall instead make such purchase,
unless Loral is similarly prohibited or would have such a default and was also
prohibited or would have had such a default at the time the Confirmation was
delivered).  If neither Loral nor the Special Purchaser completes the purchase
of the GAP Shares as a result of such a prohibition, then the Special Purchaser
shall be required to repurchase the GAP Shares as provided above as soon as such
restrictions have lapsed (and the Special Purchaser shall provide written notice
to the Participant promptly upon such lapse).  This Section 16 shall cease to
apply upon the occurrence of a Roll Up Transaction.

17.Restriction on Call Rights and Purchase.

(a)Notwithstanding Section 5.9.3 of the Plan, the call rights of the Company as
set out in Section 5.9.3 of the Plan generally shall not apply if the
Participant is terminated by the Company without Cause or the Participant’s
Employment is terminated by the Participant for Good Reason; provided, that (a)
such call rights shall fully apply to Shares that have become issuable upon the
exercise of the portion of the Award which has vested and become exercisable
solely as a consequence of such termination of employment (on the terms
specified in Section 5.9.3 of the Plan) and (b) such call rights may be
exercised in respect of any Shares held by the Participant during the six-month
and one day period commencing on the later of: (i) the date the Board, acting in
good faith, becomes aware that the Participant has become employed by, or is
otherwise providing services to, a Competitor (as defined in Schedule “A”
hereto) with the date of such determination by the Board being treated under
Section 5.9.3 of the Plan as if it was the date of termination of employment (in
such case, the call right may be exercised at the Fair Market Value of the
Shares on the date of exercise) or (ii) the exercise date of the
Award.  Notwithstanding Section 5.9.3 of the Plan, in the event that the
Participant’s employment terminates, other than for Cause or voluntarily without
Good Reason, the Company may not satisfy the purchase price under the call
rights by issuing a promissory note to Participant. Notwithstanding anything to
the contrary in the Plan, any reference to “Grant Date” in Section 5.9.3 of the
Plan shall be deemed to refer to “January 1, 2018.”  Upon exercise of the
Company of its call right, such call right shall immediately be deemed to have
been assigned to, and exercised by, the Special Purchaser (as described in
Section 17(b)).

(b)In the event that (i) the Gap Tax Shares are purchased by the Special
Purchaser, or (ii) the Committee delivers to the Participant a notice that the
Company is subject to an Applicable Restriction, but the Company gives the
Participant written confirmation

 

 

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-15-

 

that the purchase by the Special Purchaser of the Shares represented by the
Tandem SAR is permitted, and does not create a default under its or the
Company’s credit agreement (or other debt agreements), or (iii) the call right
of the Company is available pursuant to Section 17(a) and the Company exercises
such right pursuant to Section 5.9.3 of the Plan, or (iv) Shares are to be
purchased pursuant to Section 15(d), the Special Purchaser shall purchase from
the Participant all Shares issuable upon exercise of the Gap Tax Option, or all
of the Shares represented by that portion of the Tandem SAR which cannot be
exercised pursuant to Section 3(b), or all Shares in respect of which such call
rights have been exercised pursuant to Section 5.9.3 of the Plan, or all of the
Shares to be purchased as provided in Section 15(d), as the case may be, on the
date set out for such purchase in Section 16, or as provided in Section 3(b), or
as provided in Section 5.9.3 of the Plan, or as provided in Section 15(d), as
the case may be, and for the purchase price therein provided.  On such date, the
Shares shall be purchased by the Special Purchaser, and shall thereafter be
transferred, along with the obligation of the Special Purchaser to pay for the
Shares, to a subsidiary of the Special Purchaser, which shall be wound up into
the Company. The Company agrees to the acquisition of such subsidiary by the
Company from the Special Purchaser for nominal consideration and to the winding
up of such subsidiary into the Company.  The purchase price for the Shares shall
be paid by the Company within ten (10) business days after completion of the
winding-up of such subsidiary into the Company, which shall occur promptly after
exercising the call right.

(c)This Section 17 (and Section 5.9.3 of the Plan) shall cease to apply upon the
occurrence of a Roll Up Transaction.

18.Fair Market Value.  

(a)For purposes of this Agreement, “Fair Market Value” means (a) with respect to
Equity Shares, Fair Market Value as defined in the Plan, and for any purposes,
including for any call and for purposes of Section 3, Section 12 and Section 15,
shall be determined without any discount for minority interest or illiquidity,
(b) with respect to any other asset means the amount for which a willing buyer
and willing seller would purchase and sell the asset in an efficient market, and
(c) with respect to any liability means the amount which a willing creditor
would accept to discharge such liability and which a willing debtor would pay to
discharge such liability in an efficient market.

(b)The “Loral Stake FMV” means:  (i) the Fair Market Value of the total
consideration that is to be paid to the holders of Loral equity in the Loral
Transaction, plus (ii) the Fair Market Value immediately prior to closing on the
date of the closing of a Loral Transaction of any indebtedness of Loral incurred
to fund cash distributions to the holders of Loral equity, less (iii) the
amount, if any, by which the Fair Market Value of Loral’s assets (excluding the
Equity Shares) exceeds the Fair Market Value of Loral’s liabilities (other than
liabilities included in clause (ii) above).  Loral shall cooperate with the
Board in its determination of Fair Market Value for purposes of Sections 12, 15
and 18.

(c)If the Participant or Loral (with respect to Fair Market Value determinations
for the purposes of Section 12, 15 and/or 18) does not agree with the Fair
Market Value as determined by the Board pursuant to the Plan and this
Section 18, the Participant or Loral, as the case may be (the “Objector”) shall
notify the Board in writing of such objection

 

 

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-16-

 

within fifteen (15) days of receipt of written notice of such Fair Market Value,
and shall provide to the Board his own determination of Fair Market Value in
writing no later than thirty (30) days of such receipt.  The Board shall submit
the determinations of Fair Market Value to an investment banker or valuation
service agreed upon in good faith by the Board, Loral and the Participant (an
“Appraiser”) to choose one of the determinations as the most appropriate
valuation of the Fair Market Value of the Shares.  All fees of the Appraiser
shall be paid (a) by the Company if the Appraiser chooses an Objector’s
determination of Fair Market Value, and (b) by the Objector if the Appraiser
chooses the Board’s determination of Fair Market Value.  For the avoidance of
doubt, the provisions of this paragraph (c) shall also apply to the
determination of the Loral Stake FMV.

(d)This Section 18 shall cease to apply upon the occurrence of a Roll Up
Transaction.

19.Dividends.  In the event that the Company pays a dividend to the holders of
its Equity Shares, the Board will provide for the crediting of a notional
account established on the books and records of the Company (the “Notional
Account”) for the Participant (but such Notional Account shall not be
established and the Participant shall have no rights hereunder to the extent it
would not be permitted under Section 409A of the Code) an amount equal to (a)
the per-share dividend payable to holders of its Equity Shares multiplied by (b)
the number of Shares subject to the Award on the payment date; provided, that,
notwithstanding the foregoing, the Participant may elect, upon notice of an
impending dividend, and in lieu of some or all of the amount credited to the
Notional Account, to have the Board adjust in its good faith determination the
(i) Exercise Price with respect to the Option, (ii) the SAR Base Price with
respect to the Tandem SAR, and/or (iii) the number of Shares subject to the
Award, or to have the Board otherwise substitute such Award, in any case so as
to prevent dilution or enlargement of rights, and provided that such adjustment
or substitution, and any election to adjust or substitute, is done in accordance
with and only to the extent permitted by the provisions of (1) Sections 409A and
424 of the Code, to the extent the Participant is subject to taxation in the
U.S., and/or (2) Sections 7(1.4) or proposed Sections 110(1.7) and (1.8), to the
extent such Sections become effective and apply to any such adjustment or
substitution, of the Income Tax Act (Canada), to the extent the Participant is
subject to taxation in Canada.  Amounts credited to the Participant’s Notional
Account will be distributed at the time of vesting of the Award.  On the date
and to the extent a portion of the Award is forfeited, a Participant will
forfeit any amounts remaining in his Notional Account and which are attributable
to such forfeited portion of the Award.  

20.Share Repurchasing.  In the event the Company repurchases or offers to
repurchase its Shares from both Loral or PSP or their respective Affiliates, or
their respective permitted transferees, on a substantially pro rata basis, the
Company shall also offer to repurchase Shares from Participant on the same basis
to the extent such offer is legally permitted.  Such pro rata portion shall be
based on all Shares issued to Participant and all Awards outstanding that were
granted to Participant, whether vested or unvested.  Participant shall accept
such offer within ten (10) business days of its being made or shall be deemed to
have rejected such offer and, if accepted, the sale and purchase shall close at
the same time as the closing of the stock purchase from Loral and PSP or their
respective Affiliates.  To the extent necessary to permit the sale, additional
Awards shall vest in order of the next vesting tranches.  From and

 

 

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-17-

 

after a Roll Up Transaction, for purposes of this Section 20, each reference to
“Loral” shall be disregarded.

21.Taxes and Withholding.  No later than the date of exercise of the Award
granted hereunder, the Participant shall pay to the Company or make arrangements
satisfactory to the Board regarding payment of any Canadian federal, provincial,
and local taxes, and any U.S. taxes applicable to the Participant, of any kind
required by law to be withheld upon the exercise of such Award.  In the event
the Participant exercises the Tandem SAR, then the Participant shall satisfy the
Minimum Withholding Amount due upon exercise of the Tandem SAR by having the
Company remit to the appropriate taxing authority the cash to which the
Participant is entitled upon exercise of the Tandem SAR pursuant to Section 3
above.  Notwithstanding the foregoing, the Company shall, to the extent
permitted or required by law, have the right to deduct from any payment of any
kind otherwise due to the Participant any Canadian federal, provincial, and
local taxes and any applicable U.S. taxes of any kind required by law to be
withheld upon the exercise of such Award.

22.Integration.  This Agreement, and the other documents referred to herein or
delivered pursuant hereto which form a part hereof, including the Employment
Agreement, contain the entire understanding of the parties with respect to its
subject matter. There are no restrictions, agreements, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth in this Agreement, in
the Employment Agreement and in the Plan. This Agreement, the Employment
Agreement and the Plan, supersede all prior agreements and understandings
between the parties with respect to its subject matter.

23.Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument. A delivery of an Adobe Acrobat (.pdf) version via
electronic mail or delivery via electronic facsimile shall be regarded as
delivery of an original.

24.Governing Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Province of Ontario, Canada without
regard to the provisions governing conflict of laws.

25.Participant Acknowledgment.  The Participant hereby acknowledges receipt of a
copy of the Plan, including the Accession Agreement attached thereto as Exhibit
A. The Participant hereby acknowledges that all reasonable decisions,
determinations and interpretations of the Board in respect of the Plan, this
Agreement and the Award shall be final and conclusive.  The Participant further
acknowledges that, prior to the existence of a Public Market, no exercise of the
Award or any portion thereof shall be effective unless and until the Participant
has executed an Accession Agreement and the Participant hereby agrees to be
bound thereby.  The Participant acknowledges that, among other provisions, the
Plan contains a “call-right” and agrees that such “call-right” may be exercised
by the Company or its designee (with the Company having the right to enforce the
right of the designee).

26.Limitation on Liability.  The Participant acknowledges that only the Special
Purchaser, its subsidiary to which the Share and the obligations to pay for the
Shares are

 

 

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-18-

 

transferred and the Company shall be liable or responsible to the Participant in
respect of the purchase of the Shares under the provisions of this Agreement
related to actions of the Company, the Special Purchaser and its subsidiary, and
no direct or indirect shareholder of the Special Purchaser or any director or
officer of the Special Purchaser or such subsidiary shall be liable with respect
thereof (except as expressly provided hereunder).

 

 

 

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IN WITNESS WHEREOF, the Company, Participant, Loral, and PSP have each caused
this Agreement to be duly executed by its duly authorized officer and said
Participant has hereunto signed this Agreement on his own behalf, thereby
representing that he has carefully read and understands this Agreement, the Plan
and the Accession Agreement as of the day and year first written above.

 

Telesat Canada

 

 

 

 

 

 

 

By:

/s/ Chris DiFrancesco

 

 

 

 

 

 

 

Loral Space & Communications Inc.

 

 

 

 

 

 

 

By:

/s/ Avi Katz

 

 

 

 

 

 

 

Public Sector Pension Investment Board

 

 

 

 

 

 

 

By:

/s/ Guthrie Stewart

 

 

Authorized Signatory

 

 

 

 

By:

/s/ David Morin

 

 

Authorized Signatory

 

 

 

 

 

 

 

4440480 Canada Inc.

 

 

 

 

 

 

 

By:

/s/ Avi Katz

 

 

 

 

 

 

 

 

/s/ Daniel Goldberg

 

 

Daniel Goldberg

 

 

 

 

 

 

 

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SCHEDULE “A”

TO THE GRANT AGREEMENT

The Participant may not transfer any Shares or other securities received upon
the exercise of the Award, or Shares resulting from the conversion of the Shares
into other Equity Shares, or any interest therein, (in this Schedule A,
“Shares”) to any person except as permitted herein:

(i)

The Participant may transfer Shares to a Permitted Transferee as defined in
Section 5.5 of the Plan (with the prior consent of the Board, which consent may
be withheld in the Board’s sole discretion), or to a Canadian immigration trust,
subject to compliance with the conditions precedent set out in Section 5.6 of
the Plan, modified as need be to contemplate a transfer of Shares, instead of a
transfer of an Award;

(ii)

Prior to the completion by the Company of an Initial Public Offering for Equity
Shares of the Company, there shall be no transfer of Shares except as provided
in (i) above, or as otherwise expressly provided in the Agreement.

(iii)

After the completion of an Initial Public Offering of the Company, the
Participant shall be entitled to sell without restriction the Selldown
Percentage of Shares acquired by the Participant upon exercise of the Award (and
Shares subject to the Award which have vested).  The “Selldown Percentage” shall
equal (a) the percentage of all Equity Shares as shall have been sold by PSP or
Loral (and their Permitted Transferees as defined in the Accession Agreement) in
the Initial Public Offering or after the Initial Public Offering (other than
sales to PSP, Loral or a Permitted Transferee as defined in the Accession
Agreement) relative to the number of Equity Shares held by PSP and Loral
immediately prior to the Initial Public Offering or (b) 100% if PSP, Loral and
their Permitted Transferees (as defined in the Accession Agreement) cease to
hold at least 70% of all Equity Shares following the Initial Public Offering.

(iv)

The Participant shall be entitled to participate in any public offering of
Common Shares of the Company including an initial public offering in the manner
provided in Sections 6.03 and 6.04 of the Unanimous Shareholders Agreement, but
with the status only of “Included Holder” as defined in Section 6.03, provided
that in no event shall the number of shares subject to such participation exceed
the Selldown Percentage.  

(v)

References on this Schedule to PSP or Loral shall also include their respective
subsidiaries owning Equity Shares.

(vi)

This Schedule “A” shall cease to apply upon the occurrence of a Roll Up
Transaction.

(vii)

Definitions:

“Competitor” is any corporation, firm, partnership, proprietorship or other
entity which engages in the Satellite Business (as defined below) in any of the
same countries, states, provinces or other political subdivisions of countries
in which the Company or its Subsidiaries are engaged in the Satellite Business
as of the date of  Participant’s

 

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termination of employment and is a material competitor of the Company (or its
Subsidiaries) in such countries, states, provinces or other political
subdivisions of countries with respect to a material amount of Satellite
Business of the Company and its Subsidiaries (what is material being determined
based on the 5-year business plan in effect for the Company and its Subsidiaries
as of the date of  Participant’s termination of employment).

“Satellite Business” shall mean the business of communication of electronic
video, data, voice or other information by transmission by satellite operating
in the Fixed Satellite Service frequencies for hire in any of the geographic
areas in which the Company or its Subsidiaries operate such Fixed Satellite
Service frequencies as of the date of  Participant’s termination of employment.