EX-10.1






AMENDED AND RESTATED




SECURITIES PURCHASE AGREEMENT




BY AND BETWEEN




LORAL SPACE & COMMUNICATIONS INC.




AND




MHR FUND MANAGEMENT LLC




DATED: October 17, 2006




1




TABLE OF CONTENTS




Page




	 	 	 
	ARTICLE 1

ARTICLE 2

Section 2.01.

Section 2.02.

Section 2.03.

ARTICLE 3

Section 3.01.

Section 3.02.

ARTICLE 4

Section 4.01.

Section 4.02.

Section 4.03.

ARTICLE 5

Section 5.01.

Section 5.02.

Section 5.03.

Section 5.04.

Section 5.05.

Section 5.06.

Section 5.07.

Section 5.08.

Section 5.09.

Section 5.10.

Section 5.11.

Section 5.12.

Section 5.13.

Section 5.14.

Section 5.15.

ARTICLE 6

Section 6.01.

Section 6.02.

Section 6.03.

Section 6.04.

Section 6.05.

Section 6.06.

Section 6.07.

Section 6.08.

Section 6.09.

Section 6.10.

Section 6.11.

Section 6.12.

Section 6.13.

Section 6.14.

Section 6.15.

Section 6.16.

Section 6.17.

Section 6.18.

Section 6.19.

Section 6.20.

	 	DEFINITIONS

PURCHASE AND SALE OF SECURITIES; CLOSING

Authorization of Securities.

Sale and Purchase of Series A-1 Preferred Stock and Series B-1 Preferred Stock.

Closing; Delivery.

REPRESENTATIONS AND WARRANTIES

Representations and Warranties of the Corporation

Representations and Warranties of the Investors

CONDITIONS TO OBLIGATIONS

Conditions to Each Party’s Obligation.

Conditions to the Obligations of the Corporation

Conditions to the Obligation of the Investors.

COVENANTS OF THE CORPORATION AND THE INVESTORS

Redemption of SkyNet 14% Notes

Authorization of Class B Non-Voting Stock.

Bring-Down Certificate

Trading

Conversion Upon Certain Transfers.

Threshold Conversion.

Contributions to SkyNet

Permitted Indebtedness

Limitations on Disposition

Investor Transfer Restriction

MHR Board Representation

MHR Voting Covenant.

Further Actions.

Authorization of Exchange Proposal.

Voting Covenant of Series A-2 Preferred Stock and Series B-2 Preferred Stock

MISCELLANEOUS

Survival of Representations and Warranties

Indemnification.

Termination

Legends.

Fees and Expenses.

Equitable Remedies.

Notices.

Entire Agreement.

Remedies Cumulative.

Governing Law.

Counterparts.

Waivers.

Successors and Assigns.

Further Assurances.

Public Announcements

Jurisdiction; Consent to Service of Process.

Amendment

Schedule 13D Filings Conclusive

Headings

Severability






2




EXHIBITS




	 	 	 
	EXHIBIT A

EXHIBIT B

EXHIBIT C

EXHIBIT D

EXHIBIT E

EXHIBIT F

EXHIBIT G

EXHIBIT H

EXHIBIT I

EXHIBIT J

EXHIBIT K

EXHIBIT L

EXHIBIT M

EXHIBIT N

	 	FORM OF SERIES A CERTIFICATE OF DESIGNATION

FORM OF SERIES B CERTIFICATE OF DESIGNATION

FORM OF AMENDED AND RESTATED CERTIFICATE OF

INCORPORATION

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

CORPORATION SCHEDULE OF EXCEPTIONS

[INTENTIONALLY OMITTED]

FORM OF OPINION OF WILLKIE FARR & GALLAGHER LLP

FORM OF AMENDMENT TO AMENDED AND RESTATED BYLAWS

FORM OF BRING-DOWN CERTIFICATE

FORM OF BRING-DOWN OPINION

FORM OF THRESHOLD CONVERSION NOTICE

FORM OF NOTICE OF CONFIRMATION

FORM OF NOTICE OF DISAGREEMENT

FORM OF JOINDER AGREEMENT






3




SECURITIES PURCHASE AGREEMENT




SECURITIES PURCHASE AGREEMENT, dated as of October 17, 2006, as amended and restated on
February 27, 2007, by and between LORAL SPACE & COMMUNICATIONS INC., a Delaware corporation (the
“Corporation”) and MHR Fund Management LLC or any of its permitted assignees (each an
“Investor” and collectively, the “Investors”) (including all Exhibits thereto, as
so amended and restated, the “Agreement”). Unless otherwise specified, all references to
the date of this Agreement or the date hereof shall be references to October 17, 2006. The
amendment and restatement of this Agreement shall not affect in any way the original terms of this
Agreement as set forth on October 17, 2006, except as specifically amended by this amendment and
restatement.



W I T N E S S E T H:




WHEREAS, the Corporation is engaged in the global satellite communications business;



WHEREAS, the Board of Directors of the Corporation (the “Board”) (excluding directors
who are Affiliates of the Investors) has unanimously declared, following the unanimous
recommendation of the Special Committee (as defined below) to such effect (the
“Recommendation”), that the terms of the transactions contemplated hereby are fair, from a
financial point of view, to the Corporation and its stockholders (other than MHR), and, taken as a
whole, are no less favorable, from a financial point of view, than the Corporation could obtain
from an unrelated third party, and has approved this Agreement and the transactions contemplated
hereby;



WHEREAS, the Board has determined to issue and sell, and the Investors have determined to
purchase, for an aggregate purchase price of Three Hundred Million and Ninety Eight Dollars
($300,000,098.00) in cash, (i) 136,526 shares of Series A-1 Cumulative 7.50% Convertible Preferred
Stock, par value $0.01 per share, of the Corporation (the “Series A-1 Preferred Stock”),
having the rights, preferences, privileges and powers set forth in the Series A Certificate of
Designation (as defined below) attached hereto as Exhibit A , and (ii) 858,486 shares of Series B-1
Cumulative 7.50% Preferred Stock, par value $0.01 per share, of the Corporation (the “Series
B-1 Preferred Stock”), having the rights, preferences, privileges and powers set forth in the
Series B Certificate of Designation (as defined below) attached hereto as Exhibit B; and



WHEREAS, immediately following the consummation of the transactions contemplated hereby, the
shares of Common Stock issuable upon the conversion of the Series A-1 Preferred Stock, together
with the shares of Common Stock held by the Investors and their Affiliates, will represent 39.999%
of the issued and outstanding shares of Common Stock.



NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises hereinafter
set forth, the parties hereby agree as follows:



ARTICLE 1




DEFINITIONS




Unless the context otherwise requires, the terms defined hereunder shall have the meanings
therein specified for all purposes of this Agreement, applicable to both the singular and plural
forms of any of the terms defined herein. For purposes of this Agreement:



“Acquisition” shall have the meaning set forth in Section 5.01.



“Adjusted Tangible Asset Value” shall mean, as of any period, the excess, if any, of
(i) Consolidated Tangible Asset Value, over (ii) SkyNet Tangible Asset Value.



“Affiliate” shall mean, with respect to any Person hereto, any corporation or other
business entity which directly or indirectly through stock ownership or through any other
arrangement either controls, is controlled by or is under common control with, such Person. The
term “control” shall mean the power to direct the affairs of such Person by reason of ownership of
voting stock or other equity interests, by contract or otherwise.



“Agreement” shall have the meaning set forth in the preamble hereof.



“Amended and Restated Certificate of Incorporation” shall mean the Amended and
Restated Certificate of Incorporation, substantially identical in form and substance to that
attached hereto as Exhibit C.



“Applicable Law” shall mean all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations, ordinances, codes or
orders of any Governmental Authority, (ii) Governmental Approvals, and (iii) orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.



“Arrearages” shall mean, as of any particular date, the amount of any accumulated and
unpaid dividends on any shares of Preferred Stock.



“Associate” shall have the meaning ascribed to such term in Rule 12b-2 under the
Exchange Act.



“Balance Sheet” shall mean the Consolidated Balance Sheets of the Corporation included
within the Corporation’s periodic reports filed pursuant to the Exchange Act.



“Beneficial Owner” shall have the meaning as defined in Rules 13d-3 and 13d-5 under
the Exchange Act.



“Board” shall have the meaning set forth in the second recital hereof.



“Bring-Down Certificate” shall have the meaning set forth in Section 5.03.



“Business Day” shall mean any day, other than a Saturday, Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law or executive order
to close.



“Bylaws” shall mean the Amended and Restated Bylaws of the Corporation, dated as of
November 21, 2005, as amended and restated from time to time.



“Capital Lease” shall mean, for any Person, a lease of any interest in any kind of
property (whether real, personal or mixed) or asset by such Person as lessee that is, should be or
should have been recorded as a “capital lease” on the balance sheet of such Person in accordance
with GAAP.



“Certificate of Incorporation” means the Restated Certificate of Incorporation of the
Corporation.



“Class B Non-Voting Stock” shall mean the Class B-1 Non-Voting Stock and Class B-2
Non-Voting Stock collectively, and such reference shall be deemed to be a reference to each of the
Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock, except as expressly set forth and
provided for in this Agreement.



“Class B-1 Non-Voting Stock” shall mean, from the date of the Class B Non-Voting Stock
Authorization, Class B-1 Non-Voting Common Stock, par value $0.01, of the Corporation, which shall
be (i) non-voting (except as required by Applicable Law), , (ii) identical to the Common Stock in
all respects (except as set forth in clause (i) above), including with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution, and (iii) convertible
into Common Stock only under the conditions set forth in the Amended and Restated Certificate of
Incorporation.



“Class B-2 Non-Voting Stock” shall mean, from the date of the Class B Non-Voting Stock
Authorization, Class B-2 Non-Voting Common Stock, par value $0.01, of the Corporation, which shall
be (i) non-voting (except as required by Applicable Law) (ii) identical to the Common Stock in all
respects (except as set forth in clause (i) above), including with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution, and (iii) convertible
into Class B-1 Non-Voting Stock only upon the Exchange Proposal Approval, as set forth in the
Amended and Restated Certificate of Incorporation.



“Class B Non-Voting Stock Authorization” shall mean the filing of the Amended and
Restated Certificate of Incorporation with the Secretary of State of the State of Delaware
authorizing the creation of the Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock, pursuant
to Section 5.02(a) and the subsequent reservation of all such shares for issuance upon conversion
of any shares of Series A Preferred Stock and Series B Preferred Stock pursuant to the terms of the
Series A Certificate of Designation and Series B Certificate of Designation, respectively, and the
exchange of the Class B-2 Non-Voting Stock for Class B-1 Non-Voting Stock pursuant to the terms of
the Certificate of Incorporation, provided that if, at the time of such filing, there are no shares
of (i) Series A-2 Preferred Stock outstanding, such amendment to the Certificate of Incorporation
shall eliminate the Series A-2 Preferred Stock from the authorized capital of the Corporation, and
(ii) Series B-2 Preferred Stock outstanding, such amendment to the Certificate of Incorporation
shall eliminate the Series B-2 Preferred Stock from the authorized capital of the Corporation.



“Class B Proposal” shall have the meaning set forth in Section 5.02(a).



“Closing” shall have the meaning set forth in Section 2.03(a).



“Closing Date” shall have the meaning set forth in Section 2.03(a).



“Collateral” shall have the meaning set forth in Section 5.07(b).



“Collateral Documents” shall mean the Registration Rights Agreement, the Series A
Certificate of Designation and the Series B Certificate of Designation.



“Common Stock” shall mean the common stock, par value $.01 per share, of the
Corporation.



“Communications Act” shall mean the Communications Act of 1934 and the Communications
Satellite Act of 1962, as amended.



“Consolidated Deferred Income Tax Asset” shall mean, as of any period, the amount
identified as an asset on the Corporation’s Balance Sheet relating to deferred income tax assets of
the Corporation or any of its Consolidated Entities resulting from net operating loss carryforwards
generated prior to November 21, 2005, net of any applicable valuation allowances as determined in
accordance with GAAP consistently applied.



“Consolidated Entities” shall mean those entities that are consolidated into the
Consolidated Financial Statements of the Corporation in accordance with GAAP.



“Consolidated Intangible Assets” shall mean, as of any period, to the extent not
included in Goodwill, the amount identified as intangible assets of the Corporation and its
Consolidated Entities on the Corporation’s Balance Sheet, including but not limited to, patents,
trademarks, tradenames, copyrights and franchises, and all capitalized transaction fees and
expenses.



“Consolidated Preferred Stock” shall mean, as of any period, to the extent not
included in Minority Interest, the amount identified as preferred stock of the Corporation or any
of its Consolidated Entities on the Corporation’s Balance Sheet.



“Consolidated Tangible Asset Value” shall mean, as of any period, the excess, if any,
of (a) Total Shareholders’ Equity, over (b) the sum of (i) Consolidated Preferred Stock, (ii)
Goodwill, (iii) Consolidated Intangible Assets, and (iv) Consolidated Deferred Income Tax Asset.



“Contract” shall mean any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation.



“Conversion Issuance Date” shall have the meaning set forth in Section 5.03.



“Corporation” shall have the meaning set forth in the preamble hereof.



“Corporation Schedule of Exceptions” shall have the meaning set forth in Section 3.01.



“Disqualified Transferee” shall have the meaning set forth in Section 5.05(b).



“Dollar” or “$” shall mean the basic unit of the lawful currency of the United
States of America.



“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, from time to time.



“Exchange Proposal” shall have the meaning set forth in Section 5.14.



“Exchange Proposal Approval” shall have the meaning set forth in Section 5.14.



“Fairness Opinion” shall mean the opinion of North Point, to the effect that, as of
the date hereof, the terms of the transactions contemplated hereby are fair, from a financial point
of view, to the Corporation and its stockholders (other than MHR), and, taken as a whole, are no
less favorable, from a financial point of view, than the Corporation could obtain from an unrelated
third party.



“Federal” shall mean of, relating to or promulgated by the United States of America,
as distinct from its constituent states.



“GAAP” shall mean generally accepted accounting principles, consistently applied, as
in effect in the United States.



“Goodwill” shall mean, as of any period, the amount identified as Goodwill on the
Balance Sheet.



“Governmental Approval” shall mean any consent, license, registration or permit
issued, granted, given or otherwise made available by or under the authority of any Governmental
Authority or pursuant to any Legal Requirement, which consent, license, registration or permit is
related primarily to or required for the operation of the business of the Corporation.



“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof or any entity (other than the NASD or any securities exchange)
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency, department, board, commission
or instrumentality of the United States, any state of the United States or any political
subdivision thereof. For the avoidance of doubt, neither the NASD nor any securities exchange
shall be deemed to be a Governmental Authority as defined herein.



“Guarantee” by any Person shall mean any obligation, contingent or otherwise, of such
Person guaranteeing, or having the economic effect of guaranteeing, any Indebtedness of any other
Person (the “Primary Obligor”) in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person: (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Indebtedness; (ii) to
purchase property, securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness; or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the Primary Obligor so as to enable
the Primary Obligor to pay such Indebtedness (and “Guaranteed,” “Guaranteeing” and “Guarantor”
shall have meanings correlative to the foregoing); provided, however, that the
Guarantee by any Person shall not include endorsements by such Person for collection or deposit, in
either case, in the ordinary course of business.



“Hedge Agreement” shall mean any and all transactions, agreements or documents now
existing or hereafter entered into by the Corporation or any of its Consolidated Entities which
provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option, or any combination
of, or option with respect to, these or similar transactions, for the purpose of hedging exposure
to fluctuations in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.



“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.



“Indebtedness” of any Person shall mean, without duplication, (i) all obligations of
such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments and all reimbursement or other obligations in respect of letters
of credit, bankers acceptances, interest rate swaps, hedges, derivatives or other financial
products; (iii) all obligations of such Person as a lessee under Capital Leases; (iv) all
obligations or liabilities of others secured by a Lien on any asset of such Person, irrespective of
whether such obligation or liability is assumed; (v) all obligations of such Person to pay the
deferred purchase price of assets; (vi) all obligations of such Person owing under Hedge
Agreements; and (vii) any obligations of such Person Guaranteeing or intended to Guarantee (whether
directly or indirectly Guaranteed, endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person that constitutes Indebtedness of such other Person under any of
clauses (i) through (vi) above.



“Indebtedness Incurrence Period” shall have the meaning set forth in Section 5.08(a).



“Indemnifying Party” shall have the meaning set forth in Section 6.02(a).



“Investor(s)” shall have the meaning set forth in the preamble hereof.



“Investor Indemnified Liabilities” shall have the meaning set forth in Section
6.02(a).



“Investor Indemnified Party” shall have the meaning set forth in Section 6.02(a).



“Joint Venture” shall mean any joint venture between the Corporation or any of its
Subsidiaries and any other Person.



“Knowledge” shall mean the actual knowledge, after due inquiry, of Michael B. Targoff,
Eric Zahler, Richard J. Townsend, Avi Katz, Richard Mastoloni and Janet Yeung.



“Legal Requirement” shall mean any Federal, state or municipal law, ordinance,
regulation, statute or treaty, which shall not include any rules or regulations of the NASD or any
securities exchange.



“Lien” shall mean any mortgage, pledge, lien, security interest, claim, voting
agreement, conditional sale agreement, title retention agreement, restriction, option or
encumbrance of any kind, character or description whatsoever.



“Majority Ownership Date” means the earlier of the date that (i) MHR becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Common Stock of the Corporation
(including any successor to the Corporation) (excluding any shares of Series A-1 Preferred Stock
issued on the Closing Date or Common Stock issued upon the conversion thereof), and (ii) a Person
unrelated to MHR becomes the Beneficial Owner, directly or indirectly, of shares of capital stock
of the Corporation (other than any shares acquired in violation of the Transfer Restriction)
constituting, upon exercise or conversion into Common Stock of all in-the-money convertible
securities, options and warrants that such person has the immediate right to so exercise or
exchange, more than 50% of the Common Stock of the Corporation (including any successor to the
Corporation) that would be outstanding following the exercise or conversion of all in-the-money
convertible securities, options and warrants of the Corporation then outstanding; provided that the
Majority Ownership Date shall not be deemed to have occurred pursuant to clause (ii) above if at
such time MHR would, upon conversion of any shares of Series A Preferred Stock, Class B-1
Non-Voting Stock or Class B-2 Non-Voting Stock then held by it into Common Stock and upon
conversion of any shares of Series B-1 Preferred Stock then held by it into Series A-1 Preferred
Stock or Common Stock, become the Beneficial Owner of more than 50% of the Common Stock of the
Corporation (including any successor to the Corporation), that would be outstanding following the
exercise or conversion of all in-the-money convertible securities, options and warrants of the
Corporation then outstanding.



“Material Adverse Effect” shall mean such facts, circumstances, developments, events,
changes or effects that are, or would reasonably be expected to become, individually or in the
aggregate, materially adverse to the business, financial condition or continuing operations of the
Corporation and its Subsidiaries, taken as a whole, but shall not include facts, circumstances,
developments, events, changes or effects (a) generally affecting the satellite services or
satellite manufacturing industries (except to the extent such facts, circumstances, developments,
events, changes or effects have had or would reasonably be expected to have a materially
disproportionate effect on the Corporation and its Subsidiaries, taken as a whole as compared to
other Persons in the industry in which the Corporation and its Subsidiaries operate), or (b)
resulting from (i) the announcement or the existence of, or compliance with, this Agreement or any
of the transactions contemplated by this Agreement, or (ii) changes in Applicable Law, GAAP (as
hereinafter defined) or accounting standards.



“MHR” shall mean MHR Fund Management LLC and any successor thereto and its Affiliates.



“MHR Designee” shall have the meaning set forth in Section 5.11.



“Minority Interest” shall mean the amount identified as Minority Interest on the
Balance Sheet.



“NASD” means the National Association of Securities Dealers.



“NASD Request” shall have the meaning set forth in Section 4.01(h).



“Non-Voting Securities Proposal” shall have the meaning set forth in Section 5.02(a).



“North Point” shall mean North Point Advisors, LLC.



“Notes” shall have the meaning set forth in Section 5.01.



“Notice of Confirmation” shall have the meaning set forth in Section 5.06(b).



“Notice of Disagreement” shall have the meaning set forth in Section 5.06(b).



“Person” shall mean any individual, corporation, company, association, partnership,
limited liability company, joint venture, trust or unincorporated organization, or a government or
any agency or political subdivision thereof.



“PIK Dividend Issuance Date” shall have the meaning set forth in Section 5.03.



“PIK Dividends” shall have the meaning set forth in Section 3.01(c)(iii).



“Preferred Stock” shall mean the Series A Preferred Stock and the Series B Preferred
Stock.



“Proceeding” shall the meaning set forth in Section 6.02(b).



“Proxy Statement” shall have the meaning set forth in 5.02(a).



“Purchased Shares” shall have the meaning set forth in Section 2.02.



“Qualified Transferee” shall mean a Person other than a Disqualified Transferee.



“Recommendation” shall have the meaning set forth in the second recital hereof.



“Registration Rights Agreement” shall mean the Amended and Restated Registration
Rights Agreement, substantially identical in form and substance to that attached hereto as Exhibit
D.



“Restricted Transferee” shall mean a Person other than MHR who either (i) solely as a
result of a transfer by MHR of shares of Series A-1 Preferred Stock issued on the Closing Date (or
Common Stock issued upon the conversion thereof) would become the Beneficial Owner of more than
35.9% of the aggregate voting power of all outstanding securities issued by the Corporation
(assuming the conversion of all the then-outstanding Series A-1 Preferred Stock) immediately after
such transfer, or (ii) is the Beneficial Owner of more than 35.9% but less than 50% of the
aggregate voting power of all outstanding securities issued by the Corporation (assuming the
conversion of all the then-outstanding Series A-1 Preferred Stock) immediately prior to any
transfer by MHR of shares of Series A-1 Preferred Stock issued on the Closing Date (or Common Stock
issued upon the conversion thereof).



“SEC” shall mean the United States Securities and Exchange Commission or any
successors thereto.



“SEC Reports” shall mean all reports filed by the Corporation with the SEC pursuant to
the provisions of the Exchange Act or the Securities Act.



“Secured Loan Agreement” shall have the meaning set forth in Section 5.07(b).



“Securities Act” shall mean the U.S. Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, from time to time.



“Security Interest” shall have the meaning set forth in Section 5.07(b).



“Series A Certificate of Designation” shall have the meaning set forth in the third
recital hereof.



“Series A PIK Dividends” shall have the meaning set forth in Section 3.01(c)(ii).



“Series A Preferred Stock” shall mean the Series A-1 Preferred Stock and Series A-2
Preferred Stock collectively and such reference shall be deemed to be a reference to each of the
Series A-1 Preferred Stock and Series A-2 Preferred Stock, except as expressly set forth and
provided for in this Agreement.



“Series A-1 Preferred Stock” shall have the meaning set forth in the third recital
hereof.



“Series A-2 Preferred Stock” shall mean the Series A-2 Convertible Preferred Stock,
par value $0.01 per share, of the Corporation.



“Series B Certificate of Designation” shall have the meaning set forth in the third
recital hereof.



“Series B PIK Dividends” shall have the meaning set forth in Section 3.01(c)(iii).



“Series B Preferred Stock” shall mean the Series B-1 Preferred Stock and Series B-2
Preferred collectively and such reference shall be deemed to be a reference to each of the Series
B-1 Preferred Stock and Series B-2 Preferred Stock, except as expressly set forth and provided for
in this Agreement.



“Series B-1 Preferred Stock” shall have the meaning set forth in the third recital
hereof.



“Series B-2 Preferred Stock” shall mean the Series B-2 Convertible Preferred Stock,
par value $0.01 per share, of the Corporation.



“Share Purchase Price” shall have the meaning set forth in Section 2.02.



“SkyNet” shall mean Loral Skynet Corporation, a Delaware corporation and a
wholly-owned Subsidiary of the Corporation.



“SkyNet Deferred Income Tax Asset” shall mean, as of any period, any portion of the
Consolidated Deferred Income Tax Asset attributable to SkyNet and its Consolidated Entities as of
such period.



“SkyNet Goodwill” shall mean, as of any period, the amount of Goodwill attributable to
SkyNet and its Consolidated Entities as of such period.



“SkyNet Intangible Assets” shall mean, as of any period, that portion of Consolidated
Intangible Assets attributable to SkyNet and its Consolidated Entities.



“SkyNet Preferred Stock” shall mean, as of any period, (i) any portion of the
Consolidated Preferred Stock attributable to SkyNet and its Consolidated Entities, and (ii) without
duplication, the amount of Minority Interest reflected on the Balance Sheet that is attributable to
preferred stock issued by SkyNet or its Consolidated Entities, in each case, as of such period.



“SkyNet Shareholders’ Equity” shall mean, as of any period, that portion of Total
Shareholders’ Equity attributable to SkyNet and its Consolidated Entities.



“SkyNet Tangible Asset Value” shall mean, as of any period, the excess, if any, of (a)
SkyNet Shareholders’ Equity, over (b) the sum of (i) SkyNet Preferred Stock, (ii) SkyNet Goodwill,
(iii) SkyNet Intangible Assets, and (iv) SkyNet Deferred Income Tax Asset.



“Special Committee” shall mean the special committee of independent directors of the
Corporation, formed for the purpose of considering, negotiating and evaluating this Agreement and
the Collateral Documents and the transactions contemplated hereby and thereby.



“SS/L” shall mean Space Systems/Loral, Inc., a Delaware corporation and a wholly-owned
Subsidiary of the Corporation.



“Subsidiary” shall mean as to any Person, any other Person of which more than 50% of
the shares of the voting stock or other voting interests are owned or controlled, or the ability to
select or elect more than 50% of the directors or similar managers is held, directly or indirectly,
by such first Person or one or more of its Subsidiaries or by such first Person and one or more of
its Subsidiaries.



“Supplemental Listing Application” shall have the meaning set forth in 4.01(g).



“TAV Threshold” shall mean (i) the sum of (A) Adjusted Tangible Asset Value as set
forth on Schedule 1.01 hereto, (B) $400 million, and (C) any increase in Consolidated Preferred
Stock from the prior Indebtedness Incurrence Period to the extent attributable to the issuance of
any PIK Dividends, over (ii) any decrease in Consolidated Preferred Stock from the prior
Indebtedness Incurrence Period to the extent attributable to the redemption or conversion of any
shares of Preferred Stock.



“Termination Date” shall have the meaning set forth in 6.03(b).



“Threshold” shall mean 39.999% of the aggregate voting power of all outstanding
securities issued by the Corporation at any time and from time to time (assuming the conversion of
all of the then outstanding shares of Series A-1 Preferred Stock).



“Threshold Conversion Issuance Date” shall have the meaning set forth in Section
5.06(b).



“Threshold Conversion Notice” shall have the meaning set forth in Section 5.06(b).



“Total Shareholders’ Equity” shall mean, as of any period, the amount identified as
Total Shareholders’ Equity on the Balance Sheet.



“Transfer” shall mean any sale, transfer, advancement of funds, extension of credit,
financial accommodation, credit support, pledge, hypothecation, encumbrance, assignment or
constructive sale or other disposition, or the offer to make such a sale, transfer, constructive
sale or other disposition, and each agreement, arrangement or understanding, whether or not in
writing, to effect any of the foregoing.



“Transfer Restriction” shall have the meaning set forth in Section 5.10.



“Transferee” shall have the meaning set forth in Section 5.07.



“Transferor” shall have the meaning set forth in Section 5.07.



“Willkie” shall have the meaning set forth in Section 2.03(a).



When a reference is made in this Agreement to a Section, such reference shall be to a Section
of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.” The use of a gender herein shall be deemed to include the neuter, masculine and
feminine genders whenever necessary or appropriate. Whenever the word “herein” or “hereof” is used
in this Agreement, it shall be deemed to refer to this Agreement and not to a particular Section of
this Agreement unless expressly stated otherwise.



ARTICLE 2




PURCHASE AND SALE OF SECURITIES; CLOSING




Section 2.01. Authorization of Securities.



(a) The Corporation has duly authorized the issuance and sale pursuant to the terms and
conditions of this Agreement of up to 2,200,000 shares of its Series A-1 Preferred Stock and up to
80,000 shares of its Series A-2 Preferred Stock. The Series A-1 Preferred Stock and Series A-2
Preferred Stock have all of the rights, preferences, privileges, powers and restrictions set forth
in the Series A Certificate of Designation, a copy of which, in the form being filed by the
Corporation with the Secretary of State of the State of Delaware contemporaneously with the
execution of this Agreement as provided herein, is attached hereto as Exhibit A.



(b) The Corporation has duly authorized the issuance and sale pursuant to the terms and
conditions of this Agreement of up to 2,000,000 shares of its Series B-1 Preferred Stock and up to
500,000 shares of its Series B-2 Preferred Stock. The Series B-1 Preferred Stock and Series B-2
Preferred Stock have all of the rights, preferences, privileges, powers and restrictions set forth
in the Series B Certificate of Designation, a copy of which, in the form being filed by the
Corporation with the Secretary of State of the State of Delaware contemporaneously with the
execution of this Agreement as provided herein, is attached hereto as Exhibit B.



Section 2.02. Sale and Purchase of Series A-1 Preferred Stock and Series B-1 Preferred
Stock.



Subject to the terms and conditions set forth in this Agreement, the Corporation agrees to
sell at the Closing to each of the Investors, and each of the Investors severally and not jointly
agrees to purchase at such Closing from the Corporation, for $301.504 per share (the “Share
Purchase Price”), the number of shares of Series A-1 Preferred Stock and Series B-1 Preferred
Stock set forth in a written notice by any of the Investors to the Corporation, which notice may be
given pursuant to the Joinder Agreement (as defined below). The total number of shares of Series
A-1 Preferred Stock and Series B-1 Preferred Stock to be purchased by the Investors is referred to
herein as the “Purchased Shares”.



Section 2.03. Closing; Delivery.



(a) The Closing. The closing of the purchase and sale of the Series A-1 Preferred
Stock and Series B-1 Preferred Stock pursuant to this Agreement (the “Closing”) shall take
place on the second Business Day following the satisfaction or waiver of all conditions to the
Closing set forth in Article IV hereof (the “Closing Date”) at 10:00 a.m. at the offices of
Willkie Farr & Gallagher LLP (“Willkie”), New York, New York, or at such other place and at
such time and date as the Investors and the Corporation shall mutually agree.



(b) Delivery. At the Closing, the Corporation shall deliver to each Investor duly
executed and issued stock certificates evidencing the Series A-1 Preferred Stock and Series B-1
Preferred Stock being purchased by such Investor, against delivery to the Corporation of the
purchase price therefor, by a wire transfer of immediately available funds to the account specified
therefor by the Corporation, not less than three (3) Business Days prior to the Closing.



ARTICLE 3




REPRESENTATIONS AND WARRANTIES




Section 3.01. Representations and Warranties of the Corporation



The Corporation hereby represents and warrants to the Investors, as of the date hereof as
follows (except (i) to the extent such representations and warranties expressly relate only to
another date, in which case such representations and warranties shall be correct and accurate in
all material respects on and as of such other date, and (ii) as set forth in the Corporation
Schedule of Exceptions attached as Exhibit E hereto (the “Corporation Schedule of
Exceptions”) which specifically identify the subsection hereof and which exceptions shall be
deemed to be representations and warranties as if made hereunder; provided that notwithstanding
anything in this Agreement to the contrary, the inclusion of any item on the Corporation Schedule
of Exceptions will not be deemed an admission that such item is material for any purpose):



(a) Organization, Good Standing and Qualifications. Each of the Corporation and its
Subsidiaries is a corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own or lease and operate its properties and to conduct its
business as it is currently being conducted and is proposed to be conducted. Each of the
Corporation and its Subsidiaries is duly licensed, authorized or qualified as a foreign
corporation, partnership or limited liability company for the transaction of business and is in
good standing under of laws of each other jurisdiction in which its ownership, lease or operation
of property or conduct of its business requires such qualification, except where the failure to be
so qualified or in good standing would not reasonably be expected to have a Material Adverse
Effect. The Corporation is not in default under or in violation of any provision of its
Certificate of Incorporation or its Bylaws.



(b) Authorization. As of the date hereof and as of February 27, 2007, the Corporation
has all requisite power and authority to execute and deliver this Agreement and the Registration
Rights Agreement and to perform all its obligations and consummate all of the transactions
contemplated hereunder and thereunder. Except for the Class B Non-Voting Stock Authorization, the
filing of the Series A Certificate of Designation and the Series B Certificate of Designation on
the Closing Date and any approval of the Corporation’s stockholders if required by the NASD, all
corporate action on the part of the Corporation necessary for the authorization, execution and
delivery of this Agreement, the Registration Rights Agreement and each other document or agreement
to be executed by the Corporation in connection with the execution, delivery and performance of
this Agreement and the Registration Rights Agreement, the performance of the obligations of the
Corporation and the consummation of all the transactions contemplated hereby and thereby, prior to,
at or after the Closing, and the issuance and delivery of the shares of Series A-1 Preferred Stock,
Series A-2 Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Common Stock,
Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock has been taken, and no further action is
or will be required to be taken with respect to the issuance and delivery of such Series A-1
Preferred Stock, Series A-2 Preferred Stock, Series B-1 Preferred Stock, Common Stock, Class B-1
Non-Voting Stock and Class B-2 Non-Voting Stock when issued in accordance with the terms of the
Series A Certificate of Designation, Series B Certificate of Designation or Amended and Restated
Certificate of Incorporation, as the case may be, and this Agreement, the Registration Rights
Agreement and each other document or agreement to be executed by the Corporation in connection with
the execution, delivery and performance of this Agreement and the Registration Rights Agreement
have been duly executed and delivered by the Corporation and constitute a valid and legally binding
obligation of the Corporation, enforceable in accordance with its terms, except as may be limited
by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.



(c) Valid Issuance.




(i) Subject to the Class B Non-Voting Stock Authorization, the Purchased Shares have
been duly and validly authorized, reserved for issuance and, when issued, sold and delivered
by the Corporation in accordance with the terms of this Agreement for the consideration
provided for herein, will have been duly and validly issued, fully paid and nonassessable
and will be free of any Lien (other than those that may be created by the Investor) and free
of any restrictions on transfer other than restrictions on transfer contained in this
Agreement and under applicable Federal and state securities laws.




(ii) The shares of Series A-1 Preferred Stock issuable on any Threshold Conversion
Issuance Date and in payment of dividends on the Series A-1 Preferred Stock and Series B-1
Preferred Stock pursuant to the terms of the Series A Certificate of Designation and the
Series B Certificate of Designation (the “Series A PIK Dividends”) have been duly
and validly authorized by the Corporation and reserved for issuance and, when issued on any
Threshold Conversion Issuance Date or PIK Dividend Issuance Date in accordance with the
terms of the Series A Certificate of Designation and Series B Certificate of Designation
will have been duly and validly issued, fully paid and nonassessable and will be free of any
Liens and free of any restrictions on transfer other than restrictions on transfer contained
in this Agreement and under applicable Federal and state securities laws.




(iii) Subject to the Class B Non-Voting Stock Authorization, the shares of Series B-1
Preferred Stock issuable in payment of dividends on the Series A-1 Preferred Stock and
Series B-1 Preferred Stock pursuant to the terms of the Series A Certificate of Designation
and Series B Certificate of Designation (the “Series B PIK Dividends” and, together
with the Series A PIK Dividends, the “PIK Dividends”) have been duly and validly
authorized by the Corporation and reserved for issuance and, when issued on any PIK Dividend
Issuance Date in accordance with the terms of the Series A Certificate of Designation or the
Series B Certificate of Designation, will have been duly and validly issued, fully paid and
nonassessable and will be free of any Liens and free of any restrictions on transfer other
than restrictions on transfer contained in this Agreement and under applicable Federal and
state securities laws.




(iv) Subject to the Class B Non-Voting Stock Authorization and any approval of the
Corporation’s stockholders if required by the NASD, the shares of Common Stock issuable upon
the conversion of the Series A-1 Preferred Stock, Series B-1 Preferred Stock and Class B-1
Non-Voting Stock, respectively, have been duly and validly authorized by the Corporation and
reserved for issuance and, when issued on any Threshold Conversion Issuance Date or
Conversion Issuance Date in accordance with the terms of the Series A Certificate of
Designation, Series B Certificate of Designation, Amended and Restated Certificate of
Incorporation or Section 5.06 hereof, as the case may be, will have been duly and validly
issued, fully paid and nonassessable and will be free of any Liens and free of any
restrictions on transfer other than restrictions on transfer contained in this Agreement and
under applicable Federal and state securities laws.




(v) Upon the Class B Non-Voting Stock Authorization, the shares of Class B-1 Non-Voting
Stock issuable upon the conversion of the Series B-1 Preferred Stock and Class B-2
Non-Voting Stock will have been duly and validly authorized by the Corporation and reserved
for issuance and, when issued on any Conversion Issuance Date in accordance with the terms
of the Series B Certificate of Designation, will have been duly and validly issued, fully
paid and nonassessable and will be free of any Liens and free of any restrictions on
transfer other than restrictions on transfer contained in this Agreement and under
applicable Federal and state securities laws.




(vi) The shares of Series A-2 Preferred Stock and Series B-2 Preferred Stock issuable
pursuant to the terms of the Series A Certificate of Designation and Series B Certificate of
Designation, respectively, have been duly and validly authorized by the Corporation and
reserved for issuance and, when issued in accordance with the terms of the Series A
Certificate of Designation or the Series B Certificate of Designation, as the case may be,
will have been duly and validly issued, fully paid and nonassessable and will be free of any
Liens and free of any restrictions on transfer other than restrictions on transfer contained
in this Agreement and under applicable Federal and state securities laws.




(vii) Upon the Class B Non-Voting Stock Authorization, the shares of Class B-2
Non-Voting Stock issuable upon the conversion of the Series A-1 Preferred Stock, Series A-2
Preferred Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock will have been
duly and validly authorized by the Corporation and reserved for issuance and, when issued on
any Conversion Issuance Date in accordance with the terms of the Series A Certificate of
Designation or Series B Certificate of Designation, as the case may be, will have been duly
and validly issued, fully paid and nonassessable and will be free of any Liens and free of
any restrictions on transfer other than restrictions on transfer contained in this Agreement
and under applicable Federal and state securities laws.



(d) Capitalization. Except as set forth on Section 3.01(d) of the Corporation
Schedule of Exceptions, the entire authorized capital stock of the Corporation consists of
40,000,000 shares of Common Stock, of which 20,000,000 shares are issued and outstanding, and
10,000,000 shares of preferred stock, par value $0.01 per share, of which no shares, except for the
shares issued pursuant to this Agreement, are issued and outstanding as of the date of this
Agreement. Except as set forth in the Corporation’s SEC Reports, and except as contemplated
hereby, there are no outstanding or authorized warrants, options, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts, commitments or obligations that
could require the Corporation or any of its Subsidiaries to issue, grant, deliver or sell or
otherwise cause to be issued, granted, delivered or sold or become outstanding any capital stock of
the Corporation or any of its Subsidiaries. Except as set forth in the Corporation’s SEC Reports,
and except as contemplated hereby, to the Corporation’s Knowledge, there are no outstanding or
authorized warrants, options, purchase rights, subscription rights, conversion rights, exchange
rights or other contracts, commitments or obligations that could require any entity of which more
than 10% of the shares of the voting stock or other voting interests are owned or controlled, or
the ability to select or elect more than 10% of the directors or similar managers is held, directly
or indirectly, by the Corporation or any of its Subsidiaries, to issue, grant, deliver or sell or
otherwise cause to be issued, granted, delivered or sold or become outstanding any capital stock of
the Corporation or any of its Subsidiaries.



There are no outstanding or authorized stock appreciation, phantom stock, profit participation
or similar rights with respect to the Corporation or any of its Subsidiaries. Except as provided
in this Agreement, there are no voting trusts, proxies or other agreements or understandings with
respect to the voting of the capital stock of the Corporation to which the Corporation is a party
and to the Corporation’s Knowledge, there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of the Corporation to which the
Corporation is not a party.



(e) Series A-1 Preferred Stock Issuance. Immediately following the Closing, the shares
of Common Stock issuable upon conversion of the Series A-1 Preferred Stock, together with the
shares of Common Stock held by MHR as disclosed in MHR’s most recent Schedule 13D filing under the
Exchange Act, will represent 39.999% of the issued and outstanding shares of Common Stock, subject
to the exercise of the options set forth on Section 3.01(d) of the Corporation Schedule of
Exceptions.



(f) Noncontravention.




(i) Assuming the Class B Non-Voting Stock Authorization and the accuracy of each
Investor’s representations in Section 3.02(b), neither the execution and delivery of this
Agreement or the Registration Rights Agreement, nor the consummation of the transactions
contemplated hereby and thereby (which shall include the issuance of (A) PIK Dividends on
any PIK Dividend Issuance Date, (B) the Common Stock, Class B Non-Voting Stock, Series A
Preferred Stock and Series B-2 Preferred Stock when issued in accordance with the terms of
the Series A Certificate of Designation, Series B Certificate of Designation or Amended and
Restated Certificate of Incorporation, as the case may be, and (C) Series A-1 Preferred
Stock and Common Stock upon the conversion of Series B Preferred Stock and Class B
Non-Voting Stock on any Threshold Conversion Issuance Date), will (A) violate any Applicable
Law to which the Corporation or any of its Subsidiaries is subject or any provision of the
Certificate of Incorporation or the Bylaws or the certificate of incorporation or bylaws or
similar constituent documents of the Corporation’s Subsidiaries or (B) conflict with, result
in a breach or violation of, constitute a default (with or without notice or the passage of
time) under, result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or give rise to a right to put or to compel a tender offer for
outstanding securities of the Corporation or any of its Subsidiaries or require any notice,
consent, waiver or approval under, any agreement, contract, lease, license, loan, debt
instrument, note, bond, indenture, mortgage, deed of trust, joint venture agreement,
approval of a Governmental Authority (other than any notification and waiting period that
may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976) or other
arrangement to which the Corporation or any of its Subsidiaries is a party or by which the
Corporation or any of its Subsidiaries is bound or to which any of the Corporation’s or its
Subsidiaries’ assets is subject (or result in the imposition of any mortgage, pledge, Lien,
encumbrance, charge or other security interest upon any of such assets or properties),
except in either case, where such violation, conflict or default would not reasonably be
expected to have a Material Adverse Effect.




(ii) Assuming the Class B Non-Voting Stock Authorization and the accuracy of each
Investor’s representations in Section 3.02(b), the execution and delivery of this Agreement
and the Registration Rights Agreement, and the consummation of the transactions contemplated
hereby and thereby (which shall include the issuance of (A) PIK Dividends on any PIK
Dividend Issuance Date, (B) the Common Stock, Class B Non-Voting Stock, Series A Preferred
Stock and Series B-2 Preferred Stock when issued in accordance with the terms of the Series
A Certificate of Designation, Series B Certificate of Designation or Amended and Restated
Certificate of Incorporation, as the case may be, and (C) Series A-1 Preferred Stock and
Common Stock upon the conversion of Series B Preferred Stock and Class B Non-Voting Stock on
any Threshold Conversion Issuance Date), will be in compliance with all Applicable Law
(other than any notification and waiting period that may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976).




(iii) Except for filings which may be required under state securities laws and the
filings with the NASD as provided in Sections 4.01(g) and 5.13 below, for which filings the
Corporation shall be responsible, and assuming the Class B Non-Voting Stock Authorization
and the accuracy of each Investor’s representation in Section 3.02(b), neither the
Corporation nor any of its Subsidiaries is required to give any notice to, make any filing
or registration with, or obtain any authorization, consent or approval of any Governmental
Authority in connection with the execution, delivery and performance by the Corporation of
this Agreement, the Registration Rights Agreement and the transactions contemplated hereby
and thereby, other than any notification and waiting period that may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.




(iv) Except for the approval of the Class B Proposal, (A) no consent or approval of the
Corporation’s stockholders is required by Applicable Law, the Certificate of Incorporation
or the Bylaws for the execution, delivery and performance by the Corporation of this
Agreement and the Registration Rights Agreement, and the consummation of the transactions
contemplated hereby and thereby; and (B) after due inquiry, the Corporation has no reason to
believe, as of the date hereof, that any such stockholder approval is required by the rules
and regulations of the NASD for the execution, delivery and performance by the Corporation
of this Agreement and the Registration Rights Agreement, and the consummation of the
transactions contemplated hereby and thereby (which shall include the issuance of (A) PIK
Dividends on any PIK Dividend Issuance Date, (B) the Common Stock, Class B Non-Voting Stock,
Series A Preferred Stock and Series B-2 Preferred Stock when issued in accordance with the
terms of the Series A Certificate of Designation, Series B Certificate of Designation or
Amended and Restated Certificate of Incorporation, as the case may be, and (C) Series A-1
Preferred Stock and Common Stock upon the conversion of Series B Preferred Stock and Class B
Non-Voting Stock on any Threshold Conversion Issuance Date).




(v) The execution, delivery and performance of this Agreement by the Corporation and
the consummation of transactions contemplated hereby will not constitute a “Change of
Control,” or other term which has a similar meaning, as such or similar term is defined in
any contract, agreement, indenture, mortgage, note, lease or other instrument to which the
Corporation or any of its Subsidiaries is a party or by which the Corporation or any such
Subsidiary is bound or to which the properties of the Corporation or any such Subsidiary is
subject, except as would not reasonably be expected to have a Material Adverse Effect.



(g) SEC Reports; Financial Statements.




(i) The Corporation has timely filed with the SEC all SEC Reports required to be filed
by the Corporation under the Exchange Act since November 21, 2005. All such SEC Reports
since November 21, 2005 (A) comply in all material respects, with the applicable
requirements of the Exchange Act and the Securities Act, and (B) contain all statements
required to be stated therein in accordance with the Exchange Act and do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.




(ii) As of their respective dates, the financial statements of the Corporation included
in the SEC Reports since November 21, 2005 (A) complied in all material respects with
applicable accounting requirements and the published rules and regulations of the SEC with
respect thereto, (B) have been prepared in accordance with GAAP during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim financial statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and (C) fairly present in all
material respects the financial position of the Corporation and its Subsidiaries as of the
dates thereof and the results of its operations and cash flows of the Corporation and its
Subsidiaries (on a consolidated basis) for the periods then ended (subject, in the case of
unaudited interim financial statements, to normal year-end audit adjustments).




(iii) Except as disclosed in the SEC Reports since November 21, 2005, there are no
liabilities or obligations of any nature (whether accrued, absolute, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) required by GAAP to
be set forth on the financial statements of the Corporation included in any SEC Reports
since November 21, 2005. Since August 7, 2006, the Corporation has not incurred any
liabilities or obligations of any nature (whether accrued, absolute, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) other than in the
ordinary course of business or suffered any loss or loss contingency that could be
reasonably likely to materially affect the Investors’ investment decision to consummate the
transactions contemplated hereby, except such as would not be reasonably expected to have a
Material Adverse Effect.



(h) Absence of Certain Changes. Except as disclosed in the SEC Reports or otherwise
disclosed in public announcements or press releases since November 21, 2005, the Corporation and
its Subsidiaries have conducted their consolidated business in the ordinary and usual course and
there has been no change to the business, properties, assets, operations, results of operations or
condition (financial or otherwise) of the Corporation or its Subsidiaries (taken as a whole),
except for such changes which would not be reasonably expected to have a Material Adverse Effect.



(i) No General Solicitation. Neither the Corporation, nor any of its Affiliates, nor
any Person acting on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D promulgated under the Securities Act) in
connection with the offer or sale of the Purchased Shares.



(j) Disclosure. The documents set forth on Section 3.01(j) of the Corporation
Schedule of Exceptions, which have been provided to the Investors by the Corporation, are based on
assumptions and projections that the Corporation has determined in good faith to be reasonable.



(k) Information Provided for Fairness Opinion. The information (other than any
projections) provided by the Corporation to North Point, in connection with the delivery of the
Fairness Opinion, taken as a whole, was true, complete and accurate in all material respects as of
the dates such information was furnished to North Point and is true, complete and accurate in all
material respects, taken as a whole, as of the date hereof. As to any projections provided by the
Corporation to North Point, such projections were based on assumptions that the Corporation has
determined in good faith to be reasonable.



(l) No Litigation. Except as set forth in Section 3.01(l) of the Corporation Schedule
of Exceptions, there is no action, suit, proceeding or investigation pending or, to the
Corporation’s Knowledge, threatened, against the Corporation or any Subsidiary or, to the
Corporation’s Knowledge, against any director, officer or employee of the Corporation or any
Subsidiary. Except as disclosed in SEC Reports, neither the Corporation nor any Subsidiary is a
party to, or subject to the provisions of, any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. Except as disclosed in SEC Reports, there is no
action, suit, proceeding or investigation by the Corporation or any Subsidiary currently pending or
that the Corporation or any Subsidiary intends to initiate, in each case that would have,
individually or in the aggregate, a Material Adverse Effect.



(m) No Brokers. Except for North Point, Morgan Stanley & Co. Incorporated and
Deutsche Bank Securities, Inc., no agent, broker, investment banker, Person or firm is or shall be
entitled to any broker’s or finder’s fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement or the Collateral
Documents based in any way on any arrangements, agreements or understandings made by or on behalf
of the Corporation or an Affiliate thereof, and the Corporation hereby agrees to indemnify the
Investors and agrees to hold harmless the Investors against and in respect of any claims for
brokerage and other commissions relating to such transactions based in any way on any arrangements,
agreements or understandings made by or on behalf of the Corporation or an Affiliate of the
Corporation.



(n) Related Transactions. Except (i) as disclosed in the SEC Reports, (ii) for the
transactions contemplated hereby and (iii) as set forth in Section 3.01(n) of the Corporation
Schedule of Exceptions, there is no transaction, agreement or arrangement between the Corporation
or any of its Subsidiaries on the one hand, and any Person on the other hand, that would constitute
a “Related Transaction” within the meaning of Item 404 of Regulation S-K under the Exchange Act.



(o) Receipt of Fairness Opinion. The Special Committee has received the Fairness
Opinion and true and correct copies thereof have been delivered to the Board and the Investors.



Section 3.02. Representations and Warranties of the Investors



Each Investor hereby, severally and not jointly, represents and warrants to the Corporation as
of the date hereof as follows:



(a) Authorization. Each Investor has the requisite power and authority to execute and
deliver this Agreement and the Registration Rights Agreement, and to perform its obligations and
consummate all of the transactions contemplated hereunder and thereunder. All corporate action on
the part of each Investor necessary for the authorization, execution and delivery of this Agreement
and the Registration Rights Agreement, and each other document or agreement to be executed by each
Investor in connection with the execution, delivery and performance of this Agreement and the
Registration Rights Agreement, the performance of the obligations of each Investor at the Closing
and the consummation of all the transactions contemplated hereby and thereby, prior to, at or after
the Closing, and the issuance and delivery of the shares of Series A-1 Preferred Stock and Series
B-1 Preferred Stock has been taken, and this Agreement, the Registration Rights Agreement and each
other document or agreement to be executed by each Investor in connection with the execution,
delivery and performance of this Agreement and the Registration Rights Agreement has been duly
executed and delivered by such Investor and constitutes a valid and legally binding obligation of
such Investor, enforceable in accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies. No Investor is required to give any notice to,
make any filing or registration with, or obtain any authorization, consent or approval of any
Governmental Authority in connection with the execution, delivery and performance by such Investor
of this Agreement, the Registration Rights Agreement and the transactions contemplated hereby and
thereby, other than any notification and waiting period that may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.



(b) Securities Representation. Each Investor acknowledges that: (i) it is an
accredited investor (as defined in Rule 501 under the Securities Act); (ii) it is acquiring the
Purchased Shares in the ordinary course of business and for its own account for investment only and
with no present intention of distributing any such Purchased Shares; (iii) it has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and
risks of investing in the Corporation as contemplated hereby or, alternatively, that it has engaged
the services of a representative who has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the proposed investment and who has
reviewed the proposed investment on its behalf; (iv) the Purchased Shares being delivered by the
Corporation to the Investors have not been registered under the Securities Act or under the
securities laws of any state in reliance upon Federal and state exemptions for offshore
transactions or transactions not involving a public offering and are not being acquired with a view
to the distribution thereof except pursuant to a registration statement in compliance with Federal
and state securities laws or an exemption therefrom; (v) the Purchased Shares must be held by the
Investor indefinitely unless subsequently so registered or if an exemption from such registration
is available; and (vi) it has received information concerning the Corporation and has had the
opportunity to obtain additional information as desired in order to evaluate the merits and risks
inherent in holding the Purchased Shares.



(c) No Brokers. Except for the advisory fees of Deutsche Bank Securities, Inc.
payable pursuant to Section 6.05, no agent, broker, investment banker, Person or firm is or shall
be entitled to any broker’s or finder’s fee or any other commission or similar fee directly or
indirectly in connection with the transactions contemplated by this Agreement or the Collateral
Documents based in any way on any arrangements, agreements or understandings made by or on behalf
of the Investors or an Affiliate thereof, and the Investors hereby agree to indemnify the
Corporation and agree to hold harmless the Corporation against and in respect of any claims for
brokerage and other commissions relating to such transactions based in any way on any arrangements,
agreements or understandings made by or on behalf of the Investors or an Affiliate of the
Investors.



ARTICLE 4




CONDITIONS TO OBLIGATIONS




Section 4.01. Conditions to Each Party’s Obligation.



The respective obligations of the Corporation and the Investors to perform, fulfill or carry
out its agreements, undertakings and obligations herein made or expressed to be performed,
fulfilled or carried out on the Closing Date is and shall be subject to fulfillment of or
compliance with, on or prior to the Closing Date, the following conditions precedent, any of which
may be waived, in whole or in part, by the party being benefited thereby to the extent permitted by
Applicable Law:



(a) Contemporaneous Transactions. Prior to or contemporaneously with the Closing, the
Corporation shall have sold to each Investor, and each Investor shall have purchased, the Series
A-1 Preferred Stock and Series B-1 Preferred Stock to be purchased by such Investor under this
Agreement.



(b) Registration Rights Agreement. The Registration Rights Agreement shall have been
executed by the parties thereto.



(c) Fairness Opinion. North Point shall have delivered the Fairness Opinion to the
Special Committee.



(d) Recommendation of Special Committee and Approval of the Board. The Special
Committee shall have delivered its Recommendation to the Board, together with a true and correct
copy of the Fairness Opinion, and the Board shall have approved this Agreement, the Registration
Rights Agreement, the Collateral Documents and the transactions contemplated hereby and thereby.



(e) No Injunction. Consummation of the transactions contemplated hereby, by the
Registration Rights Agreement or the Collateral Documents shall not have been restrained, enjoined,
made illegal or otherwise prohibited by any Applicable Law, including any order, injunction, decree
or judgment of any court or other Governmental Authority. No court or Governmental Authority shall
have determined by any Applicable Law to make illegal the consummation of the transactions
contemplated hereby.



(f) HSR Act Notification. Any applicable approvals or waiting periods required under
the HSR Act in respect of this Agreement and the transactions contemplated hereby and any
extensions thereof shall have expired or early termination thereof shall have been granted.



(g) NASD Supplemental Listing Notification. The Corporation shall have filed a
supplemental listing notification with the NASD pursuant to NASD Rule 4310(c)(17)(D) for the
listing of the shares of Common Stock issuable upon the conversion of the Series A-1 Preferred
Stock, Series B-1 Preferred Stock and Class B-1 Non-Voting Stock (the “Supplemental Listing
Application”), and the NASD shall have approved the listing of such shares of Common Stock.



(h) NASD Confirmation. The NASD shall have confirmed, in response to a written
request by the Corporation, the form of which has been previously provided to the Investors (the
“NASD Request”), that no approval of the Corporation’s shareholders shall be required for
the consummation of the transactions contemplated hereby (including the issuance of the Preferred
Stock) and that NASDAQ will not subject the Corporation to de-listing if Loral issues the Preferred
Stock without shareholder approval on the terms proposed in this Agreement, or, if such shareholder
approval is required by the NASD, such shareholder approval shall have been obtained on or before
June 30, 2007.



(i) Securities Exemptions. The offer and sale of the Purchased Shares to the
Investors pursuant to this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all applicable state
securities laws.



Section 4.02. Conditions to the Obligations of the Corporation. The obligations of
the Corporation to perform, fulfill or carry out its agreements, undertakings and obligations
herein made or expressed to be performed, fulfilled or carried out on the Closing Date is and shall
be subject to fulfillment of or compliance with, on or prior to the Closing Date, the following
conditions precedent, any of which may be waived in whole or in part by the Corporation to the
extent permitted by Applicable Law:



(a) Representations and Warranties; Performance. The representations and warranties of
the Investors set forth in Section 3.02 of the Agreement (a) shall be true and correct in all
respects (in the case of any representation or warranty that is qualified as to “materiality” or
“Material Adverse Effect”) or in all material respects (in the case of any representation or
warranty that is not so qualified), at and as of the date hereof and (b) shall be repeated and
shall be true and correct in all respects (in the case of any representation or warranty that is
qualified as to “materiality” or “Material Adverse Effect”) or in all material respects (in the
case of any representation or warranty that is not so qualified) at and as of the Closing Date as
if made on such date.



(b) Agreements and Covenants. The Investors shall have duly and, if required to be
performed within a specified time period, timely performed and complied in all material respects
with all agreements, covenants and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date; and



(c) Certificate. The Investors shall have delivered to the Corporation a certificate,
dated the Closing Date and signed by a duly authorized officer of each Investor, certifying as to
the matters set forth in Sections 4.02(a) and (b).



Section 4.03. Conditions to the Obligation of the Investors.



The obligation of the Investors to perform, fulfill or carry out their agreements,
undertakings and obligations herein made or expressed to be performed, fulfilled or carried out on
the Closing Date is and shall be subject to fulfillment of or compliance with, on or prior to the
Closing Date, the following conditions precedent, any of which may be waived by the Investors, in
their sole discretion, in whole or in part:



(a) Representations and Warranties; Performance. The representations and warranties
of the Corporation set forth in Section 3.01 of the Agreement (a) shall be true and correct in all
respects (in the case of any representation or warranty that is qualified as to “materiality” or
“Material Adverse Effect”) or in all material respects (in the case of any representation or
warranty that is not so qualified), at and as of the date hereof and (b) shall be repeated and
shall be true and correct in all respects (in the case of any representation or warranty that is
qualified as to “materiality” or “Material Adverse Effect”) or in all material respects (in the
case of any representation or warranty that is not so qualified) at and as of the Closing Date
(except for representations and warranties expressly made as of a specified date, which need be
true only as of the specified date) as if made on such date.



(b) Agreements and Covenants. The Corporation shall have duly and, if required to be
performed within a specified time period, timely performed and complied in all material respects
with all agreements, covenants and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.



(c) Certificate. The Corporation shall have delivered to the Investors a certificate,
dated the Closing Date and signed by its duly authorized executive officer of the Corporation,
certifying as to the matters set forth in Sections 4.03(a) and (b).



(d) No Material Adverse Effect. No event shall have occurred and no condition shall
have arisen or been created since the date of this Agreement which has had, or would be reasonably
expected to have, and there shall not otherwise have been, a Material Adverse Effect.



(e) Placement Fee. The Corporation shall have paid to, or to such designee as
directed by, MHR Fund Management LLC, by a wire transfer of immediately available funds to the
account specified therefor by MHR Fund Management LLC, a placement fee equal to $6,750,000.



(f) Fees and Expenses. The Corporation shall have paid all fees and expenses set
forth in Sections 6.05(a)(i) and 6.05(a)(ii) in accordance with the terms thereof and at the times
provided for in Sections 6.05(b)(i) and 6.05(b)(ii).



(g) Certificates of Designation. The Series A Certificate of Designation and Series B
Certificate of Designation shall have been duly filed with the Secretary of State of the State of
Delaware and a copy of the Certificate of Incorporation of the Corporation (including the Series A
Certificate of Designation and Series B Certificate of Designation) certified by the Secretary of
State of the State of Delaware shall have been delivered to the Investors.



(h) Opinion of Counsel to the Corporation. Willkie shall have delivered an opinion,
dated the Closing Date, and addressed to the Investors, substantially identical in form and
substance to that attached hereto as Exhibit G.



(i) Stock Certificates. The Corporation shall have delivered to the Investors duly
executed and issued stock certificates representing the Purchased Shares as required hereunder.



(j) Proceedings. All corporate and other proceedings to be taken by the Corporation
in connection with this Agreement and the Registration Rights Agreement and with respect to the
transactions contemplated hereby and thereby to be completed at or prior to the Closing and
documents incident thereto shall have been completed in form and substance reasonably satisfactory
to the Investors, and the Investors shall have received all such counterpart originals or certified
or other copies of this Agreement and the Registration Rights Agreement.



(k) Amendment of Bylaws. The Bylaws shall have been amended in form and substance
identical to the Form of Amendment to Amended and Restated By-Laws attached hereto as Exhibit H.



ARTICLE 5




COVENANTS OF THE CORPORATION AND THE INVESTORS




Section 5.01. Redemption of SkyNet 14% Notes. If (i) the Corporation enters into a
definitive binding agreement for the acquisition (through merger, consolidation, exchange, asset
purchase, recapitalization, business combination or other similar transaction) by the Corporation
of a business or business entity, or a substantial interest therein, for aggregate consideration
(including debt assumed, refunded or remaining outstanding) exceeding $600 million (an
“Acquisition”), and (ii) the Board of Directors of SkyNet determines in connection with an
Acquisition, that it will exercise SkyNet’s right of optional redemption of the SkyNet 14% Senior
Secured Cash/PIK Notes due 2015 (the “Notes”) after the first anniversary of the issuance
thereof, pursuant to Section 5 of the Notes, then the Investors, as holders of the Notes (directly
or through any of their Affiliates), will, at the request of SkyNet, not object to such optional
redemption of the Notes, subject to the consummation of such Acquisition.



Section 5.02. Authorization of Class B Non-Voting Stock.



(a) Unless the Class B Proposal and Non-Voting Securities Proposal have each been approved by
the Corporation’s stockholders prior to such date, from and after June 30, 2007, MHR shall be
entitled to request by written notice to the Secretary of the Corporation that the Corporation
convene, and following such notice the Corporation shall take all actions necessary to convene and
the Chief Executive Officer of the Corporation shall call, a special meeting of stockholders for
the purpose of seeking approvals of proposals to amend the Certificate of Incorporation to (i)
remove Section (c) of Article IV thereof (the “Non-Voting Securities Proposal”) and (ii)
authorize the Class B Non-Voting Stock as a non-voting class of the Corporation’s securities (the
“Class B Proposal”). Prior to filing or mailing of any proxy statement (together with any
amendments thereof and any supplements thereto, the “Proxy Statement”) in connection with
the Class B Proposal, upon MHR’s request, the Corporation shall provide MHR a reasonable
opportunity to review and comment on such Proxy Statement with respect to any information about the
Class B Proposal included therein and shall include in such Proxy Statement all such comments
reasonably proposed by MHR pursuant to the foregoing. If:




(i) the Non-Voting Securities Proposal and the Class B Proposal are approved by the
stockholders of the Corporation, promptly following such approvals, the Corporation shall
(A) file an amendment to the Certificate of Incorporation with the Secretary of State of the
State of Delaware (x) removing Section (c) of Article IV thereof, and (y) authorizing the
creation of the Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock as non-voting
classes of the Corporation’s securities, (B) reserve all such shares of Class B-1 Non-Voting
Stock and Class B-2 Non-Voting Stock for issuance upon the conversion of all outstanding
 shares of Series A Preferred Stock and Series B Preferred Stock, pursuant to the terms of
the Series A Certificate of Designation and Series B Certificate of Designation,
respectively, and the exchange of the Class B-2 Non-Voting Stock for Class B-1 Non-Voting
Stock pursuant to the terms of the Certificate of Incorporation;




(ii) the Non-Voting Securities Proposal is not approved by the stockholders of the
Corporation and the Class B Proposal is approved by the stockholders of the Corporation, the
Corporation shall (A) file an amendment to the Certificate of Incorporation with the
Secretary of State of the State of Delaware authorizing the creation of the Class B-1
Non-Voting Stock and Class B-2 NonVoting Stock as non-voting classes of the Corporation’s
securities notwithstanding Section (c) of Article IV of the Certificate of Incorporation,
(B) reserve all such shares of Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock for
issuance upon the conversion of all outstanding shares of Series A Preferred Stock and
Series B Preferred Stock, pursuant to the terms of the Series A Certificate of Designation
and Series B Certificate of Designation, respectively, and the exchange of the Class B-2
Non-Voting Stock for Class B-1 Non-Voting Stock pursuant to the terms of the Certificate of
Incorporation; or




(iii) the Non-Voting Securities Proposal is approved by the stockholders of the
Corporation and the Class B Proposal is not approved by the stockholders of the Corporation,
the Corporation shall file an amendment to the Certificate of Incorporation with the
Secretary of State of the State of Delaware removing Section (c) of Article IV thereof.



(b) If MHR does not deliver a written request to hold a special meeting of stockholders as
provided for in subsection (a) above, then not less than seventy-five (75) days prior to the next
annual meeting of the stockholders of the Corporation (or forty-five (45) days if such meeting is
held in 2006), or promptly following the Board’s determination to convene or the Corporation’s
receipt of notice of a special meeting of stockholders (but excluding any special meeting of
stockholders held in 2006), the Corporation shall provide MHR notice of such meeting and include
among the matters to be voted upon at such meeting the Class B Proposal and the Non-Voting
Securities Proposal.



(c) Until the date that the Class B Proposal is approved by the stockholders of the
Corporation, the Corporation shall include among the matters to be voted upon at any annual meeting
the Class B Proposal.



Section 5.03. Bring-Down Certificate. Immediately prior to each date that (i) shares
of Series A-1 Preferred Stock and Series B-1 Preferred Stock are issued as PIK Dividends (the
“PIK Dividend Issuance Date”), (ii) shares of Common Stock, Class B Non-Voting Stock or
Series A-1 Preferred Stock are issued upon conversion of the Series A Preferred Stock or Series B
Preferred Stock and Class B Non-Voting Stock (the “Conversion Issuance Date”), (iii) shares
of Series A-2 Preferred Stock or Series B-2 Preferred Stock are issued in accordance with the terms
of the Series A Certificate of Designation or Series B Certificate of Designation, as the case may
be (the “Series A-2 Preferred Issuance Date” or “Series B-2 Preferred Issuance
Date”, as the case may be), or (iii) shares of Series A-1 Preferred Stock or Common Stock are
issued pursuant to Section 5.06 on any Threshold Conversion Issuance Date, the Corporation shall
(A) execute and deliver to the Investor(s) receiving such PIK Dividends, Series A-2 Preferred
Stock, Series B-2 Preferred Stock or converting such share(s) of Preferred Stock, Class B
Non-Voting Stock or Common Stock, as applicable, a certificate (the “Bring-Down
Certificate”), dated as of the PIK Dividend Issuance Date, the Series A-2 Preferred Issuance
Date, theSeries B-2 Preferred Issuance Date, the Conversion Issuance Date or the Threshold
Conversion Issuance Date, as the case may be, and substantially in the form attached hereto as
Exhibit I, from the Chief Executive Officer or Chief Financial Officer of the Corporation,
and (B) in the case of any Conversion Issuance Date involving the conversion of 3% or more of the
number of outstanding shares of Series A Preferred Stock, or in the case of any Series A-2
Preferred Issuance Date, Series B-2 Preferred Issuance Date, Threshold Conversion Issuance Date,
cause to be delivered to such Investor(s) an opinion of outside counsel to the Corporation, dated
as of the Conversion Issuance Date, Series A-2 Preferred Issuance Date, Series B-2 Preferred
Issuance Date or Threshold Conversion Issuance Date, as the case may be, and substantially in the
form attached hereto as Exhibit J.



Section 5.04. Trading. The Preferred Stock issued pursuant hereto shall not be listed
on any national securities exchange or included in any automated quotation system on the Closing
Date. Upon the written request of the holders of a majority of the then-outstanding shares of
Preferred Stock, the Corporation shall promptly apply for and use best efforts to obtain the
listing of the Preferred Stock on the national securities exchange or automated quotation system as
so requested by the holders of the Preferred Stock and register the Preferred Stock and the shares
of Common Stock issuable pursuant thereto under the Exchange Act.



Section 5.05. Conversion Upon Certain Transfers.



(a) Upon the transfer of any share(s) of Series B-1 Preferred Stock or Class B-1 Non-Voting
Stock to any Person who is not and does not become an Affiliate or Associate of, or a member of a
“group” (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with, MHR,
and is a Qualified Transferee, then the Series B-1 Preferred Stock (including any Series B PIK
Dividends paid or accrued in respect thereof), or Class B-1 Non-Voting Stock held by such
transferee shall be automatically converted into shares of Series A-1 Preferred Stock (in the case
of Series B-1 Preferred Stock) or Common Stock (in the case of Class B-1 Non-Voting Stock), on a
one for one basis.



(b) In the event that (i) solely as a result of such transfer of shares of Series B-1
Preferred Stock or Class B-1 Non-Voting Stock, such transferee would become the Beneficial Owner of
more than 35.9% of the voting power of Corporation, or (ii) such transferee is the Beneficial Owner
of more than 35.9% but less than 50% of the voting power of the Corporation immediately prior to
such transfer of shares of Series B-1 Preferred Stock or Class B-1 Non-Voting Stock (such
transferee in each of (i) and (ii), a “Disqualified Transferee”) then (A) in the case of
clause (i) above, such number of shares of Series B-1 Preferred Stock or Class B-1 Non-Voting Stock
transferred shall not be converted into shares of Series A-1 Preferred Stock (in the case of Series
B-1 Preferred Stock) or Common Stock (in the case of Class B-1 Non-Voting Stock), so that the
transferee does not become the Beneficial Owner of more than 35.9% of the voting power of the
Corporation solely as a result of such transfer, and (B) in the case of clause (ii) above, all the
shares of Series B-1 Preferred Stock or Class B-1 Non-Voting Stock so transferred shall not be
converted into shares of Series A-1 Preferred Stock (in the case of Series B-1 Preferred Stock) or
Common Stock (in the case of Class B-1 Non-Voting Stock). The restrictions on the conversion of
shares of Series B-1 Preferred Stock or Class B-1 Non-Voting Stock for shares of Series A-1
Preferred Stock (in the case of Series B-1 Preferred Stock) or Common Stock (in the case of Class
B-1 Non-Voting Stock) set forth in this Section 5.05, (i) shall be of no further and effect as of
and from the Majority Ownership Date, and (ii) may be waived upon the Corporation’s prior written
consent.



Section 5.06. Threshold Conversion.



(a) If at any time after the Closing Date, the sum of the number of shares of Common Stock
issuable upon conversion of the Series A-1 Preferred Stock and the number of shares of Common Stock
held by MHR is below the Threshold, then a number of shares of the (i) Series B-1 Preferred Stock
(including any PIK Dividends paid or accrued thereon), and (ii) Series B-2 Preferred Stock, if the
Exchange Proposal Approval has occurred by such date, then held by MHR shall be converted in
accordance with the procedures set forth in subsection (b) below into such number of shares of
Series A-1 Preferred Stock (on a one for one basis) or Common Stock (at the then-applicable
conversion rate) (such choice to be at the option and sole discretion of MHR) such that the
aggregate number of shares of Common Stock issuable upon conversion of the shares of Series A-1
Preferred Stock and Common Stock held by MHR equals (but does not exceed), as a percentage of the
aggregate voting power of all outstanding securities issued by the Corporation at any time and from
time to time (assuming the conversion of all outstanding shares of Series A-1 Preferred Stock held
by MHR), the Threshold. In the event that (i) the shares of Series B Preferred Stock that are
converted for Series A-1 Preferred Stock or Common Stock, as the case may be, pursuant to the
immediately preceding sentence are not sufficient to increase the number of shares of Series A-1
Preferred Stock and Common Stock held by MHR so as to equal (but not exceed) the Threshold, or (ii)
MHR does not hold any shares of Series B Preferred Stock to convert for Series A-1 Preferred Stock
or Common Stock, as the case may be, pursuant to the immediately preceding sentence, then a number
of shares of Class B-1 Non-Voting Stock held by MHR (if any) shall be converted in accordance with
the procedures set forth in the Amended and Restated Certificate of Incorporation into Common Stock
(on a one for one basis) such that the aggregate number of shares of Series A-1 Preferred Stock and
Common Stock held by MHR (including the shares of Series B Preferred Stock that were converted for
Series A-1 Preferred Stock or Common Stock, as the case may be, pursuant to the immediately
preceding sentence) equals (but does not exceed) the Threshold.



(b) The Corporation shall provide a written notice in substantially the form attached hereto
as Exhibit K (the “Threshold Conversion Notice”) not less than ten (10) days following the
end of each calendar quarter and within five (5) Business Days after any issuance of securities
exceeding two percent (2%) of the voting power of the Corporation. Within five (5) Business Days
after receipt of the Threshold Conversion Notice, MHR shall either confirm the calculations set
forth therein with respect to the number of shares of Series B Preferred Stock and/or Class B-1
Non-Voting Stock to be converted pursuant to clause (a) above, in a written notice substantially in
the form attached hereto as Exhibit L (a “Notice of Confirmation”) or dispute the
calculations set forth therein with respect to the number of shares of Series B Preferred Stock
and/or Class B-1 Non-Voting Stock to be converted pursuant to clause (a) above, in a written notice
substantially in the form attached hereto as Exhibit M (a “Notice of Disagreement”), and in
either case specify whether any or all of such shares of Series B Preferred Stock, if any, are to
be converted into shares of Series A-1 Preferred Stock or Common Stock. Within three (3) Business
Days (or fifteen (15) calendar days if the physical delivery of any certificate is involved) after
the Corporation’s receipt of (i) a Notice of Confirmation, the Corporation shall issue such number
of shares of Series A-1 Preferred Stock and/or Common Stock as set forth in the Threshold
Conversion Notice, and (ii) a Notice of Disagreement, the Corporation shall issue such number of
shares of Series A-1 Preferred Stock and/or Common Stock set forth in the Threshold Conversion
Notice and the parties shall use their reasonable best efforts to resolve the disagreements set
forth in the Notice of Disagreement and the Corporation shall, promptly upon such resolution, issue
such number of additional shares of Series A-1 Preferred Stock and/or Common Stock as necessary.
Each such date of issuance of shares of Series A-1 Preferred Stock and/or Common Stock pursuant to
the terms of this Section 5.06 shall be referred to herein as a “Threshold Conversion Issuance
Date”.



Section 5.07. Contributions to SkyNet. For as long as at least thirty-three (33%)
percent of the shares of Preferred Stock originally issued on the Closing Date are held by the
Investors, neither the Corporation nor any of its Subsidiaries, whether now or hereafter existing
(other than SkyNet and any of its Subsidiaries (for purposes of this paragraph, the
“Transferor”)), shall, and the Corporation and any of its Subsidiaries shall not take any
action that would cause any Joint Venture in which the Corporation or any of its Subsidiaries
(other than SkyNet and any of its Subsidiaries) has an equity interest, whether now or hereafter
existing, to, Transfer any assets or property (whether cash or otherwise) to SkyNet, any of its
Subsidiaries or any Joint Venture in which SkyNet or any of its Subsidiaries has an equity
interest, whether now or hereafter existing (collectively, for purposes of this paragraph, a
“Transferee”) unless:



(a) such Transfer is (i) made pursuant to agreements in existence on the date hereof, copies
of which are listed on Section 5.07(a) of the Corporation Schedule of Exceptions and which were
previously provided to the Investors if the consideration paid by the Transferor pursuant to such
agreement exceeded one million dollars ($1,000,000) in the aggregate (other than satellite
construction contracts made in the ordinary course of business), (ii) made pursuant to or in
connection with any satellite construction contracts made in the ordinary course of business, (iii)
made in the ordinary course of the business relationship between the Transferor and the Transferee
consistent with their respective past practice, (iv) for consideration or services received and on
terms that, in the aggregate, are, no less favorable to the Transferor than those that could be
obtained at the time in arms’ length dealings with a Person who is not an Affiliate, provided that
such determination shall be made (A) if such consideration or services received exceed $500,000, in
good faith by the Board, and (B) if such consideration or services received exceed $5,000,000, in
good faith by the Board upon consultation and after taking the advice of an independent third party
expert, if requested by the Investors, which request shall be made within ten (10) Business Days
after notice to the Investors, which shall be given not less than fifteen (15) Business Days prior
to the date of such determination, (v) made pursuant to tax sharing arrangements approved by the
Investors at or prior to the time such tax sharing arrangements are determined, such approval not
to be unreasonably withheld, or (vi) of the four (4) SatMex 6 transponders pursuant to the terms
set forth on Section 5.07(a) of the Corporation Schedule of Exceptions; or



(b) as conditions precedent to the consummation of the transactions contemplated by such
Transfer:




(i) the Transferee represents and covenants to the Transferor that the Secured Loan
Agreement (as defined below) and the terms of such acquisition shall be approved by the
board of directors of SkyNet;




(ii) the Transferor (as lender) and Transferee (as borrower) enter into an intergroup
secured loan agreement (the “Secured Loan Agreement”) pursuant to which, except in
the case of the Transfers disclosed in Section 5.07(b) of the Corporation Schedule of
Exceptions, which Security Interest shall be as described in such Schedule of Exceptions,
the Transferee grants to the Transferor for its sole benefit a first-priority security
interest (the “Security Interest”) in (i) all of the assets so Transferred, (ii) all
of the assets or property acquired using or in substitution for, in each case in whole or in
part, the assets so Transferred, or (iii) other assets of the Transferee having at least an
equivalent value to the assets Transferred by the Transferor, as determined in good faith by
the Board (each of (i), (ii) and (iii), individually or collectively, the
“Collateral”). For the avoidance of doubt, (a) in the event that the Collateral is
a satellite(s), the Collateral shall include any and all transponder leases thereon entered
into at any time and from time to time, and (b) the amount of the obligation secured shall
not exceed the principal of the applicable loan, plus interest, fees, expenses and
indemnities or any other amounts that may become due and payable in connection with such
loan; and




(iii) the Transferor receives the written legal opinion of outside counsel (which
counsel, if not the Corporation’s regular outside counsel, shall be reasonably acceptable to
the Investors), which shall be addressed to and be in form and substance reasonably and in
good faith satisfactory to the Transferor and the Board, regarding the Transfer and the
transactions contemplated thereby, which opinion shall include customary opinions and
exceptions (including that such opinion shall be limited to matters of New York and Delaware
corporate law and the law of the Uniform Commercial Code), including (i) the enforceability
of the Secured Loan Agreement, (ii) if the Collateral shall constitute property the
perfection of which is governed by the Uniform Commercial Code, the validity, enforceability
and perfection of the Transferor’s security interest in the Collateral, (iii) the receipt of
all required consents, the execution and delivery of all agreements, the making of any
required filings, the taking of any other actions and the absence of any conflicts that any
of the Transfer, Secured Loan Agreement or Security Interest have under the Transferee’s
charter or bylaws, or with any then-existing obligations of the Transferee or to which the
Transferee is subject that exceed $5 million as certified by the Transferee (with a copy to
the Transferor), provided, however, that any opinion with respect to any
obligations of the Transferee or to which the Transferee is subject that are between $5
million and $10 million or which are pursuant to satellite construction contracts may be
delivered by the Transferee’s in-house counsel rather than such outside counsel.



Section 5.08. Permitted Indebtedness. For as long as at least thirty-three (33%)
percent of the shares of Preferred Stock originally issued on the Closing Date are held by the
Investors:



(a) The Corporation shall not incur any Indebtedness (other than (i) any Guarantees by the
Corporation in favor of SS/L relating solely to SS/L’s performance under any satellite
manufacturing agreements, and (ii) from any wholly-owned Subsidiary so long as the Corporation does
not grant any security interest relating to or in connection with such Indebtedness) in excess of
One Million Dollars ($1,000,000) in the aggregate unless the Adjusted Tangible Asset Value as of
the date set forth in the most recent periodic report of the Corporation filed pursuant to the
Exchange Act exceeds the TAV Threshold. If the Adjusted Tangible Asset Value as of the date set
forth in the most recent periodic report of the Corporation filed pursuant to the Exchange Act
exceeds the TAV Threshold, the Corporation shall be permitted to incur Indebtedness from the day
after the filing of such periodic report until the day of the filing of the next periodic report
(the “Indebtedness Incurrence Period”), provided that the amount of such Indebtedness shall
not exceed, when aggregated with all other Indebtedness incurred during such Indebtedness
Incurrence Period, an amount equal to one-half of the difference between the Adjusted Tangible
Asset Value as of the date set forth in the most recent periodic report of the Corporation filed
pursuant to the Exchange Act and the TAV Threshold;



(b) Prior to any incurrence of any Indebtedness permitted by the paragraph immediately above,
the Corporation shall deliver to the Investors a certificate, signed by a duly authorized officer
of the Corporation, stating that the Corporation has determined, in good faith and in consultation
with and after taking the advice of the Chief Financial Officer of the Corporation, that (A) the
Adjusted Tangible Asset Value exceeds the TAV Threshold, and (B) the Indebtedness to be incurred
will not exceed one-half of the difference between the Adjusted Tangible Asset Value and the TAV
Threshold, in each case as of the date of the incurrence of such Indebtedness; and



(c) If any Subsidiary of the Corporation (other than SkyNet and its Subsidiaries) incurs
Indebtedness, such Subsidiary shall not Transfer (i) any proceeds or other consideration received
by such Subsidiary from the incurrence of such Indebtedness, and (ii) any substitution of such
proceeds or other consideration, including assets or property acquired using such proceeds or
consideration or proceeds or other consideration received from the disposition of such assets or
property, to SkyNet or any of its Subsidiaries, except in compliance with Section 5.07 hereof.



Section 5.09. Limitations on Disposition. Each of the Investors agrees not to make
any disposition of all or any portion of the Series A Preferred Stock, Series B Preferred Stock or
the shares of Common Stock or Class B Non-Voting Stock issued upon conversion thereof unless and
until:



(a) there is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such registration statement;



(b) such disposition is made pursuant to Rule 144 promulgated under the Securities Act;



(c) such Investor shall have delivered to the Corporation a written opinion by counsel which
is reasonably acceptable to the Corporation to the effect that the proposed transfer is exempt from
the registration and prospectus delivery requirements of the Securities Act;



(d) such Investor shall have transferred such shares of Series A Preferred Stock, Series B
Preferred Stock, Common Stock or Class B Non-Voting Stock, as the case may be, to an Affiliate of
such Investor and such Affiliate has delivered to the Corporation a written agreement making the
representations set forth in Section 3.02(b) and agreeing to be bound by the restrictions of
Sections 5.09, 5.10 and 5.12 hereof, in each case to the extent applicable, with respect to the
shares so transferred; or



(e) in the case of any transfer of shares of Series A-2 Preferred Stock or Series B-2
Preferred Stock, the transferee has agreed to the covenant not to vote such shares in accordance
with Section 5.15 hereof.



Section 5.10. Investor Transfer Restriction. In addition to the limitations on
disposition set forth in Section 5.09 hereof, the Investors shall not, in any single transaction or
series of related transactions, without the Corporation’s prior written consent, transfer
Beneficial Ownership of any shares, directly or indirectly, of Series A-1 Preferred Stock issued on
the Closing Date (or Common Stock issuable to the Investors upon the conversion thereof) to any
Person who is a Restricted Transferee (the “Transfer Restriction”). The Transfer
Restriction shall be of no further force and effect as of the Majority Ownership Date.



Section 5.11. MHR Board Representation. The Investors shall have the right, as of the
Closing Date, to designate a director (the “MHR Designee”) to the Board, and upon such
designation, the Board shall appoint such MHR Designee to the Class II directors, and recommend to
the stockholders of the Corporation to vote for the election of the MHR Designee at any meeting of
stockholders convened to elect directors to such class of directors. Simultaneously with the
appointment of the MHR Designee to the Board, the boards of directors of SS/L and SkyNet shall
appoint such MHR Designee to the boards of directors of SS/L and SkyNet, respectively.



Section 5.12. MHR Voting Covenant.



(a) For a period terminating upon the earlier of (i) the fifth (5th) anniversary of the
Closing Date, and (ii) the Majority Ownership Date, the Investors agree to vote all of the shares
of Series A-1 Preferred Stock issued on the Closing Date (or shares of Common Stock issued upon the
conversion thereof) then held by the Investors with respect to election or removal of directors in
accordance with the recommendation of the Board; provided, however, that
notwithstanding the foregoing, the Investors shall have a right to abstain from voting any
securities of the Corporation that it may hold at any time, including the shares of Series A-1
Preferred Stock issued on the Closing Date (or any shares of Common Stock issuable upon the
conversion thereof).



(b) At the next annual meeting of stockholders of the Corporation, MHR shall vote all shares
of Common Stock held as of the record date for such meeting in favor of a proposal to increase the
number of authorized shares of Common Stock to sixty (60) million shares.



Section 5.13. Further Actions.



(a) The Corporation and the Investors agree to use all reasonable best efforts to take all
actions and to do or cause to be done all other things required, necessary, proper or advisable to
consummate and make effective the transactions contemplated hereby as promptly as practicable. In
furtherance and not in limitation of the foregoing:




(i) the Corporation and the Investors agree to make, or cause to be made, all
appropriate filings pursuant to the HSR Act with respect to the transactions contemplated
hereby as promptly as practicable and to supply, or cause to be supplied, as promptly as
practicable any additional information and documentary material that may be requested
pursuant to the HSR Act and use their reasonable best efforts to take, or cause to be taken,
all other actions consistent with this Section 5.13(a)(i) necessary to cause the expiration
or termination of all applicable waiting periods under the HSR Act as soon as practicable;




(ii) the Corporation shall, as promptly as practicable, file or supply, or cause to be
filed or supplied, all applications, notifications and information required to be filed or
supplied by the Corporation pursuant to Applicable Law in connection with this Agreement and
the consummation of the transactions contemplated hereby, including (A) filings with the
SEC, (B) the Supplemental Listing Application with the NASD, and (C) (1) as promptly as
practicable, but in no event more than three (3) Business Days after the date hereof, submit
the NASD Request and make any required submissions to the NASD or submissions to the NASD
that the Corporation determines should be made with respect to this Agreement and the
transactions contemplated hereby as are advisable to consummate the transactions
contemplated hereby, (2) supply, as promptly as practicable, any additional information and
documentary material that may be requested by the NASD or which the Corporation determines
should be supplied, and (3) use its reasonable best efforts to timely obtain any required
consent, permit, authorization, approval, interpretive letter or waiver in connection with
such submissions or otherwise from the NASD, in each case in compliance with Section 5.13(c)
below. In furtherance and not in limitation of the foregoing (and without prejudice to the
obligations of the Corporation pursuant to Section 5.13(b) below), in the event that the
NASD makes a final determination that the transactions contemplated hereby require the
approval of the Corporation’s shareholders, the Corporation shall promptly convene a meeting
of shareholders and take all action necessary or advisable to obtain such shareholder
approval. Prior to the filing or mailing of any Proxy Statement in connection with seeking
to obtain such shareholder approval, the Corporation shall provide the Investors a
reasonable opportunity to review and comment on such Proxy Statement and shall include in
such Proxy Statement all such comments reasonably proposed by the Investors pursuant to the
foregoing. Any Proxy Statement submitted to the Corporation’s shareholders pursuant to this
Section 5.13(a)(ii)(C) shall also include the Class B Proposal and the Non-Voting Securities
Proposal.



(b) If any objections are asserted with respect to the transactions contemplated hereby by any
Governmental Authority or the NASD, the Corporation and the Investors shall use its reasonable best
efforts to resolve any such objections with the goal of enabling the transactions contemplated by
this Agreement to be consummated as promptly as practicable. In furtherance and not in limitation
of the covenants of the parties contained in this Section 5.13, each of the Corporation and the
Investors shall use its reasonable best efforts to resolve such objections, if any, as may be
asserted by a Governmental Authority or the NASD with respect to the transaction contemplated
hereby. In connection with the foregoing, if any administrative or judicial action or proceeding
by any party is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement, each of the Corporation and the Investors shall cooperate in all
respects with each other and use its respective reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction, interpretive letter or other order, whether temporary, preliminary or permanent, that
is in effect and that prohibits, prevents, conditions or restricts the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision
of this Agreement other than the obligation of the Corporation to convene a special meeting of
shareholders as described in Section 5.13(a)(ii)(C), nothing contained in this Section 5.13 shall
require the Investors or the Corporation to consummate the transactions contemplated hereby on
terms materially different from the terms set forth in this Agreement.



(c) Each of the Corporation and the Investors shall, in connection with the efforts referenced
in this Section 5.13, (i) cooperate and consult with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including any proceeding
initiated by any party, (ii) promptly inform the other party of any material communication received
by such party from, or given by such party to, any Governmental Authority or the NASD and of any
material communication received or given in connection with any proceeding by any party, in each
case, regarding the transactions contemplated hereby, (iii) consult with the other party in advance
of any meeting or conference, whether in-person or by telephone, with any Governmental Authority,
the NASD or, in connection with any proceeding by any party, with any other Person, and to the
extent permitted by such applicable Governmental Authority, the NASD or other Person, give the
other party the opportunity to attend and participate in such meetings and conferences. In
furtherance and not in limitation of the foregoing, the Corporation shall, in connection with the
efforts referenced in Section 5.13(a)(ii)(C), (i) permit counsel for the Investors to review in
advance, and consider in good faith the views of the Investors in connection with, any proposed
written communication to the NASD and provide counsel for the Investors with copies of all filings
and submissions made by the Corporation and all correspondence between the Corporation (and its
advisors) with the NASD and any other information supplied by the Corporation and the Corporation’s
Subsidiaries to the NASD or received from the NASD in connection with the transactions contemplated
by this Agreement, (ii) furnish to the Investors such information and assistance as the Investors
reasonably may request in connection with the preparation of any submissions to, or proceedings by,
the NASD, and (iii) obtain the consent of the Investors prior to the submission of any proposed
written communication to the NASD, which consent shall not be unreasonably withheld.



(d) Notwithstanding anything to the contrary herein, nothing in this Section 5.13 shall
require any party to amend this Agreement or to waive or forbear from exercising any of its rights
or remedies hereunder.



Section 5.14. Authorization of Exchange Proposal.



(a) From and after June 30, 2007, MHR shall be entitled to request by written notice to the
Secretary of the Corporation that the Corporation convene, and following such notice the
Corporation shall take all actions necessary to convene and the Chief Executive Officer of the
Corporation shall call, a special meeting of stockholders for the purpose of seeking approval of a
proposal to authorize the immediate and automatic exchange of any shares of Class B-2 Non-Voting
Stock for shares of Class B-1 Non-Voting Stock (the “Exchange Proposal”). Prior to filing
or mailing of any Proxy Statement in connection with the Exchange Proposal, upon MHR’s request, the
Corporation shall provide MHR a reasonable opportunity to review and comment on such Proxy
Statement with respect to any information about the Exchange Proposal included therein and shall
include in such Proxy Statement all such comments reasonably proposed by MHR pursuant to the
foregoing. If the Exchange Proposal is approved by the affirmative vote of holders of a majority
of the votes cast (whether in person, by proxy at a meeting of shareholders or by written consent
in lieu of a special meeting) (the “Exchange Proposal Approval”), then each share of Class
B-2 Non-Voting Stock (whether outstanding at such time or to be issued at any time following the
Exchange Proposal Approval upon the conversion of shares of Series A-2 Preferred Stock or Series
B-2 Preferred Stock) shall be automatically and immediately exchanged (on a one-for-one basis) into
a share of Class B-1 Non-Voting Stock.



(b) If MHR does not request to hold a special meeting of stockholders as provided for in
subsection (a) above, then (i) not less than seventy-five (75) days prior to each annual meeting of
the stockholders of the Corporation (or sixty (60) days in the case of the 2007 annual meeting of
stockholders), or (ii) promptly following the earlier of the Board’s determination to convene or
the Corporation’s receipt of notice of, a special meeting of stockholders, the Corporation shall
provide MHR written notice of such meeting and shall include among the matters to be voted upon at
such meeting the Exchange Proposal. Within five (5) Business Days following receipt of such written
notice, MHR shall notify the Corporation if it does not want the Exchange Proposal to be included
among the matters to be voted upon at such meeting and if MHR so notifies the Corporation or does
not respond within such five (5) Business Days, the Exchange Proposal shall not be included among
the matters to be voted upon at such meeting. The Corporation shall not file any report or
statement with the SEC, NASD or any securities exchange in respect of any meeting prior to
compliance with the notice procedures set forth in the immediately preceding sentence, except as
required by Applicable Law and NASD listing requirements.



Section 5.15. Voting Covenant of Series A-2 Preferred Stock and Series B-2 Preferred
Stock. Neither the Investors nor any subsequent holder or any person empowered to vote any
shares of Series A-2 Preferred Stock or Series B-2 Preferred Stock shall vote any such shares of
Series A-2 Preferred Stock or Series B-2 Preferred Stock held by them at any time or which they are
empowered to vote pursuant to Section B of Article VI of the Series A Certificate of Designation
and Series B Certificate of Designation, respectively. Any holder of shares of Series A-2 Preferred
Stock and Series B-2 Preferred Stock shall, prior to Transfer of any such shares, obtain and
deliver to the Corporation the written agreement of any transferee to be bound by the terms of this
Section 5.15.



ARTICLE 6




MISCELLANEOUS




Section 6.01. Survival of Representations and Warranties. The respective
representations and warranties of the Corporation and the Investors contained in or made pursuant
to this Agreement shall remain in full force and effect and shall survive the execution and
delivery of this Agreement and the delivery of and payment for the Series A-1 Preferred Stock and
Series B-1 Preferred Stock through the date that is thirty (30) months after Closing Date, and
shall in no way be affected by any investigation of the subject matter thereof, or statement as to
the results thereof, made by or on behalf of the Investors or the Corporation; provided that the
representations and warranties of the Corporation contained in Sections 3.01(a) (Organization, Good
Standing and Qualification), 3.01(b) (Authorization), 3.01(c) (Valid Issuance), 3.01(d)
(Capitalization), 3.01(e) (Series A-1 Preferred Stock Issuance), 3.01(f) (Noncontravention),
3.01(i) (No General Solicitation) and 3.01(m) (No Brokers) shall survive until the expiration of
the applicable statute of limitations. The representations and warranties of the Corporation
contained in any Bring-Down Certificate shall survive until the expiration of the applicable
statute of limitations; provided, that the survival of the representations and warranties of the
Corporation in any Bring-Down Certificate shall be only to the extent of the issuance of capital
stock covered by such certificate.



Section 6.02. Indemnification.



(a) The Corporation (the “Indemnifying Party”) shall indemnify, defend and hold
harmless to the fullest extent permitted by law the Investor and the Investor’s Affiliates and each
of their respective officers, directors, managers, partners, stockholders, members, investors,
employees, advisors, agents and other representatives and any Affiliate of the foregoing, and each
of their respective successors and permitted assigns and each Person who controls any of the
foregoing, within the meaning of the Securities Act and the Exchange Act (each, an “Investor
Indemnified Party”), from and against, and shall promptly reimburse each Investor Indemnified
Party for, all demands, claims, actions or causes of action (whether or not such demands, claims,
actions or causes of action are brought by the Corporation, the SEC, the United States Department
of Justice or any other governmental entity, or whether or not the Investor Indemnified Party is a
party thereto), assessments, losses, damages, liabilities, costs and expenses, including reasonable
attorney’s fees and expenses of investigation and attorneys’ and accountants’ fees and expenses in
connection with any action, suit or proceeding, including those incurred upon any appeal, joint or
several, arising or resulting from or in connection with any misrepresentation or any breach of any
representation or warranty, covenant or agreement of the Corporation contained in this Agreement,
any of the other Collateral Documents, or in any certificate or other document required to be
furnished by the Corporation pursuant to this Agreement (collectively, the “Investor
Indemnified Liabilities”).



(b) Whenever any claim for indemnification shall arise under this Section 6.02, the Investor
Indemnified Party shall notify the Indemnifying Party of the claim and, when known, the facts
constituting the basis for such claim; provided, however, that failure to give such
notice shall not affect any of the indemnification or other rights of any Investor Indemnified
Party hereunder, except if and to the extent the Corporation is prejudiced by such failure. In the
event of any claim for indemnification hereunder resulting from or in connection with legal
proceedings by a third party (a “Proceeding”), such notice shall also specify, if known,
the amount or an estimate of the amount of the liability arising therefrom.



If any Proceeding is filed or instituted against the Investor Indemnified Party asserting any claim
for which the Indemnifying Party may be responsible hereunder, written notice thereof shall be
given to the Indemnifying Party as promptly as practicable; and if the Indemnifying Party shall
acknowledge in writing that the Indemnifying Party shall be responsible and liable for all Investor
Indemnified Liabilities in connection with such lawsuit as and to the extent set forth herein, then
the Indemnifying Party shall be entitled, if the Indemnifying Party so elects (subject to the
Investor Indemnified Party’s written consent which may be withheld by the Investor Indemnified
Party to the extent that the Investor Indemnified Party’s rights under any other contested matter
or any aspect of the Investor Indemnified Party’s ongoing business operations may be prejudiced by
the Investor Indemnified Party’s lack of control over such lawsuit, to take control of the defense
and investigation of such lawsuit and to employ and engage attorneys of their own choice,
reasonably satisfactory to such Investor Indemnified Party, to handle and defend the same, at the
Indemnifying Party’s cost, risk and expense; and the Investor Indemnified Party shall cooperate in
all reasonable respects, at the Indemnifying Party’s cost, risk and expense, with the Indemnifying
Party and such attorneys in the investigation, trial and defense of such lawsuit and any appeal
arising therefrom. If the Investor Indemnified Party withholds its consent for the Indemnifying
Party to take control of the defense and investigation of such lawsuit because and to the extent
that the Investor Indemnified Party’s rights under any other contested matter or any aspect of the
Investor Indemnified Party’s ongoing business operations may be prejudiced by the Investor
Indemnified Party’s lack of control over such lawsuit), the Investor Indemnified Party may employ
counsel and participate in the defense thereof but the reasonable fees and expenses of such counsel
shall be at the expense of the Indemnifying Party and shall be borne by such Indemnifying Party and
paid as incurred (it being understood, however, that such Indemnifying Party shall not be liable
for the expenses of more than one separate counsel in any one Proceeding or series of related
Proceedings together with reasonably necessary local counsel representing the Investor Indemnified
Parties who are parties to such Proceeding). Except as set forth in the immediately preceding
sentence, such Investor Indemnified Party shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of such Investor
Indemnified Party unless the employment of such counsel shall have been authorized in writing by
such Indemnifying Party in connection with the defense of such Proceeding or such Indemnifying
Party shall not have employed counsel to have charge of the defense that is reasonably satisfactory
to the Investor Indemnified Party of such Proceeding within 60 days of the receipt of notice
thereof or such Investor Indemnified Party shall have reasonably concluded that there may be
defenses available to it that are different from, additional to, or in conflict with those
available to such Indemnifying Party (in which case such Indemnifying Party shall not have the
right to direct that portion of the defense of such Proceeding on behalf of such Investor
Indemnified Party, but such Indemnifying Party may employ counsel and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of such Indemnifying
Party), in any of which events such reasonable fees and expenses shall be borne by such
Indemnifying Party and paid as incurred (it being understood, however, that such Indemnifying Party
shall not be liable for the expenses of more than one separate counsel in any one Proceeding or
series of related Proceedings together with reasonably necessary local counsel representing the
Investor Indemnified Parties who are parties to such Proceeding). An Indemnifying Party shall not
be liable for any settlement or compromise of any such Proceeding effected without its consent, but
if settled or compromised with the written consent of such Indemnifying Party, such Indemnifying
Party agrees to indemnify and hold harmless an Investor Indemnified Party from and against any loss
or liability by reason of such settlement. An Indemnifying Party shall not, without the prior
written consent of the Investor Indemnified Party, consent to a settlement of, or the entry of any
judgment arising from, any pending or threatened Proceeding in respect of which such Investor
Indemnified Party is or could have been a party and indemnity could have been sought hereunder by
such Investor Indemnified Party, unless such settlement includes an unconditional release of such
Investor Indemnified Party from all liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault, culpability or failure to act, by or on
behalf of such Investor Indemnified Party.



(c) The rights of the Investor Indemnified Parties under this Section 6.02 shall be in
addition to (i) any cause of action or similar right of any Investor Indemnified Party against an
Indemnifying Party or other Persons, or (b) any liabilities to which the parties may be subject to
pursuant to any Applicable Law. In the event that the transactions described herein are not
consummated, or are otherwise modified or prevented in any way, other than in accordance with
Section 6.17 hereof, the provisions of this Section 6.02 shall remain and continue to be valid,
legally binding and in full force and effect. The Indemnifying Party agrees that no Investor
Indemnified Party shall have any liability to an Indemnifying Party or other Persons (including its
security holders or creditors) for any damages, indirect, consequential or otherwise arising out
of, related to, or in connection with this Agreement or any of the transactions contemplated
hereby, except only for actual damages arising solely in connection with breach by the Investors of
any of their representations, warranties or covenants that are contained in this Agreement.



Section 6.03. Termination. This Agreement may be terminated:



(a) at any time prior to the Closing Date by the written agreement of the Corporation and the
Investors;



(b) at any time prior to the Closing Date by either the Corporation or the Investors by
written notice to the other party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. New York City time ninety (90) days after the date hereof
(the “Termination Date”), unless such date shall be extended by the mutual written consent
of the Corporation and the Investors; provided, however, that the right to
terminate this Agreement under this Section 6.03(b) shall not be available to any party until June
30, 2007 if all of the conditions set forth in Article IV shall have been satisfied at any time
prior to the Termination Date, except for (A) such conditions that, by their terms, can only or
must be satisfied on the Closing Date, and (B) the conditions set forth in Sections 4.01(g) and
4.01(h) hereof; provided further, however, that the right to terminate this
Agreement under this Section 6.03(b) shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Closing to occur.



(c) at any time prior to the Closing Date by either the Corporation or the Investors by
written notice to the other party if any court of competent jurisdiction in the United States or
Federal, state or local government or regulatory body in the United States shall have issued an
order, decree or ruling or taken such action that permanently restrains, enjoins or otherwise
prohibits the transactions contemplated hereby and such order, decree, ruling or other action shall
have become final and non-appealable after the taking of all actions by the Corporation and the
Investors contemplated by Section 5.13 hereto; and



(d) at any time prior to the Closing Date by the Investors if there shall have occurred or a
condition shall have arisen or been created since the date of this Agreement which has had, or
would reasonably be expected to have, a Material Adverse Effect.



Section 6.04. Legends.



(a) The Investors agree that the share certificate(s) that the Investors receive from the
Corporation in respect of the Purchased Shares, and any shares of Series A Preferred Stock, Series
B Preferred Stock, Common Stock and Class B Non-Voting Stock issued in respect thereof shall be
legended with the following legend:



“THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER OR
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER.”



(b) The Investors agree that the share certificate(s) that the Investors receive from the
Corporation in respect of the Purchased Shares, and any shares of Series A Preferred Stock, Series
B Preferred Stock, Common Stock and Class B Non-Voting Stock issued in respect thereof shall be
legended with the following legends:




(i) With respect to Series A Preferred Stock:



“THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON VOTING AND TRANSFERABILITY1 PROVIDED
IN THE CERTIFICATE OF DESIGNATION FOR THE SECURITIES AND THE SECURITIES PURCHASE AGREEMENT, DATED
OCTOBER 17, 2006, AS AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS
NAMED THEREIN. COPIES OF SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION
UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE
CORPORATION.”




(ii) with respect to the Series B Preferred Stock:



“THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON CONVERTIBILITY PROVIDED IN THE CERTIFICATE OF
DESIGNATION FOR THE SECURITIES AND THE SECURITIES PURCHASE AGREEMENT, DATED OCTOBER 17, 2006 AS
AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS NAMED THEREIN. COPIES
OF SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION UPON REQUEST WITHOUT CHARGE
FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE CORPORATION.”




(iii) with respect to the Class B Non-Voting Stock issuable upon conversion of the
Series A Preferred Stock and Series B Preferred Stock:



“THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON CONVERTIBILITY PROVIDED IN THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION AND THE SECURITIES PURCHASE AGREEMENT,
DATED OCTOBER 17, 2006 AS AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS
NAMED THEREIN. COPIES OF SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION
UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE
CORPORATION.”




(iv) with respect to the Common Stock issuable upon conversion of the Series A-1
Preferred Stock, Series B-1 Preferred Stock or Class B-1 Non-Voting Stock:



“THE SECURITIES ARE SUBJECT TO AGREEMENTS, COVENANTS AND RESTRICTIONS ON VOTING
AND2 TRANSFERABILITY PROVIDED IN THE SECURITIES PURCHASE AGREEMENT, DATED OCTOBER 17,
2006 AS AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND THE PERSONS NAMED THEREIN. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED BY ANY STOCKHOLDER OF THE CORPORATION UPON REQUEST WITHOUT
CHARGE FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL OFFICE OF THE CORPORATION.”




(v) with respect to the Series A-2 Preferred Stock and Series B-2 Preferred Stock:



“THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON VOTING AS PROVIDED IN THE SECURITIES PURCHASE
AGREEMENT, DATED OCTOBER 17, 2006, AS AMENDED FROM TIME TO TIME, BY AND BETWEEN THE CORPORATION AND
THE PERSONS NAMED THEREIN. COPIES OF SUCH DOCUMENTS MAY BE OBTAINED BY ANY STOCKHOLDER OF THE
CORPORATION UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
OFFICE OF THE CORPORATION.”



(c) The legends referred to in Section 6.04(a) above shall be removed from a certificate
representing such shares of Series A Preferred Stock, Series B Preferred Stock or shares of Common
Stock and Class B Non-Voting Stock issued upon conversion thereof if the securities represented
thereby are sold pursuant to an effective registration statement under the Securities Act, or there
is delivered to the Corporation such satisfactory evidence, which may include an opinion of
independent counsel, as reasonably may be requested by the Corporation, to confirm that neither
such legend nor the instructions on transfer set forth therein are required to ensure that
transfers of such securities will not violate the registration requirements of the Securities Act.
The legends referred to in Section 6.04(b) shall be removed from the certificates representing such
shares of Series A Preferred Stock or Series B Preferred Stock or shares of Common Stock or Class
B-1 Non-Voting Stock issued upon conversion thereof promptly, but in no event more than five (5)
Business Days, after the later of (i) receipt of a request for conversion received from a holder
following the Majority Ownership Date or a transfer of such shares to a Qualified Transferee, as
applicable and (ii) delivery of the applicable certificates to the Corporation. With respect to the
Series A-2 Preferred Stock, Series B-2 Preferred Stock and Class B-2 Non-Voting Stock, the legends
referred to in Section 6.04(b) shall be removed from the certificates representing such shares
immediately following the Exchange Proposal Approval.



Section 6.05. Fees and Expenses.



(a) The Corporation shall pay (i) to Deutsche Bank Securities, Inc., an advisory fee in the
amount notified by the Investors to the Corporation prior to the date hereof, and to Stroock &
Stroock & Lavan LLP and Richards, Layton & Finger, P.A., all reasonable and documented legal fees
and expenses incurred through the Closing Date (including in connection with the preparation and
submission of any filings in connection with the HSR Act and response to comments, inquiries and
requests for information related thereto) in the amounts notified by the Investors to the
Corporation prior to the Closing Date; (ii) directly to the appropriate governmental entity, on
behalf of each of Investors, any fees payable by each of the Investors in connection with their
compliance with the applicable requirements of the HSR Act (including filing fees and expenses
related thereto); and (iii) all reasonable and documented legal fees and expenses of the Investors
incurred in connection with the Class B Proposal, the Non-Voting Securities Proposal, and any
amendment, waiver, notice or consent under this Agreement, the Series A Certificate of Designation,
the Series B Certificate of Designation or the Amended and Restated Certificate of Incorporation,
provided that, as to any such amendment, waiver or consent, the taking of such action by the
Investors is requested by the Corporation.



(b) The Corporation shall pay the fees and expenses of the Investors provided in Section
6.05(a) by wire transfers of immediately available fund to the accounts specified therefor by the
Investors as follows: (i) the fees and expenses described in Section 6.05(a)(i) on or prior to the
Closing Date; (ii) the fees and expenses described in Section 6.05(a)(ii) as and at the time
required to be paid to such governmental entity; and (iii) the fees and expenses described in
Section 6.05(a)(iii), not later than thirty (30) days following request for such payment.



(c) In the event this Agreement is terminated under any of the circumstances described in
Section 6.03, the Corporation shall promptly (but in no event more than ten (10) Business Days
following such termination) pay to Stroock & Stroock & Lavan LLP and Richards, Layton & Finger,
P.A., all reasonable and documented legal fees and expenses incurred through the date of such
termination (including in connection with the preparation and submission of any filings in
connection with the HSR Act and response to comments, inquiries and requests for information
related thereto) in the reasonable and documented amounts notified by the Investors to the
Corporation within five (5) Business Days following such termination; provided,
however, that the Investors have not breached in any material respects their obligations
under this Agreement which breach caused such termination.



Section 6.06. Equitable Remedies.



The parties hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with the specific terms of the
provisions or were otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state having jurisdiction,
this being in addition to any other remedy to which they are entitled at law or in equity. Each
party agrees that it shall not assert, as a defense against a claim for specific performance, that
the party seeking specific performance has an adequate remedy at law.



Section 6.07. Notices.



All notices, claims and other communications hereunder shall be in writing and shall be made
by hand delivery, registered or certified mail (postage prepaid, return receipt requested),
facsimile, or overnight air courier guaranteeing next day delivery,



(a) if to the Corporation, to it at:



	 
	Loral Space & Communications Inc.
600 Third Avenue
New York, NY 10016
Attention: General Counsel
Telephone: 212-338-5340
Facsimile: 212-338-5320

	 

	with a copy (which shall not constitute notice) to:

	Willkie, Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
Attention: Bruce R. Kraus, Esq.
Telephone: 212-728-8237
Facsimile: 212-728-9237

	 

	with a copy (which shall not constitute notice) to:

	Special Committee of the Board of Directors
Loral Space & Communications Inc.
600 Third Avenue
New York, NY 10016
Attention: Arthur Simon and John D. Harkey, Jr.
Telephone: 212-338-5600
Facsimile: 212-338-5880

	 

	with a copy (which shall not constitute notice) to:

	King & Spalding LLP
1185 Avenue of the Americas
New York, NY 10036
Attention: Christopher C. Paci, Esq.
Telephone: 212-556-2100
Facsimile: 212-556-2222







(b) if to the Investors, to them at:



	 
	MHR Fund Management LLC
40 West 57th Street, 24th Floor
New York, NY 10019
Attention: Hal Goldstein
Telephone: 212-262-0005
Facsimile: 212-262-9356

	 

	with a copy (which shall not constitute notice) to:

	Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Attention: Doron Lipshitz, Esq.
Telephone: 212-806-5400
Facsimile: 212-806-6006







or at such other address as any party may from time to time furnish to the other parties by a
notice given in accordance with the provisions of this Section 6.07. All such notices and
communications shall be deemed to have been duly given at the time delivered by hand, if personally
delivered; when receipt is confirmed, if sent by facsimile; and the next Business Day after timely
delivery to the courier, if sent by an overnight air courier service guaranteeing next day
delivery.



Section 6.08. Entire Agreement.



This Agreement, together with the Exhibits annexed hereto, contains the entire understanding
among the parties hereto concerning the subject matter hereof and this Agreement may not be
changed, modified, altered or terminated except by an agreement in writing executed by the parties
hereto. Any waiver by any party of any of its rights under this Agreement or of any breach of this
Agreement shall not constitute a waiver of any other rights or of any other or future breach.



Section 6.09. Remedies Cumulative.



Except as otherwise provided herein, each and all of the rights and remedies in this Agreement
provided, and each and all of the rights and remedies allowed at law and in equity in like case,
shall be cumulative, and the exercise of one right or remedy shall not be exclusive of the right to
exercise or resort to any and all other rights or remedies provided in this Agreement or at law or
in equity.



Section 6.10. Governing Law.



This Agreement shall be construed in accordance with and subject to the laws and decisions of
the State of New York applicable to contracts made and to be performed entirely therein, except to
the extent that the Delaware General Corporation Law applies and, to that extent, by the internal
laws of the State of Delaware.



Section 6.11. Counterparts.



This Agreement may be executed in several counterparts hereof, and by the different parties
hereto on separate counterparts hereof, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.



Section 6.12. Waivers.



No provision in this Agreement shall be deemed waived except by an instrument in writing
signed by the party waiving such provision.



Section 6.13. Successors and Assigns.



This Agreement shall be binding upon and inure to the benefit of the parties and their
successors and permitted assigns. The Corporation shall not assign this Agreement or any rights or
obligations hereunder. Notwithstanding the foregoing, the Investors may assign their rights
hereunder to any of their Affiliates, without the consent of the Corporation or to any other Person
or entity with the consent of the Corporation, which consent shall not be unreasonably withheld, in
either case provided that such Person executes and delivers to the Corporation an agreement to be
bound by the provisions of, and to become a party to, this Agreement, substantially in the form
attached hereto as Exhibit N (a “Joinder Agreement”). By executing and delivering
to the Corporation a completed Joinder Agreement, such Person shall be deemed to be an “Investor”
party hereto, and shall be bound by all covenants, agreements, representations and warranties made
by it as an Investor hereunder, as if such Person was an original party hereto and if the Investor
set forth on the signature page hereto so assigns all of its rights and obligations hereunder, such
Investor shall cease to be a party hereto and to have any further rights or obligations hereunder.



Section 6.14. Further Assurances.



The Investors shall, at the request of the Corporation, and the Corporation shall, at the
request of the Investors, from time to time, execute and deliver such other assignments, transfers,
conveyances and other instruments and documents and do and perform such other acts and things as
may be reasonably necessary or desirable for effecting complete consummation of this Agreement, the
Registration Rights Agreement and the transactions herein and therein contemplated.



Section 6.15. Public Announcements. No public announcement by any party hereto with
regard to the transactions contemplated hereby or the material terms hereof shall be issued by any
party without the mutual prior consent of the other parties, except that in the event the parties
are unable to agree on a press release or other public disclosure and legal counsel for one party
is of the opinion that such press release or other public disclosure is required by law and such
party furnishes the other party an opinion to that effect, then such party may issue the legally
required press release or other public disclosure.



Section 6.16. Jurisdiction; Consent to Service of Process.



Each party hereby irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York and any court of the State of New York located
in the City of New York in any such action, suit or proceeding, and agrees that any such action,
suit or proceeding shall be brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that such
consent to jurisdiction is solely for the purpose referred to in this Section 6.16 and shall not be
deemed to be a general submission to the jurisdiction of said courts or the State of New York other
than for such purpose.



Section 6.17. Amendment. This Agreement may not be amended, except by an instrument
in writing signed by the parties hereto or their permitted successors and assigns.



Section 6.18. Schedule 13D Filings Conclusive. The information contained in the
Schedule 13D filed by the Investors with the United States Securities and Exchange Commission with
respect to the Corporation, as amended from time to time, shall be conclusive for the purposes of
the Corporation’s compliance with its obligations under Section 5.06 hereunder, absent manifest
error, unless the Investors have delivered written notice to the contrary to the Corporation as
provided in Section 6.07.



Section 6.19. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.



Section 6.20. 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 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 extent
possible.



1 Words in italics to be included only in
share certificates for Series A Preferred Stock issued on the Closing Date.



2 Words in italics to be included only in share
certificates for Common Stock issuable on conversion of Series A-1 Preferred
Stock issued on the Closing Date.



4



IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
above written.



	 	 	 
	LORAL SPACE & COMMUNICATIONS INC.

	 
	 	 
	By:

	 	/s/ Michael Targoff
	
 
	 	Name: Michael Targoff
	
 
	 	Title: Chief Executive Officer
	 
	 	 
	INVESTORS

	 
	 	 
	MHR FUND MANAGEMENT LLC

	 
	 	 
	By:

	 	/s/ Hal Goldstein
	
 
	 	Name: Hal Goldstein
	
 
	 	Title: Managing Principal






5




EXHIBIT A




FORM OF SERIES A CERTIFICATE OF DESIGNATION




6




EXHIBIT B




FORM OF SERIES B CERTIFICATE OF DESIGNATION




7




EXHIBIT C




FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION




SECOND AMENDED AND




RESTATED CERTIFICATE OF INCORPORATION




OF




LORAL SPACE & COMMUNICATIONS INC.




Loral Space & Communications Inc. (the “Corporation”), a corporation organized and
existing under and by virtue of the laws of the State of Delaware, DOES HEREBY CERTIFY that:



1. The name of the corporation is Loral Space & Communications Inc.



2. The original Certificate of Incorporation of the Corporation was filed with the Secretary
of State of the State of Delaware under the name of Loral Space & Communications Inc. on June 24,
2005. The Restated Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on November 21, 2005.



3. Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware,
this Second Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”) restates and integrates and further amends the provisions of the Restated
Certificate of Incorporation of the Corporation.



4. This Certificate of Incorporation was duly authorized and adopted in accordance with the
applicable provisions of Sections 242 and 245 of the General Corporation Law of the State of
Delaware.



5. The text of the Restated Certificate of Incorporation is hereby amended and restated to
read in its entirety as follows:



SECOND AMENDED AND




RESTATED CERTIFICATE OF INCORPORATION




OF




LORAL SPACE & COMMUNICATIONS INC.




ARTICLE I




The name of the corporation (the “Corporation”) is Loral Space & Communications Inc.



ARTICLE II




The address of the registered office of the Corporation in the State of Delaware is 1209
Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of the registered agent
of the Corporation at such address is:



The Corporation Trust Company.



ARTICLE III




Except as provided in Paragraph (d) of Article V of this Certificate of Incorporation, the
nature of the business or purposes to be conducted or promoted by the Corporation is to engage in
any lawful act or activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the “DGCL”).



ARTICLE IV




The total authorized capital stock of the Corporation shall be NINETY SEVEN MILLION
(97,000,000) shares consisting of (i) SIXTY MILLION (60,000,000) shares of Common Stock, $0.01 par
value per share (“Common Stock”), (ii) TWENTY ONE MILLION (21,000,000) shares of Class B-1
Non-Voting Common Stock, $0.01 par value per share (“Class B-1 Non-Voting Stock”), (iii)
SIX MILLION (6,000,000) shares of Class B-2 Non-Voting Common Stock, $0.01 par value per share
(“Class B-2 Non-Voting Stock”) and (iv) TEN MILLION (10,000,000) shares of Preferred Stock,
$0.01 par value per share (“Preferred Stock”).



Pursuant to the authority conferred by this Article FOURTH, the following series of Preferred
Stock have been designated, each such series consisting of such number of shares, with such voting
powers and with such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof as are stated and expressed
in the exhibit with respect to such series attached hereto as specified below and incorporated
herein by reference:




	 	 	 	Exhibit A Series A-1 Cumulative 7.50% Convertible Preferred Stock and Series
A-2 Convertible Preferred Stock






	 	 	 	Exhibit B Series B-1 Cumulative 7.50% Convertible Preferred Stock and Series
B-2 Convertible Preferred Stock





(a) Common Stock, Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock.



(i) The shares of Common Stock, Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock (and
the rights, preferences, privileges and powers of the holders thereof) shall be in all respects
identical and all such shares shall be deemed to be a single class with respect to all actions
taken in respect thereof, except as expressly set forth and provided for in this Certificate of
Incorporation (including, without limitation, Section (a)(vii) of this Article IV). Except as set
forth and provided for in this Certificate of Incorporation, the shares of Common Stock, Class B-1
Non-Voting Stock and Class B-2 Non-Voting Stock (and the rights, preferences, privileges and powers
of the holders thereof) shall be in all respects identical.



(ii) The holders of Common Stock, Class B-1 Non-Voting Stock (each, a “Class B-1
Holder” and collectively, the “Class B-1 Holders”) and Class B-2 Non-Voting Stock
(each, a “Class B-2 Holder” and collectively, the “Class B-2 Holders”), shall be
entitled to receive, from time to time, when and as declared, in the discretion of the Board, such
cash dividends, dividends of stock of the Corporation or other property as the Board may from time
to time determine, out of such funds as are legally available therefor, in proportion to the number
of shares of Common Stock, Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock held by them,
respectively, without regard to class; provided, however, that if dividends are
declared on the Common Stock, the Class B-1 Non-Voting Stock or the Class B-2 Non-Voting Stock that
are payable in shares of Common Stock, or securities convertible into, or exercisable or
exchangeable for Common Stock, the dividends payable to the holders of (a) Class B-1 Non-Voting
Stock shall be paid only in shares of Class B-1 Non-Voting Stock (or securities convertible into,
or exercisable or exchangeable for Class B-1 Non-Voting Stock), and (b) Class B-2 Non-Voting Stock
shall be paid only in shares of Class B-2 Non-Voting Stock (or securities convertible into, or
exercisable or exchangeable for Class B-2 Non-Voting Stock), and such dividends shall be paid in
the same number of shares (or fraction thereof) on a per share basis of the Class B-1 Non-Voting
Stock or Class B-2 Non-Voting Stock, as the case may be (or securities convertible into, or
exercisable or exchangeable for the same number of shares (or fraction thereof) on a per share
basis of the Class B-1 Non-Voting Stock or Class B-2 Non-Voting Stock, as the case may be);
provided further, however, that if dividends are declared on the Common Stock, the
Class B-1 Non-Voting Stock or the Class B-2 Non-Voting Stock that are payable in shares of Class
B-1 Non-Voting Stock, or securities convertible into, or exercisable or exchangeable for Class B-1
Non-Voting Stock, the dividends payable to the holders of Class B-2 Non-Voting Stock shall be paid
only in shares of Class B-2 Non-Voting Stock (or securities convertible into, or exercisable or
exchangeable for Class B-2 Non-Voting Stock), and such dividends shall be paid in the same number
of shares (or fraction thereof) on a per share basis of the Class B-2 Non-Voting Stock (or
securities convertible into, or exercisable or exchangeable for the same number of shares (or
fraction thereof) on a per share basis of the Class B-2 Non-Voting Stock). Dividends shall not be
paid or issued on any Common Stock unless such dividends are simultaneously paid or issued on each
of the Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock.



(iii) In the event of any liquidation, dissolution or winding up (either voluntary or
involuntary) of the Corporation, the holders of Common Stock, Class B-1 Non-Voting Stock and Class
B-2 Non-Voting Stock shall be entitled to receive the assets and funds of the Corporation in
proportion to the number of shares of Common Stock, Class B-1 Non-Voting Stock and Class B-2
Non-Voting Stock held by them, respectively, without regard to class.



(iv) In no event shall the shares of any of the Common Stock, Class B-1 Non-Voting Stock or
Class B-2 Non-Voting Stock be split, divided, combined or reclassified, unless the outstanding
shares of the other classes shall be proportionately, and in an equal manner, split, divided,
combined or reclassified. If any event similar to or of the type contemplated by the provisions of
this Section (a)(iv), but not expressly provided by such provision occurs, then the Board shall
take such action to adjust the conversion rights, powers, preferences and privileges of the Class
B-1 Non-Voting Stock and Class B-2 Non-Voting Stock and the number of shares of Class B-1
Non-Voting Stock and Class B-2 Non-Voting Stock to be outstanding after any particular event to
prevent any dilution of the conversion or other rights of the Class B-1 Holders or Class B-2
Holders set forth in Sections (a)(viii) and (a)(ix) of this Article IV, respectively.



(v) If there should be any distribution of property, merger, consolidation, purchase or
acquisition of property or stock, asset transfer, division, share exchange, recapitalization,
reorganization of the Corporation or similar event, the holders of Common Stock, Class B-1
Non-Voting Stock and Class B-2 Non-Voting Stock shall receive the shares of stock, other securities
or rights or other assets or property as would be issuable or payable upon such distribution,
merger, consolidation, purchase or acquisition of such property or stock, asset transfer, division,
share exchange, recapitalization, reorganization or similar event in proportion to the aggregate
number of shares held by them, respectively, without regard to class.



(vi) If there should be any tender or exchange offer made by the Corporation or any Subsidiary
of the Corporation for all or any portion of the Common Stock, Class B-1 Non-Voting Stock or Class
B-2 Non-Voting Stock, such tender or exchange offer shall be equally made to all outstanding shares
of Common Stock, Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock, without regard to
class.



(vii) Voting.



(A) Except as otherwise provided herein or by law, each holder of Common Stock shall be
entitled to one vote in respect of each share of Common Stock held of record on all matters
submitted to a vote of stockholders.



(B) The Class B-1 Holders and Class B-2 Holders shall have the voting rights set forth below
and as otherwise from time to time required by law. When voting separately as a class, each share
of Class B-1 Non-Voting Stock and Class B-2 Non-Voting Stock shall entitle the Class B-1 Holder and
Class B-2 Holder thereof, respectively, to one vote.



(1) [Notwithstanding section (c) of this Article IV,]3 [E]xcept as otherwise
required by law and except as otherwise provided for herein, no share of Class B-1 Non-Voting Stock
or Class B-2 Non-Voting Stock shall entitle the Class B-1 Holder or Class B-2 Holder thereof,
respectively, to vote.



(2) Without the consent or affirmative vote of the Class B-1 Holders of at least a majority of
the outstanding shares of Class B-1 Non-Voting Stock voting together as a single class, the
Corporation shall not authorize, or take any action, directly or indirectly, to alter, repeal,
change or amend any provision of this Certificate of Incorporation, whether by or in connection
with any merger, consolidation, reclassification, business combination, exchange, recapitalization,
joint venture, partnership, sale, transfer, conveyance, lease, other disposition of all or
substantially all of its property or assets, any similar transaction or otherwise, if such
authorization or action would reasonably be expected to adversely affect the rights, preferences,
privileges or powers of the Class B-1 Non-Voting Stock or Common Stock into which the Class B-1
Non-Voting Stock is convertible, or any of the holders thereof.



(3) Without the consent or affirmative vote of the Class B-2 Holders of at least a majority of
the outstanding shares of Class B-2 Non-Voting Stock voting together as a single class, the
Corporation shall not authorize, or take any action, directly or indirectly, to alter, repeal,
change or amend any provision of this Certificate of Incorporation, whether by or in connection
with any merger, consolidation, reclassification, business combination, exchange, recapitalization,
joint venture, partnership, sale, transfer, conveyance, lease, other disposition of all or
substantially all of its property or assets, any similar transaction or otherwise, if such
authorization or action would reasonably be expected to adversely affect the rights, preferences,
privileges or powers of the Class B-2 Non-Voting Stock, or any of the holders thereof.



(4) Without the consent or affirmative vote of each Class B-1 Holder affected, the Corporation
shall not (i) amend, alter, repeal or waive this Certificate of Incorporation, whether by or in
connection with any merger, consolidation, reclassification, business combination, joint venture,
partnership, exchange, recapitalization, sale, transfer, conveyance, lease or other disposition of
all or substantially all of its property or assets or otherwise, to alter the voting rights of the
Class B-1 Non-Voting Stock or reduce the number of shares of such Class B-1 Non-Voting Stock whose
Class B-1 Holders must consent to an amendment, supplement or waiver, or (ii) enter into any
agreement, amend or modify any existing agreement or obligation, or issue any security that
prohibits, conflicts or is inconsistent with, or would be breached by, the Corporation’s
performance of its obligations hereunder.



(5) Without the consent or affirmative vote of each Class B-2 Holder affected, the Corporation
shall not (i) amend, alter, repeal or waive this Certificate of Incorporation, whether by or in
connection with any merger, consolidation, reclassification, business combination, joint venture,
partnership, exchange, recapitalization, sale, transfer, conveyance, lease or other disposition of
all or substantially all of its property or assets or otherwise, to alter the voting rights of the
Class B-2 Non-Voting Stock or reduce the number of shares of such Class B-2 Non-Voting Stock whose
Class B-2 Holders must consent to an amendment, supplement or waiver, or (ii) enter into any
agreement, amend or modify any existing agreement or obligation, or issue any security that
prohibits, conflicts or is inconsistent with, or would be breached by, the Corporation’s
performance of its obligations hereunder.



(viii) Conversion of Class B-1 Non-Voting Stock. Each share of Class B-1 Non-Voting
Stock may be converted in the manner provided herein into one fully paid and nonassessable share of
Common Stock.



(A) Conversion Upon Majority Ownership Date. As of and from the Majority Ownership
Date, at the option and election of the Class B-1 Holder thereof, each share of Class B-1
Non-Voting Stock may be converted into one fully paid and nonassessable share of Common Stock in
the manner provided herein at any time in accordance with Section (a)(viii)(D) of this Article IV.



(B) Threshold Conversion. If at any time after the Closing Date, the sum of the
number of shares of Common Stock issuable upon conversion of the Series A-1 Preferred Stock and the
number of shares of Common Stock held by MHR is below the Threshold, and either (i) the shares of
Series B Preferred Stock that are converted into Series A-1 Preferred Stock or Common Stock, as the
case may be, pursuant to Section 5.06 of the Securities Purchase Agreement and Section
VII.A(d)(iii) of the Series B Certificate of Designation are not sufficient to increase the number
of shares of Series A-1 Preferred Stock and Common Stock held by MHR so as to equal (but not
exceed), as a percentage of the aggregate voting power of all outstanding securities issued by the
Corporation at any time and from time to time (assuming the conversion of all outstanding shares of
Series A-1 Preferred Stock held by MHR) the Threshold, or (ii) MHR does not hold any shares of
Series B Preferred Stock to convert into Series A-1 Preferred Stock or Common Stock, as the case
may be, pursuant to Section 5.06 of the Securities Purchase Agreement and Section VII.A(d)(iii) of
the Series B Certificate of Designation, then a number of shares of Class B-1 Non-Voting Stock held
by MHR (if any) shall be converted in accordance with the procedures set forth in the paragraph
immediately below into shares of Common Stock such that the aggregate number of shares of Series
A-1 Preferred Stock and Common Stock held by MHR (including the shares of Series B Preferred Stock
that were converted into Series A-1 Preferred Stock or Common Stock, as the case may be, pursuant
to Section 5.06 of the Securities Purchase Agreement and Section VII.A(d)(iii) of the Series B
Certificate of Designation) equals (but does not exceed) the Threshold.



The Corporation shall provide a written notice in substantially the form attached as Exhibit K to
the Securities Purchase Agreement (the “Threshold Conversion Notice”) not less than ten
(10) days following the end of each calendar quarter and within five (5) Business Days after any
issuance of securities exceeding two percent (2%) of the voting power of the Corporation. Within
five (5) Business Days after receipt of the Threshold Conversion Notice, MHR shall either confirm
the calculations set forth therein in a written notice substantially in the form attached to the
Securities Purchase Agreement as Exhibit L (a “Notice of Confirmation”) or dispute the
calculations set forth therein in a written notice substantially in the form attached to the
Securities Purchase Agreement as Exhibit M (a “Notice of Disagreement”), and in either case
specify whether any or all of such shares of Series B Preferred Stock, if any, are to be converted
into shares of Series A-1 Preferred Stock or Common Stock. Within three (3) Business Days (or
fifteen (15) calendar days if physical delivery of any certificate is involved) after the
Corporation’s receipt of (i) a Notice of Confirmation, the Corporation shall issue such number of
shares of Series A-1 Preferred Stock and/or Common Stock as set forth in the Threshold Conversion
Notice, and (ii) a Notice of Disagreement, the Corporation shall issue such number of shares of
Series A-1 Preferred Stock and/or Common Stock set forth in the Threshold Conversion Notice and the
parties shall use their reasonable best efforts to resolve the disagreements set forth in the
Notice of Disagreement and the Corporation shall, promptly upon such resolution, issue such number
of additional shares of Series A-1 Preferred Stock and/or Common Stock as necessary.



(C) Conversion Upon Certain Transfers. Upon the transfer of any share(s) of Class B-1
Non-Voting Stock to any Person who is not and does not become an Affiliate or Associate of, or a
member of a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with, MHR, and is
a Qualified Transferee, then the Class B-1 Non-Voting Stock held by such transferee shall be
convertible into shares of Common Stock in accordance with Section (a)(viii)(D) of this Article IV.
In the event that (x) solely as a result of such transfer of shares of Class B-1 Non-Voting Stock,
such transferee would become the Beneficial Owner of more than 35.9% of the voting power of the
Corporation, or (y) such transferee is the Beneficial Owner of more than 35.9% but less than 50% of
the voting power of the Corporation immediately prior to such transfer of shares of Class B-1
Non-Voting Stock (such transferee in each of (x) and (y), a “Disqualified Transferee”),
then (A) in the case of clause (x) above, such number of shares of Class B-1 Non-Voting Stock
transferred shall not be convertible into Common Stock so that the transferee does not become the
Beneficial Owner of more than 35.9% of the outstanding voting power of the Corporation solely as a
result of such transfer, and (B) in the case of clause (y) above, all the shares of Class B-1
Non-Voting Stock so transferred shall not be convertible into Common Stock. The restrictions on
the conversion of shares of Class B-1 Non-Voting Stock for shares of Common Stock set forth in this
paragraph shall be of no further force and effect as of and from the Majority Ownership Date.



(D) Conversion Procedures. The conversion of shares of Class B-1 Non-Voting Stock
pursuant to this Section (a)(viii) may be effected by any Class B-1 Holder upon the surrender to
the Corporation at the principal office of the Corporation or at the office of any agent or agents
of the Corporation, as may be designated by the Board and identified to the Class B-1 Holders in
writing upon such designation, of the certificate for such shares of Class B-1 Non-Voting Stock to
be converted accompanied by a written notice stating that such Class B-1 Holder elects to convert
all or a specified whole number of shares represented by such certificate in accordance with the
provisions of this Section (a)(viii) and specifying the name or names in which such Class B-1
Holder wishes the certificate or certificates for shares of Common Stock to be issued. In case
such notice shall specify a name or names other than that of such Class B-1 Holder, such notice
shall be accompanied by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation shall pay any and all
documentary, stamp or similar issue or transfer taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock upon conversion of Class
B-1 Non-Voting Stock pursuant hereto. As promptly as practical, and in any event within three (3)
Business Days (or fifteen (15) calendar days if physical delivery of any certificate is involved)
after the Conversion Date, the Corporation shall deliver or cause to be delivered as directed by
the converting Class B-1 Holder (i) certificates representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock to which such Class B-1 Holder shall be
entitled, and (ii) if less than the full number of shares of Class B-1 Non-Voting Stock evidenced
by the surrendered certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares of Class B-1 Non-Voting Stock evidenced by
such surrendered certificate or certificates less the number of shares of Class B-1 Non-Voting
Stock being converted. Such conversion shall be deemed to have occurred at the close of business
on the date (the “Conversion Date”) of the giving of such notice by the Class B-1 Holder to
be converted and of such surrender of the certificate or certificates representing the shares of
Class B-1 Non-Voting Stock to be converted so that as of such time the rights of the Class B-1
Holder thereof as to the shares being converted shall cease, except for the right to receive
certificates representing shares of Common Stock in accordance herewith, and the Class B-1 Holder
entitled to receive the shares of Common Stock issued as a result of such conversion shall be
treated for all purposes as having become the holder of such shares of Common Stock at such time.



(E) Reservation of Shares. The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Class B-1 Non-Voting Stock in accordance with the
terms hereof such number of its authorized but unissued shares of Common Stock as will at any time
and from time to time be sufficient to permit the conversion of any and all outstanding shares of
Class B-1 Non-Voting Stock, and shall take all action required to increase the authorized number of
shares of Common Stock if necessary to permit the conversion of all outstanding shares of Class B-1
Non-Voting Stock.



(ix) Exchange of Class B-2 Non-Voting Stock. [Each share of Class B-2 Non-Voting Stock
shall be immediately and automatically exchanged in the manner provided herein into one fully paid
and nonassessable share of Class B-1 Non-Voting Stock upon the Exchange Proposal Approval. If any
shares of Class B-2 Non-Voting Stock are issued at any time following the Exchange Proposal
Approval, such shares of Class B-2 Non-Voting Stock shall be immediately and automatically
exchanged upon issuance in the manner provided herein into one fully paid and nonassessable share
of Class B-1 Non-Voting Stock.]4 [Each share of Class B-2 Non-Voting Stock shall be
immediately and automatically exchanged in the manner provided herein into one fully paid and
nonassessable share of Class B-1 Non-Voting Stock.]5



(A) Exchange Procedures. The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes (other than taxes based on income) that may be payable in respect
of any issue or delivery of shares of Class B-1 Non-Voting Stock upon exchange of Class B-2
Non-Voting Stock pursuant hereto. As promptly as practical, and in any event within three (3)
Business Days (or fifteen (15) calendar days if physical delivery of any certificate is involved)
after the Exchange Date (as defined below), the Corporation shall deliver or cause to be delivered
as directed by the exchanging Class B-2 Holder certificates representing the number of validly
issued, fully paid and nonassessable full shares of Class B-1 Non-Voting Stock to which such Class
B-2 Holder shall be entitled. Such exchange shall be deemed to have occurred at the close of
business on the date (the “Exchange Date”) of the Shareholder Approval. As of such time
the rights of the Class B-2 Holder thereof as to the shares being exchanged shall cease, except for
the right to receive certificates representing shares of Class B-1 Non-Voting Stock in accordance
herewith, and the Class B-2 Holder entitled to receive the shares of Class B-1 Non-Voting Stock
issued as a result of such exchange shall be treated for all purposes as having become the holder
of such shares of Class B-1 Non-Voting Stock at such time.



(B) Reservation of Shares. The Corporation shall at all times reserve and keep
available for issuance upon the exchange of the Class B-2 Non-Voting Stock in accordance with the
terms hereof, such number of its authorized but unissued shares of Class B-1 Non-Voting Stock as
will at any time and from time to time be sufficient to permit the exchange of any and all
outstanding shares of Class B-2 Non-Voting Stock, and shall take all action required to increase
the authorized number of shares of Class B-1 Non-Voting Stock if necessary to permit the exchange
of all outstanding shares of Class B-2 Non-Voting Stock.



(b) Preferred Stock. The Preferred Stock may be issued from time to time in one or
more series, each of which series shall have such distinctive designation or title and such number
of shares as shall be fixed by the Board prior to the issuance of any shares thereof. Each such
series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and
such preferences and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issuance of such series of Preferred Stock as may be
adopted from time to time by the Board prior to the issuance of any shares thereof pursuant to the
authority hereby expressly vested in it. The Board is further authorized to increase or decrease
(but not below the number of shares outstanding) the number of shares of any series of Preferred
Stock subsequent to the issuance of shares of that series, except as otherwise provided in the
resolution or resolutions of the Board providing for the issuance of such series. In case the
number of shares of any series shall be so decreased, the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution originally fixing the
number of shares of such series. Except as provided in the resolution or resolutions of the Board
or in any Certificate of Designation or similar certificate creating any series of Preferred Stock
or as otherwise provided herein, the shares of Common Stock shall have the exclusive right to vote
for the election and removal of directors and for all other purposes.



(c) [The Corporation shall not issue non-voting equity securities within the meaning of
section 1123 of chapter 11 of title 11 of the United States Code.]6



ARTICLE V




(a) In furtherance and not in limitation of the powers conferred by statute, the Bylaws of the
Corporation (the “Bylaws”) may be made, altered, amended or repealed by the Board.



(b) In addition to any affirmative vote of the holders of any particular class or series of
the capital stock of the Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of not less than eighty percent (80%) in voting power of the
outstanding shares of the Corporation then entitled to vote upon the election of directors
generally, voting together as a single class, shall be required for (i) the alteration, amendment,
or repeal of (x) Paragraphs (b) or (d) of Article V of this Certificate of Incorporation or (y)
Article VII of this Certificate of Incorporation, or (ii) the alteration, amendment or repeal of
the By-laws of the Corporation by the stockholders of the Corporation.



(c) Meetings of stockholders may be held within or without the State of Delaware, as the
Bylaws may provide. Voting at meetings of stockholders need not be by written ballot. The books
of the Corporation may be kept (subject to any provision contained in the statutes) outside the
State of Delaware at such place or places as may be designated from time to time by the Board or in
the Bylaws. Except as otherwise provided for or fixed pursuant to the provisions of Paragraph (b)
of Article IV of this Certificate of Incorporation relating to the rights of holders of any series
of Preferred Stock, no action that is required or permitted to be taken by the stockholders of the
Corporation at any annual or special meeting of stockholders may be effected by written consent of
stockholders in lieu of a meeting of stockholders.



(d) For so long as the Corporation owns any shares of Space Systems/Loral, Inc., a Delaware
corporation, directly or indirectly, the Corporation shall not cause such shares to be voted in
favor of any amendment to or modification of Section 3 of the Restated Certificate of Incorporation
of Space Systems/Loral, Inc.



ARTICLE VI




(a) The business and affairs of the Corporation shall be managed by or under the direction of
the Board. In addition to the powers and authority expressly conferred upon them by statute or by
this Certificate of Incorporation or the Bylaws, the Board is hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by the Corporation. Subject to
Paragraph (f) below, the number of directors of the Corporation shall be fixed from time to time by
the Board, provided, however, that such number shall be no fewer than three (3) and no more than
fifteen (15).



(b) The Corporation is to have perpetual existence.



(c) The Board (other than those directors elected solely by the holders of any series of
Preferred Stock provided for or fixed pursuant to the provisions of Paragraph (b) of Article IV
hereof, if any (the “Preferred Stock Directors”)) shall be divided into three classes to be
designated as Class I, Class II and Class III. The number of such directorships shall be
apportioned among the classes so as to maintain the classes as nearly equal in number as possible.
At annual elections, other than with respect to the Preferred Stock Directors, the directors chosen
to succeed those whose terms are expiring shall be identified as being of the same class as the
directors whom they succeed, and shall be elected for a term ending at the time of the third
succeeding annual meeting of stockholders, or thereafter in each case when their respective
successors are elected and qualified.



(d) If the number of directors that constitutes the whole Board is changed in accordance with
this Article VI, the majority of the Board that adopts the change shall also fix and determine the
number of directors comprising each class; provided, however, that any increase or decrease in the
number of directors shall be apportioned among the classes as equally as possible. No decrease in
the number of directors constituting the entire Board shall have the effect of shortening the term
of any incumbent director.



(e) A director, other than a Preferred Stock Director, may be removed from office only for
cause and only by the vote of at least two-thirds in voting power of the outstanding stock entitled
to vote in an election of directors. Subject to the rights of the holders of shares of any series
of Preferred Stock then outstanding, any vacancy on the Board, however resulting, and any newly
created directorship resulting from any increase in the authorized number of directors elected by
all of the stockholders having the right to vote as a single class, shall be filled only by a
majority of the directors then in office, even if less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy shall hold office for a term that shall coincide
with the term of the class to which such director shall have been elected.



(f) During any period when the holders of any series of Preferred Stock have the right to
elect additional directors as provided for or fixed pursuant to the provisions of Paragraph (b) of
Article IV hereof, then upon commencement and for the duration of the period during which such
right continues: (i) the then otherwise total authorized number of directors of the Corporation
shall automatically be increased by such specified number of directors, and the holders of such
Preferred Stock shall be entitled to elect the additional director or directors so provided for or
fixed pursuant to said provisions, and (ii) each such additional director shall serve until such
director’s successor shall have been duly elected and qualified, or until such director’s right to
hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his
or her earlier death, disqualification, resignation or removal. Except as otherwise provided by
the Board in the resolution or resolutions establishing such series, whenever the holders of any
series of Preferred Stock having such right to elect additional directors are divested of such
right pursuant to the provisions of such stock, the terms of office of all such additional
directors elected by the holders of such stock, or elected to fill any vacancies resulting from the
death, resignation, disqualification or removal of such additional directors, shall forthwith
terminate and the total authorized number of directors of the Corporation shall forthwith be
reduced accordingly.



(g) Elections of directors need not be by written ballot.



(h) In the event that the votes of the directors on any matter voted upon by the Board are
equally divided, the director who is at that time the Vice Chairman of the Board shall have a
second or casting vote on such matter.



ARTICLE VII




(a) The Corporation shall indemnify to the fullest extent authorized or permitted under and in
accordance with the laws of the State of Delaware (as now or hereafter in effect) any person who
was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative in nature
(including any legislative or self-regulatory proceeding), by reason of the fact that he or she is
or was, or had agreed to become or is alleged to have been, a director or officer of the
Corporation, or, while a director or officer of the Corporation, is or was serving, or had agreed
to serve or is alleged to have served, at the request of or to further the interests of the
Corporation as a director, officer, trustee, appointee, designee, employee, manager, partner, or
agent of or in any other capacity with another corporation or any limited liability company,
partnership, joint venture, trust or other enterprise, including any employee benefit plan of the
Corporation or of any of its affiliates and any charitable or not-for-profit enterprise (any such
person being sometimes referred to hereafter as an “Indemnitee”), or by reason of any
action taken or omitted or alleged to have been taken or omitted by an Indemnitee in any such
capacity, against expenses (including court costs and attorneys’ fees), judgments, damages, fines,
penalties, amounts paid in settlement and other liabilities actually and reasonably incurred by him
or her or on his or her behalf in connection with such action, suit or proceeding and any appeal
therefrom. In case any action, suit or proceeding shall be brought against any Indemnitee, such
Indemnitee shall notify the Corporation of the commencement thereof, and the Corporation shall be
entitled to participate therein and, to the extent that it shall wish, to assume the defense
thereof. The termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, that such person had reasonable cause to believe that his or her conduct was
unlawful. With respect to service by an Indemnitee on behalf of any employee benefit plan of the
Corporation or any of its affiliates, action in good faith in what the Indemnitee reasonably
believed to be the best interest of the beneficiaries of the plan shall be considered to be in or
not opposed to the best interests of the Corporation. The Corporation shall indemnify an
Indemnitee for expenses (including attorneys’ fees) reasonably incurred by the Indemnitee in
connection with a proceeding successfully establishing his or her right to indemnification, in
whole or in part, pursuant to this Article. However, notwithstanding anything to the contrary in
this Article, the Corporation shall not be required to indemnify an Indemnitee against expenses
incurred in connection with a proceeding (or part thereof) initiated by the Indemnitee against the
Corporation (other than as contemplated by the immediately preceding sentence) or any other person
who is an Indemnitee unless the initiation of the proceeding was approved by the Board of the
Corporation.



(b) Expenses (including any attorneys’ fees) reasonably incurred in investigating, defending
or responding to any civil or criminal action, suit, proceeding or investigation in which a current
or former director or officer of the Corporation has been named as a defendant, respondent or
target, and any appeal therefrom, shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
the current or former director or officer of the Corporation to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the Corporation as
authorized in this Article VII. Such undertaking shall be accepted by the Corporation without
reference to the financial ability of the current or former director or officer of the Corporation
to make such repayment.



(c) This indemnification and other rights set forth in this Article VII shall not be exclusive
of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may
be entitled under any law (common or statutory), contract, agreement, bylaws, vote of stockholders
or action of the Board or otherwise, both as to action in his or her official capacity and as to
action in any other capacity while holding office for the Corporation, and nothing contained in
this Article VII shall be deemed to prohibit the Corporation from entering into agreements with
officers and directors providing indemnification rights and procedures different from those set
forth in this Article VII.



(d) The right to indemnification and advancement of expenses provided by this Article VII
shall continue as to any person who formerly was an officer or director of the Corporation in
respect of acts or omissions occurring or alleged to have occurred while he or she was an officer
or director of the Corporation and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitees. Unless otherwise required by law, the burden of proving that
the Indemnitee is not entitled to indemnification or advancement of expenses under this Article
shall be on the Corporation. The right of an Indemnitee to indemnification or advances as granted
by this Article VII shall be a contractual obligation of the Corporation and, as such, shall be
enforceable by the Indemnitee in any court of competent jurisdiction.



(e) In addition to indemnification by the Corporation of current and former officers and
directors and advancement of expenses by the Corporation to current and former officers and
directors as provided for by the foregoing provisions of this Article VII, the Corporation may, in
a manner and to the fullest extent permitted by law, indemnify current and former employees, agents
and other persons serving the Corporation and advance expenses to current and former employees,
agents and other persons serving the Corporation, in each case as may be authorized by the Board,
and any rights to indemnity or advancement of expenses granted to such persons may be equivalent
to, or greater or less than, those provided to directors, officers and employees by this Article
VII.



(f) The Corporation may purchase and maintain insurance, at its expense, to protect itself and
any current or former director, officer, employee or agent of the Corporation or of another
corporation or a limited liability company, partnership, joint venture, trust or other enterprise
(including any employee benefit plan) in which the Corporation has an interest against any expense,
liability or loss incurred by the Corporation or such person in his or her capacity as such, or
arising out of his or her status as such, whether or not the Corporation would have the power to or
is obligated to indemnify such person against such expense, liability or loss. The indemnification
and reimbursement of expenses so provided by this Article VII shall not be available to the extent
that indemnification or reimbursement has been received by such director or officer under any
applicable policy of insurance or otherwise.



(g) No amendment, termination or repeal of this Article VII or the adoption of any provision
of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate or reduce
the effect of this Article VII, in respect of any actions, transactions, facts or matter occurring
before such amendment, repeal or adoption of an inconsistent provision or in respect of any cause
of action, suit, claim, proceeding or investigation arising out of or relating to any actions,
transactions, facts or matter which would have given rise to a right of indemnification or right to
receive expenses pursuant to this Article VII, if such provision had not been so amended,
terminated or repealed or if a provision inconsistent therewith had not been so adopted.



(h) A director shall have no personal liability to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for (i) any breach of the
director’s duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law by the director,
(iii) liability under Section 174 of the DGCL or (iv) any transaction from which the director
derived an improper personal benefit. If the DGCL is hereafter amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then the liability of a
director shall be eliminated or limited to the full extent permitted by the DGCL, as so amended.
Any repeal or modification of this Article VII shall not adversely affect any right or protection
of a director of the Corporation existing at the time of such repeal or modification with respect
to an act or omission of such director occurring prior to such repeal or modification.



(i) Notwithstanding anything to the contrary set forth in this Article VII, and except as
provided in clause (iv) below and as provided in the Stipulation and Agreement Among the Debtors
and Their Directors and Officers in Respect of Certain Indemnification Claims in In re Loral Space
& Communications Ltd. et al., Case Nos. 03-41710 (RDD), 03-41709 (RDD) through 03-41728 (RDD) in
the United States Bankruptcy Court for the Southern District of New York, (i) for the purposes of
this Article VII, the term “Corporation” shall not include Loral Space & Communications Ltd., a
Bermuda company, or any direct or indirect subsidiary thereof that at the time was not or that is
not a direct or indirect subsidiary of the Corporation (collectively, “Old Loral”), and the
Corporation shall not have obligations pursuant to this Article VII solely by virtue of any
assertion by any person, entity or governmental authority or any determination by a court of
competent jurisdiction, that it is a successor to Old Loral or any other entity; (ii) the
Corporation may, but shall not be required to, indemnify any director or officer of Old Loral, or
any person who was serving, or had agreed to serve or is alleged to have served, at the request of
or to further the interests of Old Loral as a director, officer, trustee, appointee, designee,
employee, manager, partner, or agent of or in any other capacity with another corporation or any
limited liability company, partnership, joint venture, trust or other enterprise, including any
employee benefit plan of Old Loral or of any of its affiliates and any charitable or not-for-profit
enterprise, except as specifically set forth in that certain Fourth Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of June 3, 2005 of Loral Space &
Communications, Ltd. and its subsidiaries that are a party thereto (as the same may be amended from
time to time, the “Plan”); (iii) the Corporation may, but shall not be required to, indemnify any
Indemnitee with respect to any events or circumstances occurring prior to the filing of a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code on July 11, 2003 by Loral Space &
Communications, Ltd. and its subsidiaries that are a party thereto, except as specifically set
forth in the Plan; and (iv) the Corporation shall indemnify and hold harmless each Indemnitee from
and against and for any and all obligations incurred directly or indirectly by Old Loral with
respect to any taxes owed by Old Loral or the Debtors (as defined in the Plan) for the period prior
to the Effective Date (as defined in the Plan), including interest and penalties, to any
governmental entity and as to which Old Loral or the Debtors are the primary obligor(s), to the
full extent provided in Paragraphs (a) through (h) of this Article VII.



ARTICLE VIII




For the purposes of this Certificate of Incorporation, the following terms shall have the
meanings indicated:



“Affiliate” of any specified Person means any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, “control” when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.



“Associate” shall have the meaning as defined in Rule 12b-2 under the Exchange Act.



“Beneficial Owner” shall have the meaning as defined in Rules 13d-3 and 13d-5 under
the Exchange Act.



“Board” means the Board of Directors of the Corporation.



“Business Day” means any day, other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or executive order to
close.



“Closing Date” shall have the meaning assigned to such term in the Securities Purchase
Agreement.



“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, from time to time.



“Exchange Proposal Approval” means the affirmative vote of at least a majority of the
votes cast (whether in person, by proxy at a meeting of shareholders or by written consent in lieu
of a special meeting) in favor of a proposal to permit the Class B-2 Non-Voting Stock to be
exchangeable into shares of Class B-1 Non-Voting Stock in accordance with the terms and conditions
of Section (a)(ix) of Article IV of this Restated Certificate of Incorporation.



“Joint Venture” means any joint venture between the Corporation and any other Person.



“Majority Ownership Date” means the earlier of the date that (i) MHR becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Common Stock of the Corporation
(including any successor to the Corporation) (excluding any shares of Series A-1 Preferred Stock
issued on the Closing Date or Common Stock issued upon the conversion thereof), and (ii) a Person
unrelated to MHR becomes the Beneficial Owner, directly or indirectly, of shares of capital stock
of the Corporation (other than any shares acquired in violation of the Transfer Restriction)
constituting, upon exercise or conversion into Common Stock of all in-the-money convertible
securities, options and warrants that such person has the immediate right to so exercise or
exchange, more than 50% of the Common Stock of the Corporation (including any successor to the
Corporation) that would be outstanding following the exercise or conversion of all in-the-money
convertible securities, options and warrants of the Corporation then outstanding; provided that the
Majority Ownership Date shall not be deemed to have occurred pursuant to clause (ii) above if at
such time MHR would, upon conversion of any shares of Series A Preferred Stock, Class B-1
Non-Voting Stock or Class B-2 Non-Voting Stock then held by it into Common Stock and upon
conversion of any shares of Series B-1 Preferred Stock then held by it into Series A-1 Preferred
Stock or Common Stock, become the Beneficial Owner of more than 50% of the Common Stock of the
Corporation (including any successor to the Corporation) that would be outstanding following the
exercise or conversion of all in-the-money convertible securities, options and warrants of the
Corporation then outstanding.



“MHR” means MHR Fund Management LLC and any successor thereto (“Fund Management”) and
any investment fund or other entity controlled by, or under common control with, Fund Management or
any Person that controls or is controlled by Fund Management.



“Person” means any individual, corporation, company, association, partnership, limited
liability company, joint venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.



“Qualified Transferee” shall mean a Person other than a Disqualified Transferee.



“Securities Purchase Agreement” means the Securities Purchase Agreement, dated as of
October 17, 2006, by and between the Corporation and MHR Fund Management LLC or any of its
permitted assignees, as amended and restated by the Amended and Restated Securities Purchase
Agreement, dated as of February [27], 2007, between the same parties, as further amended,
supplemented or otherwise modified from time to time.



“Series A Certificate of Designation” means the Certificate of Designation setting
forth the rights, preferences, privileges and powers of the Series A-1 Preferred Stock and Series
A-2 Preferred Stock, as filed with the Secretary of State of the State of Delaware.



“Series A-1 Preferred Stock” means the Series A-1 Cumulative 7.50% Convertible
Preferred Stock, par value $0.01 per share, of the Corporation.



“Series A-2 Preferred Stock” means the Series A-2 Convertible Preferred Stock, par
value $0.01 per share, of the Corporation.



“Series B Certificate of Designation” means the Certificate of Designation setting
forth the rights, preferences, privileges and powers of the Series B-1 Preferred Stock and Series
B-2 Preferred Stock, as filed with the Secretary of State of the State of Delaware.



“Series B-1 Preferred Stock” means the Series B-1 Cumulative 7.50% Preferred Stock,
par value $0.01 per share, of the Corporation.



“Series B-2 Preferred Stock” means the Series B-2 Convertible Preferred Stock, par
value $0.01 per share, of the Corporation.



“Subsidiary” means as to any Person, any other Person of which more than 50% of the
shares of the voting stock or other voting interests are owned or controlled, or the ability to
select or elect more than 50% of the directors or similar managers is held, directly or indirectly,
by such first Person or one or more of its Subsidiaries or by such first Person and one or more of
its Subsidiaries; provided, however, that no Joint Venture shall be considered (i) a “Subsidiary”
of the Corporation or (ii) a “Subsidiary” of any Subsidiary of the Corporation.



“Threshold” means 39.999% of the aggregate voting power of all outstanding securities
issued by the Corporation at any time and from time to time (assuming the conversion of all of the
then outstanding shares of Series A-1 Preferred Stock).



“Transfer Restriction” shall have the meaning assigned to such term in the Securities
Purchase Agreement.



3 [To be included if stockholders do not
approve the Non-Voting Securities Proposal (as defined in the Securities
Purchase Agreement).]



4 [This provision to be included if the
Exchange Proposal Approval is not approved when this Restated Certificate is
filed with the Secretary of State of the State of Delaware.]



5 [This provision to be included if the
Exchange Proposal Approval occurs simultaneously with the Class B Non-Voting
Stock Authorization.]



6 [To be removed if stockholders approve the
Non-Voting Securities Proposal (as defined in the Securities Purchase
Agreement).]



8



IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate of
Incorporation to be signed and attested by its duly authorized officers on this      day of
     , 200     .



	 
	 

	     

	 

	Avi Katz

	 

	Vice President and Secretary







	 
	 

	 

	 

	ATTEST:

	 

	     

	 

	Janet Yeung

	 

	Vice President and Assistant Secretary







9




EXHIBIT D




AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT




10




EXHIBIT E




CORPORATION SCHEDULE OF EXCEPTIONS




11




EXHIBIT F




INTENTIONALLY OMITTED




12




EXHIBIT G




FORM OF OPINION OF WILLKIE FARR & GALLAGHER LLP




13




EXHIBIT H




FORM OF AMENDMENT TO AMENDED AND RESTATED BYLAWS




14




EXHIBIT I




FORM OF BRING-DOWN CERTIFICATE




15




EXHIBIT J




FORM OF BRING-DOWN OPINION




16




EXHIBIT K




FORM OF THRESHOLD CONVERSION NOTICE




17




EXHIBIT L




FORM OF NOTICE OF CONFIRMATION




18




EXHIBIT M




FORM OF NOTICE OF DISAGREEMENT




19




EXHIBIT N




FORM OF JOINDER AGREEMENT





20