EX-10.1



 





Exhibit 10.1



December 16, 2006




BCE Inc.

1000, de la Gauchetiere West

Suite 3700

Montreal, QC H3B 4Y7

Attention: Andrew Smith, Director M&A



Ladies and Gentlemen:




     Reference is hereby made to that certain Share Purchase Agreement, dated as of the date hereof
(as amended in accordance with its terms, the “Purchase Agreement”), between 4363213 Canada
Inc., a corporation existing under the laws of Canada (the “Company”), BCE Inc., a
corporation existing under the laws of Canada (the “Seller”), and Telesat Canada, a
corporation existing under the laws of Canada, pursuant to which the Company has agreed to purchase
from the Seller all of the issued and outstanding shares (the “Purchased Shares”) of
Telesat. Capitalized, undefined terms used herein shall have the respective meanings ascribed to
them in the Purchase Agreement.



     This letter confirms in writing the agreement of Loral Space & Communications Inc., a Delaware
corporation (“Loral”), Public Sector Pension Investment Board, a Canadian federal Special
Act corporation (“PSP” and, together with Loral, the “Sponsors”), and the Seller,
for itself and the other Releasors (as hereinafter defined), regarding the following matters:



     A. In the event that (i) the Purchase Agreement is terminated pursuant to Section 6.2(b) or
6.3(c) thereof and the Company is required to pay the Break-Up Fee to the Seller (a “Break-Up
Fee Termination”), (ii) the conditions set forth in Section 5.1 of the Purchase Agreement are
satisfied and the Company fails to consummate the Closing as provided in the Purchase Agreement, or
(iii) the Company defaults under, or otherwise breaches, the provisions of the Purchase Agreement
such that the Seller shall have the right to terminate the Purchase Agreement in accordance with
its terms and the Seller exercises such right to terminate (each such termination described in the
preceding clause (ii) and this clause (iii), a “Breach Termination”), the Sponsors shall
severally, but not jointly, pay or cause the Company (or an affiliate thereof) to pay, to the
Seller: (A) in the event of a Break-Up Fee Termination, the aggregate amount of the Break-Up Fee
by wire transfer of immediately available funds, provided that, notwithstanding anything to
the contrary contained in this letter agreement, the Purchase Agreement, those certain letters,
dated December 4, 2006 and December 14, 2006, respectively, in each case as superseded by that
certain letter, dated December 16, 2006 (such letters, collectively, the “Loral Commitment
Letter”), from Loral to 4363205 Canada Inc., a corporation existing under the laws of Canada
and the sole



 









 





BCE Inc.

December 16, 2006

Page 2



shareholder of the Company (“Holdings”), those certain letters, dated December
4, 2006 and
December 14, 2006, respectively, in each case as superseded by that certain letter, dated
December 16, 2006 (such letters, together, with the Loral Commitment Letter, the “Equity
Commitment Letters”), or any other documents or instruments delivered in connection herewith or
therewith, Loral shall be responsible for 64% (the “Loral Break-Up Fee Cap”), and PSP shall
be responsible for 36% (together with the Loral Break-Up Fee Cap, the “Sponsor Break-Up Fee
Cap”), of the aggregate amount of the Break-Up Fee payable for, upon or by reason of any matter
that arises out of or relates in any way to any such Break-Up Fee Termination; and (B) in the event
of a Breach Termination, the damages actually incurred by the Seller and for which the Company is
liable to the Seller under the terms of the Purchase Agreement, after a final and non-appealable
judgment in respect thereof, by wire transfer of immediately available funds (the “Termination
Damages”), provided that, notwithstanding anything to the contrary contained in this
letter agreement, the Purchase Agreement, any Equity Commitment Letter or any other documents or
instruments delivered in connection herewith or therewith, (x) Loral shall be responsible for 64%
(the “Loral Termination Damages Cap”), and PSP shall be responsible for 36% (together with
the Loral Termination Damages Cap, and, subject to the proviso in clause (y) below, the
“Sponsor Termination Damages Cap”), of the aggregate amount of the Termination Damages
payable for, upon or by reason of any matter that arises out of or relates in any way to any such
Breach Termination, and (y) under no circumstances shall (I) the Seller be entitled to Damages (as
hereinafter defined) in excess of C$200,000,000 in the aggregate, (II) Loral be responsible for
Damages in excess of C$128,000,000 in the aggregate, (III) PSP be responsible for Termination
Damages in excess of C$72,000,000 in the aggregate or (IV) PSP or the Company be responsible for
any Loral Breach Damages (as hereinafter defined). In the event that Loral defaults under, or
otherwise breaches, its representations and warranties under paragraph D hereof (any such default
or breach, a “Loral Breach”), subject to the proviso in clause (y) above, Loral shall pay
to the Seller the damages actually incurred by the Seller as a result of any such Loral Breach,
after a final and non-appealable judgment in respect thereof, by wire transfer of immediately
available funds (such damages, subject to the proviso in clause (y) above, the “Loral Breach
Damages” and, together with the Termination Damages, the “Damages”). As used in this
letter agreement: (a) “Sponsor Cap” shall mean, (1) with respect to any Break-Up Fee
Termination, the Sponsor Break-Up Fee Cap, (2) with respect to any Breach Termination, the Sponsor
Termination Damages Cap and (3) with respect to any Loral Breach, C$128,000,000 in the aggregate
(subject to the proviso in clause (y) above); and (b) “Applicable Amount” shall mean, (1)
with respect to any Break-Up Fee Termination, the Break-Up Fee, (2) with respect to any Breach
Termination, the Termination Damages and (3) with respect to any Loral Breach, the Loral Breach
Damages.




     B. The Seller, for itself and its affiliates (collectively, the “Releasors”), hereby
agrees that, subject to the applicable Sponsor Cap, payment of the Applicable Amount as set forth
in this letter agreement shall be the sole and exclusive right and remedy of any Releasor



 









 





BCE Inc.

December 16, 2006

Page 3



against
the Sponsors, the Company and their respective affiliates and each of their respective
shareholders, partners, officers, directors (or Persons in similar positions), successors,
assigns, agents and representatives (collectively, the “Releasees”), and, from and after
such payment, no Claims (as hereinafter defined), whether based on contract, tort or otherwise
shall be asserted against any Releasee for, upon or by reason of any Claim or matter that arises
out of or relates in any way to this letter agreement, the Purchase Agreement, any Equity
Commitment Letter or any of the transactions contemplated hereby or thereby. In addition, the
Seller (for itself and the other Releasors) hereby agrees that upon payment by or on behalf of the
Sponsors to the Seller of the Applicable Amount (subject to the applicable Sponsor Cap), without
any further action by any other Person, each Releasee shall be released and forever discharged by
each Releasor from any and all actions, liabilities, obligations, suits, debts, sums of money,
agreements, promises, damages, judgments, executions, claims and demands, of every nature
whatsoever, whether known or unknown, in law or equity, which any Releasor ever had, now has or
hereafter can, shall or may have against any Releasee (collectively “Claims”) for, upon or
by reason of any matter that arises out of or relates in any way to this letter agreement, the
Purchase Agreement, any Equity Commitment Letter or any of the transactions contemplated hereby or
thereby. Notwithstanding the foregoing, the limitations on the liability of Loral and PSP set
forth in this letter agreement shall not apply to: (i) with respect to Loral, any fraud or willful
misconduct on the part of Loral; and (ii) with respect to PSP, any fraud or willful misconduct on
the part of PSP.




     C. Notwithstanding anything to the contrary that may be expressed or implied in this letter
agreement, the Seller (for itself and the other Releasors), by its acceptance hereof, acknowledges
and agrees that (i) no recourse hereunder or under any documents or instruments delivered in
connection herewith or with the Purchase Agreement or any Equity Commitment Letter may be had
against any director (or Person in a similar position), officer, agent, employee or affiliate
(other than the Company) of any Sponsor or any director (or Person in a similar position), officer,
employee, partner, affiliate (other than the Company), assignee or representative of the foregoing
(any such Person, a “Sponsor Representative”), whether by the enforcement of any judgment
or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or
other applicable law, and (ii) no personal liability whatsoever will attach to, be imposed on or
otherwise be incurred by any Sponsor Representative under this letter agreement or any documents or
instruments delivered in connection herewith or with the Purchase Agreement or any Equity
Commitment Letter for any claim based on, in respect of or by reason of any obligations hereunder
or under any such documents or instruments or by the creation of any such obligations;
provided, however, that, the limitations on the liability of a Sponsor
Representative set forth in this paragraph C shall not apply to any fraud or willful misconduct on
the part of such Sponsor Representative.



     D. Loral hereby represents and warrants to the Seller that:



 









 





BCE Inc.

December 16, 2006

Page 4





	 	1.	 	The proposed transfer by Loral, either directly or indirectly,
of all of the capital stock or substantially all of the assets of Loral Skynet
Corporation (“Skynet”) to the Company (or an Affiliate thereof) at or
after the Closing and the consummation of the transactions contemplated by, or
required to be consummated to give effect to, such transfer (the “Skynet
Transfer”) will not:






	 	a.	 	constitute or result in (i) a breach or
violation of, or a default under, the articles, by-laws or the
comparable governing instruments of Loral, Skynet or any of their
respective Subsidiaries, (ii) a breach or violation of, a default
under, the triggering of any payment or other material obligation
pursuant to, or the acceleration of (with or without the giving of
notice or the lapse of time) any provision of any material Contract to
which Loral, Skynet or any of their respective Affiliates is a party
other than the outstanding 14% Senior Secured Notes due 2015 of Skynet,
or (iii) a breach or violation of any Law to which any of Loral, Skynet
or any of their respective Affiliates is subject, except in the case of
each of the immediately preceding clauses (i), (ii) and (iii),
violations, defaults, accelerations or changes that, alone or in the
aggregate, would not reasonably be expected to prevent or materially
delay or impair the consummation of the transactions contemplated by
the Skynet Transfer;
	 
	 	b.	 	require that any consent, approval or
authorization be obtained by Loral from the shareholders of Loral under
applicable Law or from any Person (other than any Governmental Entity)
except any such consent, approval or authorization the failure of which
to obtain, either alone or in the aggregate, would not reasonably be
expected to prevent or materially delay or impair the consummation of
the transactions contemplated by the Skynet Transfer;
	 
	 	c.	 	trigger rights in favor of any third party
under any written or oral Contract or option, or any right or privilege
(whether by Law, pre-emptive or contractual) capable of becoming a
Contract or option, for the purchase or acquisition by any third party
of the capital stock or assets of Skynet which are to be transferred to
the Purchaser as part of the Skynet Transfer, and




 









 











BCE Inc.

December 16, 2006

Page 5





	 	 	 	such capital stock and assets are not subject to any such Contract;
or
	 
	 	d.	 	prevent or materially impair or, to the
knowledge of Loral, delay beyond the Outside Date the consummation of
the transactions contemplated by the Purchase Agreement.






	 	2.	 	Loral is not aware of any reason why the conditions set forth
in the Commitment Letters (including, without limitation, any condition
relating to the delivery of audited consolidated financial statements,
unaudited consolidated financial statements, pro forma financial statements,
forecasts or other financial information of Skynet and its Subsidiaries) would
not be satisfied or on before the Closing Date or such other earlier date as
may be set forth in the Commitment Letters.





     E. The terms of this letter agreement shall remain confidential and the Seller shall not, and
shall cause its affiliates not to, disclose the terms or existence of this letter agreement to any
Person except (i) to the extent required by applicable law or (ii) to the extent necessary to
enforce its rights or obligations under this letter agreement.



     F. This letter agreement contains the entire agreement between the parties hereto in respect
of the subject matter hereof and supersedes any and all prior agreements, arrangements or
understandings (whether written or oral), including, without limitation, each Equity Commitment
Letter (and the provisions thereof pursuant to which the Seller is a third party beneficiary), with
respect to such subject matter. This letter agreement may not be changed, amended, modified, or
altered, except by written agreement signed by Loral, PSP and the Seller.



     G. The parties hereto acknowledge that this letter agreement was drafted jointly by the
parties, and its terms shall not be construed against any party. All references to “C$” herein
shall be to Canadian dollars.



     H. Neither this letter agreement nor any of the rights or obligations hereunder may be
assigned by any of the parties hereto (by operation of law or otherwise) without the prior written
consent of Loral, PSP and the Seller and, nothing contained herein shall confer upon any Person
(other than the Seller, the Releasors and the Releasees) any rights or remedies hereunder.



     I. This letter agreement may be executed in two or more counterparts, each of which shall be
deemed an original (including facsimile signatures) and all of which together shall constitute one
and the same instrument. This letter agreement shall be governed by the laws of the Province of
Ontario and the federal laws of Canada applicable therein (without



 









 





BCE Inc.

December 16, 2006

Page 6



giving effect to the conflicts of law principles thereof). Each party hereto hereby
irrevocably and unconditionally: (i) consents and submits to the exclusive jurisdiction of the
courts of the Province of Ontario for any dispute arising out of or relating to this letter or the
transactions contemplated hereby; (ii) waives any objection to the laying of venue of any such
dispute in such courts; and (iii) waives and agrees not to plead or claim that any such dispute
brought in any such court has been brought in an inconvenient forum.




     J. EACH PARTY HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY DISPUTE DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.



[remainder of page intentionally left blank]




 









 





     If you are in agreement with the terms set forth above, please sign this letter agreement in
the space provided below and return an executed copy to the undersigned.



	 	 	 	 	 
	 	Very truly yours,



PUBLIC SECTOR PENSION INVESTMENT BOARD

 	 
	 	By:  	/s/ Derek Murphy
 	 
	 	 	Name:  	Derek Murphy 	 
	 	 	Title:  	First Vice President, Private Equity 	 
	 
	 	 	 
	 	By:  	                                              /s/ Assunta Di Lorenzo
 	 
	 	 	Name:  	Assunta Di Lorenzo 	 
	 	 	Title:  	First Vice President, General Counsel

and Secretary 	 
	 
	 	LORAL SPACE & COMMUNICATIONS INC.

 	 
	 	By:  	/s/ Michael B. Targoff
 	 
	 	 	Name:  	Michael B. Targoff 	 
	 	 	Title:  	CEO and Vice Chairman of the Board 	 
	 



	 	 	 	 	 
	ACCEPTED AND AGREED:	 	 
	 
	 	 	 	 
	BCE INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael J. Sabia	 	 
	 

	 	 	 	 
	 

	 	Name: Michael J. Sabia	 	 
	 

	 	Title: President and Chief Executive Officer