EX-10.1



 





Exhibit 10.1




ALTERNATIVE SUBSCRIPTION AGREEMENT




     ALTERNATIVE SUBSCRIPTION AGREEMENT, dated as of August 7, 2007 by and between LORAL SPACE &
COMMUNICATIONS INC., a corporation existing under the laws of Delaware (together with any successor
thereto, “Loral”), LORAL SKYNET CORPORATION, a corporation existing under the laws of Delaware and
an indirect wholly-owned subsidiary of Loral (together with any successors thereto, “Skynet”) and
4363205 CANADA INC., a corporation existing under the laws of Canada (together with any successor
thereto “Holdco”).



R E C I T A L S




     WHEREAS, on December 16, 2006, 4363213 Canada Inc., a Canadian corporation and a wholly-owned
subsidiary of Holdco (“Acquireco”), BCE Inc., a Canadian corporation (“BCE”), and Telesat Canada, a
Canadian corporation (“Telesat”), entered into a Share Purchase Agreement pursuant to which
Acquireco has agreed to purchase from BCE, and BCE has agreed to sell to Acquireco, all of the
issued shares of Telesat and certain safe income notes (the “Share Purchase Agreement”);



     WHEREAS, on December 16, 2006, Loral executed and delivered to Holdco a letter (as amended
from time to time, the “Commitment Letter”), pursuant to which Loral committed to acquire shares of
Holdco simultaneously with the consummation of the Telesat Closing (as hereinafter defined) under
the Share Purchase Agreement;



     WHEREAS, in connection with the Share Purchase Agreement, on December 14, 2006, Loral entered
into an Investors Letter Agreement with the Public Sector Pension Investment Board, a Canadian
Crown corporation (“PSP”), and others, to which is attached as Schedule C thereto a “Contribution
Term Sheet” relating to a “Skynet Contribution Agreement” contemplating the transfer by Skynet of
certain of its assets and related liabilities to Holdco in connection with Skynet’s acquisition of
shares of Holdco (the “Investor Letter Agreement”);



     WHEREAS, Loral, Skynet and Holdco have entered into an Asset Transfer Agreement dated the date
hereof, pursuant to which Skynet has agreed, subject to, among other things, receipt of the Major
Regulatory Approvals (as defined therein) to transfer to Holdco certain assets of Skynet in
exchange for the issuance by Holdco to Skynet of shares of Holdco (the “Skynet Asset Transfer
Agreement”);



     WHEREAS, the Contribution Term Sheet contemplated that if the transactions contemplated by the
Skynet Asset Transfer Agreement did not occur simultaneously with the Telesat Closing, Loral would
be required to make certain contributions to Holdco and would receive in exchange therefor shares
of Holdco;



     WHEREAS, in connection with the contributions contemplated by the immediately preceding
paragraph, Loral desires to commit to the acquisition by Loral Space & Communications Holdings
Corporation, a Delaware corporation and a wholly-owned subsidiary of Loral, or such other direct or
indirect wholly-owned subsidiary of Loral as Loral shall









 



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designate (“LSCC”), of redeemable shares of Holdco, and Holdco desires to commit to issue to
LSCC certain redeemable shares of Holdco, in each case as provided herein;



     WHEREAS, the Investor Letter Agreement and the Contribution Term Sheet also contemplated that
if the transactions contemplated by the Skynet Asset Transfer Agreement did not occur by the first
anniversary of the Telesat Closing, Loral would be required to make certain alternative
contributions to Holdco, including the T-11N as herein defined, and would receive in exchange
therefor shares of Holdco;



     WHEREAS, in connection with the transactions contemplated by the Investor Letter Agreement,
Loral and Skynet desire to commit to make such alternative contributions to Holdco, and Holdco
desires to commit to issue to Loral Holdings Corporation, a Delaware corporation and an indirect
wholly-owned subsidiary of Loral (“Loral Holdings”) and to the T-11N Transferor certain shares of
Holdco in exchange therefor, in each case as provided herein;



     WHEREAS, the parties intend that, for United States federal income tax purposes, such
alternative contributions and the transfer of the T-11N hereunder, when taken together with the
acquisition of shares of Holdco hereunder and with the purchase of additional shares of Holdco by
other investors, including PSP, to qualify as an “exchange” under the provisions of Section 351 of
the Code, as hereinafter defined;



     WHEREAS, Holdco desires to transfer T-11N to a Subsidiary of Holdco (the “Successive
Transfer”);



     NOW THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements contained herein, the parties hereto hereby covenant and agree as follows:



ARTICLE 1

DEFINITIONS AND INTERPRETATION




1.1 Definitions




     For the purpose of this Agreement, unless the context otherwise requires, capitalized terms
shall have the respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:


“Acquireco” is defined in the recitals;



“Affiliate” means, with respect to any Person, (a) each Person that, directly or indirectly, owns
or controls such Person, and (b) each Person that controls, is controlled by, or is under common
control with such Person or any Affiliate of such Person. For the purpose of this definition,
“control” of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise;



“Agreed Exchange Rate” means the rate of 1.16355 Canadian dollars per U.S. dollar;










 



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“Agreement” means, collectively, this Agreement including all instruments supplementing or amending
or confirming this Agreement;



“Alternative Subscription Date” is defined in Section 4.1;



“Asset Purchase Agreement” means that certain Asset Purchase Agreement, dated of even date
herewith, between Skynet and Skynet Satellite Corporation relating to the purchase of certain
assets by Skynet Satellite Corporation from Skynet;



“BCE” is defined in the recitals;



“Business Day” means any day of the year other than: (a) Saturday or Sunday, and (b) any other day
on which banks located in any of Montréal, Québec, Toronto, Ontario or New York, New York generally
are closed for business;



“Closing Amount” is defined in Section 4.3;



“Code” means the Internal Revenue Code of 1986, as amended;



“Contribution Term Sheet” is defined in the recitals;



“Equity Shares” means the Holdco Common Shares, the Holdco Redeemable Common Shares, the Holdco
Voting Preferred Shares, the Holdco Redeemable Preferred Shares and the Holdco Non-Voting Preferred
Shares;



“Financing Amount” is defined in Section 4.1;



“Governmental Entity” means any nation or government, any state, regional, provincial, territorial,
local, foreign or other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, quasi-judicial, regulatory or administrative functions of or
pertaining to government;



“GRA” shall mean a gain recognition agreement (as defined in Treasury Regulation Section
1.367(a)-8);



“Holdco Common Shares” means shares of Holdco designated as Common Shares;



“Holdco Non-Voting Preferred Shares” means shares of Holdco designated as Non-Voting Participating
Preferred Shares and convertible on a one-to-one basis into Holdco Common Shares;



“Holdco Redeemable Common Shares” means shares of Holdco designated as Redeemable Common Shares and
being shares having identical rights, restrictions, conditions and limitations to the Holdco Common
Shares, except that such shares are redeemable by Holdco;



“Holdco Redeemable Preferred Shares” means shares of Holdco designated as Redeemable Non-Voting
Participating Preferred Shares and being shares having identical rights, restrictions,








 



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conditions and limitations to the Holdco Non-Voting Preferred Shares, except that such shares are
redeemable by Holdco;



“Holdco Voting Preferred Shares” means shares of Holdco designated as Voting Participating
Preferred Shares and convertible on a one-to-one basis into Holdco Common Shares;



“Holdco Unanimous Shareholders Agreement” means an agreement to be entered into between Holdco,
Acquireco, Telesat, each of the holders of shares of Holdco and others with respect to the
ownership and transfer of shares of Holdco and the governance of Holdco, substantially in the form
attached as Exhibit D to the Skynet Asset Transfer Agreement;



“Interco” means 4363230 Canada Inc., a corporation incorporated under the laws of Canada and a
wholly-owned subsidiary of Acquireco;



“Investor Letter Agreement” is defined in the recitals;



“ITA” means the Income Tax Act (Canada), as amended;



“LSCC” is defined in the recitals;



“Law” means any law (including civil and common law), statute, regulation, ordinance, rule, order,
order-in-council, by-law, permit, judgment, consent, decree, settlement agreement or governmental
requirement enacted, promulgated, issued, entered into, agreed or imposed by any Governmental
Entity having jurisdiction;



“Lien” means any mortgage, lien, charge, pledge, security interest, hypothecation, easement,
encroachment, encumbrance or title retention agreement of any nature or kind;



“Loral” is defined in the recitals;



“Loral Alternative Subscription” means the transfer to Holdco of all or part of the Required Loral
Alternative Subscription as provided in Section 4.1, adjusted as provided in Section 4.3, and the
issuance to Loral Holdings and the T-11N Transferor of Holdco Non-Voting Preferred Shares as
provided in Section 4.4;



“Loral Alternative Subscription Amount” means, (X) in the case where there is a Closing Amount, (i)
the sum of the T-11N Valuation and the Financing Amount (each expressed in Canadian dollars as
provided in Section 4.2) plus the Closing Amount and (Y) in the case where there is a Refund
Amount, (i) the sum of the T-11N Valuation and the Financing Amount (each expressed in Canadian
dollars as provided in Section 4.2) less the Refund Amount, or if the Financing Amount is reduced
by the Refund Amount as permitted by Section 4.3(a), the sum of the T-11N Valuation and the
Financing Amount (each expressed in Canadian dollars as provided in Section 4.2);



“Loral Holdings” is defined in the recitals;



“Loss” or “Losses” has the meaning set forth in the Skynet Asset Transfer Agreement;










 



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“Person” means an individual, legal person, partnership, limited partnership, limited liability
company, joint venture, syndicate, sole proprietorship, company or corporation with or without
share capital, unincorporated association, trust, trustee, executor, administrator or other legal
personal representative or Governmental Entity, or any other entity;



“Proposed Transaction” shall mean a transaction involving the exchange, disposition, reorganization
or liquidation of or involving the T-11N (including of any equity interest in a subsidiary of
Holdco or any successor which owns, directly or indirectly, the T-11N or any material interest
therein), that may require the T-11N Transferor to recognize gain, for United States federal income
tax purposes, pursuant to a GRA entered into by Loral with respect to any transfer of T-11N;



“PSP” is defined in the recitals;



“Red Isle” means Red Isle Investments Limited, a Canadian corporation and a wholly-owned Subsidiary
of PSP;



“Refund Amount” is defined in Section 4.3;



“Remaining Equity Contribution Amount” means the Required Equity Contribution Amount less the Stage
One Purchase Price;



“Required Equity Contribution Amount” means an amount, expressed in Canadian dollars, equal to
1.88767 multiplied by the cash amount contributed by Red Isle to Holdco as the subscription price
for Equity Shares on or prior to the Telesat Closing, less the Total Hedging Differential;



“Required Loral Alternative Subscription” is defined in Section 4.1;



“Restructuring Decision” refers to the decision to restructure a Proposed Transaction, which shall
be at the sole and absolute discretion of Holdco or its relevant Affiliate, subject to the terms of
Section 6.3(f) of this Agreement;



“Securities Act” means the Securities Act of 1933, as amended;



“Share Purchase Agreement” is defined in the recitals;



“Skynet” is defined in the recitals;



“Skynet Asset Transfer Agreement” is defined in the recitals;



“Skynet Closing” means the Closing as defined in the Skynet Asset Transfer Agreement;



“SS/L” means Space Systems/Loral, Inc., a Delaware corporation and an indirect wholly-owned
Subsidiary of Loral;



“Stage One Closing Date” means the date on which the Stage One Purchased Shares are to be acquired
by LSCC pursuant to Section 2.1, and also being the date of the Telesat Closing;










 



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“Stage One Purchase Price” is defined in Section 2.1;



“Stage One Purchased Shares” is defined in Section 2.1;



“Subsidiary” means, with respect to any Person, any other Person that directly or indirectly is
controlled by such Person. For purposes of this definition, “control” shall mean the ownership of
stock or other ownership interests of a Person constituting more than 50% of the total combined
voting power of all classes of shares or other ownership interests of such Person entitled to vote;



“T-11N” means all rights of the “Purchaser” pursuant to the T-11N Construction Contract, and if but
only if title to the satellite known as “T-11N” has been transferred to the T-11N Transferor on or
prior to the Alternative Subscription Date pursuant to the T-11N Construction Contract, then such
satellite, in each case together with all rights of the T-11N Transferor, pursuant to any contract
of launch/in orbit insurance or launch contract related to such satellite;



“T-11N Construction Contract” means that certain Amended and Restated Satellite Construction
Contract, effective December 22, 2006, between Skynet and SS/L in respect of the construction of a
satellite designated as T-11N;



“T-11N Transferor” shall mean the Loral entity that delivers to Holdco the T-11N pursuant to
Section 4.1 hereof, it being understood that such entity shall be Skynet, unless Skynet assigns or
transfers its rights to the T-11N to Loral or to another Subsidiary of Loral in compliance with
Section 6.5;



“T-11N Valuation” means, at any time, the sum of (i) $80,000,000 and (ii) the aggregate of the
total costs incurred by Skynet in connection with the construction, launch and launch/in orbit
insurance of the T-11N satellite as set forth in Skynet’s financial statements for the month
immediately preceding the month in which the Alternative Subscription Date occurs, as adjusted for
all such costs incurred by Skynet through the Alternative Subscription Date;



“Taxes” means all taxes, charges, fees, duties (including customs duties), levies or other
assessments, including income, gross receipts, net proceeds, ad valorem, turnover, real and
personal property (tangible and intangible), sales, use, goods and services, franchise, excise,
value added, stamp, leasing, lease, user, transfer, fuel, occupational, interest equalization,
license, payroll, environmental, capital stock, disability, severance, employee’s income
withholding, other withholding, employment insurance and social security taxes, premiums or levies,
which are imposed by any Governmental Entity, whether disputed or not, and such term shall include
any interest, penalties or additions to tax attributable thereto;



“Telesat” is defined in the recitals;



“Telesat Closing” means the Closing (as defined in the Share Purchase Agreement);



“Total Hedging Differential”, which may be a positive or negative number, has the meaning set forth
in the Skynet Asset Transfer Agreement;










 



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“Transaction Agreements” means this Agreement, the Skynet Asset Transfer Agreement and the Asset
Purchase agreement; and



“351 Transfer” means a transfer of property which, in conjunction with the issuance of shares of
the transferee, will qualify as an exchange under the provisions of Section 351 of the Code.





	1.2	 	Expanded Meanings
	 
	 	 	In this Agreement, unless the context otherwise requires:






	 	(a)	 	words used herein importing the singular number only shall include the plural
and vice versa, and words importing the use of any gender shall include all genders;
	 
	 	(b)	 	the term “including” means “including, without limitation”;
	 
	 	(c)	 	references to the “parties” means the parties to this Agreement; and
	 
	 	(d)	 	references herein to any agreement or instrument, including this Agreement,
shall be deemed to be references to the agreement or instrument as varied, amended,
modified, supplemented or replaced from time to time, in accordance with the terms of
such agreement or instrument, and any specific references herein to any legislation or
enactment shall be deemed to be references to such legislation or enactment as the same
may be amended or replaced from time to time up to the Alternative Subscription Date
unless specifically otherwise provided.






	1.3	 	Interpretation not Affected by Headings, etc.





     The division of this Agreement into articles, sections, subsections, paragraphs and clauses
and the insertion of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. The terms “this Agreement”, “hereof”, “herein”,
“hereunder” and similar expressions refer to this Agreement and not to any particular article,
section, subsection, paragraph, clause or other portion hereof and include any agreement or
instrument supplementary or ancillary hereto.




	1.4	 	Currency





     Unless otherwise specified herein, all dollar amounts expressed in this Agreement as (a) “$”
are to United States dollars and (b) “C$” are to Canadian dollars.



ARTICLE 2

SUBSCRIPTION FOR SHARES





	2.1	 	Conditional Subscription for Shares





     In the event that the Skynet Closing shall not occur simultaneously with the Telesat Closing,
Loral shall cause LSCC to subscribe for and purchase, and Holdco shall issue to LSCC, at an issue
price of C$10 per share, on the Stage One Closing Date, Holdco Redeemable Common Shares and Holdco
Redeemable Preferred Shares having an aggregate acquisition cost









 



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of C$270,900,000 (the “Stage One Purchase Price”). The number of Holdco Redeemable Common
Shares to be issued to LSCC shall be equal to
331/3% of the aggregate number of Holdco Common Shares,
Holdco Redeemable Common Shares, Holdco Voting Preferred Shares and Holdco Redeemable Preferred
Shares to be issued to Red Isle and LSCC on the day of the Telesat Closing, and the number of
Holdco Redeemable Preferred Shares to be issued to LSCC pursuant to this Section 2.1 shall be equal
to the quotient of (A) the result obtained by subtracting from the Stage One Purchase Price the
product of the number of Holdco Redeemable Common Shares to be issued to LSCC pursuant to this
Section 2.1, multiplied by C$10, divided by (B) C$10. The Holdco Redeemable Common Shares and the
Holdco Redeemable Preferred Shares to be issued to LSCC are together referred to as the “Stage One
Purchased Shares”. Holdco agrees that the payment by LSCC of the Stage One Purchase Price to
Holdco shall constitute complete performance by Loral of its obligations to Holdco under, and shall
irrevocably and unconditionally discharge the obligations of Loral to Holdco pursuant to, the
Commitment Letter.





	2.2	 	Payment of Purchase Price – Issuance of Shares





     On the Stage One Closing Date, Loral shall cause LSCC to pay by wire transfer of immediately
available funds, to such bank account or accounts as Holdco shall designate not later than three
(3) Business Days prior to the Stage One Closing Date, the Stage One Purchase Price against
delivery by Holdco to LSCC of certificates in the name of LSCC representing the Stage One Purchased
Shares.



ARTICLE 3

REDEMPTION OF STAGE ONE PURCHASED SHARES





	3.1	 	Redemption of Stage One Purchased Shares





     In the event that the Skynet Closing does not occur simultaneously with the Telesat Closing,
and LSCC has subscribed and purchased the Stage One Purchased Shares as described in Article 2,
simultaneously with the Skynet Closing (if the Skynet Closing shall subsequently occur), Holdco
shall call for redemption, with effect on the date of the Skynet Closing, and Holdco shall redeem
on such date, at a redemption price of C$10 per share, all of the Holdco Redeemable Common Shares
and the Holdco Redeemable Preferred Shares issued pursuant to Article 2. Holdco covenants not to
call for redemption any Holdco Redeemable Common Shares or Holdco Redeemable Preferred Shares in
any other circumstances, without the prior written consent of Loral and LSCC.




	3.2	 	Payment in Lieu of Dividends





     In the event that the Skynet Closing does not occur simultaneously with the Telesat Closing,
and LSCC has subscribed for the Stage One Purchased Shares as described in Article 2, at the Skynet
Closing (if the Skynet Closing shall subsequently occur), Holdco shall pay to Skynet by wire
transfer in immediately available funds to such bank account or accounts as Skynet shall designate
not later than three (3) Business Days prior to the Skynet Closing an amount equal to any dividends
that would have been paid to Skynet if the shares issuable to Skynet pursuant to the Skynet Closing
had been issued to Skynet on the date of the Telesat









 



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Closing and had been outstanding from the date of the Telesat Closing, less the aggregate
amount of all dividends declared and paid on the Stage One Purchased Shares from their date of
issuance to the Skynet Closing.



ARTICLE 4

LORAL ALTERNATIVE SUBSCRIPTION





	4.1	 	Required Loral Subscription





     If the Skynet Closing shall not have occurred by the first anniversary date of the Telesat
Closing (or such later date as the parties hereto shall agree) (the “Alternative Subscription
Date”), Loral shall, subject to performance by Holdco of Section 4.4, transfer or deliver, or cause
to be transferred or delivered, to Holdco on the Alternative Subscription Date:




	 	(a)	 	the T-11N, free and clear of all Liens (the “T-11N Contribution”); and
	 
	 	(b)	 	the sum of $175,000,000 (the “Financing Amount”).




(collectively, the “Required Loral Alternative Subscription”); provided however,
that Skynet agrees that if Loral shall not have delivered the T-11N as required by this Section
4.1, then Skynet shall effect the T-11N Contribution, and in such circumstances, Loral agrees to
cause Skynet to effect the T-11N Contribution.





	4.2	 	Value of Required Loral Alternative Subscription
	 
	 	 	The Required Loral Alternative Subscription shall be valued at:






	 	(a)	 	in respect of the T-11N Contribution, the T-11N Valuation, translated into
Canadian dollars at the Agreed Exchange Rate;
	 
	 	(b)	 	in respect of the Financing Amount, the amount thereof translated into Canadian
dollars at the Agreed Exchange Rate.






	4.3	 	Determination of Closing Amount or Refund Amount






	 	(a)	 	If the value of the Required Loral Alternative Subscription, determined in
accordance with Section 4.2, shall be less than the Remaining Equity Contribution
Amount, then, subject to the provisions of Section 4.3(b), Loral shall pay to Holdco on
the Alternative Subscription Date, an amount in Canadian dollars equal to such
difference (the “Closing Amount”). If, however, the value of the Required Loral
Alternative Subscription, determined in accordance with Section 4.2, shall be greater
than the Remaining Equity Contribution Amount, Holdco shall pay to Loral on the
Alternative Subscription Date an amount in Canadian dollars equal to such excess (the
“Refund Amount”). Alternatively, at Loral’s option, the Financing Amount to be paid by
Loral on the Alternative Subscription Date shall be reduced by the Refund Amount.
Loral and Holdco shall determine the Closing Amount or the Refund Amount, as the case
may be, and whether any










 



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	 	 	 	Refund Amount shall reduce the Financing Amount, by the close of business in New
York on the second Business Day prior to the Alternative Subscription Date.
	 
	 	(b)	 	Notwithstanding the provisions of Section 4.3(a), Loral shall only be obligated
to pay the Closing Amount if it has or could reasonably acquire the financial resources
to do so through the use of its commercially reasonable efforts, and for the avoidance
of doubt, Loral shall not be required (i) to sell any of its assets, (ii) to grant or
incur any Lien on its direct or indirect equity interest in SS/L, or (iii) to cause
SS/L or any of its subsidiaries to borrow, give security or guarantee any obligation.






	4.4	 	Issuance of Holdco Non-Voting Preferred Shares





     In consideration of the receipt by Holdco of all or part of the Loral Alternative Subscription
Amount, Holdco shall issue (i) to Loral Holdings on behalf of Loral in respect of the Financing
Amount and the Closing Amount (if any) and (ii) to the T-11N Transferor in respect of the T-11N
Valuation, Holdco Non-Voting Preferred Shares at the rate of one Non-Voting Preferred Share for
each C$10 of Loral Alternative Subscription Amount received by Holdco. In the case where the Loral
Alternative Subscription Amount has been delivered in full, the Non-Voting Preferred Shares of
Holdco issued and delivered to Loral Holdings and the T-11N Transferor under this Section 4.4, when
added to the Stage One Purchased Shares, shall constitute 64% of the Equity Shares of Holdco then
outstanding (assuming that no Equity Shares have been issued since the Telesat Closing, other than
the Stage One Purchased Shares).




	4.5	 	Partial Contribution





     In the event that Loral shall be unable, for any reason, to pay the full amount of the Loral
Alternative Subscription Amount, Holdco shall issue to Loral Holdings on behalf of Loral, and to
T-11N Transferor (if applicable in respect of the T-11N Contribution), Holdco Non-Voting Preferred
Shares for such portion thereof actually paid or transferred to Holdco, determined pursuant to
Section 4.4, it being agreed that the payment of the full amount of the Loral Alternative
Subscription Amount shall not be a condition in favour of any party to the closing of the Loral
Alternative Subscription.




	4.6	 	Payment in Lieu of Dividends





     On the Alternative Subscription Date, Holdco shall pay to Loral Holdings and the T-11N
Transferor, an amount equal to any dividends that would have been paid to Loral Holdings and the
T-11N Transferor if the shares issuable to Loral Holdings and the T-11N Transferor pursuant to
Section 4.4 had been issued to Loral Holdings and the T-11N Transferor on the date of the Telesat
Closing and had been outstanding from the date of the Telesat Closing.




	4.7	 	Closing of Loral Alternative Subscription





     The closing of the transactions constituting the Loral Alternative Subscription shall take
place on the Alternative Subscription Date at the offices of Loral at 600 Third Avenue, New York,
New York 10016. At the Closing: (i) Holdco shall deliver to Loral Holdings (A) duly executed
certificates representing the Holdco Non-Voting Preferred Shares as provided









 



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in Section 4.4 and (B) the Refund Amount to the extent required by Section 4.3 by wire
transfer of immediately available funds to the bank account or accounts designated by Loral
Holdings in writing not less than three (3) Business Day prior to the Alternative Subscription
Date; and (ii) (A) Loral or Loral Holdings shall deliver to Holdco the Financing Amount and Closing
Amount, to the extent required by Section 4.3, by wire transfer of immediately available funds to
the bank account or accounts designated by Holdco in writing not less than three (3) Business Day
prior to the Alternative Subscription Date and (B) the T-11N Transferor shall deliver to Holdco an
assignment of the T-11N Construction Contract and all rights of Skynet to the T-11N, including an
assignment of any launch/in orbit insurance and launch contracts related to the T-11N, all free and
clear of any Liens.




	4.8	 	Liability under T-11N Construction Contract





     From and after the transfer of the T-11N to Holdco on the Alternative Subscription Date or
such other date on which the T-11N is transferred to Holdco, Holdco shall assume all of the
obligations of Skynet pursuant to the T-11N Construction Contract and any launch/in orbit insurance
or launch contracts associated with the T-11N, provided that Loral shall continue to be liable for
any damages and costs related to any breach of the T-11N Construction Contract and any launch/in
orbit insurance or launch contract by Skynet prior to the date of the transfer of the T-11N to
Holdco and Loral shall indemnify and hold harmless Holdco from and against breaches of any such
contracts prior to such transfer to Holdco.




	4.9	 	No Further Liability





     On and after the Skynet Closing, Loral shall have no obligation or liability to Holdco under
this Article 4 and this Article 4 shall be of no further force or effect.



ARTICLE 5

REPRESENTATIONS AND WARRANTIES





	5.1	 	Representations and Warranties of Loral





     Loral hereby represents and warrants to Holdco as of the date hereof and as of the Alternative
Subscription Date as follows, and acknowledges that Holdco is relying upon such representations and
warranties in entering into this Agreement and the transactions contemplated hereby:




	 	(a)	 	Corporate Organization and Qualification. Loral and Skynet are
corporations validly existing under the laws of Delaware.
	 
	 	(b)	 	Corporate Authority. Loral and Skynet have the requisite corporate
power and authority and have taken all corporate action necessary in order to execute
and deliver this Agreement and to consummate the transactions contemplated by this
Agreement. This Agreement has been duly executed and delivered by each of Loral and
Skynet and, assuming the due authorization, execution and delivery hereof by Holdco,
constitutes a legal, valid and binding obligation of Loral and Skynet, enforceable
against each of them in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency and other laws affecting










 



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	 	 	 	the rights of creditors generally and the availability of equitable remedies
(provided that such exception shall not apply to any limitation of such enforcement
resulting from the Bankruptcy Cases (as defined in the Skynet Asset Transfer
Agreement)). Without limiting and in furtherance of the foregoing, the approval of
the shareholders of Loral is not required in order for Loral or Skynet to consummate
the transactions contemplated by this Agreement.
	 
	 	(c)	 	Filings and Approvals. No notices, reports or other filings, and no
consents, registrations, approvals, permits or authorizations, are required to be made
or obtained by Loral or Skynet with or from any Governmental Entity or any other Person
in connection with the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement, except where the failure to make or
obtain any or all of which would not reasonably be expected to materially delay or
materially impair the consummation of the transactions contemplated by this Agreement.
	 
	 	(d)	 	No Violation. The execution and delivery of this Agreement, and
consummation of the transactions contemplated thereby, by Loral and Skynet does not,
and will not, constitute or result in (i) a breach or violation of, or a default under,
the articles, by-laws or the comparable governing instruments of Loral or Skynet, (ii)
a breach or violation of any Law to which Loral or Skynet is subject, (iii) the
creation of any Lien or the forfeiture of any asset of Loral or Skynet, (iv) a breach
or violation of, a default under, the triggering of any payment or other material
obligation pursuant to, the acceleration of (with or without notice or lapse of time or
both) any provision of, (A) the T-11N Construction Contract or (B) any other contract
to which Loral is a party, except, in the case of clauses (ii), (iii) or (iv)(B), for
such breaches, violations or defaults that, individually or in the aggregate, would not
prevent, materially delay or materially impair the consummation of the transactions
contemplated by this Agreement.
	 
	 	(e)	 	T-11N Construction Contract. The T-11N Construction Contract has been
duly authorized, executed and delivered by each of Skynet and SS/L and constitutes a
legal, valid and binding obligation of SS/L, enforceable by Skynet in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency and other
laws affecting the rights of creditors generally and the availability of equitable
remedies. Skynet is not in material breach of any of its obligations under the T-11N
Construction Contract, and Skynet has (or the T-11N Transferor will have) all the
rights of the “Purchaser” under the T-11N Construction Contract.
	 
	 	(f)	 	Investor Matters. (i) LSCC is acquiring the Stage One Purchased Shares
pursuant to Section 2.1, and Loral Holdings and the T-11N Transferor are acquiring the
Holdco Non-Voting Preferred Shares to be issued to Loral Holdings and the T-11N
Transferor pursuant to Section 4.4, for investment, and without any present intention
of transferring such securities to any other Person, and Loral acknowledges that LSCC,
Loral Holdings and the T-11N Transferor and any other Person acquiring such securities
directly or indirectly from LSCC , Loral










 



 - 13 - 


	 	 	 	Holdings or the T-11N Transferor may not sell or otherwise transfer such securities
in a manner that would constitute a “distribution” as such term is used in the
Securities Act; (ii) each of LSCC, Loral Holdings and the T-11N Transferor has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment decision with respect to such
securities; (iii) Loral and Skynet acknowledge that such securities have not been
registered under the Securities Act or any state securities laws and may not be
transferred unless subsequently registered thereunder or pursuant to a valid
exemption from registration; (iv) Loral and Skynet acknowledge that such securities
have not been distributed pursuant to a prospectus for which a receipt has been
obtained under the securities laws of any province of Canada and may not be
transferred in Canada unless a receipt for such prospectus has subsequently been
obtained or pursuant to a valid exemption from such receipt requirement; and (v)
each of LSCC, Loral Holdings and the T-11N Transferor is an “accredited investor” as
such term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act, and an “accredited investor” as such term is defined in Section 1.1 of National
Instrument 45-106 promulgated under Canadian securities laws, or is a corporation
described in Section 2.4(2)(i) of such National Policy.






	5.2	 	Representations and Warranties of Holdco





     Holdco represents and warrants to Loral and Skynet as of the date hereof and as of the
Alternative Subscription Date as follows, and acknowledges that Loral and Skynet are relying upon
such representations and warranties in entering into this Agreement and the transactions
contemplated hereby:




	 	(a)	 	Corporate Organization. Holdco is a corporation validly existing under
the laws of Canada.
	 
	 	(b)	 	Corporate Authority. Holdco has the requisite corporate power and
authority and has taken all corporate action necessary in order to execute and deliver
this Agreement and to consummate the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by Holdco and constitutes a legal, valid
and binding obligation of Holdco, enforceable against Holdco in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency and other laws
affecting the rights of creditors generally and the availability of equitable remedies.
	 
	 	(c)	 	Filings and Approvals. No notices, reports or other filings, and no
consents, registrations, approvals, permits or authorizations, are required to be made
or obtained by Holdco with or from any Governmental Entity or any other Person
(including the shareholders of Holdco) in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this Agreement,
except where the failure to make or obtain any or all of which would not prevent,
materially delay or materially impair the consummation of the transactions contemplated
by this Agreement.










 



 - 14 - 


	 	(d)	 	No Violation. The execution and delivery of this Agreement by Holdco
does not, and the consummation by Holdco of the transactions contemplated by this
Agreement will not, constitute or result in (i) a breach or violation of, or a default
under, the articles, by-laws or other comparable governing instruments of Holdco; or
(ii) a breach or violation of any Law to which Holdco is subject, except in each case
for such breaches, violations or defaults that, individually or in the aggregate, would
not prevent or materially delay or materially impair the consummation of the
transactions contemplated by this Agreement.
	 
	 	(e)	 	Brokers and Finders. Neither Holdco nor any of its officers, directors
or employees has incurred any liability for any brokerage fees, commissions or finders
fees to any broker or finder employed or engaged thereby in connection with the
transactions contemplated by this Agreement for which Holdco or any of its Affiliates
would be liable other than as contemplated by the Investors Letter Agreement.
	 
	 	(f)	 	Holdco Shares. The issuance and delivery by Holdco of (i) Holdco
Redeemable Common Shares and Holdco Redeemable Preferred Shares to LSCC as contemplated
by Section 2.2, and (ii)Holdco Non-Voting Preferred Shares to Loral Holdings and the
T-11N Transferor as contemplated by Section 4.4 have been duly authorized by all
requisite corporate or other action on the part of Holdco and, as of the Stage One
Closing Date in respect of (i), and as of the Alternative Subscription Date in respect
of (ii), such shares, upon the issuance and delivery thereof by Holdco as contemplated
by this Agreement, will be (a) validly issued and outstanding, (b) fully paid and
non-assessable and (c) other than as expressly provided in the Holdco Unanimous
Shareholders Agreement, free and clear of any and all Liens or restrictions on the
voting rights thereof or other incidents of record or beneficial ownership pertaining
thereto.
	 
	 	(g)	 	No Reliance.
	 
	 	 	 	There are no representations, warranties, covenants, conditions or other agreements,
express or implied, between any of the parties in connection with the subject matter
of this Agreement except as specifically set forth in this Agreement. Holdco agrees
that no reliance may be placed on any representation, warranty, opinion, advice or
assertion of fact made by Loral or Skynet or any of their directors (or Persons in
similar positions), officers, employees, stockholders, equity holders and agents to
Holdco or any of its directors, officers, employees, shareholders, agents or
representatives, except to the extent that any such representation, warranty,
opinion, advice or assertion of fact has been reduced to writing and is expressly
included as a term of this Agreement. Any claims Holdco may have for breach of
representation or warranty shall be based solely on the representations and
warranties of Loral expressly set forth in this Agreement. Without limiting the
generality of the foregoing, Holdco agrees that no reliance may be placed on any
representation, warranty, opinion, advice or assertion contained in any prospectus
or registration statement relating to the public offering of securities of Loral or
any of its Affiliates or shareholders, in










 



 - 15 - 


	 	 	 	any document or material provided or made available to Holdco in connection with its
due diligence review or for any other reason in connection with the conclusion of
this Agreement, or in any quarterly, annual or current report (including any report
on Form 10-Q, Form 10-K or Form 8-K), interim or annual financial statement,
management presentation, discussion and analysis, material change report (including
any report on Form 8-11) or other similar continuous disclosure documents required
to be filed with any Securities Commission pertaining to Loral or any of its
Affiliates or shareholders. Nothing contained in this Agreement is intended to
relieve Loral or Skynet from liability for fraud. Nothing in this Section 5.2(g) is
intended to limit or affect the representations and warranties made under this
Agreement.





ARTICLE 6

COVENANTS





	6.1	 	Further Action





     Loral, Skynet and Holdco shall take, or cause to be taken, all other action and do, or cause
to be done, all other things necessary, proper or appropriate under applicable Laws to consummate
and make effective the transactions contemplated by this Agreement. Loral, Skynet and Holdco shall
use all reasonable commercial efforts to fulfill the conditions set forth in Article 7.




	6.2	 	Publicity and Confidentiality





     Unless otherwise required by applicable Law or by obligations of the parties or their
Affiliates pursuant to any listing agreement with or rules of any Securities Commission, (a)
without the prior written consent of the other party hereto (such consent not to be unreasonably
withheld, delayed or conditioned), each party hereto shall consult with the other party hereto
before issuing any press release or otherwise making any public statement with respect to this
Agreement, the transactions contemplated hereby or the activities and operations of any other party
hereunder. Neither Loral nor Skynet shall issue any press release or otherwise make any public
statement that mentions PSP or Red Isle without the prior written consent of PSP, unless such
mentioning of PSP is required by applicable Law or by obligations of the parties or their
Affiliates pursuant to any listing agreement with or rules of any stock exchange or securities
regulatory authority.




	6.3	 	Tax Matters






	 	(a)	 	All transfer, documentary, sales, use, stamp, registration and other such
taxes, and all conveyance fees, recording charges and other fees and charges (including
any penalties and interest) incurred in connection with consummation of the
transactions contemplated by this Agreement shall be paid by Holdco when due, and
Holdco will, at its own expense, file all necessary tax returns and other documentation
with respect to all such taxes, fees and charges, and, if required by applicable law,
Loral will, and will cause its Affiliates to, join in the execution of any such tax
returns and other documentation.










 



 - 16 - 


	 	(b)	 	The values of the items forming the Required Loral Alternative Subscription
shall be determined by the parties as provided in Section 4.2. Holdco and Loral will,
subject to applicable laws, use such allocations in filing their respective tax returns
or similar filings.
	 
	 	(c)	 	Except to the extent that a different allocation is required for United States
tax purposes, the parties hereto shall allocate the Non-Voting Preferred Shares to be
issued to Loral Holdings and the T-11N Transferor on the Alternative Subscription Date
to each item of the Required Loral Alternative Subscription in a manner consistent with
the value stipulated in Section 4.2.
	 
	 	(d)	 	The T-11N Transferor and Holdco will jointly elect under subsection 85(1) of
the ITA, in prescribed form and within the time provided, with respect to the transfer
of the T-11N, and the agreed amount for the purposes of paragraph 85(1)(a) of the ITA
in respect of such property will be the amount specified by the T-11N Transferor and
approved by PSP. In addition, the T-11N Transferor and Holdco agree to jointly make,
execute and file, in prescribed form and within the time provided, with the appropriate
taxation authorities any similar elections required under the provisions of any
applicable provincial legislation.
	 
	 	(e)	 	The parties hereto shall, and shall cause their Affiliates to, each treat on
all tax returns the transfer of the T-11N hereunder and the successive transfers as 351
Transfers, and not take any position in any tax return inconsistent herewith unless
compelled to do so pursuant to a determination as defined in Section 1313(a) of the
Code.
	 
	 	(f)	 	Until the fifth anniversary of the last day of the calendar year in which the
T-11N Contribution occurs, without the prior written consent of Loral and PSP (each in
its sole and absolute discretion), neither Holdco nor any of its Affiliates shall
engage in or effect any transaction or series of related transactions (other than the
Successive Transfer) involving an exchange, disposition, reorganization or liquidation
thereby of (i) the T-11N or any material interest therein or (ii) any equity interest
in a subsidiary of Holdco or any successor which owns directly or indirectly the T-11N
or any material interest therein, including any distribution with respect to such
equity interest that is treated as an “exchange” for U.S. federal income tax purposes;
provided that this Section 6.3(f) shall only apply if, as reasonably determined by
Loral, such transaction would or is likely to trigger gain pursuant to any GRA entered
into by Loral with respect to the transfer of the T-11N.






	6.4	 	Waiver Relating to Certain Proposed Transactions.





     Skynet and Loral hereby irrevocably waive any and all claims or demands they may have at any
time against Holdco and its Affiliates as a result of or arising directly or indirectly out of or
in connection with (i) any Restructuring Decision, (ii) any restructuring of a Proposed
Transaction, and (iii) any gain recognized by Skynet or its Affiliates as a result of consummation
of a Proposed Transaction (other than any gain recognized by reason of breach of









 



 - 17 - 



the covenant set forth in Section 6.3(f)), it being understood that nothing contained in this
Section shall relieve Holdco of any of its obligations, or shall otherwise affect any of Loral’s
rights, under Section 6.3(f).




	6.5	 	T-11N





     Skynet shall not, and Loral shall cause Skynet not to, assign or transfer any of its rights
under the T-11N Construction Contract, or to T-11N, to any person other than Loral, without the
prior written consent of Holdco. Any attempted assignment or transfer of the T-11N Construction
Contract, the T-11N or any rights thereto in violation of this Section 6.5 shall be null and void
ab initio, and of no effect.



ARTICLE 7

CONDITIONS





	7.1	 	Conditions to Obligations of the Parties.





     The obligations of Holdco and of Loral and of Skynet to consummate the transactions
contemplated by this Agreement are subject to the fulfillment of each of the following conditions,
any or all of which may be waived in whole or in part by either party hereto (as to itself only and
not with respect to or on behalf of the other party) to the extent permitted by applicable Law:




	 	(a)	 	no court or other Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law, judgment, decree, ruling,
injunction or other order (whether temporary, preliminary or permanent) which is in
effect and prohibits the consummation of the transactions contemplated by this
Agreement;
	 
	 	(b)	 	the Telesat Closing shall have been consummated;
	 
	 	(c)	 	with respect to the Loral Alternative Subscription, the Skynet Asset Transfer
Agreement and Asset Purchase Agreement shall have been terminated; and
	 
	 	(d)	 	the Holdco Unanimous Shareholders Agreement shall have been executed and
delivered by all parties thereto.






	7.2	 	Conditions to Obligations of Holdco





     The obligations of Holdco to consummate the transactions contemplated by this Agreement are
subject to the fulfillment of each of the following conditions, any or all of which may be waived
in whole or in part by Holdco to the extent permitted by applicable Law:




	 	(a)	 	the representations and warranties of Loral contained in Section 5.1 shall have
been true and correct in all material respects as of the date hereof and as of the
relevant date upon which performance is being made, except to the extent that such
failure of the representations are warranties to be true and correct does not










 



 - 18 - 


	 	 	 	affect the ability of Loral and Skynet to consummate the transactions contemplated
by this Agreement; and
	 
	 	(b)	 	the covenants contained in this Agreement to be complied with or performed by
Loral, the T-11N Transferor and Skynet shall have been complied with or performed in
all material respects through the relevant date upon which performance is being made,
except to the extent that the failure to comply with such covenants does not affect the
ability of Loral or Skynet to consummate the transactions contemplated by this
Agreement;






provided that Holdco may not refuse to consummate the transactions contemplated by this
Agreement as a result of the failure of any condition contained in this Section 7.2 to the
extent that Holdco is responsible for such failure.



7.3 Conditions to Obligations of Loral and the T 11N Transferor




     The obligations of Loral and the T-11N Transferor to consummate the transactions contemplated
by this Agreement are subject to the fulfillment of each of the following conditions, any or all of
which may be waived in whole or in part by Loral and the T-11N Transferor to the extent permitted
by applicable Law:




	 	(a)	 	the representations and warranties of Holdco contained in Section 5.2 shall
have been true and correct in all material respects as of the date hereof and as of the
relevant date upon which performance is being made, except to the extent that such
failure of the representations and warranties to be true and correct does not affect
the ability of Holdco to consummate the transactions contemplated by this Agreement;
and
	 
	 	(b)	 	the covenants contained in this Agreement to be complied with or performed by
Holdco shall have been complied with or performed in all material respects through the
relevant date upon which performance is being made, except to the extent that the
failure to comply with such covenants does not affect the ability of Holdco to
consummate the transactions contemplated by this Agreement;






provided that Loral or the T-11N Transferor may not refuse to consummate the transactions
contemplated by this Agreement as a result of the failure of any condition contained in this
Section 7.3 to the extent that Loral or the T-11N Transferor is responsible for such
failure.



ARTICLE 8

TERMINATION





	8.1	 	Termination Upon Termination of the Share Purchase Agreement





     This Agreement shall terminate and the transactions contemplated hereby shall be abandoned
simultaneously with any termination of the Share Purchase Agreement for any reason whatsoever.









 



 - 19 - 



	8.2	 	Termination Upon Simultaneous Occurrence of the Telesat Closing and the Skynet
Closing





     This Agreement shall terminate and the transactions contemplated hereby shall be abandoned
upon the simultaneous occurrence of the Telesat Closing and the Skynet Closing.




	8.3	 	Termination by Mutual Consent





     This Agreement may be terminated and the transactions contemplated hereby may be abandoned at
any time by the mutual consent of Loral and Holdco.




	8.4	 	Effect of Termination.





     In the event of the termination of this Agreement pursuant to this Article 8, this Agreement
shall become null and void and no party hereto (or any of its directors (or Persons in similar
positions), officers, Affiliates, shareholders, equity holder, agents or representatives) shall
have any liability or further obligation to the other party hereto pursuant to this Agreement,
except that nothing herein will relieve any party hereto from liability for any breach by it of the
provisions of this Agreement occurring prior to the date of such termination.



ARTICLE 9

REMEDIES





	9.1	 	No Consequential Damages





     NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF THE OTHER PARTY OR ANY THIRD PARTY, WHETHER FORESEEABLE OR NOT, WITH RESPECT TO THE
SUBJECT MATTER HEREOF, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, INCLUDING WITHOUT LIMITATION
FOR LOSS OF REVENUE OR PROFIT, except that if Loral shall fail to pay the Stage One Purchase Price
or the Financing Amount, or the T 11N Transferor and Loral shall fail to make the T-11N
Contribution or subject to the provisions of Section 4.3(b), Loral shall fail to pay the Closing
Amount to the extent payable pursuant to Section 4.3(a), then Loral shall be liable for any
additional financing costs that may be incurred by Holdco or its Subsidiaries under the Financing
(as defined in the Share Purchase Agreement).




	9.2	 	Specific Performance for T-11N Contribution





     Skynet agrees that in the event of a breach of the obligation of Skynet to make the T-11N
Contribution pursuant to Section 4.1, irrevocable damage would occur to Holdco and that Holdco
would not have an adequate remedy in law in the event of such breach. Accordingly, Holdco shall be
entitled to injunction or injunctions to prevent such breach and to specific performance as a
remedy for such breach without bond or other security being required. Neither Skynet nor Loral
shall assert, as a defense against a claim for specific performance or injunction, that Holdco has
an adequate remedy at law. Such remedies are, however, cumulative and not exclusive and are in
addition to any other remedies which Holdco may have under this Agreement or otherwise.









 



 - 20 - 



	9.3	 	Specific Performance for Share Issuance





     Holdco agrees that in the event of a breach of Holdco’s obligation either to issue to LSCC the
Stage One Purchased Shares pursuant to Section 2.1 or to issue to Loral Holdings and the T-11N
Transferor the Holdco Non-Voting Preferred Shares pursuant to Section 4.4 irrevocable damage would
occur to Loral, LSCC, Loral Holdings and the T-11N Transferor and that they would not have an
adequate remedy in law in the event of such breach. Accordingly, Loral, LSCC, Loral Holdings and
the T-11N Transferor shall be entitled to injunction or injunctions to prevent such breach and to
specific performance as a remedy for such breach without bond or other security being required.
Holdco shall not assert, as a defense against a claim for specific performance or injunction, that
Loral, LSCC, Loral Holdings or the T-11N Transferor has an adequate remedy at law. Such remedies
are, however, cumulative and not exclusive and are in addition to any other remedies which LSCC,
Loral Holdings or the T-11N Transferor may have under this Agreement or otherwise.




	9.4	 	Survival of Representations and Warranties





     All representations and warranties set forth in Article 5 shall survive the transactions
contemplated hereunder; provided, however, that neither party shall be entitled to
recover any Losses pursuant to Section 5.1 or Section 5.2 hereof unless written notice of a claim
is delivered to the other party prior to the Applicable Limitation Date. For purposes of this
Agreement, the term “Applicable Limitation Date” shall mean the earlier of (i) the Skynet Closing
and (ii) the first (1st) anniversary of the Alternative Subscription Date;
provided, however, that the Applicable Limitation Date with respect to the
following Losses shall be as follows:




	 	(a)	 	with respect to any Loss arising from or related to a breach of the
representations and warranties of Loral set forth in Sections 5.1(a) (Corporate
Organization), 5.1(b) (Corporate Authority) and 5.1(f) (Investor Matters) or fraud on
the part of Loral, the Applicable Limitation Date shall be the date on which all claims
relating to such breach shall have been barred by the statute of limitations applicable
thereto;
	 
	 	(b)	 	with respect to any Loss arising from or related to a breach of the
representations and warranties of Holdco set forth in Section 5.2(a) (Corporate
Organization), 5.2(b) (Corporate Authority) and 5.2(f) (Holdco Shares) or fraud on the
part of Holdco, the Applicable Limitation Date shall be the date on which all claims
relating to such breach shall have been barred by the statute of limitations applicable
thereto.





ARTICLE 10

MISCELLANEOUS AND GENERAL





	10.1	 	Payment of Expenses





     Notwithstanding anything to the contrary contained in the Transaction Agreements, the Share
Purchase Agreement or the Investors Letter Agreement (including Section 10 of the Investors Letter
Agreement), whether or not the transactions contemplated by









 



 - 21 - 

this Agreement shall have been consummated, Holdco shall pay, and shall be solely responsible
for the payment of, any and all costs and expenses incurred by Loral, Skynet and Holdco or any of
their Affiliates incident to preparing, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.





	10.2	 	Modification or Amendment





     Loral, Skynet and Holdco may modify or amend this Agreement by written agreement executed and
delivered by duly authorized officers of each such party. No amendment or waiver of any provision
of this Agreement shall be binding on any party unless consented to in writing by Loral, Skynet and
Holdco. No waiver of any provision of this Agreement shall constitute a waiver of any other
provision, nor shall any waiver constitute a continuing waiver unless otherwise expressly provided.




	10.3	 	Further Assurances





     Each party to this Agreement covenants and agrees that, from time to time subsequent to the
Stage One Closing Date or the Alternative Subscription Date, in respect of the transaction matters
to be consummated by each such provision, it will execute and deliver, or cause to be executed and
delivered by its controlled Affiliate, all such documents including all such additional
conveyances, transfers, consents and other assurances, and do all such other acts and things as any
other party hereto, acting reasonably, may from time to time request be executed or done in order
to better evidence or perfect or effectuate any provision of this Agreement or any of the
respective obligations intended to be created hereby or thereby.




	10.4	 	Counterparts





     For the convenience of the parties hereto, this Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.




	10.5	 	Governing Law and Waiver of Jury Trial





     This Agreement, and all matters arising out of or related to this Agreement, and the
transactions contemplated hereby, including (a) its negotiation and validity, and (b) any claim or
cause of action, whether in tort, in contract, or otherwise (including any representation or
warranty made in or in connection with this Agreement or as an inducement to enter into this
Agreement) shall be governed by, and construed and interpreted in accordance with the laws of the
State of New York, without regard to the conflicts of law rules and principles thereof. Any suit,
action or proceeding against any party or any of its assets arising out of or relating to this
Agreement shall be brought in the federal or state courts located in New York, New York, and each
party hereby irrevocably and unconditionally attorns and submits to the exclusive jurisdiction of
such courts over the subject matter of any such suit, action or proceeding. Each party irrevocably
waives and agrees not to raise any objection it might now or hereafter have to any such suit,
action or proceeding in any such court including any objection that the place where such court is
located is an inconvenient forum or that there is any other suit, action or proceeding in any other
place relating in whole or in part to the same subject matter. EACH PARTY HEREBY ACKNOWLEDGES AND
AGREES THAT ANY DISPUTE OR









 



 - 22 - 



CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY IRREVOCABLY CONSENTS TO PROCESS BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY
LEGAL PROCEEDING BY DELIVERY OF A COPY THEREOF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 10.7.




	10.6	 	Time of Essence
	 
	 	 	Time shall be of the essence in this Agreement.
	 
	10.7	 	 Notices





     Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be given by hand, courier (with a copy sent by facsimile), by facsimile or other
means of electronic communication (with a copy sent by courier) or by delivery as hereafter
provided. Any such notice or other communication, if sent by courier or if sent by facsimile or
other means of electronic communication, shall be deemed to have been received on the Business Day
following the confirmation of receipt, or if delivered by hand shall be deemed to have been
received at the time it is delivered to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent authority to accept deliveries
on behalf of the addressee. Notice of change of address shall also be governed by this Section
10.7. Notices and other communications shall be addressed as follows or to such other address as
the parties shall notify each other in writing from time to time:



     (a) if to Holdco:


4363205 Canada Inc.

c/o McCarthy Tétrault

66 Wellington Street

Toronto, Ontario M5K 1E6



Attention: Secretary (c/o Robert Forbes)

Facsimile: (416) 868-0673










 



 - 23 - 




     with copies to:


Public Sector Pension Investment Board

1250 René Lévesque Blvd. West

Suite 2030

Montréal, Québec H3B 4W8



Attention: Vice President and General Counsel

Telephone: (514) 939-5376

Facsimile: (514) 937-0403



and:



Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153



Attention: Douglas P. Warner

Telephone: (212) 310-8751

Facsimile: (212) 310-8007




     (b) if to Loral or Skynet:


Loral Space & Communications Inc.

600 Third Avenue

New York, NY 10016



Attention: Avi Katz

Telephone: (212) 338-5340

Facsimile: (212) 338-5320



with copies to:



Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019



Attention: Bruce R. Kraus

Telephone: (212) 728-8237

Facsimile: (212) 728-9237



and










 



 - 24 - 

McCarthy Tétrault LLP

66 Wellington Street

Toronto, Ontario, M5K 1E6

Attention: Robert Forbes

Telephone: (416) 601-8267

Facsimile: (416) 868-0673





	10.8	 	Severability





     If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.




	10.9	 	Entire Agreement





     Except as agreed to in writing on or after the date hereof, this Agreement and the other
Transaction Agreements constitute the entire agreement, and supersedes all other prior agreements,
understandings, representations and warranties (both written and oral), among the parties with
respect to the subject matter hereof, including the Investor Letter Agreement.




	10.10	 	Assignment





     No party may transfer or assign any of its rights or obligations hereunder without the express
written consent of each other party hereto, and any such attempted transfer in violation of this
Section 10.10 shall be null and void ab initio, provided, however, that a party
hereto may, without the prior written consent of the other party hereto, (a) assign (in whole or in
part) this Agreement and all of its rights hereunder to its lenders and debt providers (or any
administrative or collateral agent therefor) for collateral security purposes, and (b) assign,
after the Alternative Subscription Date, (in whole or in part), this Agreement and its rights and
obligations hereunder to any of its subsidiaries; provided, however, that,
notwithstanding any such assignment described in the immediately preceding clauses (a) and (b), the
assigning party shall remain liable to perform all of its obligations hereunder




	10.11	 	Parties in Interest and Rights of PSP





     This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person
any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that, from the date hereof through the date of the Telesat
Closing, PSP shall have the right to take any action on behalf of Holdco, and to exercise all
remedies and rights on behalf of and for the benefit of Holdco, under this Agreement and shall be
entitled to full indemnity from Holdco in respect of, and Holdco shall pay to PSP an amount









 



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equal to, any Losses incurred by PSP in doing so (including any costs and expenses incurred by
PSP incidental to exercising any such remedies or rights) unless PSP shall have acted in bad faith
or shall have been grossly negligent, provided that nothing contained in this Section 10.11 shall
be deemed to create any liability on PSP’s part to any of the parties hereto in connection with,
and no party hereto shall have any recourse against PSP for, any action so taken or any exercise of
such remedies or rights made by PSP on behalf of or for the benefit of Holdco pursuant to this
Section 10.11. PSP shall be a third party beneficiary of this provision and of Sections 6.2,
6.3(d), 6.3(f) and this Section 10.11, and LSCC and Loral Holdings shall be third party
beneficiaries of Section 9.3.





	10.12	 	Successors





     This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective successors.



[signatures on following page]










 



   


     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto on the date first hereinabove written.



	 	 	 	 	 
	 	LORAL SPACE & COMMUNICATIONS INC.

 	 
	 	By:  	/s/ Michael B. Targoff
 	 
	 	 	Name:  	Michael B. Targoff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	LORAL SKYNET CORPORATION

 	 
	 	By:  	/s/ Michael B. Targoff
 	 
	 	 	Name:  	Michael B. Targoff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	4363205 CANADA INC.

 	 
	 	By:  	/s/ Michael B. Targoff
 	 
	 	 	Name:  	Michael B. Targoff 	 
	 	 	Title:  	Vice Chairman 	 
	 
	 	 	 
	 	By:  	/s/ Jim Pittman
 	 
	 	 	Name:  	Jim Pittman 	 
	 	 	Title:  	Vice President