EXHIBIT 10.43
**EXECUTION COPY**

$20,000,000
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
between
SPACE SYSTEMS/LORAL, INC.,as Borrower,
and
JPMORGAN CHASE BANK

Dated as of April 2, 2004

 

 

TABLE OF CONTENTS               **Page**SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION  1   1.01. Defined Terms  1   1.02. Terms Generally  8   1.03. Accounting Terms; GAAP  8 SECTION 2. LETTERS OF CREDIT  9   2.01. General  9   2.02. Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions  9   2.03. Expiration Date  10   2.04. Priority and Liens  10   2.05. Reimbursement  10   2.06. Obligations Absolute; Limitation of Liability  11   2.07. Practices  13   2.08. Disbursement Procedures  13   2.09. Termination and Reduction of Commitment  13   2.10. Fees  13   2.11. Default Rate of Interest  14   2.12. Increased Costs  14   2.13. Taxes  15   2.14. Payments Generally; Treatment  15   2.15. Assumption  of this Agreement or Cancellation of Letters of Credit  16 SECTION 3. COLLATERAL  16   3.01. Cash Collateral  16   3.02. Currency Exchange Rate Fluctuations  17 SECTION 4. CONDITIONS PRECEDENT TO EACH CREDIT EVENT  17   4.01. Execution of Agreement  17   4.02. Sufficient Collateral  17   4.03. No Default; Representations and Warranties  17   4.04. Opinion of Counsel  17   4.05. Corporate Documents; Proceedings  17   4.06. Payment of Fees  18   4.07. Letter of Credit Request  18   4.08. The Orders  18   4.09. Documents  19   4.10. Release of Liens on Collateral  19 
 

 
               **Page**SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS  19   5.01. Corporate Status  19   5.02. Corporate Power and Authority  20   5.03. No Violation  20   5.04. Governmental Approvals  20   5.05. Litigation  20   5.06. True and Complete Disclosure  20   5.07. Tax Returns and Payments  21   5.08. Compliance with Statutes, etc.  21   5.09. Investment Company Act  21   5.10. Properties  21   5.11. Financial Condition; No Material Adverse Change  21   5.12. Use of Proceeds  22   5.13. The Orders  22   5.14. Security Interests  22 SECTION 6. AFFIRMATIVE COVENANTS  22   6.01. Financial Statements  22   6.02. Certificates; Other Information  23   6.03. Maintenance of Existence; Compliance  23   6.04. Notices  23   6.05. Books, Records and Inspections  24   6.06. Taxes  24 SECTION 7. NEGATIVE COVENANTS  24   7.01. Amendment to Plan  24   7.02. Liens  24   7.03. Collateral Requirement  24 SECTION 8. EVENTS OF DEFAULT  24 SECTION 9. MISCELLANEOUS  26   9.01. Right of Setoff  26   9.02. Notices  26   9.03. Expenses; Indemnity  26   9.04. Benefit of Agreement  28   9.05. No Waiver; Remedies Cumulative  28   9.06. Calculations; Computations  28   9.07. Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial  28   9.08. Confidentiality  29   9.09. Counterparts  29   9.10. Headings Descriptive  30 
ii
 

 
               **Page**  9.11. Amendment or Waiver  30   9.12. Survival  30 
EXHIBITS
Exhibit A - Form of Interim Order
Exhibit B - Form of Officers’ Certificate of the Borrower
iii
 

 

     LETTER OF CREDIT REIMBURSEMENT AGREEMENT (this “Agreement”), dated as ofApril 2, 2004, between Space Systems/Loral, Inc. (the “Borrower”), acorporation existing under the laws of the State of Delaware and a debtor anddebtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code(as defined below), and JPMorgan Chase Bank, a New York banking corporation(the “Bank”).
W I T N E S S E T H :
     WHEREAS, on July 15, 2003 (the “Petition Date”), the Borrower and certainof its affiliates filed voluntary petitions for relief in the United StatesBankruptcy Court for the Southern District of New York (the “Bankruptcy Court”)under Chapter 11 of the Bankruptcy Code, Case No. 03-41710 (RDD) (the“Bankruptcy Proceeding”);
     WHEREAS, the Borrower has requested that the Bank make available to it aletter of credit facility to issue letters of credit in an aggregate faceamount not to exceed $20,000,000 at any one time to provide credit support inconnection with (x) bids made by the Borrower for contracts to build satellitesand related components and (y) general corporate purposes, including, withoutlimitation, workers’ compensation obligations;
     WHEREAS, to provide security for the reimbursement of any drawing of aLetter of Credit and the payment of the other Obligations of the Borrower, theBorrower will provide to the Bank (all as more fully described in thisAgreement and the Cash Collateral Agreement): (i) pursuant to Section364(c)(1), a superpriority administrative expense claim in the BankruptcyProceeding, having priority over all administrative expenses of the kindspecified in Sections 503(b) and 507(b) of the Bankruptcy Code and (ii)pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected firstpriority Lien on, and security in, all of the Collateral, including the CashCollateral Account;
     WHEREAS, upon consummation of the Plan and pursuant to the ConfirmationOrder, the letter of credit facility described herein may be assumed by theBorrower, as a reorganized debtor, for the issuance (or the amendment, renewalor extension) of Letters of Credit after the Plan Effective Date; and
     WHEREAS, subject to and upon the terms and conditions set forth herein,the Bank is willing to issue Letters of Credit, all as provided for herein;
     NOW, THEREFORE, IT IS AGREED:
     Section 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
     1.01. Defined Terms. As used in this Agreement, the following terms shallhave the following meanings (such meanings to be equally applicable to both thesingular and plural forms of the terms defined):
     “Additional Credit” shall have the meaning assigned thereto in Section4.08(b).
 

 

     “Affiliate” shall mean, with respect to a specified Person, another Personthat directly, or indirectly through one or more intermediaries, Controls or isControlled by or is under common Control with the Person specified.
     “Agreement” shall mean this Letter of Credit Reimbursement Agreement, asamended, supplemented or otherwise modified from time to time.
     “Alternative Currency” shall mean Euros or Yen.
     “Alternative Currency Letter of Credit” shall mean any Letter of Credithaving a face amount denominated in an Alternative Currency.
     “Assumption Agreement” shall have the meaning provided in Section 2.15.
     “Availability Period” shall mean the period from and including the ClosingDate to but excluding the earlier of the Maturity Date and the date oftermination of the Commitment.
     “Bank” shall have the meaning provided in the preamble.
     “Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C.§§ 101 et seq., as now or hereafter in effect, or any successor thereto.
     “Bankruptcy Court” shall mean the United States Bankruptcy Court for theSouthern District of New York or any other court having jurisdiction over theBankruptcy Proceeding from time to time.
     “Bankruptcy Proceeding” shall mean the Borrower’s Chapter 11 case pendingin the Bankruptcy Court.
     “Bid Bonds” shall mean bonds or other credit support provided by theBorrower in respect of bids made by the Borrower for contracts to buildsatellites and related components.
     “Borrower” shall have the meaning provided in the preamble.
     “Business Day” shall mean any day that is not a Saturday, Sunday or otherday on which commercial banks in New York City are authorized or required bylaw to remain closed.
     “Cash Collateral Account” shall have the meaning provided in the CashCollateral Agreement.
     “Cash Collateral Agreement” shall mean the Cash Collateral Agreement,dated as of even date herewith, between the Borrower and the Bank, as amended,supplemented or otherwise modified from time to time.
     “Change in Law” shall mean (a) the adoption of any law, rule or regulationafter the date of this Agreement, (b) any change in any law, rule or regulationor in the interpretation or application thereof by any Governmental Authorityafter the date of this Agreement or (c) compliance by the Bank (or, forpurposes of Section 2.13(b), by any lending office of the Bank’s
 

 

holding company, if any) with any request, guideline or directive (whetheror not having the force of law) of any Governmental Authority made or issuedafter the date of this Agreement.
     “Closing Date” shall mean the date on which all of the conditions setforth in Section 5 shall have been satisfied.
     “Code” shall mean the Internal Revenue Code of 1986, as amended from timeto time, and the regulations promulgated thereunder and the rulings basedthereon. Section references to the Code are to the Code, as in effect at thedate of this Agreement, and to any subsequent provisions of the Code,amendatory thereof, supplemental thereto or substituted therefor.
     “Collateral” shall have the meaning assigned thereto in the CashCollateral Agreement.
     “Committee” shall mean the Official Committee of Unsecured Creditorsappointed by the Office of the United States Trustee on July 24, 2003.
     “Commitment” shall mean the commitment of the Bank hereunder to issueLetters of Credit, as it may be reduced from time to time pursuant to Section2.09. The amount of the Commitment on the Closing Date is $20,000,000.
     “Confirmation Order” shall mean any final order of the Bankruptcy Courtconfirming a Plan pursuant to Section 1129 of the Bankruptcy Code.
     “Control” shall mean the possession, directly or indirectly, of the powerto direct or cause the direction of the management or policies of a Person,whether through the ability to exercise voting power, by contract or otherwise.“Controlling” and “Controlled” have meanings correlative thereto.
     “Credit Documents” shall mean this Agreement and the Cash CollateralAgreement.
     “Credit Event” shall mean the issuance, amendment, renewal or extension ofany Letter of Credit.
     “Default” shall mean any event, act or condition specified in Section 8,which with notice or lapse of time, or both, would, unless cured or waived,constitute an Event of Default.
     “Dollars” and the symbol “$” shall each mean freely transferable lawfulmoney of the United States.
     “Dollar Equivalent” shall mean of any amount, at the time of determinationthereof, (a) if such amount is expressed in Dollars, such amount, and (b) ifsuch amount is expressed in an Alternative Currency, (i) for purposes ofdetermining the amount of a Reimbursement Obligation, such amount shall bedetermined at the time that the Bank makes the
 

 

LC Disbursement giving rise to such Reimbursement Obligation and (ii) inall other cases, the equivalent of such amount in Dollars determined using therate of exchange quoted by JPMorgan Chase Bank in New York, New York at 11:00a.m. (New York time) on the date of determination to prime banks in New Yorkfor the spot purchase in the New York foreign exchange market of such amount ofDollars with such Alternative Currency.
     “Drawing Document” shall mean any draft or other document presented forpurposes of demanding payment under a Letter of Credit.
     “EMU Legislation” shall mean the legislative measures of the EuropeanUnion for introduction of, changeover to or operation of the euro in one ormore Participating Member States.
     “Euro”and the symbol “€” shall mean the single currency ofParticipating Member States introduced in accordance with the provision ofArticle 123 of the Treaty and, in respect of all payments to be made under thisAgreement in Euro, means immediately available, freely transferable funds insuch currency.
     “Event of Default” shall have the meaning provided in Section 8.
     “Excluded Taxes” shall mean, with respect to the Bank, (a) Taxes that areimposed on its overall net income by the United States, Taxes that are imposedon its overall net income (and franchise taxes imposed in lieu thereof) by thejurisdiction under the laws of which the Bank is organized, Taxes that areimposed on its overall net income (and franchise taxes imposed in lieu thereof)by the jurisdiction in which the Bank’s Payment Office is located or (b) in theevent that payments are made under the Credit Documents to a jurisdictionoutside the United States, any United States withholding taxes payable withrespect to such payments under the Credit Documents under laws (including anystatute, treaty or regulation) in effect on the Closing Date (but excluding anyUnited States withholding taxes payable as a result of any Change in Lawoccurring after the Closing Date) and any similar tax imposed by any otherjurisdiction in which the Bank is located.
     “Federal Funds Effective Rate” shall mean, for any day, the weightedaverage (rounded upwards, if necessary, to the next 1/100 of 1%) of the rateson overnight federal funds transactions with members of the Federal ReserveSystem arranged by federal funds brokers, as published on the next succeedingBusiness Day by the Federal Reserve Bank of New York, or, if such rate is notso published for any day that is a Business Day, the average (rounded upwards,if necessary, to the next 1/100 of 1%) of the quotations for such day for suchtransactions received by the Bank from three federal funds brokers ofrecognized standing selected by it.
     “Fees” shall mean all amounts payable pursuant or referred to in Section2.10.
     “Final Order” shall mean an order of the Bankruptcy Court entered in theBankruptcy Proceeding, in substantially the form of the Interim Order, withsuch modifications thereto as are reasonably satisfactory to the Bank.
 

 

     “Good Faith” shall mean honesty in fact in the conduct of the transactionconcerned.
     “Governmental Authority” shall mean the government of the United States ofAmerica, any other nation or any political subdivision thereof, whether stateor local, and any agency, authority, instrumentality, regulatory body, court,central bank or other entity exercising executive, legislative, judicial,taxing, regulatory or administrative powers or functions of or pertaining togovernment.
     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.
     “Instructions” has the meaning given to it in Section 2.02.
     “Interim Order” shall mean an order of the Bankruptcy Court grantinginterim approval of the transactions contemplated by this Agreement and theother Credit Documents and granting the Liens and the Superpriority Claims asprovided in Section 2.04 in favor of the Bank, substantially in the form ofExhibit A hereto, or otherwise in form and substance reasonably satisfactory tothe Bank.
     “ISP” shall mean International Standby Practices 1998 (InternationalChamber of Commerce Publication Number 590) and any subsequent revision thereofadhered to by the Bank.
     “LC Disbursement” shall mean a payment made by the Bank pursuant to aLetter of Credit.
     “LC Exposure” shall mean, at any time, the Dollar Equivalent of the sum of(a) the aggregate undrawn amount of all outstanding Letters of Credit at suchtime plus (b) the aggregate amount of all LC Disbursements that have not yetbeen reimbursed by or on behalf of the Borrower at such time.
     “Letter of Credit” shall mean any letter of credit issued for the accountof the Borrower pursuant to Section 2.01, which letter of credit shall be (i) astandby letter of credit, (ii) issued for the purposes permitted by Section5.12, (iii) denominated in Dollars or an Alternative Currency, and (iv)otherwise in such form as may be approved by the Bank.
     “Letter of Credit Application” shall mean an application submitted to theBank by the Applicant requesting the opening of a Letter of Credit.
     “Lien” shall mean any mortgage, pledge, hypothecation, assignment, depositarrangement, encumbrance, lien (statutory or other), preference, priority orother security agreement of any kind or nature whatsoever (including, withoutlimitation, any conditional sale or other title retention agreement, anyfinancing or similar statement or notice filed under the UCC or any othersimilar recording or notice statute, and any lease having substantially thesame effect as any of the foregoing).
 

 

     “Material Adverse Effect” shall mean a material adverse effect on (a) thebusiness, assets, operations, prospects or condition, financial or otherwise,of the Borrower and the Subsidiaries taken as a whole, (b) the ability of theBorrower to perform any of its obligations under this Agreement or (c) therights of or benefits available to the Bank under this Agreement or the CreditDocuments.
     “Maturity Date” shall mean April 6, 2006.
     “Notice Office” shall mean the collective reference to the following threeoffices or such other office as the Bank may hereafter designate in writing:(i) JPMorgan Chase Bank, Special Loan Group, 270 Park Avenue,20th Floor, NewYork, New York 10017, Attn: Anna Marie Greer; (ii) JPMorgan Treasury Services,Global Trade Services, Standby Production, 10420 Highland Manor Dr. (Bl. 2,Floor 4), Tampa Bay, Florida 33610, Attn: James Alonzo; and (iii) JPMorganChase Bank, Global Credit Operations, 575 Washington Blvd, Floor 21, JerseyCity, New Jersey 07310, Attn: Douglas Ogle.
     “Obligations” shall mean the collective reference to the unpaid amount ofReimbursement Obligations and all other obligations and liabilities of theBorrower (including, without limitation, interest accruing at the thenapplicable rate provided in this Agreement after the maturity of theReimbursement Obligations and interest accruing at the then applicable rateprovided in this Agreement after the filing of any petition in bankruptcy, orthe commencement of any insolvency, reorganization or like proceeding, relatingto the Borrower (other than the Bankruptcy Proceeding), whether or not a claimfor post-filing or post-petition interest is allowed in such proceeding) to theBank, whether direct or indirect, absolute or contingent, due or to become due,or now existing or hereafter incurred, which may arise under, out of, or inconnection with, this Agreement, or the other Credit Documents, or any Letterof Credit, or any other document made, delivered or given in connectiontherewith, in each case whether on account of principal, interest,reimbursement obligations, fees, indemnities, costs, expenses or otherwise(including, without limitation, all fees and disbursements of counsel to theBank that are required to be paid by the Borrower pursuant to the terms of anyof the foregoing agreements, and all Fees).
     “Orders” shall mean the collective reference to the Interim Order and theFinal Order.
     “Other Taxes” shall mean any and all present or future stamp ordocumentary taxes or any other excise or property taxes, charges or similarlevies arising from any payment made hereunder or from the execution, deliveryor enforcement of, or otherwise with respect to, this Agreement.
     “Participating Member State” shall mean a member of the EuropeanCommunities that adopts or has adopted the Euro as its currency in accordancewith EMU Legislation.
     “Payment Office” shall mean the Bank’s office located at JPMorgan TreasuryServices, Global Trade Services, Standby Production, 10420 Highland Manor Dr.(Bl. 2, Floor 4), Tampa Bay, Florida 33610, Attn: James Alonzo.
 

 

     “Person” shall mean any natural person, corporation, limited liabilitycompany, trust, joint venture, association, company, partnership, GovernmentalAuthority or other entity.
     “Plan” shall mean a Chapter 11 plan of reorganization which shall provide,among other things, for the cancellation of the Letters of Credit issued andoutstanding hereunder and the payment in full of the Obligations or theexecution of the Assumption Agreement in accordance with Section 2.15(a).
     “Plan Effective Date” shall mean the date as of which the conditionsprecedent to effectiveness set forth in the Plan have been satisfied or waivedin accordance therewith.
     “Quarterly Payment Date” shall mean the last Business Day of each March,June, September and December.
     “Regulation D” shall mean Regulation D of the Board of Governors of theFederal Reserve System as from time to time in effect and any successor to allor a portion thereof establishing reserve requirements.
     “Reimbursement Obligation” shall mean the obligation of the Borrower toreimburse to the Bank any LC Disbursements pursuant to Section 2.05.
     “Requirement of Law” shall mean as to any Person, the Articles ofIncorporation and By-Laws or other organizational or governing documents ofsuch Person, and any law, treaty, rule or regulation or determination of anarbitrator or a court or other Governmental Authority, in each case applicableto or binding upon such Person or any of its property or to which such Personor any of its property is subject.
     “Standard Letter of Credit Practice” shall mean, for the Bank, anydomestic or foreign law or letter of credit practices applicable in the city inwhich the Bank issued the Letter of Credit or for its branch or correspondent,such laws and practices applicable in the city in which it has advised ornegotiated the Letter of Credit, as the case may be. Such practices shall bethose of (i) banks that regularly issue letters of credit in the particularcity and (ii) required or permitted under the ISP or the UCP, as applicable.
     “subsidiary” shall mean, with respect to any Person (the “parent”) at anydate, any corporation, limited liability company, partnership, association orother entity the accounts of which would be consolidated with those of theparent in the parent’s consolidated financial statements if such financialstatements were prepared in accordance with GAAP as of such date, as well asany other corporation, limited liability company, partnership, association orother entity (a) of which securities or other ownership interests representingmore than 50% of the equity or more than 50% of the ordinary voting power or,in the case of a partnership, more than 50% of the general partnershipinterests are, as of such date, owned, controlled or held, or (b) that is, asof such date, otherwise Controlled, by the parent or one or more subsidiariesof the parent or by the parent and one or more subsidiaries of the parent.
     “Subsidiary” shall mean any subsidiary of the Borrower.
 

 

     “Superpriority Claim” shall mean a claim against the Borrower in theBankruptcy Proceeding which is an administrative expense claim having priorityover any or all administrative expenses of the kind in Sections 503(b) or507(b) of the Bankruptcy Code, including a claim pursuant to Section 364(c)(1)of the Bankruptcy Code.
     “Taxes” shall mean any and all present or future taxes, levies, imposts,duties, deductions, charges or withholdings imposed by any GovernmentalAuthority.
     “UCC” shall mean the Uniform Commercial Code as from time to time ineffect in the relevant jurisdiction.
     “UCP” shall mean the Uniform Customs and Practice for Documentary Credits(1993 Revision), International Chamber of Commerce Publication No. 500 and anysubsequent revision thereof adhered to by the Bank.
     “United States” and “U.S.” shall each mean the United States of America.
     “Yen” and the symbol “¥” shall mean freely transferable and lawful moneyof Japan.
     1.02. Terms Generally. The definitions of terms herein shall applyequally to the singular and plural forms of the terms defined. Whenever thecontext may require, any pronoun shall include the corresponding masculine,feminine and neuter forms. The words “include”, “includes” and “including”shall be deemed to be followed by the phrase “without limitation”. The word“will” shall be construed to have the same meaning and effect as the word“shall”. Unless the context requires otherwise (a) any definition of orreference to any agreement, instrument or other document herein shall beconstrued as referring to such agreement, instrument or other document as fromtime to time amended, supplemented or otherwise modified (subject to anyrestrictions on such amendments, supplements or modifications set forthherein), (b) any reference herein to any Person shall be construed to includesuch Person’s successors and assigns, (c) the words “herein”, “hereof” and“hereunder”, and words of similar import, shall be construed to refer to thisAgreement in its entirety and not to any particular provision hereof, (d) allreferences herein to Articles, Sections, Exhibits and Schedules shall beconstrued to refer to Articles and Sections of, and Exhibits and Schedules to,this Agreement and (e) the words “asset” and “property” shall be construed tohave the same meaning and effect and to refer to any and all tangible andintangible assets and properties, including cash, securities, accounts andcontract rights.
     1.03. Accounting Terms; GAAP. Except as otherwise expressly providedherein, all terms of an accounting or financial nature shall be construed inaccordance with GAAP, as in effect from time to time; provided that, if theBorrower notifies the Bank that the Borrower requests an amendment to anyprovision hereof to eliminate the effect of any change occurring after the datehereof in GAAP or in the application thereof on the operation of such provision(or if the Bank notifies the Borrower that the Bank requests an amendment toany provision hereof for such purpose), regardless of whether any such noticeis given before or after such change in GAAP or in the application thereof,then such provision shall be interpreted on the basis of
 

 

GAAP as in effect and applied immediately before such change shall havebecome effective until such notice shall have been withdrawn or such provisionamended in accordance herewith.
     Section 2. LETTERS OF CREDIT.
     2.01. General. Subject to the terms and conditions set forth herein, theBorrower may request the issuance of Letters of Credit denominated in Dollarsor an Alternative Currency in support of its obligations by delivering a Letterof Credit Application, at any time and from time to time during theAvailability Period and, subject to the terms and conditions set forth hereinand any other legal or regulatory requirements applicable to the Bank, the Bankshall issue such Letters of Credit; provided that no Letter of Credit shall beissued if after giving effect to such issuance (i) the aggregate LC Exposurewould exceed the lesser of (x) the Commitments and (y) the amount permitted tobe outstanding hereunder pursuant to the Interim Order (or the Final Order, asapplicable) and (ii) the aggregate LC Exposure in respect of Letters of Creditdenominated in an Alternative Currency would exceed $12,000,000. For purposesof determining compliance with this Section 2.01, the LC Exposure for eachAlternative Currency Letter of Credit shall be at the time of issuance thereofthe amount equal to 110% of the Dollar Equivalent of the face amount of suchAlternative Currency Letter of Credit. In the event of any inconsistencybetween the terms and conditions of this Agreement and the terms and conditionsof any Letter of Credit Application or other agreement submitted by theBorrower to, or entered into by the Borrower with, the Bank relating to anyLetter of Credit, the terms and conditions of this Agreement shall control.
     2.02. Notice of Issuance, Amendment, Renewal, Extension; CertainConditions. To request the issuance of a Letter of Credit (or the amendment,renewal or extension of an outstanding Letter of Credit), the Borrower shalldeliver (or transmit by electronic communication, if arrangements for doing sohave been approved by the Bank) to the Bank two (2) Business Days in advance ofthe requested date of issuance, amendment, renewal or extension) a Letter ofCredit Application requesting the issuance of a Letter of Credit, or a noticeidentifying the Letter of Credit to be amended, renewed or extended, andspecifying the requested date of issuance, amendment, renewal or extension(which shall be a Business Day), of the date on which such Letter of Credit isto expire (which shall comply with Section 2.03), the face amount of suchLetter of Credit, the name and address of the beneficiary thereof, adescription of the transaction to be supported by such Letter of Credit andsuch other information (collectively, the “Instructions”) as shall be necessaryto prepare, amend, renew or extend such Letter of Credit. Absent manifesterror, the Bank’s records of the content of any Instruction shall beconclusive. A Letter of Credit shall be issued, amended, renewed or extendedonly if (and upon issuance, amendment, renewal or extension of each Letter ofCredit the Borrower shall be deemed to represent and warrant that), aftergiving effect to such issuance, amendment, renewal or extension, the aggregateLC Exposure shall not exceed any of the limits specified in the proviso inSection 2.01 and the conditions of Section 4 are satisfied. Promptly afterissuing any Letter of Credit, the Bank will provide the Borrower with a copythereof. Each request for an issuance, amendment, renewal or extension of aLetter of Credit shall be irrevocable unless modified or rescinded by theBorrower prior to 10:00 a.m. (New York City time) on the proposed date ofissuance, amendment, renewal or extension specified in the Borrower’s request.
 

 

     2.03. Expiration Date. Each Letter of Credit shall expire at or prior tothe close of business on the earlier of (i) the date one year after the date ofthe issuance of such Letter of Credit (or, in the case of any renewal orextension thereof, one year after such renewal or extension) and (ii) the datethat is five Business Days prior to the Maturity Date; provided that any Letterof Credit with a one-year term may provide for an annual renewal if suchrenewal is consented to by the Bank and all conditions precedent specified inSection 4 are met at the time of such renewal.
     2.04. Priority and Liens. The Borrower hereby covenants, represents andwarrants that, upon entry of the Interim Order (or the Final Order, asapplicable), and as to all Obligations, such Obligations: (i) pursuant toSection 364(c)(1) of the Bankruptcy Code, shall at all times constitute allowedSuperpriority Claims in the Bankruptcy Proceeding and (ii) pursuant to Section364(c)(2) of the Bankruptcy Code, shall at all times be secured by a perfectedfirst priority Lien on all Collateral maintained in the Cash Collateral Accountand any investments of the funds contained therein.
     2.05. Reimbursement.
     (a) If the Bank shall make any LC Disbursement in respect of a Letter ofCredit, the Borrower shall reimburse the Bank for such LC Disbursement bypaying directly to the Bank in immediately available funds an amount inDollars, equal to such LC Disbursement or, in the case of an LC Disbursement inrespect of an Alternative Currency Letter of Credit, in the Dollar Equivalentthereof, plus any taxes, fees, charges or other costs or expenses incurred bythe Bank in connection with such payment which are obligations of the Borrowerhereunder (the amounts described in the foregoing clauses (a) and (b) inrespect of any drawing, collectively, the “Payment Amount”) on (i) the BusinessDay on which the Borrower receives notice from the Bank of an LC Disbursement,if such notice is received on such Business Day prior to 10:00 A.M., New YorkCity time, or (ii) if clause (i) above does not apply, the Business Dayimmediately following the day on which the Borrower receives such notice. Eachsuch payment shall be made to the Bank at the Payment Office. Interest shallbe payable on each Payment Amount from the date of the applicable drawing untilthe Business Day next succeeding the date of the relevant notice at the FederalFunds Effective Rate and, thereafter until payment in full of the PaymentAmount, at the rate set forth in Section 2.11.
     (b) Unless the Borrower has reimbursed the Bank in accordance with clause(a) above or otherwise advised the Bank in writing, prior to 3:00 P.M, New YorkCity time on the date that any Reimbursement Obligation is due, that theBorrower will satisfy such Reimbursement Obligation by making a payment to theBank prior to 10:00 a.m. (New York City time) of the next Business Day inaccordance with Section 2.05(a) above, the Borrower authorizes the Bank uponany drawing under any Letter of Credit, and the Bank is hereby authorized anddirected, without notice to any Person or further order of or application tothe Bankruptcy Court, to withdraw Collateral from the Cash Collateral Accountin an amount equal to such Reimbursement Obligation in satisfaction thereof(with any losses upon liquidation of any investments required to make suchtransfer being for the account of the Borrower).
 

 

     2.06. Obligations Absolute; Limitation of Liability. (a) The Borrower’sobligation to reimburse LC Disbursements, and the Bank’s rights to applyCollateral to such Obligations, as provided in Section 2.05 and in the CashCollateral Agreement shall be absolute, unconditional and irrevocable, andshall be performed strictly in accordance with the terms of this Agreement andthe Cash Collateral Agreement under any and all circumstances whatsoever andirrespective of (i) any lack of validity or enforceability of any Letter ofCredit, this Agreement or the Cash Collateral Agreement, or any term orprovision therein, (ii) any draft or other document presented under a Letter ofCredit proving to be forged, fraudulent or invalid in any respect or anystatement therein being untrue or inaccurate in any respect, (iii) payment bythe Bank under a Letter of Credit against presentation of a draft or otherdocument that does not comply with the terms of such Letter of Credit, (iv)payment against presentation of any Drawing Document which is signed, issued orpresented by a Person (or a transferee of such Person) purporting to be asuccessor or transferee of the beneficiary of the Letter of Credit; (v) theBank or any of its branches or affiliates being the beneficiary of the Letterof Credit; (vi) the Bank or any correspondent honoring a drawing against aDrawing Document up to the amount available under the Letter of Credit even ifsuch Drawing Document claims an amount in excess of the amount available underthe Letter of Credit; (vii) the existence of any claim, set-off, defense orother right that the Borrower or any other Person may have at any time againstany beneficiary, any assignee of proceeds, the Bank or any other Person; (viii)the Bank or any correspondent having previously paid against fraudulentlysigned or presented Drawing Documents (whether or not the Borrower reimbursedthe Bank for such drawing); (ix) any appeal, reversal or modification of theOrder or (x) any other event or circumstance whatsoever, whether or not similarto any of the foregoing, that might, but for the provisions of this Section,constitute a legal or equitable discharge of, or provide a right of setoffagainst, the Borrower’s obligations hereunder.
     (b) Neither the Bank nor any of its Affiliates, shall have any liabilityor responsibility by reason of or in connection with the issuance or transferof any Letter of Credit or any payment or failure to make any paymentthereunder (irrespective of any of the circumstances referred to in clause (a)above), or for any error, omission, interruption, loss or delay in transmissionor delivery of any draft, notice or other communication under or relating toany Letter of Credit (including any document required to make a drawingthereunder), any error in interpretation of technical terms or any consequencearising from causes beyond the control of the Bank; provided that the foregoingshall not be construed to excuse the Bank from liability to the Borrower to theextent of any direct damages (as opposed to consequential damages, claims inrespect of which are hereby waived by the Borrower to the extent permitted byapplicable law) suffered by the Borrower that are caused by the Bank’s failureto exercise care when determining whether drafts and other documents presentedunder a Letter of Credit comply with the terms thereof. The parties heretoexpressly agree that, in the absence of gross negligence or willful misconducton the part of the Bank (as finally determined by a court of competentjurisdiction), the Bank shall be deemed to have exercised care in each suchdetermination. In furtherance of the foregoing and without limiting thegenerality thereof, the parties agree that, with respect to documents presentedwhich appear on their face to be in substantial compliance with the terms of aLetter of Credit, the Bank may, in its sole discretion, either accept and makepayment upon such documents without responsibility for further investigation,regardless of any notice or
 

 

information to the contrary, or refuse to accept and make payment uponsuch documents if such documents are not in strict compliance with the terms ofsuch Letter of Credit.
     (c) Without limiting any other provision of this Agreement, the Bank: (i)may (but shall not be obligated to) honor a presentation under a Letter ofCredit which on its face substantially complies with the terms of the Letter ofCredit; (ii) may honor a presentation of any Drawing Documents which appear ontheir face to have been signed, presented or issued (X) by any purportedsuccessor or transferee of any beneficiary or other party required to sign,present or issue the Drawing Documents or (Y) under a new name of thebeneficiary; (iii) shall not be responsible for the identity or authority ofany presenter or signer of any Drawing Document or the form, accuracy,genuineness, or legal effect of any presentation under any Letter of Credit orof any Drawing Documents; (iv) may (but shall not be obligated to) disregardany non-documentary conditions stated in any Letter of Credit; (v) may act uponany Instruction which it, in Good Faith believes to have been given by a Personor entity authorized to give such Instruction; (vi) shall not be responsiblefor any errors, omissions, interruptions or delays in transmission or deliveryof any message, advice or document, (regardless of how sent or transmitted) orfor errors in interpretation of technical terms or in translation; (vii) shallnot be responsible for any acts, omissions or fraud by, or the solvency of, anybeneficiary, any nominated Person or any other Person; (viii) may assert orwaive any provision of the UCP or ISP which primarily benefits an issuing bankof a letter of credit, including, any requirement that any Drawing Document bepresented to it at a particular hour or place; (ix) may pay any paying ornegotiating bank (designated or permitted by the terms of any Letter of Credit)claiming that it rightfully honored or is entitled to reimbursement orindemnity under the Standard Letter of Credit Practice applicable to it; and(x) may act or not act as required or permitted under Standard Letter of CreditPractice applicable to it where it has issued, confirmed, advised or negotiatedthe Letter of Credit, as the case may be.
     (d) The Borrower shall notify the Bank of (i) any noncompliance with anyInstruction, any other irregularity with respect to the text of the Letter ofCredit or any amendment thereto or any claim of an unauthorized, fraudulent orotherwise improper Instruction, within one (1) Business Day prior to theissuance or amendment of any Letter of Credit and (ii) subject to thelimitations of liability of the Bank in Section 5-109 of the UCC, any objectionthe Borrower may have to the Bank’s honor or dishonor of any presentation underthe Letter of Credit or any other action or inaction taken or proposed to betaken by the Bank under or in connection with this Agreement or any Letter ofCredit, within three (3) Business Days after the Borrower receives notice ofthe objectionable action or inaction. The failure to so notify the Bank withinsaid times shall discharge the Bank from any loss or liability that the Bankcould have avoided or mitigated had it received such notice, to the extent thatthe Bank could be held liable for damages hereunder; provided that, if theBorrower shall not provide such notice to the Bank within three (3) BusinessDays of the date of receipt in the case of clause (i) or ten (10) Business Daysfrom the date of receipt of clause (ii), then the Bank shall have no liabilitywhatsoever for such noncompliance, irregularity, action or inaction and theBorrower shall be precluded from raising such noncompliance, irregularity orobjection as a defense or claim against the Bank. The Borrower’s acceptance orretention of any Drawing Documents presented under or in connection with aLetter of Credit (whether or not the document is genuine) shall ratify theBank’s honor of the presentation and preclude the Borrower from raising adefense, set-
 

 

off or claim with respect to the Bank’s honor of the Letter of Credit.The Bank shall not be required to seek any waiver of discrepancies from theBorrower or to grant any waiver of discrepancies that the Borrower approves orInstructions.
     2.07. Practices. Letters of Credit shall be subject to the ISP, or, ifspecified in Part I of the Letter of Credit Application, the UCP.
     2.08. Disbursement Procedures. The Bank shall, following its receiptthereof, examine all documents purporting to represent a demand for paymentunder a Letter of Credit. The Bank shall promptly notify the Borrower bytelephone (confirmed by telecopy) of such demand for payment and whether theBank has made or will make an LC Disbursement thereunder; provided that anyfailure to give or delay in giving such notice shall not relieve the Borrowerof its obligation to reimburse the Bank with respect to any such LCDisbursement.
     2.09. Termination and Reduction of Commitment. (a) Unless previouslyterminated, the Commitment shall terminate on the Maturity Date.
     (b) The Borrower may at any time terminate, or from time to time reduce,the Commitment; provided that (i) each reduction of the Commitment shall be inan amount that is an integral multiple of $1,000,000 and not less than$5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitmentif the then-current LC Exposure or any of the sublimits set forth in Section2.01 would exceed the Commitment.
     (c) The Borrower shall notify the Bank of any election to terminate orreduce the Commitment under paragraph (b) of this Section at least threeBusiness Days prior to the effective date of such termination or reduction,specifying such election and the effective date thereof. Each notice deliveredby the Borrower pursuant to this Section shall be irrevocable. Any terminationor reduction of the Commitment shall be permanent.
     2.10. Fees. (a) The Borrower agrees to pay to the Bank a facility fee,which shall accrue at the rate of .05% per annum on the daily amount of theCommitment (whether used or unused) during the period from and including thedate hereof to but excluding the date on which the Obligations are paid infull. Accrued facility fees shall be payable in arrears on each QuarterlyPayment Date and on the date on which the Commitment terminates, commencing onthe first such date to occur after the date hereof; provided that any facilityfees accruing after the date on which the Commitment terminates shall bepayable on demand. All facility fees shall be computed on the basis of a yearof 360 days and shall be payable for the actual number of days elapsed(including the first day but excluding the last day).
     (b) The Borrower shall pay to the Bank a fee for the issuance, renewal,extension or amendment of a Letter of Credit in an amount equal to 0.25% of theface amount of such Letter of Credit, to be paid upon the date of issuance,renewal, extension or amendment of each Letter of Credit.
     (c) On or before the Closing Date, the Borrower shall pay to the Bank anarrangement fee of $100,000.
 

 

     (d) All fees payable hereunder shall be paid on the dates due, inimmediately available funds, to the Bank. Fees paid shall not be refundableunder any circumstances.
     2.11. Default Rate of Interest. If any fee or other amount payable by theBorrower hereunder is not paid when due, whether at stated maturity, uponacceleration or otherwise, such overdue amount shall bear interest, after aswell as before judgment, at a rate per annum equal to 2% plus the Federal FundsEffective Rate.
     2.12. Increased Costs. (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special depositor similar requirement against assets of, deposits with or for theaccount of, or credit extended by the Bank; or
     (ii) impose on the Bank any other condition affecting this Agreementor any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to theBank of issuing or maintaining any Letter of Credit or to reduce the amount ofany sum received or receivable by the Bank hereunder (whether of principal,interest or otherwise), then the Borrower will pay to the Bank such additionalamount or amounts as will compensate the Bank for such additional costsincurred or reduction suffered.
     (b) If the Bank shall determine that any Change in Law regarding capitalrequirements has or would have the effect of reducing the rate of return on theBank’s capital or on the capital of the Bank’s holding company as a consequenceof this Agreement or the Letters of Credit issued by the Bank, to a level belowthat which the Bank or the Bank’s holding company could have achieved but forsuch Change in Law (taking into consideration the Bank’s policies and thepolicies of the Bank’s holding company with respect to capital adequacy), thenfrom time to time the Borrower will pay to the Bank, such additional amount oramounts as will compensate the Bank or the Bank’s holding company for any suchreduction suffered.
     (c) A certificate of the Bank setting forth the amount or amountsnecessary to compensate the Bank or its holding company as specified inparagraph (a) or (b) of this Section shall be delivered to the Borrower andshall be conclusive absent manifest error. The Borrower shall pay the Bank theamount shown as due on any such certificate within 20 days after receiptthereof.
     (d) Failure or delay on the part of the Bank to demand compensationpursuant to this Section shall not constitute a waiver of the Bank’s right todemand such compensation; provided that the Borrower shall not be required tocompensate the Bank pursuant to this Section for any increased costs orreductions incurred more than 270 days prior to the date that the Bank notifiesthe Borrower of the Change in Law giving rise to such increased costs orreductions and of the Bank’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs orreductions is retroactive, then the 270-day period referred to above shall beextended to include the period of retroactive effect thereof.
 

 

     2.13. Taxes. (a) Any and all payments by or on account of any obligationof the Borrower hereunder shall be made free and clear of and without deductionfor any Indemnified Taxes or Other Taxes; provided that if the Borrower shallbe required to deduct any Indemnified Taxes or Other Taxes from such payments,then (i) the sum payable shall be increased as necessary so that after makingall required deductions (including deductions applicable to additional sumspayable under this Section) the Bank receives an amount equal to the sum itwould have received had no such deductions been made, (ii) the Borrower shallmake such deductions and (iii) the Borrower shall pay the full amount deductedto the relevant Governmental Authority in accordance with applicable law.
     (b) In addition, the Borrower shall pay any Other Taxes to the relevantGovernmental Authority in accordance with applicable law.
     (c) The Borrower shall indemnify the Bank within 10 days after writtendemand therefor, for the full amount of any Indemnified Taxes or Other Taxespaid by the Bank on or with respect to any payment by or on account of anyobligation of the Borrower hereunder (including Indemnified Taxes or OtherTaxes imposed or asserted on or attributable to amounts payable under thisSection) and any penalties, interest and reasonable expenses arising therefromor with respect thereto, whether or not such Indemnified Taxes or Other Taxeswere correctly or legally imposed or asserted by the relevant GovernmentalAuthority. A certificate as to the amount of such payment or liabilitydelivered to the Borrower by the Bank shall be conclusive absent manifesterror.
     (d) As soon as practicable after any payment of Indemnified Taxes or OtherTaxes by the Borrower to a Governmental Authority, the Borrower shall deliverto the Bank the original or a certified copy of a receipt issued by suchGovernmental Authority evidencing such payment, a copy of the return reportingsuch payment or other evidence of such payment reasonably satisfactory to theBank.
     (e) If the Bank determines, in its sole discretion, that it has received arefund of any Taxes or Other Taxes as to which it has been indemnified by theBorrower or with respect to which the Borrower has paid additional amountspursuant to this Section 2.13, it shall pay over such refund to the Borrower(but only to the extent of indemnity payments made, or additional amounts paid,by the Borrower under this Section 2.13 with respect to the Taxes or OtherTaxes giving rise to such refund), net of all out-of-pocket expenses of theBank and without interest (other than any interest paid by the relevantGovernmental Authority with respect to such refund); provided that theBorrower, upon the request of the Bank, agrees to repay the amount paid over tothe Borrower (plus any penalties, interest or other charges imposed by therelevant Governmental Authority) to the Bank in the event the Bank is requiredto repay such refund to such Governmental Authority. This Section shall not beconstrued to require the Bank to make available its Tax returns (or any otherinformation relating to its Taxes which it deems confidential) to the Borroweror any other person.
     2.14. Payments Generally; Treatment. (a) The Borrower shall make eachpayment required to be made by it hereunder (whether of, fees or reimbursementof LC Disbursements, or of any other amounts payable hereunder, or otherwise)in immediately
 

 

available funds, without set-off or counterclaim. Any amounts receivedafter 12:00 noon, New York City time on any date may, in the discretion of theBank, be deemed to have been received on the next succeeding Business Day forpurposes of calculating interest thereon. All such payments shall be made tothe Bank at its offices at the Payment Office. If any payment hereunder shallbe due on a day that is not a Business Day, the date for payment shall beextended to the next succeeding Business Day, and, in the case of any paymentaccruing interest, interest thereon shall be payable for the period of suchextension. All payments hereunder shall be made in Dollars.
     (b) If at any time insufficient funds are received by and available to theBank to pay fully the aggregate amount of unreimbursed LC Disbursements plusinterest and fees then due hereunder, such funds shall be applied (i) first,towards payment of interest and fees, and (ii) second, towards payment ofunreimbursed LC Disbursements then due hereunder.
     (c) Subject to the provision of Section 8, upon the maturity (whether byacceleration or otherwise) of any of the Obligations under this Agreement orany Credit Document, the Bank shall be entitled to immediate payment of suchObligations without further application to or order of the Bankruptcy Court.
     2.15. Assumption of this Agreement or Cancellation of Letters of Credit.
     (a) If the Plan Effective Date occurs prior to the expiration of anyLetter of Credit, (i) such Letter of Credit shall be replaced and returned tothe Bank undrawn and marked “cancelled” on or prior to the Plan Effective Dateor (ii) if the Borrower is unable to comply with clause (i) above, theBorrower, in its capacity as a reorganized Borrower, shall enter into anassumption agreement to assume this Agreement and the Cash Collateral Agreement(the “Assumption Agreement”) simultaneously with the occurrence of the PlanEffective Date in form and substance satisfactory to the Bank, which shallprovide, among other things, that all Obligations hereunder and under the CashCollateral Agreement shall be deemed to be Obligations of the reorganizedBorrower and the Collateral shall continue to be maintained in the CashCollateral Account pursuant to the terms of this Agreement and the CashCollateral Agreement for the benefit of the Bank until all Obligations are paidin full or each Letter of Credit issued hereunder is returned to the Bankundrawn and marked “cancelled”.
     (b) If the Maturity Date occurs prior to the expiration of any Letter ofCredit, such Letter of Credit shall be replaced and returned to the Bankundrawn and marked “cancelled” on or prior to the Maturity Date.
     Section 3. COLLATERAL.
     3.01. Cash Collateral. To secure the prompt payment and performance tothe Bank of the Obligations of the Borrower under the Letters of Credit, theBorrower has simultaneously herewith entered into the Cash Collateral Agreementpursuant to which the Borrower grants to the Bank a continuing first prioritysecurity interest, senior to all other Liens, if any, in the Collateral.Collateral held in the Cash Collateral Account shall not be available for
 

 

use by the Borrower or any of its subsidiaries or affiliates, whetherpursuant to Section 363 of the Bankruptcy Code or otherwise.
     3.02. Currency Exchange Rate Fluctuations.
     (a) In the event that at any time the Borrower determines that by reasonof currency exchange rates any aggregate or individual limits or sublimits setforth in Section 2.01 have been breached, in each case, by more than 5%, theBorrower shall immediately notify the Bank (which notice shall promptly beconfirmed in writing). Nothing herein shall obligate the Borrower to monitorcurrency exchange rates so as to make such determination but shall comply withthis Section 3.02 and Section 4 of the Cash Collateral Agreement if,nonetheless, any such determination has been made.
     (b) The Bank will calculate the LC Exposure (including any portion made inany Alternative Currency) and in any event on each date of receipt of a Letterof Credit Application or request to amend, renew or extend an outstandingLetter of Credit and otherwise not less frequently than once each calendarmonth.
     (c) In the event that on any date the Bank calculates that by reason ofcurrency exchange rates any limits set forth in the proviso in Section 2.01have been breached, in each case, by more than 5%, the Bank shall give noticeto such effect to the Borrower.
     Section 4. CONDITIONS PRECEDENT TO EACH CREDIT EVENT. Each Credit Eventis subject (except and to the extent as hereinafter indicated) to thesatisfaction of the following conditions:
     4.01. Execution of Agreement. The Closing Date shall have occurred.
     4.02. Sufficient Collateral. At the time of each Credit Event and aftergiving effect thereto, the Bank shall have received sufficient Collateral inrespect of such Credit Event in accordance with the terms of the CashCollateral Agreement.
     4.03. No Default; Representations and Warranties. At the time of eachCredit Event and also after giving effect thereto (i) there shall exist noDefault or Event of Default and (ii) all representations and warrantiescontained herein and in the other Credit Documents shall be true and correct inall material respects with the same effect as though such representations andwarranties had been made on and as of the date of such Credit Event, except tothe extent such representations and warranties expressly relate to an earlierdate, in which case such representations and warranties shall be true andcorrect in all material respects as of such earlier date.
     4.04. Opinion of Counsel. On the Closing Date, the Bank shall havereceived from counsel to the Borrower an opinion addressed to the Bank anddated the Closing Date in form, scope and substance satisfactory to the Bank.
     4.05. Corporate Documents; Proceedings. (a) On the Closing Date, theBank shall have received (i) a certificate, dated the Closing Date, signed bythe Secretary or any
 

 

Assistant Secretary, and attested to by the President, any Vice Presidentor the Treasurer of the Borrower, in the form of Exhibit B hereto withappropriate insertions, together with copies of the Certificate ofIncorporation and By-Laws of the Borrower and the resolutions of the Borrowerreferred to in such certificate and (ii) a certificate of the Secretary ofState of the State of Delaware certifying the good standing of the Borrower insuch jurisdiction and listing all charter documents of the Borrower on filetherewith.
     (b) All corporate and legal proceedings and all instruments and agreementsin connection with the Transactions shall be satisfactory in form and substanceto the Bank shall have received all information and copies of all documents andpapers, including records of corporate proceedings and governmental approvals,if any, which the Bank reasonably may have requested in connection therewith,such documents and papers where appropriate to be certified by proper corporateor governmental authorities.
     4.06. Payment of Fees. The Borrower shall have paid all costs, fees andexpenses due to the Bank on or prior to the Closing Date (including, withoutlimitation, reasonable legal fees and expenses due pursuant to Section 9.03) tothe extent due.
     4.07. Letter of Credit Request. Prior to any Credit Event, the Bank shallhave received a request for an extension, amendment or renewal of such Letterof Credit meeting the requirements of Section 2.02 or a Letter of CreditApplication, such request or Letter of Credit Application to include acertification by the Borrower that, after giving effect to the issuance,renewal, amendment or extension of the requested Letter of Credit and theproposed use of any proceeds thereof, no Default or Event of Default exists.The acceptance of the benefits of each Credit Event shall constitute arepresentation and warranty by the Borrower to the Bank that all the conditionsspecified in Section 4.03 exist as of that time.
     4.08. The Orders.
     (a) At the time of the initial Credit Event, the Bank shall have receiveda copy of the Interim Order approving the Credit Documents and granting theSuperpriority Claims and Liens described in Section 2.04 and findings that theBank is extending credit to the Borrower in good faith within the meaning ofSection 364(e) of the Bankruptcy Code, which Interim Order shall (i) be in formand substance satisfactory to the Bank, (ii) approve the payment by theBorrower of all Fees, (iii) be in full force and effect and (iv) not have beenstayed, reversed, vacated, rescinded, modified or amended in any respect and,if the Interim Order is the subject of a pending appeal in any respect, none ofthe Credit Events, the grant of Liens and Superpriority Claims pursuant toSection 2.04 or the performance by the Borrower of any of its obligationshereunder or under the other Credit Documents or under any other instrument oragreement referred to herein shall be the subject of a presently effective staypending appeal.
     (b) At the time of any subsequent Credit Events, the Interim Order shallbe in full force and effect and shall not have been stayed, reversed, vacated,rescinded, modified or amended in any respect; provided that at the time of theissuance of any Letter of Credit the aggregate amount of which, when added tothe LC Exposure at such time, would exceed the amount authorized by the InterimOrder (the “Additional Credit”), the Bank shall have received a
 

 

certified copy of the Final Order which, in any event, shall have beenentered by the Bankruptcy Court no later than thirty (30) days after the entryof the Interim Order and, at the time of the extension of any AdditionalCredit, the Final Order shall be in full force and effect and shall not havebeen stayed, reversed, vacated, rescinded, modified or amended in any respect;and if either the Interim Order or the Final Order is the subject of a pendingappeal in any respect, none of the Credit Events, the grant of Liens andSuperpriority Claims pursuant to Section 2.04 or the performance by theBorrower of any of its obligations hereunder or under the other CreditDocuments or under any other instrument or agreement referred to herein shallbe the subject of a presently effective stay pending appeal.
     4.09. Documents. All certificates, legal opinions and other instrumentsreferred to in this Section 4, unless otherwise specified, shall be deliveredto the Bank and, shall be satisfactory in form and substance to the Bank.
     4.10. Release of Liens on Collateral. The Bank shall have receivedevidence reasonably satisfactory to it that (a) any pre-existing Liens,security interests and encumbrances on the Collateral securing the obligations(including any adequate protection obligations pursuant to any cash collateralorder entered in the Borrower’s and its affiliates’ Chapter 11 cases) owing to(i) Bank of America, N.A., as administrative agent and collateral agent to thelenders (in such capacity, the “SpaceCom Agent”), and the lenders (the“SpaceCom Lenders”) under the Amended and Restated Credit Agreement, dated asof December 21, 2001, as amended, with Loral SpaceCom Corporation, as borrower,and (ii) Bank of America, N.A., as administrative agent and collateral agent tothe lenders (in such capacity, the “Satellite Agent”), and the lenders (the“Satellite Lenders”) under the Credit Agreement, dated as of November 17, 2000,as amended, with Loral Satellite, Inc., as borrower, shall have been releasedand terminated and (b) the SpaceCom Agent, the SpaceCom Lenders, the SatelliteAgent and the Satellite Lenders shall not have any right, title or interestwhatsoever in any Collateral deposited into the Cash Collateral Account.
     Section 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to inducethe Bank to enter into this Agreement and issue Letters of Credit, the Borrowermakes the following representations and warranties to, and agreements with, theBank, all of which shall survive the execution and delivery of this Agreementand the issuance of any Letter of Credit, with the execution and delivery ofthis Agreement and the occurrence of each Credit Event being deemed toconstitute a representation and warranty that the matters specified in thisSection 6 are true and correct on and as of the date of such execution anddelivery and the date of each such Credit Event:
     5.01. Corporate Status. The Borrower (i) is a duly organized and validlyexisting corporation in good standing under the laws of the jurisdiction of itsformation or incorporation, (ii) has the power and authority to own itsproperty and assets and to transact the business in which it is engaged and(iii) is duly qualified as a foreign company or corporation and in goodstanding in each jurisdiction where the failure to so qualify or be in goodstanding would have a material adverse effect on such corporation.
 

 

     5.02. Corporate Power and Authority. Upon the entry by the BankruptcyCourt of the Interim Order (or the Final Order, as applicable), the Borrowerhas the corporate power and authority to execute, deliver and perform the termsand provisions of this Agreement, any Letter of Credit Application or requestfor an amendment, renewal or extension of a Letter of Credit, any Instructionsand the Cash Collateral Agreement and has taken all necessary corporate actionto authorize the execution, delivery and performance by it of this Agreementand the Cash Collateral Agreement. Upon entry by the Bankruptcy Court of theInterim Order (or the Final Order, as applicable), the Borrower has dulyexecuted and delivered this Agreement and the Cash Collateral Agreement, andeach of this Agreement, its reimbursement obligations under all Letters ofCredit and the Cash Collateral Agreement constitutes, and any Letter of CreditApplication or request for an amendment, renewal or extension of a Letter ofCredit will constitute, its legal, valid and binding obligation enforceable inaccordance with its terms, except as the enforceability thereof may be limitedby applicable bankruptcy, insolvency, reorganization or other similar lawsaffecting creditors’ rights generally and by general equitable principles(regardless of whether the issue of enforceability is considered in aproceeding in equity or at law).
     5.03. No Violation. Upon entry by the Bankruptcy Court of the InterimOrder (or the Final Order as applicable), neither the execution, delivery orperformance by the Borrower of this Agreement or the Cash Collateral Agreement,nor compliance by it with the respective terms and provisions thereof, (i) willcontravene any provision of any law, statute, rule or regulation or any order,writ, injunction or decree of any court or governmental instrumentality, (ii)will conflict or be inconsistent with or result in any breach of any of theterms, covenants, conditions or provisions of, or constitute a default under,or result in the creation or imposition of (or the obligation to create orimpose) any Lien (other than pursuant to the Credit Documents) upon any of theproperty or assets of the Borrower pursuant to the terms of, any indenture,mortgage, deed of trust, credit agreement, loan agreement or any otheragreement, contract or instrument to which the Borrower is a party or by whichit or any of its property or assets is bound or to which it may be subject,including the Plan or (iii) will violate any provision of the by-laws orCertificate of Incorporation of the Borrower.
     5.04. Governmental Approvals. Upon entry by the Bankruptcy Court of theInterim Order (or the Final Order, as applicable), no order, consent, approval,license, authorization or validation of, or filing, recording or registrationwith (except as have been obtained or made prior to the Closing Date), orexemption by, any governmental or public body or authority, or any subdivisionthereof, is required to authorize, or is required in connection with, (i) theexecution, delivery and performance of this Agreement or the Cash CollateralAgreement or (ii) the legality, validity, binding effect or enforceability ofthis Agreement or the Cash Collateral Agreement.
     5.05. Litigation. Except as publicly or otherwise disclosed to the Bankprior to the date hereof, there are no actions, suits or proceedings pendingor, to the best knowledge of the Borrower, threatened with respect to anyCredit Document.
     5.06. True and Complete Disclosure. All factual information heretofore orcontemporaneously furnished by or on behalf of the Borrower in writing to theBank (including,
 

 

without limitation, all information contained in the Credit Documents) forpurposes of or in connection with this Agreement or any transactioncontemplated herein is true and accurate in all material respects on the dateas of which such information is dated or certified and does not omit to stateany fact necessary to make such information not misleading at such time inlight of the circumstances under which such information was provided, it beingunderstood that any projections delivered were prepared in Good Faith onassumptions believed by the Borrower to be appropriate but actual results maymaterially differ from the projections.
     5.07. Tax Returns and Payments. The Borrower and its Subsidiaries hasfiled all Tax returns required to be filed by it and has paid all income Taxespayable by it which have become due pursuant to such Tax returns and all otherTaxes and assessments payable by it which have become due, other than thosewhich (a) are not material, (b) payment of which has been stayed as a result ofthe Bankruptcy Proceeding or (c) are being contested in good faith and forwhich adequate reserves have been established. Each of the Borrower and itsSubsidiaries has paid, or has provided adequate reserves (in the good faithjudgment of the management of the Borrower) for the payment of, all federal andstate income Taxes applicable for all prior fiscal years and for the currentfiscal year to the date hereof.
     5.08. Compliance with Statutes, etc. Except as a result of the BankruptcyProceeding, the Borrower is in compliance with all applicable statutes,regulations and orders of, and all applicable restrictions imposed by, allgovernmental bodies, domestic or foreign, in respect of the conduct of itsbusiness and the ownership of its property (including applicable statutes,regulations, orders and restrictions relating to environmental standards andcontrols), except such noncompliance as would not, in the aggregate, have amaterial adverse effect on the business, operations, property, assets orfinancial condition of the Borrower (taking into account the effect of theautomatic stay in the Bankruptcy Proceeding).
     5.09. Investment Company Act. The Borrower is not an “investment company”within the meaning of the Investment Company Act of 1940, as amended.
     5.10. Properties. (a) The Borrower has good title to, or valid leaseholdinterests in, all its real and personal property material to its business,except for minor defects in title that do not interfere with its ability toconduct its business as currently conducted or to utilize such properties fortheir intended purposes.
     (b) The Borrower owns, or is licensed to use, all trademarks, tradenames,copyrights, patents and other intellectual property material to its business,and the use thereof by the Borrower does not infringe upon the rights of anyother Person, except for any such infringements that, individually or in theaggregate, could not reasonably be expected to result in a Material AdverseEffect.
     5.11. Financial Condition; No Material Adverse Change. (a) The Borrowerhas heretofore furnished to the Bank its consolidated balance sheet andstatements of income, stockholders equity and cash flows as of and for thefiscal year ended December 31, 2003, reported on by Deloitte & Touche LLP,independent public accountants. Such financial statements present fairly, inall material respects, the financial position and results of operations and
 

 

cash flows of the Borrower and its consolidated Subsidiaries as of suchdates and for such periods in accordance with GAAP, subject to year-end auditadjustments and the absence of footnotes in the case of the statements referredto in clause (ii) above.
     (b) Except as may have been disclosed in the Form 10-K for the year endedDecember 31, 2003 of Loral Space & Communications Ltd., since December 31,2003, there has been no material adverse change in the business, assets,operations, prospects or condition, financial or otherwise, of the Borrower andits Subsidiaries, taken as a whole.
     5.12. Use of Proceeds. The Letters of Credit requested hereunder shall beused only to provide credit support (x) in connection with Bid Bonds and bidsmade by the Borrower for contracts to build satellites and related componentsand (y) for general corporate purposes, including, without limitation, workers’compensation obligations.
     5.13. The Orders. As of the date of the submission of a Letter of CreditApplication or the request for a renewal, amendment or extension of a Letter ofCredit, the Interim Order or the Final Order, as applicable, has been enteredand has not been stayed, amended, vacated, reversed, rescinded or otherwisemodified in any respect (except in accordance with the terms hereof).
     5.14. Security Interests. The security interests and the Liens grantedpursuant to this Agreement and the Cash Collateral Agreement, upon the entry ofthe Interim Order (or the Final Order, applicable), are (a) valid firstpriority security interests in all of the Collateral and the Cash CollateralAccount, as collateral security for the Obligations, enforceable in accordancewith the terms hereof against all creditors of the Borrower and its affiliatesand any Persons purporting to purchase any Collateral from the Borrower and (b)prior to all other security interests and Liens on the Collateral
     Section 6. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees thaton and after the Closing Date and until the Commitment has terminated, and allLetters of Credit have terminated and, Fees and all other obligations incurredhereunder and under the other Credit Documents, are paid in full, the Borrowershall:
     6.01. Financial Statements. Furnish to the Bank:
     (a) as soon as available, but in any event within 75 days after the end ofeach fiscal year of the Borrower, the annual report of Loral Space &Communications Ltd. on Form 10-K, and for any financial statements and relatedmaterials delivered after the Plan Effective Date, reported on without a “goingconcern” or like qualification or exception, or qualification arising out ofthe scope of the audit, by Deloitte & Touche LLP or other independent certifiedpublic accountants of nationally recognized standing; and
     (b) as soon as available, but in any event not later than 40 days afterthe end of each of the first three quarterly periods of each fiscal year of theBorrower, the quarterly report of Loral Space & Communications Ltd. reported onForm 10-Q;.
 

 

     (c) as soon as available, but in any event not later than 35 days afterthe end of each month, the Borrower’s monthly operating statements in the formpreviously provided to the Bank.
     All such financial statements shall be complete and correct in allmaterial respects and shall be prepared in reasonable detail and in accordancewith GAAP applied (except as approved by such accountants or officer, as thecase may be, and disclosed in reasonable detail therein) consistentlythroughout the periods reflected therein and with prior periods.
     6.02. Certificates; Other Information. Furnish to the Bank:
     (a) concurrently with the delivery of any financial statements pursuant toSection 6.01, a certificate of a responsible officer of the Borrower statingthat such responsible officer has obtained no knowledge of any Default or Eventof Default except as specified in such certificate;
     (b) promptly, such additional financial and other information as the Bankmay from time to time reasonably request.
     6.03. Maintenance of Existence; Compliance. (a)(i) Preserve, renew andkeep in full force and effect its organizational existence and (ii) take allreasonable action to maintain all rights, privileges and franchises necessaryor desirable in the normal conduct of its business except, in the case ofclause (ii) above, to the extent that failure to do so could not reasonably beexpected to have a Material Adverse Effect; and (b) comply with allRequirements of Law, the noncompliance with which, in the aggregate, couldreasonably be expected to have a Material Adverse Effect of the type set forthin clauses (b) and (c) of the definition thereof, except for any suchRequirements of Law being contested in good faith by appropriate proceedings.
     6.04. Notices. Promptly give notice to the Bank of:
     (a) the occurrence of any Default or Event of Default;
     (b) any litigation, or proceeding or, to the knowledge of the Borrower,any investigation that, in each case, may exist at any time between theBorrower or any of its Subsidiaries or Affiliates and any GovernmentalAuthority, that if adversely determined, could reasonably be expected to have aMaterial Adverse Effect;
     (c) any litigation or proceeding to which the Borrower or any of itsSubsidiaries or Affiliates is a party (i) the primary purpose of which is tochallenge the legality, validity or enforceability of the Credit Documents, or(ii) seeks to prohibit the ownership or operation by the Borrower or any of itsSubsidiaries or Affiliates of all or a material portion of their respectivebusinesses or assets; or
     (d) any development or event (other than any litigation or proceeding)that has had or could reasonably be expected to have a Material Adverse Effect.
 

 

     6.05. Books, Records and Inspections. (a) Keep proper books of recordand account entries in conformity with generally accepted accounting principlesreflecting all dealings and transactions in relation to its business andactivities.
     (a) Permit officers and designated representatives of the Bank to visitand inspect, under guidance of officers of the Borrower or such Subsidiary, anyof the properties of the Borrower or such Subsidiary, and to examine the booksof record and account of the Borrower or such Subsidiary and discuss theaffairs, finances and accounts of the Borrower or such Subsidiary with, and beadvised as to the same by, its and their officers, all at such reasonable timesand intervals and to such reasonable extent as the Bank may request.
     6.06. Taxes. Pay and discharge or cause to be paid and discharged whendue all Taxes, assessments and governmental charges or levies imposed upon itor upon its income or profits or upon any of its property (real, personal ormixed), or upon any part thereof; provided, however, that the failure of theBorrower to pay any such Tax, assessment, charge, levy or claim shall notconstitute a breach of this covenant if (a) such payment is not material or hasbeen stayed as a result of the Bankruptcy Proceeding or (b) for so long as theamount, applicability or validity thereof shall concurrently be contested ingood faith by appropriate and timely proceedings diligently conducted, and ifsuch reserve or other appropriate provision, if any, as shall be required bygenerally accepted accounting principles shall have been made therefor, andneither the Borrower’s nor any such Subsidiary’s title to or right to use ofany of its property is impaired in any material respect by reason of suchcontest.
     Section 7. NEGATIVE COVENANTS. The Borrower hereby agrees that, so longas the Commitments remain in effect, any Letter of Credit remains outstandingor any other amount is owing to the Bank, the Borrower shall not:
     7.01. Amendment to Plan. Any time prior to the Plan Effective Date, withrespect to any Plan proposed in the Bankruptcy Proceeding, make or consent toany amendment to the Plan that could be reasonably expected to materially andadversely affect (i) the ability of the Borrower to perform its obligationsunder Section 2.15 or under any of the Credit Documents entered into prior tothe Plan Effective Date or (ii) the rights and remedies of the Bank hereunderor under any of the Credit Documents or with respect to the Collateral.
     7.02. Liens. Create, incur, assume or suffer to exist any Lien upon anyCollateral, whether now owned or hereafter acquired, except for Liens securingthe Borrower’s obligations to the Bank under this Agreement and the otherCredit Documents.
     7.03. Collateral Requirement. Fail at any time to maintain the Collateralpursuant to the terms of this Agreement and the Cash Collateral Agreement.
     Section 8. EVENTS OF DEFAULT. Upon the occurrence of any of the followingspecified events and the continuance thereof beyond any applicable grace period(each an “Event of Default”)
 

 

     (a) the Borrower shall (i) default, and such default shall continue forone or more Business Days, in the payment of any Reimbursement Obligation inrespect of any LC Disbursement when and as the same shall become due andpayable, (ii) default, and such default shall continue unremedied for two ormore Business Days, in the payment when due of any interest on any such amountsor (iii) default, and such default shall continue unremedied for five or moreBusiness Days, in payment when due of any Fees or any other amounts owinghereunder; or
     (b) any representation, warranty or statement made by the Borrower in thisAgreement or in any certificate delivered pursuant hereto or thereto shallprove to be untrue in any material respect on the date as of which made ordeemed made; or
     (c) the Borrower shall default in the due performance or observance by itof any term, covenant or agreement contained in (i) this Agreement or the CashCollateral Agreement and such default shall continue unremedied for a period of30 days or (ii) Section 2.15, Section 6.04(a), Section 7 or Section 4 of theCash Collateral Agreement; or
     (d) prior to the Plan Effective Date, (i) the Bankruptcy Proceeding shallbe dismissed by order of the Bankruptcy Court, (ii) the Bankruptcy Proceedingshall be converted to a case under Chapter 7 of the Bankruptcy Code, (iii) atrustee under Chapter 11 of the Bankruptcy Code shall be appointed in theBankruptcy Proceeding or (iv) the Borrower shall filing any pleading seeking orotherwise consenting to any of the matters set forth in paragraphs (a) through(c) above;
     (e) an order of the Bankruptcy Court shall be entered reversing, stayingfor a period in excess of 10 days, vacating or otherwise amending,supplementing or modifying the Order without the written consent of the Bank;or
     (f) an order of the Bankruptcy Court shall be entered and be in effect inthe Bankruptcy Case appointing an examiner having enlarged powers relating tothe operation of the business of the Borrower (i.e., powers beyond those setforth under Sections 1106(a)(3) and (4) of the Bankruptcy Code) and such ordershall not be reversed or vacated within 30 days after the entry thereof; or
     (g) any material provision of any Credit Document shall, for any reason,cease to be valid and binding on the Borrower, or the Borrower shall so assertin any pleading filed in the Bankruptcy Court; or
     (h) the Confirmation Order is stayed, reversed, vacated or otherwisemodified after the date hereof in any manner that could reasonably be expectedto materially and adversely affect the Borrower’s ability to perform itsobligations under the Credit Documents; or
     (i) the Borrower shall file an application seeking, or an order of theBankruptcy Court shall be entered, granting another superpriorityadministrative expense claim or a Lien on the Collateral pari passu with orsenior to the Superpriority Claims and Liens
 

 

granted to the Bank pursuant to this Agreement and the Interim Order (orthe Final Order, as applicable);
then, and in any such event, and at any time thereafter, if any Event ofDefault shall then be continuing, and without further order of or applicationto the Bankruptcy Court, the Bank may take any or all of the following actions:(i) declare the Commitment terminated, whereupon the Commitment of the Bank torenew, amend or issue any Letters of Credit shall forthwith terminateimmediately; and/or (ii) terminate any Letter of Credit which may be terminatedin accordance with its terms and/or (iii) upon five (5) Business Days’ writtennotice to the Borrower (with a copy to counsel for the Committee and to theOffice of the United States Trustee for the Southern District of New York),charge, set-off and otherwise apply all or any part of the Collateral againstunpaid Obligations then due or which subsequently become due.
     Section 9. MISCELLANEOUS.
     9.01. Right of Setoff. In addition to any rights now or hereafter grantedunder applicable law or otherwise, and not by way of limitation of any suchrights, upon the occurrence of an Event of Default, the Bank is herebyauthorized at any time or from time to time, without presentment, demand,protest or other notice of any kind to the Borrower or to any other Person(other than upon five (5) Business Days’ written notice to the Borrower (with acopy to counsel for the Committee and to the Office of the United StatesTrustee for the Southern District of New York)), any such notice being herebyexpressly waived, and without further order of or application to the BankruptcyCourt, to set off and to appropriate and apply any and all deposits (general orspecial) and any other indebtedness at any time held or owing by the Bank,including all deposits held in the Collateral Account, in any currency, and anyother credits, indebtedness or claims, in any currency, in each case whetherdirect or indirect, absolute or contingent, matured or unmatured, at any timeheld or owing by the Bank, or any branch or agency thereof to or for the creditor the account of the Borrower against and on account of the Obligations andliabilities of the Borrower to the Bank under this Agreement or under any ofthe other Credit Documents, and all other claims of any nature or descriptionarising out of or connected with this Agreement or any other Credit Document,irrespective of whether the Bank shall have made any demand hereunder andalthough such Obligations, liabilities or claims, or any of them, shall becontingent or unmatured.
     9.02. Notices. Except as otherwise expressly provided herein, all noticesand other communications provided for hereunder shall be in writing (includingtelegraphic, telex, telecopier or cable communication) or by telephone (but ifby telephone, confirmed immediately by telex, telecopier or cablecommunication) and mailed, telegraphed, telexed, telecopied, cabled ordelivered: if to the Borrower, at its address specified opposite its signaturebelow; if to the Bank, at the Notice Office; or, as to the Borrower, at suchother address as shall be designated by such party in a written notice to theother parties hereto and, as to each other party, at such other address asshall be designated by such party in a written notice to the Borrower. No suchnotice or communication shall be effective until received.
     9.03. Expenses; Indemnity. (a) The Borrower shall pay (i) all reasonableout-of-pocket expenses incurred by the Bank and its Affiliates, including thereasonable fees,
 

 

charges and disbursements of counsel for the Bank, in connection with thepreparation, negotiation and administration of the Credit Documents or anyamendments, modifications or waivers of the provisions thereof (whether or notthe transactions contemplated hereby or thereby shall be consummated), (ii) allreasonable out-of-pocket expenses paid to third parties by the Bank inconnection with the issuance, amendment, renewal or extension of any Letter ofCredit or any demand for payment thereunder and (iii) all out-of-pocketexpenses incurred by the Bank, including the reasonable fees, charges anddisbursements of any counsel for the Bank in connection with the enforcement orprotection of its rights in connection with this Agreement, including itsrights under this Section, or in connection with any Letters of Credit issuedhereunder, including all such out-of-pocket expenses incurred during anyworkout, restructuring or negotiations in respect of such Letters of Credit.
     (b) The Borrower shall indemnify the Bank and each Affiliate of the Bank(each such Person being called an “Indemnitee”) against, and hold eachIndemnitee harmless from, any and all losses, claims, damages, liabilities andrelated expenses, including the fees, charges and disbursements of any expertwitness or counsel for any Indemnitee, incurred by or asserted against anyIndemnitee arising out of, in connection with, or as a result of (i) theexecution or delivery of this Agreement or any agreement or instrumentcontemplated hereby, the performance by the parties hereto of their respectiveobligations hereunder or the consummation of the transactions contemplatedhereby; (ii) any Letter of Credit or the use of the proceeds therefrom(including any refusal by the Bank to honor a demand for payment under a Letterof Credit if the documents presented in connection with such demand do notstrictly comply with the terms of such Letter of Credit); (iii) any transfer,sale, delivery, surrender, or endorsement of any Drawing Document at anytime(s) held by any Indemnitee in connection with any Letter of Credit; (iv)any independent undertakings issued by the beneficiary of any Letter of Credit;(v) any unauthorized, fraudulent or improper Instructions or error in computertransmission; (vi) the acts or omissions, whether rightful or wrongful, of anypresent or future de jure or de facto governmental or regulatory authority orcause or event beyond the control of such Indemnitee; (vii) any actual oralleged presence or release of hazardous materials on or from any propertyowned or operated by the Borrower or any of its Subsidiaries, or anyenvironmental liability related in any way to the Borrower or any of itsSubsidiaries; or (viii) any actual or prospective claim, litigation,investigation or proceeding relating to any of the foregoing, whether based oncontract, tort or any other theory and regardless of whether any Indemnitee isa party thereto; provided that such indemnity shall not, as to any Indemnitee,be available to the extent that such losses, claims, damages, liabilities orrelated expenses are determined by a court of competent jurisdiction by finaland nonappealable judgment to have resulted from the gross negligence orwillful misconduct of such Indemnitee.
     (c) To the extent permitted by applicable law, the Borrower shall notassert, and hereby waives, any claim against any Indemnitee, on any theory ofliability, for special, indirect, consequential or punitive damages (as opposedto direct or actual damages) arising out of, in connection with, or as a resultof, this Agreement or any agreement or instrument contemplated hereby, thetransactions contemplated hereby, or Letter of Credit or the use of theproceeds thereof.
 

 

     (d) All amounts due under this Section shall be payable not later than 15days after written demand therefor.
     9.04. Benefit of Agreement. This Agreement shall be binding upon andinure to the benefit of and be enforceable by the respective successors andassigns of the parties hereto; provided that the Borrower may not assign ortransfer any of its rights or obligations hereunder or under any other CreditDocument without the prior written consent of the Bank. The Bank may at anytime grant participations in any or all of its rights and/or obligationshereunder to another financial institution; provided that in the case of anysuch participation, the participant shall not have any rights under thisAgreement or any of the other Credit Documents (the participant’s rightsagainst such Bank in respect of such participation to be those set forth in theagreement executed by such Bank in favor of the participant relating thereto)and all amounts payable by the Borrower hereunder shall be determined as ifsuch Bank had not sold such participation, except that the participant shall beentitled to receive the additional amounts under Section 2.12 to, and only to,the extent that such Bank would be entitled to such benefits if theparticipation had not been entered into or sold; and provided further, that theBank shall not transfer, grant or assign any participation under which theparticipant shall have rights to approve any amendment to or waiver of thisAgreement or any other Credit Document except to the extent such amendment orwaiver would (i) reduce the principal amount thereof, or increase suchparticipant’s participating interest in any Commitment over the amount thereofthen in effect (it being understood that a waiver of any Default or Event ofDefault or of a mandatory reduction in the Commitment shall not constitute achange in the terms of any Commitment and that an increase in any Commitmentshall be permitted without the consent of any participant if such participant’sparticipation is not increased as a result thereof) or (ii) permit theassignment or transfer by the Borrower of any of its rights and obligationsunder this Agreement except in accordance with the terms hereof and thereof.
     9.05. No Waiver; Remedies Cumulative. No failure or delay on the part ofthe Bank in exercising any right, power or privilege hereunder or under anyother Credit Document and no course of dealing between the Borrower or the Bankshall operate as a waiver thereof; nor shall any single or partial exercise ofany right, power or privilege hereunder or under any other Credit Documentpreclude any other or further exercise thereof or the exercise of any otherright, power or privilege hereunder or thereunder. The rights, powers andremedies herein or in any other Credit Document expressly provided arecumulative and not exclusive of any rights, powers or remedies which the Bankwould otherwise have. No notice to or demand on the Borrower in any case shallentitle the Borrower to any other or further notice or demand in similar orother circumstances or constitute a waiver of the rights of the Bank to anyother or further action in any circumstances without notice or demand.
     9.06. Calculations; Computations. All computations of interest in respectof Fees and interest hereunder shall be made on the basis of a year of 360 daysfor the actual number of days (including the first day but excluding the lastday) occurring in the period for which such interest or Fees are payable.
     9.07. Governing Law; Submission to Jurisdiction; Venue; Waiver of JuryTrial. (a) This Agreement and the other Credit Documents and the rights andobligations of the parties
 

 

hereunder and thereunder shall be construed in accordance with and begoverned by the law of the State of New York. Any legal action or proceedingbetween the Borrower and any other party to this Agreement or any other CreditDocument arising out of or with respect to this Agreement or any other CreditDocument must be brought (a) prior to the Plan Effective Date, in theBankruptcy Court and (b) at any time thereafter, in the state courts of theState of New York located in the County of New York or in the courts of theUnited States for the Southern District of New York, and the Borrower submitsto the non-exclusive jurisdiction of such courts for the purpose of any suchsuit, action or proceeding or judgment. Each party to this Agreementirrevocably consents to service of process in the manner provided for noticesin Section 9.02, such service to become effective 30 days after such mailing.Nothing in this Agreement will affect the right of any party to this Agreementto serve process in any other manner permitted by law. Nothing herein shallaffect the right of the Bank to bring any legal action or proceeding againstthe Borrower in any court having jurisdiction with respect thereto but actionsand proceedings brought prior to the Plan Effective Date shall be brought inthe Bankruptcy Court.
     (b) Each of the Bank and the Borrower hereby irrevocably waives, to thefullest extent it may legally and effectively do so, any objection which it maynow or hereafter have to the laying of venue of any of the aforesaid actions orproceedings arising out of or in connection with this Agreement or any otherCredit Document brought in the courts referred to in Section 9.07(a) and herebyfurther irrevocably waives and agrees not to plead or claim in any such courtthat any such action or proceeding brought in any such court has been broughtin an inconvenient forum.
     (c) Each of the Borrower and the Bank waives, to the fullest extent it maylegally and effectively do so, any right it may have to jury trial in any legalproceeding directly or indirectly arising out of or relating to each of theBorrower’s and the Bank’s rights and obligations under this Agreement ortransactions contemplated hereby (whether based on contract, tort or any othertheory).
     9.08. Confidentiality. The Bank shall hold, and shall cause itsparticipants and prospective participants, if any, to agree to hold, allnon-public information obtained pursuant to the requirements of any CreditDocument which has been identified as such by the Borrower in accordance withits customary procedure for handling confidential information of such natureand in accordance with safe and sound banking practices and in any event maymake disclosure reasonably required by any bona fide assignee, transferee orparticipant or as legally required or reasonably requested by any governmentalagency or representative thereof or pursuant to legal process.
     9.09. Counterparts. This Agreement may be executed in any number ofcounterparts and by the different parties hereto on separate counterparts, eachof which when so executed and delivered shall be an original, but all of whichshall together constitute one and the same instrument. A set of counterpartsexecuted by all the parties hereto shall be lodged with the Borrower and theBank.
 

 

     9.10. Headings Descriptive. The headings of the several sections andsubsections of this Agreement are inserted for convenience only and shall notin any way affect the meaning or construction of any provision of thisAgreement.
     9.11. Amendment or Waiver. Neither this Agreement nor any other CreditDocument nor any terms hereof or thereof may be amended, waived, discharged orterminated unless such amendment, waiver, discharge or termination is inwriting signed by the Bank and, in the case of any amendment, by the Borrower.
     9.12. Survival. All indemnities set forth herein including, withoutlimitation, in Sections 2.06 and 9.03 shall survive the execution and deliveryof this Agreement.
 

 

     IN WITNESS WHEREOF, the parties hereto have caused their duly authorizedofficers to execute and deliver this Agreement as of the date first abovewritten.           SPACE SYSTEMS/LORAL, INC.          By             Name:     Title:            Address:            Attention:     Fax number:     Telephone:       JPMORGAN CHASE BANK           By            Name: Anna Marie GreerTitle: Vice President