Document:

MASTER AGREEMENT

 

EXHIBIT 10.1

MASTER AGREEMENT

     THIS MASTER AGREEMENT (this “Master Agreement”) is entered into as of this
30th day of June 2003 by and among LORAL SPACE & COMMUNICATIONS LTD. a Bermuda
corporation (“Loral”), LORAL SPACE & COMMUNICATIONS CORPORATION, a Delaware
corporation (“LSCC”), LORAL SPACECOM CORPORATION, a Delaware corporation
(“LSC”) and SPACE SYSTEMS/LORAL, INC., a Delaware corporation (“SS/L”) (Loral,
LSCC, LSC and SS/L hereinafter collectively referred to as the “Loral
Parties”), on the one hand, and ALCATEL SPACE, a société anonyme organized and
existing under the laws of France, individually and in its capacity as sole
successor-in-interest to Alcatel Space Industries, a société anonyme
(“Alcatel”), on the other hand (Loral, LSCC, LSC, SS/L and Alcatel hereinafter
individually referred to as a “Party” and collectively referred to as the
“Parties”).

     WHEREAS, certain disputes have arisen between Alcatel, on the one hand,
and the Loral Parties, on the other hand, which disputes are the subject of an
arbitration proceeding among the Parties pending before the International
Chamber of Commerce’s International Court of Arbitration (“ICC”) as ICC Case
Number 11508/TE (collectively, the “ICC Arbitration”) and in an action before
the United States District Court for the Southern District of New York as Case
Number 03 Civ. 0742(SAS) to confirm and enforce the Partial Awards of the ICC
in the ICC Arbitration (the “Confirmation Proceeding”);

     WHEREAS, certain additional disputes have arisen between Alcatel, on the
one hand, and the Loral Parties, on the other hand, which disputes are the
subject of an Alcatel lawsuit against SS/L styled Alcatel v. Space Systems
Loral, Inc., pending before the United States District Court for the Southern
District of New York as case number 03 Civ. 2587(MBM) (the “Intelsat Orbitals
Case”);

     WHEREAS, the Parties now find it in their respective best interests to
enter into certain business transactions and, at the same time, to resolve and
settle the Intelsat Orbitals Case, the ICC Arbitration and the Confirmation
Proceeding, and to settle any and all claims and/or issues of law or fact that
have been or could have been raised by any Party in the ICC Arbitration, the
Confirmation Proceeding or the Intelsat Orbitals Case, in accordance with, and
subject to the terms and conditions set forth in this Master Agreement; and

     WHEREAS, the transactions contemplated in this Master Agreement will
directly and indirectly provide substantial direct and indirect benefits to

 

 

Affiliates of Loral (including without limitation Loral Global and Loral
Broadband) and Affiliates of Alcatel (including without limitation Audelec) and
to the Loral Lenders
who are intended third party beneficiaries with respect to Sections
3.3(a)(xii) and 3.3(c) of this Master Agreement.

     NOW, THEREFORE, in consideration of their mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereby agree as follows:

1. Definitions

     1.1 “Affiliate” means: (a) with respect to a natural Person, any member of
such Person’s family; (b) with respect to an entity, any officer, director, or
general partner of or in such entity or of or in any Affiliate of such entity;
and (c) with respect to a natural Person or entity, any Person or entity which
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person or entity.

     1.2
“Alcatel” shall have the meaning set forth in the Recitals.

     1.3 “Alcatel Account” has the meaning set forth in Section 2.3(e)(ii)
hereof.

     1.4 “Alcatel Approvals” has the meaning set forth in Section 5.1(a)
hereof.

     1.5 “Alcatel Multimedia” means Alcatel Multimedia Satellite, a French
société anonyme Affiliated with Alcatel, organized and existing under the laws
of France and formerly known as Losalec.

     1.6 “Alcatel Releasing Parties” has the meaning set forth in Section
3.3(a) hereof.

     1.7 “Alcatel Spacecom” means Alcatel Spacecom s.a.s, a société par actions
simplifée organized and existing under the laws of France, which is wholly
owned by Alcatel.

     1.8 “Audelec” means, Audelec, a société anonyme, now known as Alcatel
Cyber Satellite, Affiliated with Alcatel and organized and existing under the
laws of France.

     1.9 “Claims” means all demands, claims, actions or causes of action,
assessments, suits, proceedings, demands, judgments, losses, obligations,

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payments, costs, deficiencies, charges, damages (including, without limitation,
diminution in value), liabilities, costs and expenses, including, without
limitation, interest, penalties and attorneys’ fees and disbursements.

     1.10 “Closing” shall mean the performance and satisfaction by the Parties
of their respective obligations as set forth in Section 2 of this Master
Agreement, which are occurring on the Closing Date.

     1.11 “Closing Date” shall be Monday, June 30, 2003, or such other date as
the Parties may agree, but in no event later than July 2, 2003.

     1.12 “Confirmation Proceeding” has the meaning set forth in the Recitals.

     1.13 “Consent Judgment” has the meaning set forth in the Section 2.2(a)
hereof, and in the form attached hereto as Exhibit 2.2(a)(2).

     1.14 “Control” means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities, by agreement or otherwise).

     1.15 “Cyberstar” means CyberStar, L.P., a limited partnership organized
under the laws of the state of Delaware, pursuant to that certain Agreement of
Limited Partnership of CyberStar, L.P. dated as of June 30, 1997, as it may
have been amended from time to time.

     1.16
“Cyberstar Agreements” has the meaning set forth in Section
3.3(a)(ii) hereof.

     1.17 “Cyberstar Partnership Agreement” means the Agreement of Limited
Partnership of CyberStar, L.P. dated as of June 30, 1997.

     1.18 “Cyberstar Units” means the 240 limited partnership units of
Cyberstar owned by Audelec.

     1.19 “Deferred Payment” has the meaning set forth in Section 3.1(a)
hereof.

     1.20 “Encumbrance” means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.

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     1.21 “Europe*Star” means Europe*Star Limited, a company organized under
the laws of England under the registered number 3562015 with its registered
office at 35 Basinghall Street, London.

     1.22 “Europe*Star Articles” has the meaning set forth in Section 2.3(c)(i)
hereof.

     1.23 “Europe*Star Irrevocable Power” has the meaning set forth in Section
2.3(c)(ii) hereof and in the form attached hereto as Exhibit 2.3(c)(ii)(a).

     1.24 “Europe*Star Shares” means the 19,987 A Shares (0.01p each) of
Europe*Star owned by Loral.

     1.25 “Europe*Star Transfer Form” has the meaning set forth in Section
2.3(c)(ii) hereof and attached hereto as Exhibit 2.3(c)(ii)(b).

     1.26 “FCO” has the meaning set forth in Section 2.3(c)(ii) hereof.

     1.27 “Framework Agreement” has the meaning set forth in Section 3.2
hereof.

     1.28 “Globalstar” has the meaning set forth in Section 3.3(a)(x) hereof.

     1.29 “Governmental Entity” (including the term “Governmental”) means any
governmental, quasi-governmental or regulatory authority, whether domestic or
foreign.

     1.30 “ICC” means the International Chamber of Commerce’s International
Court of Arbitration.

     1.31 “ICC Arbitration” has the meaning set forth in the Recitals hereto.

     1.32 “ICC Termination Letter” has the meaning set forth in Section 2.2(b)
hereof and is in the form attached hereto as Exhibit 2.2(b)(2).

     1.33 “Intelsat” means Intelsat LLC, a limited liability company organized
under the laws of Delaware, and a successor in interest of the International
Telecommunications Satellite Organization.

     1.34 “Intelsat Orbitals Case” has the meaning set forth in the Recitals.

     1.35 “Law” means all statutes, laws, ordinances, regulations, rules,
resolutions, orders, determinations, writs, injunctions, awards (including
without limitation awards of any arbitrator), judgments and decrees applicable
to the specified Persons or entities and to the businesses and assets thereof
(including without limitation Laws relating to securities registration and

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regulation; the sale, leasing, ownership or management of real property;
employment practices, terms and conditions, and wages and hours; building
standards, land use and zoning; and environmental protection).

     1.36 “Loral” has the meaning set forth in the Recitals.

     1.37 “Loral Approvals” has the meaning set forth in Section 4.1(a) hereof.

     1.38 “Loral Broadband” means Loral Broadband Holdings, L.P., a Delaware
limited partnership Affiliated with Loral.

     1.39
“Loral Cyberstar, L.L.C.” means Loral CyberStar, L.L.C., a Delaware
limited liability corporation Affiliated with Loral.

     1.40 “Loral Global” means Loral Global Services, N.V., a corporation
Affiliated with Loral and organized under the laws of the Netherlands Antilles.

     1.41 “Loral Lenders” means each of the Agents and lenders from time to
time party to the Loral Loan Facilities.

     1.42 “Loral Loan Facilities” means (i) that certain $600 million Amended
and Restated Credit Agreement, dated December 21, 2001, as amended, among LSC,
the lenders thereunder, and Bank of America, N.A. as administrative agent (the
“LSC Facility”) and (ii) that certain $500 million Credit Agreement, dated
November 17, 2000, as amended, among Loral Satellite, Inc., the lenders
thereunder and Bank of America, N.A., as administrative agent.

     1.43 “Loral Parties” has the meaning set forth in the Recitals hereto.

     1.44 “Loral Releasing Parties” has the meaning set forth in Section 3.3(b)
hereof.

     1.45 “Loral Resignation Letters” has the meaning set forth in Section
2.3(e)(iii) hereof and are in the form attached hereto as Exhibit 2.2(e)(iii).

     1.46 “Loral Transfers” shall mean, collectively, the payments to Alcatel
set forth in Section 2.3(e)(i) and (ii) hereof; the transfer of the SkyBridge
Units to Alcatel Multimedia as contemplated by Section 2.3(a) hereof; and the
transfers of the Europe*Star Shares and the SLOD Share to Alcatel Spacecom as
contemplated by Sections 2.3(c) and 2.3(d), respectively, hereof.

     1.47 “Loral Transfers Date” shall mean the date when the last of the Loral
Transfers shall have been duly completed and become effective.

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     1.48 “LSC” has the meaning set forth in the Recitals.

     1.49 “LSC Facility” has the meaning set forth in Section 1.42 hereof.

     1.50 “LSCC” has the meaning set forth in the Recitals.

     1.51 “Master Agreement” has the meaning set forth in the Recitals.

     1.52 “Party” has the meaning set forth in the Recitals.

     1.53 “Person” means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.

     1.54 “Reinstated Claims” has the meaning set forth in Section 7.2 hereof.

     1.55 “Released Claims” has the meaning set forth in Section 3.3(c) hereof.

     1.56 “SkyBridge” means SkyBridge Limited Partnership, a limited
partnership organized under the laws of the State of Delaware pursuant to that
certain agreement of limited partnership dated as of February 26, 1997, as it
may have been amended from time to time.

     1.57 “SkyBridge Agreements” has the meaning set forth in Section
3.3(a)(iii) hereof.

     1.58 “SkyBridge Partnership Agreement” means that certain Third Amended
and Restated Agreement of Limited Partnership of SkyBridge Limited Partnership
dated as of December 20, 1999.

     1.59 “SkyBridge Transfer Notice” has the meaning set forth in Section
2.3(a)(ii) hereof and is in the form attached hereto as Exhibit 2.3(a)(ii).

     1.60 “SkyBridge Units” means the 368 limited partnership units of
SkyBridge owned by Loral Broadband.

     1.61 “SLOD” means Europe*Star Gesellschaft fur Satellitenkommunikation
mbH, a company organized and existing under the laws of Germany, whose
principal place of business is Mathias-Brüggen-Straße 87-89, 50829 Cologne,
Germany registered at the Local Court of Cologne under HRB21060.

     1.62 “SLOD Irrevocable Power” has the meaning set forth in Section 2.3(d)
hereof.

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     1.63 “SLOD Local Transfer Agreement” has the meaning set forth in Section
2.3(d) hereof.

     1.64 “SLOD Share” means the 1 share of SLOD held by Loral Global.

     1.65 “SLUG” means Europe*Star Gesellschaft fur den Betrieb von
Nachrichtensatelliten mbH, whose principal place of business is
Mathias-Brüggen-Straße 87-89, 50829 Cologne, Germany, registered at the Local
Court of Cologne under HRB25781.

     1.66 “SS/L” has the meaning set forth in the Recitals.

     1.67 “Taxes” (including the terms “Tax” and “Taxing”) means all national,
federal, state, local and foreign taxes (including, without limitation, income,
profit, franchise, sales, use, real property, personal property, value added
(VAT), ad valorem, excise, employment and wage withholding taxes) as well as
social security contributions and installments of estimated taxes, assessments,
deficiencies, levies, imports, duties, license fees, registration fees,
withholdings, or other similar charges of every kind, character or description
imposed by any Governmental Entity, and any interest, penalties or additions to
tax imposed thereon or in connection therewith.

2. The Closing

     The Closing shall take place on the Closing Date:

     2.1 Location and Time of Closing

     The Closing shall take place at the offices of Hogan & Hartson LLP, 875
Third Avenue, New York, New York on the Closing Date.

     2.2 Closing Deliveries of the Parties

     At the Closing:

          (a) the Parties shall execute and deliver to Alcatel: (i) a joint request
to the United States District Court for the Southern District of New York to
suspend the Confirmation Proceeding, in the form of
Exhibit 2.2(a)(1), and (ii)
the “Consent Judgment” in the form of Exhibit 2.2(a)(2), which Alcatel shall
file if required pursuant to Section 7.1 below, with the United States District
Court for the Southern District of New York in order to award the Deferred
Payment to Alcatel as the final judgment in the Confirmation Proceeding;

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          (b) the Parties shall execute and deliver to Alcatel: (i) a joint request
to the ICC to suspend the ICC Arbitration, in the form of Exhibit 2.2(b)(1),
which Alcatel shall file promptly with the ICC, and (ii) the letter attached
as Exhibit 2.2(b)(2) (the “ICC Termination
Letter”) which Alcatel shall file
(if required pursuant to Section 7.1 below) requesting the ICC to terminate the
ICC Arbitration and return to Alcatel and the Loral Parties, on a 50/50 basis,
any unused amounts paid by the Parties to the ICC for costs of the ICC
Arbitration (including any costs of the independent auditor), with the
understanding that the Parties shall be responsible for bearing their own
respective costs in connection with the ICC Arbitration, including the cost of
their respective experts or attorneys;

          (c) the Parties shall execute and deliver to Alcatel, and Alcatel shall
promptly file with the United States District Court for the Southern District
of New York, the documents attached hereto as Exhibit 2.2(c) in order to
stipulate and to request the dismissal, with prejudice, of the Intelsat
Orbitals Case (as well as any other documents that shall be necessary to obtain
such dismissal); and

          (d) the Parties shall execute and deliver to one another the “Notice of
Completion Of Closing Under Master Agreement,” in the form attached hereto as
Exhibit 2.2(d).

     2.3 Closing Deliveries of the Loral Parties

          (a) SkyBridge Transfer Deliveries

               At the Closing, the Loral Parties shall cause Loral Broadband to:

               (i) assign, transfer and deliver to Alcatel Multimedia the SkyBridge Units
pursuant to the irrevocable unit power in the form attached hereto as Exhibit
2.3(a)(i); and

               (ii) execute the transfer notice in the form attached hereto as Exhibit
2.3(a)(ii) (the “SkyBridge Transfer Notice”), notifying SkyBridge and the other
SkyBridge partners as contemplated by Section 10.02(a) of the SkyBridge
Partnership Agreement, and deliver such SkyBridge Transfer Notice to SkyBridge
and all other SkyBridge partners (with a copy to be delivered to Alcatel).

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          (b) Cyberstar Transfer Deliveries

          At the Closing, the Loral Parties shall cause:

               (i) Loral Cyberstar, L.L.C to execute and deliver to Audelec a waiver in
the form attached hereto as Exhibit 2.3(b)(i), waiving, on behalf of Cyberstar,
the notice contemplated by Section 10.01(c) of the Cyberstar Partnership
Agreement and confirming that Cyberstar will not request a legal opinion in
connection with the proposed transfer.

               (ii) Loral Broadband to execute and deliver the waiver in the form
attached hereto as Exhibit 2.3(b)(ii), waiving its right to the notice and
rights of first refusal referenced in Section 10.02(a) of the Cyberstar
Partnership Agreement, and to deliver such notice to Cyberstar and all of the
other partners of Cyberstar (with a copy to Alcatel).

          (c) Europe*Star Transfer Deliveries

          At the Closing, Loral shall:

               (i) execute the notice in the form attached hereto as Exhibit 2.3(c)(i),
notifying Europe*Star of the proposed transfer as contemplated by Article 35 of
the Europe*Star Articles of Association adopted on December 7, 1998 (the
“Europe*Star Articles”), and shall deliver such notice to Alcatel and
Europe*Star;

               (ii) execute and deliver to Alcatel Spacecom the irrevocable power of
attorney (the “Europe*Star Irrevocable Power”) in the form attached hereto as
Exhibit 2.3(c)(ii)(a), authorizing Alcatel Spacecom (A) to submit, on Loral’s
behalf, any filings to the German Federal Cartel Office (Bundeskartellamt) (the
“FCO”) to obtain FCO clearance of the transfer by Loral to Alcatel Spacecom of
the Europe*Star Shares and (B) to execute, deliver and file, on Loral’s behalf,
any documents necessary to complete the transfer of the Europe*Star Shares to
Alcatel Spacecom, including without limitation the stock transfer form in the
form attached hereto as Exhibit 2.3(c)(ii)(b) (the “Europe*Star Transfer
Form”), and with respect to the foregoing, Loral hereby instructs Alcatel not
to submit the Europe*Star Transfer Form to the relevant stamp office unless and
until FCO clearance has been received or obtained with respect to the proposed
transfer of the Europe*Star Shares;

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               (iii) execute and deliver the Europe*Star Transfer Form, and with respect
to the foregoing, Loral hereby instructs Alcatel not to submit the Europe*Star
Transfer Form to the relevant stamp office unless and until FCO clearance has
been received or obtained with respect to the proposed transfer of the
Europe*Star Shares; and

               (iv) deliver to Alcatel Spacecom the original share certificate No. 5
representing the Europe*Star Shares.

          (d) SLOD Transfer Deliveries

          At the Closing, the Loral Parties shall cause Loral Global to execute and
deliver to Alcatel Spacecom the irrevocable power of attorney (the “SLOD
Irrevocable Power”) in the form attached hereto as Exhibit 2.3(d)(i)(a),
authorizing Alcatel Spacecom, on Loral Global’s behalf, to execute, file or
deliver any documents necessary to transfer to Alcatel Spacecom the SLOD Share,
including without limitation the execution, pursuant to German notaries
formalities, of the share transfer agreement in the form attached hereto as
Exhibit 2.3(d)(i)(b) (the “SLOD Local Transfer Agreement”), and with respect to
the foregoing, Loral hereby instructs Alcatel not to execute or implement the
SLOD Local Transfer Form unless and until FCO clearance has been received or
obtained with respect to the proposed transfer of the SLOD Share (it being
understood that Loral Global shall have the obligation to transfer the SLOD
Share to Alcatel Spacecom upon such clearance being received or obtained); and

          (e) Payment by the Loral Parties

          At the Closing:

               (i) The Loral Parties shall pay to Alcatel the sum of US$5,000,000, plus
the amounts specified in clauses (A)-(G), below:

                    (A) US$125,000 as payment for the Loral Parties’ share of cost assessments
in the ICC Arbitration;

                    (B) US$82,228.45 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract, SC-995212-AK, dated October 4, 1988,
originally between Ford Aerospace Corporation (a predecessor of SS/L) and
Alcatel Espace (predecessor-in-interest of Alcatel), as amended, related to the
“Intelsat VII” satellite program and that certain Fixed Price Subcontract
KF-274516-S, dated September 16, 1992, as amended, between SS/L and Alcatel (as
successor of Aérospatiale S.N.I.);

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                    (C) US$579,731 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract, S-612837-RJW, dated as of March 18, 1997,
originally between SS/L and Alcatel Espace (predecessor-in-interest of
Alcatel), as amended, regarding the “Intelsat IX” satellite program;

                    (D) US$47,000 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract S-676105-EKW, relating to the “MTSat – 1R”
satellite program;

                    (E) US$404,390 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract S-676738-TNT, relating to the “MBSAT”
satellite program;

                    (F) US$360,190 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract S-676802-TNT relating to the “IPSTAR”
satellite program; and

                    (G) US$50,710 representing amounts owed by SS/L to Alcatel under that
certain Firm Fixed Price Subcontract KS-274923-M and that certain Firm Fixed
Price Subcontract KS-274922-M relating to the “Globalstar” satellite program.

               (ii) The payment required in clause (i), above, shall be made in
immediately available funds sent by wire transfer to the following bank account
of Alcatel (the “Alcatel Account”):

	 	 	 
	Société Générale	 	
 
	30003 02110 00020089896 19	 	 
	Innopole voie 8	 	 
	BP 500	 	 
	31316 Labège cedex	 	 
	Swift code SOGEFRPP	 	 

               (iii) The Loral Parties shall deliver to Alcatel the resignation letters
in substantially the form attached hereto as Exhibit 2.3(e)(iii) (the “Loral
Resignation Letters”) of every Person representing any Loral Party who, as of
the date of this Master Agreement, to the knowledge of the Loral Parties, is
serving as a director, officer, advisory committee representative or
participant, or in any other capacity, in SkyBridge, Europe*Star, SLOD or SLUG.
In the event any additional Persons are identified following the Closing as
representing any Loral Party as a director, officer, advisory committee

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representative or participant or in any other capacity in SkyBridge,
Europe*Star, SLOD or SLUG, the Loral Parties shall promptly cause such Person
to resign, with effect as of the Closing Date.

               (iv) The Loral Parties shall deliver to Alcatel a true and complete
executed copy of Amendment No. 2 to the LSC Facility.

     2.4. Closing Deliveries of Alcatel

          (a) SkyBridge Transfer Deliveries:

          At the Closing, Alcatel shall cause:

               (i) Alcatel Multimedia to execute a first election notice pursuant to
Section 10.02(a) of the SkyBridge Partnership Agreement, which notice is in the
form attached hereto as Exhibit 2.4(a)(i), and to deliver such notice to
SkyBridge and all of the other partners of SkyBridge (with a copy to Loral);
and

               (ii) SkyBridge GP, Inc. to execute and deliver to Loral Broadband, a
waiver in the form attached hereto as Exhibit 2.4(a)(ii), waiving, on behalf of
SkyBridge, the notice contemplated by Section 10.01(c) of the SkyBridge
Partnership Agreement and confirming that SkyBridge will not request a legal
opinion in connection with the proposed transfer.

          (b) Cyberstar Transfer Deliveries:

          At the Closing, Alcatel shall cause Audelec to assign, transfer and
deliver to Loral Broadband the Cyberstar Units pursuant to the irrevocable unit
power in the form attached hereto as Exhibit 2.4(b).

          (c) Europe*Star Transfer Deliveries

          At the Closing, Alcatel shall cause Alcatel Spacecom to execute and
deliver to Europe*Star the waiver in the form attached hereto as Exhibit 2.4(c)
waiving, with respect to Loral’s transfer of the Europe*Star Shares pursuant to
this Master Agreement: (i) Alcatel Spacecom’s right to the notice referenced
in Article 36 of the Europe*Star Articles and (ii) Alcatel Spacecom’s right of
first refusal referenced in Article 37 of the Europe*Star Articles.

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          (d) Additional Deliveries by Alcatel

          In the event any Persons are identified following the Closing as
representing Audelec in any capacity in Cyberstar, Alcatel shall promptly cause
such Person to resign, with effect as of the Closing Date.

3. Additional Agreements and Covenants of the Parties

     3.1 Deferred Payment of The Loral Parties

     (a)  The Loral Parties shall pay to Alcatel the sum of US$8,000,000 in
immediately available funds sent by wire transfer to the Alcatel Account upon
the earliest to occur of (i) the Loral Parties, individually or collectively,
having US$8,000,000 in cash that can be paid to Alcatel without violating any
restrictive covenants contained in the Loral Loan Facilities; (ii) the first
anniversary of the Closing; or (iii) initiation of a case under Chapter 7 or 11
of title 11 of the United States Code by or against any of the Loral Parties
(such $8,000,000 payment, the “Deferred Payment”). The foregoing payment
obligation shall be a joint and several obligation of the Loral Parties.

     (b)  Until the Deferred Payment has been made, the Loral Parties shall
notify Alcatel promptly, and in any event within 5 business days, following
every asset sale (or related series of sales) by any Loral Party (or any of its
Affiliates that is not a natural person) for a gross sales price of at least
US$8,000,000, with such notice including a reasonably detailed explanation as
to whether applicable restrictive covenants would be violated if the proceeds
were used to make the Deferred Payment.

     3.2 Termination of the Framework Agreement

     Effective as of completion of the Closing, the Parties hereby absolutely,
irrevocably and unconditionally terminate that certain “Term Sheet for the
Framework for Joint Pursuit of Satellite Service Opportunities” dated as of
December 6, 1998 (the “Framework Agreement”), including without limitation all
clauses or provisions thereunder which may, by their terms or otherwise,
survive or continue in effect following termination or expiration of the
Framework Agreement.

     3.3 Mutual Releases and Discharge Among the Parties

          (a) Effective as of completion of the Closing, Alcatel, for itself and on
behalf of Alcatel Spacecom, Audelec, Alcatel Multimedia, their respective
officers, directors, stockholders, advisors, Affiliates, successors, and
assigns,

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and SkyBridge GP, Inc., SkyBridge and Europe*Star and SLUG (the
“Alcatel Releasing Parties”), hereby absolutely and irrevocably releases and
forever discharges each of
the Loral Parties, Loral Broadband, Loral Global, Loral Cyberstar, L.L.C.,
Cyberstar, and their Affiliates and their respective current and former
officers, directors, employees, principals, members, partners, stockholders,
advisors (including legal counsel), successors and assigns, from any and all
Claims which the Alcatel Releasing Parties now have or have ever had against
any or all of such released Persons or entities, whether known or unknown
(including an express waiver of any and all rights conferred upon the Alcatel
Releasing Parties by any statute or rule of law that provides that a release
does not extend to claims of which the releasing party does not know or suspect
to exist in its favor at the time of executing the release, which if known by
the releasing party would have materially affected the releasing party’s
settlement with the released parties), matured or unmatured, contingent or
fixed, arising pursuant to or in connection with the following:

               (i) the Alliance Agreement dated June 23, 1997 by and among Loral, LSCC,
SS/L, Aerospatiale S.N.I., Alcatel, and Finmeccanica S.p.A, as amended; the
Operational Agreement, dated April 22, 1991, by and among SS/L, Loral Aerospace
Holdings, Inc., Loral Corporation, Aerospatiale S.N.I., Alcatel and Alenia
Aeritalia & Selenia S.p.A, as amended; the Stockholders Agreement, dated April
22, 1991, by and among SS/L, Loral Aerospace Holdings, Inc., Loral Corporation,
Aerospatiale S.N.I., Alcatel and Alenia Aeritalia & Selenia S.p.A; and the
Exchange Agreement, dated as of June 18, 1997, by and among Loral, Alcatel and
Aerospatiale S.N.I.

               (ii) Cyberstar, including without limitation all related agreements
(including that certain Subscription Agreement by and among Cyberstar, Loral
Cyberstar, LLC., Loral, Audelec and Alcatel (which executed such agreement
under its prior name Alcatel Espace) dated as of June 17, 1998, and that
certain Agreement of Limited Partnership of Cyberstar, L.P. dated as of June
30, 1997 (collectively, the “Cyberstar Agreements”));

               (iii) SkyBridge, including without limitation all related agreements
(including the SkyBridge Subscription Agreement by and among SkyBridge, Alcatel
Espace, Loral Broadband and Loral and the SkyBridge Partnership Agreement
(collectively, the “SkyBridge Agreements”));

               (iv) Europe*Star, including without limitation all related agreements
(including those set forth in Schedule 3.3(a)(iv)) and the following financial
obligations related directly to Europe*Star:

	 	(A)	 	overdues and vendor-financing;

14

 

	 	(B)	 	management fees and royalties;
	 
	 	(C)	 	repayment of loans (and
any accrued interest thereunder) for operations
and other purposes including without limitation
loans made by shareholders in connection with the
Stellat investment; and
	 
	 	(D)	 	construction of the
Europe*Star 1 and 2 satellites, including without
limitation Claims relating to the agreements
relating to the construction of the Europe*Star 1
and 2 satellites, cancellation, in-orbit
incentives and liquidated damages.

               (v) SLOD and SLUG (including without limitation all related agreements,
including those set forth in Schedule 3.3(a)(iv);

               (vi) the Framework Agreement;

               (vii) the ICC Arbitration (including all claims and counterclaims that
have been or could have been asserted therein);

               (viii) the Confirmation Proceeding;

               (ix) the Intelsat Orbitals Case;

               (x) Globalstar, L.P., Globalstar L.L.C., Globalstar Services Company, Inc.
and Globalstar Capital Corporation (collectively, “Globalstar”);

               (xi) any and all other amounts due from the Loral Parties relating to
Europe*Star, SLOD or SLUG, including Claims against the Loral Parties (and
their Affiliates);

               (xii) the Loral Loan Facilities and all of the “Loan Documents” as defined
therein;

               (xiii) the June 5, 2002 Letter Agreement among the Parties requiring,
inter alia, that all settlement discussions be kept confidential and subject to
all settlement discussion privileges; and

15

 

               (xiv) the Interim Agreement, dated April 23, 2003, as amended between
Alcatel, on the one hand, and Loral and SS/L, on the other hand.

     Provided, however, with the exception of clause 3.3(a)(xii), the foregoing
release and discharge set forth in this Section 3.3(a) does not apply to, limit
or otherwise affect the rights, obligations and liabilities of the Parties
under this
Master Agreement, under the Consent Judgment or with respect to: (A)
agreements listed in Schedule 3.3 hereto; (B) warranty and service obligations
under the subcontract between Alcatel Space and SS/L for procurement of the
Europe*Star satellite; and (C) agreements between Alcatel or its Affiliates, on
the one hand, and SS/L, on the other hand, that are not specifically referenced
in clauses 3.3(a)(i)-(vi), and 3.3(a)(xiii)-(xiv), above and that involve: (I)
confidentiality agreements, (II) technical assistance agreements, (III) service
or support agreements, (IV) warranty obligations on equipment that has been
delivered, provided that payment obligations associated with such equipment and
warranty obligations also continue; or (V) arm’s length supply and service
agreements substantially similar to agreements that would be entered in the
ordinary course of business by companies in the same industry that have no
alliance, strategic or other long term relationship between them.

          (b) Each Loral Party, for itself, Loral Broadband, Loral Global, Loral
Cyberstar, L.L.C. and their Affiliates and respective officers, directors,
stockholders, advisors, successors, and assigns and Cyberstar (the “Loral
Releasing Parties”), hereby absolutely and irrevocably releases and forever
discharges each of Alcatel, Alcatel Spacecom, Audelec, Alcatel Multimedia,
Europe*Star, SLOD, SLUG, SkyBridge GP, Inc., and SkyBridge, and their
Affiliates and each of its respective current and former officers, directors,
employees, principals, members, partners, stockholders, advisors (including
legal counsel), successors and assigns, from any and all Claims which Loral
Releasing Parties now have or have ever had against any or all of such released
Persons or entities, whether known or unknown (including an express waiver of
any and all rights conferred upon the Loral Releasing Parties by any statute or
rule of law that provides that a release does not extend to claims of which the
releasing party does not know or suspect to exist in its favor at the time of
executing the release, which if known by the releasing party would have
materially affected the releasing party’s settlement with the released
parties), matured or unmatured, contingent or fixed, arising pursuant to or in
connection with the following:

               (i) the Alliance Agreement dated June 23, 1997 by and among Loral, LSCC,
SS/L, Aerospatiale S.N.I., Alcatel, and Finmeccanica

16

 

S.p.A, as amended; the
Operational Agreement, dated April 22, 1991, by and among SS/L, Loral Aerospace
Holdings, Inc., Loral Corporation, Aerospatiale S.N.I., Alcatel and Alenia
Aeritalia & Selenia S.p.A, as amended; the Stockholders Agreement dated
April 22, 1991, by and among SS/L, Loral Aerospace Holdings, Inc., Loral
Corporation, Aerospatiale S.N.I., Alcatel and Alenia Aeritalia & Selenia S.p.A;
and the Exchange Agreement, dated as of June 18, 1997, by and among Loral,
Alcatel and Aerospatiale S.N.I.

               (ii) Cyberstar, including without limitation all related agreements,
including the Cyberstar Agreements;

               (iii) SkyBridge, including without limitation all related agreements,
including the SkyBridge Agreements;

               (iv) Europe*Star, including without limitation all related agreements
(including those set forth in Schedule 3.3(a)(iv)) and the following financial
obligations related directly to Europe*Star:

	 	(A)	 	overdues and vendor-financing;
	 
	 	(B)	 	management fees and royalties;
	 
	 	(C)	 	repayment of loans (and
any accrued interest thereunder) for operations
and other purposes, including without limitation
loans made by shareholders in connection with the
Stellat investment; and
	 
	 	(D)	 	construction of the
Europe*Star 1 and 2 satellites, including without
limitation Claims relating to the agreements
relating to the construction of the Europe*Star 1
and 2 satellites, cancellation, in-orbit
incentives and liquidated damages.

               (v) SLOD and SLUG (including without limitation all related agreements,
including those set forth in Schedule 3.3(a)(iv))

               (vi) the Framework Agreement;

               (vii) the ICC Arbitration (including all claims and counterclaims that
have been or could have been asserted therein)

17

 

               (viii) the Confirmation Proceeding;

               (ix) the Intelsat Orbitals Case;

               (x) Globalstar;

               (xi) any and all other amounts due from Alcatel relating to Europe*Star,
SLOD or SLUG, including without limitation Claims against Alcatel (and its
Affiliates) as the manager of Europe*Star, SLOD and/or SLUG;

               (xii) the Loral Loan Facilities and all of the “Loan Documents” as defined
therein;

               (xiii) the June 5, 2002, Letter Agreement among the Parties requiring,
inter alia, that all settlement discussions be kept confidential and subject to
all settlement discussion privileges; and

               (xiv) the Interim Agreement, dated April 23, 2003, as amended between
Alcatel, on the one hand, and Loral and SS/L, on the other hand.

     Provided, however, with the exception of clause 3.3(b)(xii) the foregoing
release and discharge set forth in this Section 3.3(b) does not apply to, limit
or otherwise affect the rights, obligations and liabilities of the Parties
under this Master Agreement, under the Consent Judgment or with respect to:
(A) agreements listed in Schedule 3.3 hereto; (B) warranty and service
obligations under the subcontract between Alcatel Space and SS/L for
procurement of the Europe*Star satellite; and (C) agreements between Alcatel or
its Affiliates, on the one hand, and SS/L, on the other hand, that are not
specifically referenced in clauses 3.3(a)(i)-(vi) and 3.3(a)(xiii)-(xiv), above
and that involve: (I) confidentiality agreements, (II) technical assistance
agreements, (III) service or support agreements, (IV) warranty obligations on
equipment that has been delivered, provided that payment obligations associated
with such equipment and warranty obligations also continue; or (V) arm’s length
supply and service agreements substantially similar to agreements that would be
entered in the ordinary course of business by companies in the same industry
that have no alliance, strategic or other long term relationship between them.

     (c)  The Alcatel Releasing Parties hereby irrevocably, fully and forever
release, relieve, waive, relinquish and discharge the Loral Lenders and each of
their directors, officers, present and/or former employees serving in any
capacity or function, including as fiduciaries, agents, advisors, shareholders,

18

 

subsidiaries, affiliates, heirs, executors, administrators, successors and
assigns from, against and with respect to any and all actual or potential
Claims and all other forms of liability whatsoever, in law or equity, whether
asserted or unasserted, known or unknown, foreseen or unforeseen, arising under
the United States Bankruptcy Code, state law or otherwise now existing or
hereafter arising that any of the Alcatel Releasing Parties ever had, now has
or hereafter may have related to the Loral Loan Facilities and all of the “Loan
Documents” as defined thereunder, including without limitation any Claims
related to the granting of collateral to the Loral Lenders and the validity,
priority, subordinatability and seniority of the liens and Claims held by the
Loral Lenders (collectively, the “Released Claims”). This release shall apply
to all Released Claims, whether known or unknown, including, without
limitation, claims which if known by any of the Alcatel Releasing Parties might
materially affect its decision to abide by this Master Agreement. Without
limiting the
generality of the foregoing, each of the Alcatel Releasing Parties hereto
expressly waives any and all rights conferred upon it by any statute or rule of
law that provides that a release does not extend to claims of which the
releasing party does not know or suspect to exist in its favor at the time of
executing the release, which if known by the releasing party would have
materially affected the releasing party’s settlement with the released parties.
The release provided for in this paragraph shall be full and final, and shall
constitute a complete defense against the Released Claims with respect to any
and all parties who may seek to assert such claims.

     3.4 Alcatel Not A Globalstar Creditor

     Effective as of the completion of the Closing, the Loral Parties agree not
to contend or assert that Alcatel is now, or has ever been, a “creditor” (as
that term is defined in the United States Bankruptcy Code) of Globalstar or
ever asserted any Claims against Globalstar.

     3.5 Transfer of Europe*Star Shares

     Effective upon completion of the Closing, the Loral Parties shall
cooperate, assist, take, or shall cause to be taken, such further actions to
execute, deliver and file, or cause to be executed, delivered and filed, such
further documents and instruments, and to use best efforts to obtain such
consents, as may be necessary or as may be requested to effect the transfer of
the Europe*Star Shares to Alcatel Spacecom. In addition, the Loral Parties
shall (a) cooperate in good faith with Alcatel Spacecom with respect to all FCO
filings that Alcatel Spacecom elects to make or is required by Law to make in
connection with the transfer of the Europe*Star Shares to Alcatel Spacecom and
(b) promptly provide Alcatel Spacecom any information necessary or

19

 

appropriate
to complete any FCO filings associated with the transfer of the Europe*Star
Shares.

     3.6 Cyberstar and SkyBridge Transfers

     If all or any portion of any SkyBridge Units or the Cyberstar Units are
transferred during any accounting period, net income, net loss, each item
thereof and all other items attributable to such SkyBridge Units or Cyberstar
Units for such period shall be divided and allocated between the transferor and
the transferee by accounting for their varying interests during such period in
accordance with the interim closing of the books method as provided in section
706(d) of the United States Internal Revenue Code of 1986, as amended.

     3.7 Transfer Intentions

     In the event the FCO declines clearance of or otherwise rejects the
transfer by Loral to Alcatel Spacecom of the Europe*Star Shares or the transfer
by Loral Global to Alcatel Spacecom of the SLOD Share (if such transfer is
required to be
reviewed by the FCO), Alcatel shall have the right to designate alternate
transferees, and, if the FCO declines clearance of or otherwise rejects the
transfers to such alternate transferees the Parties shall negotiate in good
faith to modify the arrangements to transfer the Europe*Star Shares and/or the
SLOD Share so as to provide for transfers as similar as possible to those
contemplated in this Master Agreement and consistent with applicable law and
any conditions the FCO may have imposed. In all cases the transfer shall be
subject to applicable law and the Parties shall cooperate in taking such
further actions (including executing such further documents and instruments),
as may be necessary or reasonably appropriate to effectuate the foregoing.

     3.8 Miscellaneous Covenants

     (a)  The Loral Parties shall, by no later than July 11, 2003, deliver to
Alcatel a Netherlands Antilles commercial register extract, dated no later than
5 days after the Closing Date, evidencing the authority of the Loral Global
signatory to the SLOD Irrevocable Power.

     (b)  The Parties shall make good faith efforts following the Closing
promptly to finalize Schedule 3.3 by agreeing on which of the “open” contracts
listed on Schedule 3.3 shall remain on the schedule and reaching an agreement
on a complete and final version of Schedule 3.3.

20

 

4. Representations and Warranties of the Loral Parties

     The Loral Parties hereby jointly and severally represent and warrant to
Alcatel, as follows:

     4.1 Restrictions and Consents

          (a) The execution, delivery and performance by each Loral Party, Loral
Global and Loral Broadband of this Master Agreement and all other documents
contemplated hereby, the fulfillment of and compliance with the respective
terms and provisions hereof and thereof, and the consummation by each Loral
Party, Loral Global and Loral Broadband of the transactions contemplated hereby
and thereby, do not: (i) require any third party (including administrative,
judicial or other governmental or super-governmental) notices, reviews,
approvals, consents (including any “non-exercise” of veto or other rights) or
any waivers, consents or approval of any Person or entity (collectively, the
“Loral Approvals”) which have not already been fully provided, obtained or
otherwise satisfied; or (ii) conflict with, result in any breach of, or
constitute a default under any agreement to which a Loral Party, Loral Global
or Loral Broadband is a party.

          (b) A true and complete list of the Loral Approvals is attached hereto as
Schedule 4.1(b).

     4.2 Authorization

          (a) The Loral Parties have full legal right, power and authority to
execute and deliver this Master Agreement, to consummate the transactions set
forth herein and to perform all of the terms and conditions hereto to be
performed by each of them.

          (b) The execution and delivery of this Master Agreement by each of the
Loral Parties and the performance by each Loral Party, Loral Global and Loral
Broadband of the transactions contemplated herein have been duly and validly
authorized by all requisite corporate action of each Loral Party and, as
applicable, by Loral Global and Loral Broadband.

          (c) This Master Agreement has been duly and validly executed and delivered
by each Loral Party and is the legal, valid and binding obligation of each
Loral Party, enforceable against each Loral Party in accordance with its terms.

21

 

     4.3 Title

          (a) Loral Broadband has sole and exclusive legal and equitable ownership
of and has good, valid and marketable title to the SkyBridge Units, free and
clear of any Encumbrances; Loral has sole and exclusive legal and equitable
ownership of and has good, valid and marketable title the Europe*Star Shares,
free and clear of any Encumbrances; and Loral Global has sole and exclusive
legal and equitable ownership of and has good, valid and marketable title the
SLOD Share, free and clear of any Encumbrances.

          (b) The SkyBridge Units constitute each and every right, title and
interest in and to SkyBridge held by the Loral Parties or any of their
Affiliates;

          (c) The Europe*Star Shares constitute each and every right, title and
interest in and to Europe*Star held by the Loral Parties or any of their
Affiliates;

          (d) The SLOD Share constitutes each and every right, title and interest in
and to SLOD held by the Loral Parties or any of their Affiliates;

          (e) With effect as of the Closing, Alcatel (or Alcatel Spacecom or any
other Affiliate or other Person designated by Alcatel, as the case may be)
shall acquire good, valid and marketable title to, and all right, title and
interest in, the SkyBridge Units free and clear of any Encumbrances.

     4.4 Loral Loan Facilities

          The Loral Parties have furnished to Alcatel true and complete copies of
the Loral Loan Facilities.

5. Representations and Warranties of Alcatel

     Alcatel hereby represents and warrants to the Loral Parties, as follows:

     5.1 Restrictions and Consents

          (a) The execution, delivery and performance by Alcatel of this Master
Agreement and all other documents contemplated hereby, the fulfillment of and
compliance with the respective terms and provisions hereof and thereof, and the
consummation by Alcatel and Audelec of the transactions contemplated hereby and
thereby, do not: (i) require any third party (including administrative,
judicial or other governmental or super-governmental) notices, reviews,
approvals, consents (including any “non-exercise” of veto or other rights) or
any waivers, consents or approvals of any Person or Governmental Entity
(collectively, the “Alcatel Approvals”) which have not already been fully

22

 

provided, obtained and otherwise satisfied; or (ii) conflict with, result in
any breach of, or constitute a default under any agreement to which Alcatel is
a party.

          (b) A true and complete list of the Alcatel Approvals is attached hereto
as Schedule 5.1(b).

     5.2 Authorization

          (a) Alcatel has full legal right, power and authority to execute and
deliver this Master Agreement, to consummate the transactions set forth herein
and to perform all of the terms and conditions hereto to be performed by it.

          (b) The execution and delivery of this Master Agreement by Alcatel and the
performance by Alcatel and Audelec of the transactions contemplated herein have
been duly and validly authorized by all requisite corporate action of Alcatel
and Audelec.

          (c) This Master Agreement has been duly and validly executed and delivered
by Alcatel and is the legal, valid and binding obligation of Alcatel,
enforceable against Alcatel in accordance with its terms.

     5.3 Title

          (a) Audelec has sole and exclusive legal and equitable ownership of and
has good, valid and marketable title to the Cyberstar Units, free and clear of
any Encumbrances

          (b) With effect as of the Closing, Loral (or any Affiliate or other Person
designated by Loral, as the case may be) shall acquire good, valid and
marketable title to, and all right, title and interest in, the Cyberstar Units,
free and clear of any Encumbrances.

          (c) The Cyberstar Units constitute each and every right, title and
interest in and to Cyberstar held by Alcatel or any of its Affiliates.

6. Governing Law; Jurisdiction

     6.1 This Master Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws principles thereof (other than Section 5-1401 of the New York General
Obligations Law).

23

 

     6.2 This Master Agreement and the duties and obligations of Alcatel
hereunder shall be enforceable against Alcatel in the Commercial Court of
Paris. For such purpose, Alcatel hereby submits to the non-exclusive
jurisdiction of such court, and agrees that all claims in respect of this
Master Agreement may be heard and determined in such court.

     6.3 This Master Agreement and the duties and obligations of each Loral
Party hereunder shall be enforceable against any Loral Party in any New York
state court or, at Alcatel’s option and in its sole discretion, any New York
federal court. For such purpose, each Loral Party hereby submits to the
non-exclusive jurisdiction of such courts, and agrees that all claims in
respect of this Master Agreement may be heard and determined in any of such
courts.

7. Miscellaneous

     7.1 Confirmation Proceeding and ICC Arbitration.

     (a)  If no Loral Party has become subject to a case under Chapter 7 or 11
of title 11 of the United States Code prior to the 91st day following the Loral
Transfers Date, then by no later than the 100th day following the Loral
Transfers Date Alcatel shall duly file and submit (on behalf of Alcatel and the
Loral Parties) the Consent Judgment with the United States District Court for
the Southern District of New York and the ICC Termination Letter with the ICC.

     (b)  If a Loral Party has become subject to a case under Chapter 7 or 11 of
title 11 of the United States Bankruptcy Code prior to the 91st day following
the Loral Transfers Date, Alcatel shall not be required to file the ICC
Termination Letter with the ICC or the Consent Judgment with the Southern
District of New York until the date of confirmation of a plan of reorganization
or a liquidation in such proceeding; provided, however, that if any action is
commenced in such case seeking the repayment, disgorgement, or turnover of any
of the Loral Transfers to a trustee, receiver, debtor-in-possession, an
unsecured creditor’s committee or any other Person or entity, then Alcatel
shall not be required to file the ICC Termination Letter or the Consent
Judgment until such action has been dismissed.

     7.2 Effect of Insolvency Events

     (a)  Notwithstanding anything to the contrary in this Master Agreement (i)
if all or any portion of the US$5,000,000 payment to Alcatel pursuant to
Section 2.3 (e)(i) hereof (excluding the sub-clauses thereof) or the transfer
of the SkyBridge Units to Alcatel Multimedia as contemplated by Section 2.3(a)
hereof or the transfers of the Europe*Star Shares and the SLOD Share to Alcatel
Spacecom, as contemplated by Sections 2.3(c) and 2.3(d) hereof; or (ii)

24

 

 if any
substantial portion of the payments to Alcatel described sub-clauses (A)-(G) of
Section 2.3(e)(i) hereof, is, pursuant to judicial order subsequently repaid,
disgorged or turned over
to a trustee, receiver, debtor-in-possession, an unsecured creditor’s
committee or any other Person or entity, in each case pursuant to any
insolvency, bankruptcy, or any state or federal insolvency proceeding or case
(whether at law or in equity), including without limitation, a case under
Chapter 7 or 11 of title 11 of the United States Code or for any other reason,
then at Alcatel’s sole option, all Claims Alcatel has made against the Loral
Parties in “Phase III” of the ICC Arbitration (as more specifically set forth
in Partial Award II, dated January 18, 2003, at paragraph 212(I)) and passim
(such claims, the “Reinstated Claims”) shall be reinstated in full, and the
Mutual Releases and Discharges among Alcatel and the Loral Parties in Section
3.3 hereof shall be deemed null, void, invalid and unenforceable to the extent
they are inconsistent with, or otherwise limit, the Reinstated Claims.

     (b)  Alcatel shall be entitled to pursue and recover the Reinstated Claims
(less the value of any consideration received in the Loral Transfers that has
not been so repaid, disgorged or turned over) in the ICC Arbitration or if so
required in a proceeding before the applicable bankruptcy court. Prior to the
reinstatement of the Reinstated Claims pursuant to Section 7.2(a), Alcatel
shall not pursue the ICC Arbitration.

     (c)  For purposes of going forward on the Reinstated Claims: (i) all Phase
I and Phase II rulings in the ICC Arbitration, including those set forth in
Partial Award I, dated February 9, 2002, and in Partial Award II, dated January
18, 2003, as well as all Phase III rulings by the Arbitral Tribunal through the
date on which Phase III of the ICC Arbitration is suspended, shall be valid and
binding upon, fully accepted and admitted by the Parties; and (ii) all of the
Parties’ Phase III submissions in the ICC Arbitration shall be valid and
effective, and need not be resubmitted or realleged.

     7.3 Headings

     Section headings contained in this Master Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this Master
Agreement for any purpose and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.

     7.4 No Admission of Liability

     This Master Agreement neither constitutes nor shall be construed as an
admission of liability by any Party.

25

 

     7.5 Further Assurances

     Each Party shall take, or shall cause to be taken, such further actions to
execute, deliver and file, or cause to be executed, delivered and filed, such
further
documents and instruments, and to use best efforts to obtain such
consents, as may be necessary or as may be requested to effectuate fully the
purposes and terms of this Master Agreement, whether before, at or after the
date first set forth hereinabove.

     7.6 Amendment

     No amendment, modification or discharge of this Master Agreement, and no
waiver hereunder, shall be valid or binding unless set forth in writing and
duly executed by the Party or the Agent under the Loral Loan Facilities, as
applicable, against whom enforcement of the amendment, modification, discharge
or waiver is sought.

     7.7 Enforcement of Provisions

     No delay or failure at any time on the part of any Party in exercising any
right, power or privilege under this Master Agreement, or in enforcing any
provisions of this Master Agreement, shall (i) impair any such right, power or
privilege, (ii) be construed as a waiver of such provision, (iii) be construed
as a waiver of any default or as an acquiescence therein or (iv) affect the
right of such Party thereafter to enforce each and every provision of this
Master Agreement in accordance with its terms.

     7.8 Entire Agreement

     This Master Agreement constitutes the entire agreement among the Parties
with respect to the subject matter hereof, and supersedes all prior oral or
written agreements, commitments or understandings with respect to such matters.
This Master Agreement (together with the Exhibits and Schedules hereto) shall
be binding upon and shall inure to the benefit of the Parties and their
respective heirs, devisees, executors, administrators, legal representatives,
successors and assigns. The Parties hereby expressly acknowledge that the
Loral Lenders are intended third party beneficiaries of Sections 3.3(a)(xii)
and 3.3(c) of this Master Agreement.

     7.9 Notices

     Any notice required to be provided hereunder by one Party to the other
shall be given in writing and shall be delivered by personal messenger,

26

 

international courier service of international standing and recognition with
charges prepaid or facsimile addressed as set forth below or addressed as the
Party receiving the notice shall have specified most recently by written
notice:

	 	 	 
	(a)	 	
If to the Loral Parties:
	 	 	 
	 	 	
Loral Space & Communications, Ltd
	 	 	
600 Third Avenue
	 	 	
New York, New York 10016
	 	 	
Facsimile: (212) 338 5320
	 	 	
Attention: Avi Katz, Esq.
	 	 	 
	 	 	
With a copy (which shall not constitute notice) to:
	 	 	 
	 	 	
Willkie Farr & Gallagher
	 	 	
787 Seventh Avenue
	 	 	
New York, NY 10019
	 	 	
Facsimile: +(1)212/728-8111
	 	 	
Attention: Steven H. Reisberg, Esq.
	 	 	 
	(b)	 	
If to Alcatel:
	 	 	 
	 	 	
Alcatel Space
	 	 	
5, rue Noel-Pons
	 	 	
92737 Nanterre Cedex
	 	 	
France
	 	 	 
	 	 	
Facsimile: + (33) 1.46.52.64.33
	 	 	
Attention: Yves de la Serre
	 	 	 
	 	 	
With a copy (which shall not constitute notice) to:
	 	 	 
	 	 	
Mark E. Mazo, Esq.
	 	 	
Hogan & Hartson L.L.P.
	 	 	
555 13th Street, N.W.
	 	 	
Washington, D.C. 20004
	 	 	
Facsimile: +(1) 202/637-5910
	 	 	 
	(c)	 	
If to the Loral Lenders:

27

 

	 	 	 
	 	 	
Bank of America, N.A.
	 	 	
Agency Management Services
	 	 	
101 N. Tryon Street
	 	 	
Charlotte, North Carolina, 28255
	 	 	
Attention: Kim Williams
	 	 	
Facsimile: +(1) 704/409-0650
	 	 	 
	 	 	
With a copy (which shall not constitute notice) to:
	 	 	 
	 	 	
John Fouhey, Esq.
	 	 	
Davis Polk & Wardwell
	 	 	
450 Lexington Avenue
	 	 	
New York, NY 10017
	 	 	
Facsimile: +(1) 212/450-3358

     7.9 Severability

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

     7.10 Expenses

     Each Party shall pay its own expenses incident to the negotiations and
preparation of this Master Agreement and with respect to the transactions
contemplated hereby, including all legal and accounting fees and disbursements.

     7.11 Counterparts; Facsimile Execution

     This Master Agreement may be executed in one or more counterparts, and by
the different Parties in separate counterparts, each of which when so executed
and delivered shall constitute a single, binding instrument. To facilitate
execution, this Master Agreement may be executed through the use of facsimile
transmission, and a counterpart of this Master Agreement

28

 

 that contains the
facsimile signature of a Party shall constitute an executed counterpart of this
Master Agreement.

[Remainder of this page intentionally left blank;

signature pages follow on pages 31 and 32.]

[Remainder of this page intentionally left blank;

signature pages follow on pages 31 and 32.]

29

 

[Remainder of this page intentionally left blank;

signature pages follow on pages 31 and 32.]

30

 

IN WITNESS WHEREOF, each of the Parties has duly executed and delivered this
MASTER AGREEMENT with effect as of the date first set forth hereinabove.

	 	 	 
	LORAL SPACE & COMMUNICATIONS LTD.
	 	 	 
	By :	 	
/s/ Eric J. Zahler
	 	 	

	Name :	 	
Eric J. Zahler
	Title :	 	
President and COO
	 	 	 
	LORAL SPACE & COMMUNICATIONS CORPORATION
	 	 	 
	By :	 	
/s/ Eric J. Zahler
	 	 	

	Name :	 	
Eric J. Zahler
	Title :	 	
President and COO
	 	 	 
	LORAL SPACECOM CORPORATION
	 	 	 
	By :	 	
/s/ Eric J. Zahler
	 	 	

	Name :	 	
Eric J. Zahler
	Title :	 	
President and COO
	 	 	 
	SPACE SYSTEMS/LORAL INCORPORATED
	 	 	 
	By :	 	
/s/ Eric J. Zahler
	 	 	

	Name :	 	
Eric J. Zahler
	Title :	 	
Executive Vice President

31

 

	 	 	 
	ALCATEL SPACE
	 	 	 
	By :	 	
/s/ Yves de la Serre
	 	 	

	Name :	 	
Yves de la Serre
	Title :	 	
Executive Vice President, Finance and Administration

32<PAGE>
                                                                   EXHIBIT 10.78

     *** TEXT IN SECTION 9.2 OMITTED AND FILED SEPARATELY CONFIDENTIAL TREATMENT
                  REQUESTED UNDER 17 C.F.R. SEC. 280.80(b)(4) AND SEC. 240.24b-2

                  SETTLEMENT AND NONEXCLUSIVE LICENSE AGREEMENT

THIS SETTLEMENT AND NONEXCLUSIVE LICENSE AGREEMENT ("Agreement"), dated as of
January 10, 2001, is entered into by and between Incyte Genomics, Inc., a
Delaware corporation, with offices at 3160 Porter Drive, Palo Alto, California
94304 ("Incyte"), and Gene Logic, Inc., a Delaware corporation, with offices at
708 Quince Orchard Road, Gaithersburg, Maryland 20878 ("Gene Logic"). Incyte and
Gene Logic may each be referred to herein individually as a "Party" and
collectively as the "Parties".

                                   WITNESSETH

        WHEREAS, Incyte has the right to grant licenses under certain patents
and patent applications regarding RNA amplification and bioinformatics.

        WHEREAS, Incyte has agreed to grant a nonexclusive license to Gene Logic
under certain of these patents and patent applications for the purposes of, and
subject to the terms and conditions of this Agreement.

        WHEREAS, Incyte and Gene Logic have agreed to settle the litigations
between Incyte and Gene Logic filed as Case Nos. C 99-05180 MJJ (ENE) (JL) (the
"First Action") and C-00-04627 SBA (the "Second Action") in the United States
District Court for the Northern District of California (collectively the
"Actions"), based on the terms herein.

        NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

In this Agreement the following words and expressions have the following
meanings:

1.1     "AFFILIATE" shall mean any corporation, firm, limited liability company,
        partnership or other entity that is controlled by Gene Logic. For the
        purpose of this definition, control means ownership of one hundred
        percent (100%) of the shares of stock entitled to vote for the election
        of directors, in the case of a corporation, or one hundred percent
        (100%) of the equity interests in the case of any other type of legal
        entity, status as a general partner in any partnership. Notwithstanding
        the foregoing, for purposes of this Agreement, the term "Affiliate"
        shall not include Affymetrix, Inc. ("Affymetrix"), Perlegen
        Sciences, Inc. ("Perlegen") or Applera Corporation ("Applera").

1.2     "CLINICAL DIAGNOSTICS" shall mean the performance of FDA-approved
        clinical diagnostic test(s) on a human tissue or other human biological
        sample, the results

                                       1
<PAGE>

        of which are provided to health care providers for use in the clinical
        management of individual patients.

1.3     "CONTROL" OR "CONTROLLED" shall mean possession of the ability to grant
        the licenses or sublicenses or to make the assignments as provided for
        herein without violating the terms of any agreement or other arrangement
        with any Third Party.

1.4     "EFFECTIVE DATE" shall mean the date first set forth above.

1.5     "END USER" shall mean any corporate entity or individual to whom Gene
        Logic directly sells or otherwise provides Gene Expression Information
        for use in research and development, including clinical development of
        pharmaceuticals and Clinical Diagnostics.

1.6     "LAYTON FIELD OF USE ACTIVITIES" shall mean the preparation of samples
        by Gene Logic for gene expression analysis for research and development
        of pharmaceutical and diagnostic products and services, specifically
        including uses in clinical trials by Gene Logic or End Users. For
        purposes of clarification, Gene Logic and End Users have the right to
        commercialize such pharmaceutical and diagnostic products and services
        developed pursuant to the first sentence of this Section 1.6; provided
        that such products or services would not otherwise infringe the Layton
        Patents. End Users may commercialize pharmaceutical and diagnostic
        products and/or services developed using the Gene Expression Information
        generated by Gene Logic under the license granted herein but are not
        themselves granted any license to practice the inventions claimed in the
        Layton Patents hereunder. Notwithstanding the foregoing, the Layton
        Field of Use Activities specifically excludes (a) making, having made,
        using, selling, offering for sale, or otherwise providing Clinical
        Diagnostics; (b) making, having made, selling, offering for sale, or
        otherwise providing Layton Kits; (c) high throughput sequencing; and (d)
        genotyping, SNP detection and SNP discovery.

1.7     "GENE EXPRESSION INFORMATION" shall mean information generated by Gene
        Logic concerning the presence, absence and/or abundance of messenger RNA
        molecules in a biological sample.

1.8     "GENOTYPING" shall mean the determination of sequence variation of
        genetic markers in DNA, including sequence variation in SNPs ("single
        nucleotide polymorphisms"), subject to the following limitation: the
        term "genotyping" specifically excludes generation of Gene Expression
        Information.

1.9     "INCYTE PATENTS" shall mean (a) U.S. Patent No. 6,023,659, "Database
        System Employing Protein Function Hierarchies For Viewing Biomolecular
        Sequences" issued February 8, 2000, (b) all patents and patent
        applications, including provisional applications whether or not filed
        more than one year ago, Controlled by Incyte as of the Effective Date or
        during the term of this Agreement that claim benefit under 35 USC
        Sections 119 and/or 120 of any application or provisional application to
        which the patent identified in (a) claims benefit under 35 USC Sections

                                       2
<PAGE>

        119 and/or 120; (c) all continuations, continuations-in-part, divisions
        or provisionals of any application that matured into the patent included
        in (a) or (b); (d) all patents issuing from any patent application,
        including any provisional application included in (b) or (c); (e) all
        foreign counterparts of any of the foregoing, and the patents issuing
        therefrom; and (f) all reissues and re-examinations of any of the
        foregoing and the patents issuing therefrom.

1.10    "LAYTON KITS" shall mean combined sets of reagents whose use would
        infringe one or more claims of the Layton Patents.

1.11    "LAYTON PATENTS" shall mean (a) U.S. Patent No. 5,716,785, "Processes
        for Genetic Manipulations Using Promoters" issued February 1, 1998; U.S.
        Patent No. 5,891,636, "Processes for Genetic Manipulations Using
        Promoters" issued April 6, 1999, (b) all patents and patent
        applications, including provisional applications whether or not filed
        more than one year ago, Controlled by Incyte as of the Effective Date or
        during the term of this Agreement that claim benefit under 35 USC
        Sections 119 and/or 120 of any application or provisional application to
        which the patent identified in (a) claims benefit under 35 USC Sections
        119 and/or 120; (c) all continuations, continuations-in-part, divisions
        or provisionals of any application that matured into the patent included
        in (a) or (b); (d) all patents issuing from any patent application,
        including any provisional application included in (b) or (c); (e) all
        foreign counterparts of any of the foregoing, and the patents issuing
        therefrom; and (f) all reissues and re-examinations of any of the
        foregoing and the patents issuing therefrom.

1.12    "LICENSED PATENTS" shall mean the Incyte Patents and the Layton Patents.

1.13    "THIRD PARTY" shall mean any person or entity other than Incyte, Gene
        Logic or Gene Logic's Affiliates.

                                    ARTICLE 2
                                  LICENSE GRANT

2.1     LAYTON PATENTS NON-EXCLUSIVE LICENSE GRANT. Subject to the terms of this
        Agreement, Incyte hereby grants to Gene Logic and its Affiliates and
        Gene Logic and its Affiliates accept from Incyte a non-exclusive, fully
        paid up, non-transferable (except as permitted under Section 11.7),
        revocable only as permitted under Section 9.2, world-wide license under
        the Layton Patents limited to the Layton Field of Use Activities, said
        license being subject to the provisions of Section 1.6, without the
        right to sublicense or any sublicense being implied.

2.2     INCYTE PATENTS NON-EXCLUSIVE LICENSE GRANT. Subject to the terms of this
        Agreement, Incyte hereby grants to Gene Logic and its Affiliates and
        Gene Logic and its Affiliates accept a non-exclusive, fully paid up,
        non-transferable (except as permitted under Section 11.7), revocable
        only as permitted under Section 9.2, worldwide license under the Incyte
        Patents for all uses (excluding resale of any

                                       3
<PAGE>

        Third Party database product), said license being without the right to
        sublicense or any sublicense being implied.

2.3     NO EXTENSION OF RIGHTS TO SUPPLIERS. The non-exclusive license grants of
        Sections 2.1 and 2.2 hereof do not extend any right under the Licensed
        Patents to any Third Party that supplies any product or service covered
        by the Licensed Patents or used by Gene Logic under the licenses granted
        herein, including any supplier of Layton Kits, gene expression
        microarrays or Gene Expression Information except for Third Parties
        supplying reagents other than Layton Kits for purposes of Gene Logic's
        use under Section 2.1.

2.4     THIRD PARTY LITIGATION. Gene Logic may not, under any circumstances,
        rely on the licenses granted through this Agreement to preclude Incyte
        from taking any legal action for infringement of the Licensed Patents
        against any Third Party, including obtaining injunctive relief that
        would bar such Third Party from providing to Gene Logic any product or
        service covered by a valid claim under the Licensed Patents including
        any Layton Kit, gene expression microarray, or Gene Expression
        Information except for Third Parties supplying reagents other than
        Layton Kits for purposes of Gene Logic's use under Section 2.1.

                                    ARTICLE 3
                            DISMISSAL OF THE ACTIONS

3.1     DISMISSAL OF THE ACTIONS. The Parties shall have their counsel execute
and submit a Stipulation and [Proposed] Order of Dismissal of the Actions in the
form attached as Exhibit A within three (3) business days of the payment
specified in Section 5.1 of this Agreement. The Parties agree that the
Stipulation and [Proposed] Order of Dismissal shall not preclude the right of
Incyte to bring suit against Gene Logic or Gene Logic's Affiliates in the United
States District Court for the Northern District of California if this Agreement
is breached by Gene Logic in one or more causes of action including an action
for infringement of the Licensed Patents, and an action for breach of contract.
The Parties agree that the stipulation and [Proposed] Order of Dismissal shall
not preclude the right of Gene Logic to bring suit against Incyte in the United
States District Court for the Northern District of California if this Agreement
is breached by Incyte in one or more causes of action, including an action for
breach of contract.

                                    ARTICLE 4
                             ADDITIONAL OBLIGATIONS

4.1     RELEASE. Incyte and Gene Logic for themselves and for their parents,
subsidiaries, agents, servants, successors, assigns, and representatives,
including but not limited to, officers, directors, employees, and attorneys
and/or any other related or affiliated corporation or entity, hereby mutually
release each other from any and all claims, causes of action, potential
counterclaims, suits, demands, obligations, promises, liabilities, and damages
of any kind whatsoever, whether at law or equity, whether known or unknown,
which they, or any of them, had or may have had as of the Effective Date

                                       4
<PAGE>

against each other arising out of any dispute, claim or counterclaim of any
nature whatsoever arising directly or indirectly or in any way related to the
claims asserted in the Actions and from the commencement, prosecution, defense
and dismissal of the Actions.

4.2     CAL. CIVIL CODE SECTION 1542. The Parties expressly waive any right or
        benefit to Section 1542 of the California Civil Code which provides:

        A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
        KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
        RELEASE, WHICH IF KNOWN TO HIM, MUST HAVE MATERIALLY AFFECTED HIS
        SETTLEMENT WITH THE DEBTOR.

The Parties, being aware of the above code section, also waive any right or
benefit to which they may be entitled under any other similar statute or common
law principle to the extent permitted by law.

4.3     COVENANT NOT TO SUE. Each party hereby covenants that for a period of
        twelve months from the Effective Date, and provided that the other Party
        is not in material breach of this Agreement, neither Party will
        institute any action for patent infringement against the other Party.
        Each Party also agrees that, during the twelve-month period provided by
        this Section 4.3, appropriate representatives of each Party will make a
        good faith effort to meet with each other to explore licensing and
        cross-licensing of the Parties' respective intellectual property as well
        as other business opportunities that may exist.

4.4     DISPUTE RESOLUTION. Each Party hereby agrees that for a period of
        twenty-four months following the termination of the twelve-month period
        provided under Section 4.3 hereof, and provided that the Agreement has
        not been terminated, each Party will provide the other Party ninety-days
        notice before instituting any action for patent infringement against the
        other Party. During the ninety-day notification period provided by this
        Section 4.4, the Parties shall attempt in good faith to settle the
        issues raised by the notice either by submitting the issues raised by
        the notice to appropriate senior management representatives of each
        party in an effort to effect a mutually acceptable resolution thereof or
        by agreeing to a binding alternative dispute resolution procedure by
        which those issues may be resolved. In the event no mutually acceptable
        resolution of the issues raised by the notice is achieved and no
        mutually acceptable procedure for alternative dispute resolution is
        agreed upon within the ninety-day period provided by this Section 4.4,
        then either party shall be entitled to seek final settlement of such
        Dispute by any administrative or judicial mechanism which may be
        available.

4.5     ISSUE PRECLUSION: INFRINGEMENT OF LAYTON PATENTS BY ACCUSED PROTOCOLS.
        Gene Logic will not assert in any litigation with Incyte, or any
        successor to Incyte, that Gene Logic's use of its current and past
        protocols for amplifying RNA for gene expression analysis (e.g., Eastman
        Exhibit 21, GL 68518-68523)

                                       5
<PAGE>

        accused of infringement in the claim charts in the First Action does not
        infringe the Layton Patents. The Parties agree that the provisions of
        this Section 4.5 will have issue preclusive effect. Based on the
        previous sentence, it is the Parties' specific intent that this
        Agreement and the dismissal of the Actions pursuant hereto shall be
        binding on and shall absolutely bar and preclude Gene Logic, Gene
        Logic's Affiliates, or any entity that acquires Gene Logic from
        contesting any issue concerning the infringement of such patents by such
        protocols or any insubstantial variation of such protocols in any
        judicial proceeding on any claim.

4.6     ISSUE PRECLUSION: VALIDITY AND ENFORCEABILITY OF LAYTON PATENTS. Gene
        Logic will not assert in any litigation with Incyte, or any successor to
        Incyte, that the Layton Patents are invalid or unenforceable. The
        Parties agree that the provisions of this Section 4.6 will have issue
        preclusive effect as to the validity and enforceability of the Layton
        Patents. Based on the previous sentence, it is the Parties' specific
        intent that this Agreement and the dismissal of the Actions pursuant
        hereto shall be binding on and shall absolutely bar and preclude Gene
        Logic, Gene Logic's Affiliates, or any entity that acquires Gene Logic
        from contesting any issue concerning the validity and enforceability of
        those patents in any judicial proceeding on any claim. Gene Logic
        further agrees to remain neutral in any action or proceeding contesting
        the validity or enforceability of those patents, e.g. by responding to
        court order or subpoena. This Section 4.6 shall not apply if the Layton
        Patents are held invalid or unenforceable by a court decision that is
        not appealable or from which no appeal is taken.

4.7     USE OF AGREEMENTS, PRECLUSIONS, OR DISCOVERY IN SUBSEQUENT LITIGATIONS.
        Incyte may rely on and offer in evidence the agreements and preclusions
        set forth in Sections 4.5 and 4.6 in any litigation that involves the
        Layton Patents against Gene Logic, Gene Logic's Affiliates, or any
        entity that acquires Gene Logic. Incyte shall not use, rely on, or offer
        into evidence such agreements and preclusions in any litigation
        involving the Layton Patents against Affymetrix. Gene Logic agrees that
        in the ongoing litigation between Incyte and Affymetrix concerning the
        Layton Patents filed as Case No. C-OO-3210 MJJ in the United States
        District Court for the Northern District of California, Gene Logic will
        promptly respond to written discovery requests by producing all
        earlier-produced documents and deposition transcripts to both Affymetrix
        and Incyte, except that it reserves the right (i) to object to the
        production of documents and transcripts that it independently determines
        lack relevance to the Affymetrix suit and (ii) to object to production
        of any documents on grounds of joint privilege with Affymetrix if Gene
        Logic is requested by Affymetrix to do so. Regardless, Gene Logic agrees
        that it will produce without objection the documents and deposition
        transcript excerpts itemized in Exhibit B attached hereto. Any and all
        such production shall be made pursuant to Northern District of
        California Local Rule 16-6 until the ultimate entry of an appropriate
        protective order in the Affymetrix suit. Gene Logic further agrees to
        "meet and confer" with Incyte to attempt to promptly resolve any
        objections Gene Logic might have to production of any such information
        or documents in the above-styled Affymetrix litigation. The

                                       6
<PAGE>

        provisions of Section 9.2 of this Agreement shall not be applicable to
        this Section 4.7.

                                    ARTICLE 5
                                     PAYMENT

5.1     PAYMENT. Based on the consideration provided in this Agreement, Gene
        Logic shall pay to Incyte, no later than ten (10) days after the
        Effective Date, the sum of Nine Million U.S. dollars (U.S.
        $9,000,000.00) by electronic wire transfer in immediately available
        funds to such account as Incyte shall designate by written notice to
        Gene Logic, which sum shall be non-refundable and which notice shall be
        provided no later than the Effective Date.

                                    ARTICLE 6
                                 CONFIDENTIALITY

6.1     CONFIDENTIALITY OBLIGATION. Notwithstanding any other provision herein
        to the contrary, including, without limitation, the provisions of
        Section 4.7, Incyte and Gene Logic each agree that, without the prior
        written consent of the other Party or unless required by law, it shall
        not disclose to any Third Party the terms of this Agreement or any
        confidential information regarding the other Party or the business of
        the other Party which has been made available to it (the "Protected
        Information"), except as provided in Sections 6.2 and 6.3 of this
        Article and except that (i) the terms of this Agreement may be disclosed
        to outside legal counsel, provided that such outside legal counsel agree
        to maintain the Protected Information in confidence and (ii) Incyte may
        disclose to the Third Party licensor of the Layton Patents such terms of
        this Agreement as are necessary to be disclosed to such Third Party
        licensor under the terms of the license agreement between Incyte and
        such Third Party license, provided that such Third Party licensor agrees
        to maintain the Protected Information in confidence. Disclosure solely
        consisting of the existence of this Agreement and Gene Logic's status as
        a non-exclusive licensee under the Licensed Patents are specifically not
        within the confidentiality obligation imposed by this Section 6.1.

6.2     STATUE, REGULATION OR JUDICIAL PROCEEDING. Notwithstanding any other
        provision of this Article 6, if either Party is required by statute,
        rule or regulation, including the rules and regulations of the
        Securities and Exchange Commission, or by force of law, to disclose the
        Protected Information, the disclosing Party shall promptly notify the
        other Party of such requirement and shall seek an appropriate protective
        order to preserve the confidential status of the Protected Information.
        The disclosing Party shall give the other Party reasonable notice of
        such protective order, and shall obtain the other Party's consent to
        disclose the Protected Information pursuant to such protective order,
        which consent shall not be unreasonably withheld. Disclosure of the
        Protected Information in such proceedings shall take place only under
        the terms provided in the appropriate protective order. If, in the
        absence of a protective order or the receipt of a waiver of the
        confidential status of the Protected Information from the other Party,
        the

                                       7
<PAGE>

        disclosing Party is nonetheless, compelled to disclose Protected
        Information pursuant to a legal proceeding, such party, after notice to
        the other Party, may disclose such Protected Information pursuant to
        such legal proceeding, and shall not be in breach of this Agreement.

6.3     SURVIVAL. The above obligations of confidentiality shall survive
        expiration or termination of this Agreement.

                                    ARTICLE 7
                       PATENT PROSECUTION AND ENFORCEMENT

7.1     PATENT PROCUREMENT. As between Incyte and Gene Logic only, Incyte shall
        have the sole right (in Incyte's sole discretion), but not the
        obligation, at its own expense, to control the preparation, filing,
        prosecution, maintenance and enforcement of the Licensed Patents,
        provided, however, that Incyte shall promptly notify Gene Logic, in
        writing, upon the issuance, expiration, invalidation, abandonment,
        disclaimer or lapse of any valid claim included within the Licensed
        Patents.

7.2     PATENT ENFORCEMENT. Incyte shall have no obligation to take any action
        whether through the institution of legal proceedings or otherwise with
        respect to any infringement or suspected infringement of the Licensed
        Patents. Without prejudice to any separate agreement that may be or have
        been reached between the Parties, if Incyte in its sole discretion
        decides to take any such action against any Third Party it shall do so
        at its own cost, and Gene Logic shall have no claim to any sums received
        by Incyte in connection with taking any such action.

                                    ARTICLE 8
                       WARRANTIES AND WARRANTY DISCLAIMERS

8.1     REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each Party hereby
        represents and warrants to the other that:

        (a)     it is a corporation or entity duly organized and validly
        existing under the laws of the state or other jurisdiction of its
        incorporation or formation;

        (b)     the execution, delivery and performance of this Agreement by
                such Party has been duly authorized by all requisite corporate
                action and does not require any shareholder action or approval;

        (c)     it has the power and authority to execute and deliver this
                Agreement and to perform its obligations hereunder;

        (d)     the execution, delivery and performance by such Party of this
                Agreement and its compliance with the terms and provisions
                hereof does not and will not conflict with or result in a breach
                of any of the terms and provisions of or constitute a default
                under (a) a loan agreement, guaranty, financing

                                       8
<PAGE>

                agreement, agreement affecting a product or other agreement or
                instrument binding or affecting it or its property; (b) the
                provisions of its charter or operative documents or bylaws; or (
                c) any order, writ, injunction or decree of any court or
                governmental authority entered against it or by which any of its
                property is bound; and

        (e)     it shall at all times comply with all applicable material laws
                and regulations relating to its activities under this Agreement.

8.2     ADDITIONAL REPRESENTATIONS AND WARRANTIES OF INCYTE. In addition to the
        representations and warranties made by Incyte under Section 8.1 above,
        Incyte hereby further represents and warrants to Gene Logic that:

        (a)     as of the Effective Date, the Licensed Patents are existing and,
                to the best of its knowledge, those issued patents included
                within the Licensed Patents are not invalid or unenforceable, in
                whole or in part;

        (b)     it has the full right, power and authority to grant all of the
                right, title and interest in the licenses granted to Gene Logic
                under this Agreement; and

        (c)     it Controls the Licensed Patents and its grant of the licenses
                to Gene Logic hereunder does not violate the rights of any Third
                Party and does not and will not constitute a material breach or
                other violation of any agreement between Incyte and any Third
                Party.

8.3     LEGAL COUNSEL. Each Party hereby further represents and warrants to the
        other Party that it has been represented by legal counsel in connection
        with this Agreement and acknowledges that it has participated in the
        drafting hereof In interpreting and applying the terms and provisions of
        this Agreement, the Parties agree that no presumption shall exist or be
        implied against the Party which drafted such terms and provisions.

8.4     DISCLAIMER. Incyte makes no warranty, representation or undertaking:

        (a)     as to the efficacy or usefulness of the Licensed Patents or any
                discovery or invention covered thereby;

        (b)     that any pending patent application included within the Licensed
                Patents will proceed to grant of a patent;

        (c)     that the exploitation of the Licensed Patents, or the exercise
                of any rights licensed hereunder, will not infringe any
                intellectual property or other rights of any Third Party; or

        (d)     as imposing any obligation on Incyte to bring or prosecute
                actions or proceedings against Third Parties for infringement or
                to defend any actions or proceedings for revocation of any of
                the Licensed Patents.

                                       9
<PAGE>
        ADDITIONALLY, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY AND
        ALL RIGHTS LICENSED AND PATENTS MADE AVAILABLE BY INCYTE TO GENE LOGIC
        ARE LICENSED OR MADE AVAILABLE "AS IS". INCYTE MAKES NO REPRESENTATIONS
        OR WARRANTIES OF ANY KIND (OTHER THAN AS SET FORTH IN THIS ARTICLE 8)
        AND INCYTE DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
        ANY IMPLIED WARRANTIES OF QUALITY, MERCHANTABILITY, FITNESS FOR A
        PARTICULAR PURPOSE OR NONINFRINGEMENT.

                                    ARTICLE 9
                              TERM AND TERMINATION

9.1     TERM. This Agreement and the license granted under hereby shall be
        effective as of the Effective Date and unless terminated earlier in
        accordance with this Article 9 shall continue in force on a country by
        country basis until the last to expire of the Licensed Patents in such
        country.

9.2     TERMINATION FOR CAUSE. This Agreement may be terminated by written
        notice by either Party at any time during the term of this Agreement for
        a material breach by the other Party, which breach remains uncured for
        sixty (60) days from receipt of the written notice of breach. Gene Logic
        will not initiate any legal action based on any material breach alleged
        by Incyte for a period of seventy five (75) days after its receipt of
        notice of breach from Incyte. Incyte will not initiate any legal action
        based on any material breach alleged by Gene Logic for a period of
        seventy five (75) days after its receipt of notice of breach from Gene
        Logic. This Agreement may also be terminated by Incyte if Gene Logic,
        Gene Logic's Affiliates, or an entity acquiring Gene Logic infringes any
        of the Layton Patents outside the scope of the Layton Field of Use
        Activities, or induces End Users to infringe any of the Layton Patents.
        If Gene Logic disputes any claim by Incyte that Gene Logic has
        materially breached this Agreement, and if a court subsequently
        determines that Gene Logic materially breached this Agreement, then the
        license granted under this Agreement shall terminate, and Gene Logic
        shall immediately pay Incyte liquidated damages in the amount of [. . .
        *** . . .] dollars [. . . *** . . .], in addition to any other remedies
        available to Incyte at law or in equity. If Gene Logic disputes any
        claim by Incyte that Gene Logic has materially breached this Agreement,
        and if a court subsequently determines that Gene Logic has not
        materially breached this Agreement or if Gene Logic claims that Incyte
        has materially breached this Agreement and Incyte disputes same, and a
        court subsequently determines that Incyte has materially breached this
        Agreement, then the licenses granted under this Agreement shall remain
        in effect pursuant to the terms of this Agreement, and Incyte shall
        immediately pay Gene Logic [. . . *** . . .] dollars ($[. . . *** . .
        .]), in addition to any other remedies available to Gene Logic at law or
        inequity. If Gene Logic claims that Incyte has materially breached this
        Agreement and Incyte disputes same, and a Court subsequently determines
        that Incyte has not materially breached this Agreement,

*** CONFIDENTIAL TREATMENT REQUESTED

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<PAGE>

        then Gene Logic shall immediately pay Incyte [. . . *** . . .] dollars
        ($[. . . *** . . .])in addition to any other remedies available to
        Incyte at law or equity.

9.3     EFFECTS OF TERMINATION. No termination of this Agreement shall in any
        way affect Gene Logic's obligations pursuant to Article 3 to pay the
        amounts specified prior to such termination of this Agreement.
        Furthermore, no termination of this Agreement shall in any way affect
        (i) the obligations of Gene Logic under Sections 4.5, 4.6 and 4.7 if
        this Agreement is terminated based on a material breach by Gene Logic,
        or (ii) the Parties' respective obligations under Articles 6, 10 and 11.

                                   ARTICLE 10
                                 INDEMNIFICATION

10.1    INDEMNIFICATION BY GENE LOGIC. Gene Logic shall defend, indemnify and
        hold Incyte its directors, officers and employees (each an "Incyte
        Indemnified Party") harmless from all losses, liabilities, damages and
        expenses, including reasonable attorneys' fees and costs (collectively,
        a "Liability") which the Incyte Indemnified Party may incur, suffer or
        be required to pay resulting from or arising in connection with any
        claims, demands, actions or other proceedings by any Third Party based
        upon (a) any breach of any representation, warranty or covenant of Gene
        Logic under this Agreement, or (b) any use by or on behalf of Gene Logic
        of the Licensed Patents. Notwithstanding the foregoing, Gene Logic shall
        have no obligation under this Agreement to indemnify, defend or hold
        harmless any Incyte Indemnified Party with respect to claims, demands,
        costs or judgments which result from willful misconduct or negligent
        acts or omissions of Incyte, its affiliates, or any of their respective
        employees, officers, directors or agents.

10.2    INDEMNIFICATION BY INCYTE. Incyte shall defend, indemnify and hold Gene
        Logic, its Affiliates and each or their respective directors, officers
        and employees ( each an "Gene Logic Indemnified Party") harmless from
        any and all Liabilities which the Gene Logic Indemnified Party may
        incur, suffer or be required to pay resulting from or arising in
        connection with any claims, demands, actions or other proceedings by any
        Third Party based upon any breach of any representation, warranty or
        covenant of Incyte under this Agreement. Notwithstanding the foregoing,
        Incyte shall have no obligation under this Agreement to indemnify,
        defend or hold harmless any Gene Logic Indemnified Party with respect to
        claims, demands, costs or judgments which result from willful misconduct
        or negligent acts or omissions of Gene Logic, its Affiliates, or any of
        their respective employees, officers, directors or agents.

10.3    CONDITIONS TO INDEMNIFICATION. The obligations of the indemnifying Party
        under Sections 10.1 and 10.2 are conditioned upon the delivery of
        written notice to the indemnifying Party of any potential Liability
        promptly after the indemnified Party becomes aware of such potential
        Liability. The indemnifying Party shall have the right to assume the
        defense of any suit or claim related to the Liability if it has assumed
        responsibility for the suit or claim in writing; however,

*** CONFIDENTIAL TREATMENT REQUESTED

                                       11
<PAGE>

        if in the reasonable judgment of the indemnified Party, such suit or
        claim involves an issue or matter which could have a materially adverse
        effect on the business operations or assets of the indemnified Party,
        the indemnified Party may waive its rights to indemnity under this
        Agreement and control the defense or settlement thereof, but in no event
        shall any such waiver be construed as a waiver of any indemnification
        rights such Party may have at law or in equity. If the indemnifying
        Party defends the suit or claim, the indemnified Party may participate
        in (but not control) the defense thereof at its sole cost and expense.

10.4    SETTLEMENTS. Neither Party may settle a claim or action related to a
        Liability without the consent of the other Party, if such settlement
        would impose any monetary obligation on the other Party or require the
        other Party to submit to an injunction or otherwise limit the other
        Party's rights under this Agreement. Any payment made by a Party to
        settle any such claim or action shall be at its own cost and expense.

                                   ARTICLE 11
                                  MISCELLANEOUS

11.1    WAIVER. No failure or delay on the part of either Party to exercise any
        right or remedy under this Agreement shall be construed or operate as a
        waiver thereof, nor shall any single or partial exercise of any right or
        remedy preclude the further exercise of such right or remedy.

11.2    INDEPENDENT CONTRACTORS. It is understood that both Parties hereto are
        independent contractors and are engaged in the operation of their own
        respective businesses, and neither Party hereto is to be considered the
        agent or partner of the other Party for any purpose whatsoever. Neither
        Party has any authority to enter into any contracts or assume any
        obligations for the other Party or make any warranties or
        representations on behalf of the other Party. Neither Party shall act or
        describe itself as the agent of the other, nor shall it make or
        represent that it has authority to make any commitments on the other's
        behalf.

11.3    NOTICES. Any consent, notice or report required or permitted to be given
        or made under this Agreement by one of the Parties hereto to the other
        Party shall be in writing, sent to such other Party at its address and
        fax number indicated below, or to such other address as the addressee
        shall have last furnished in writing to the addresser, and shall be
        effective upon receipt by the addressee.

                                       12
<PAGE>

If to Incyte:               Incyte Genomics, Inc.
                            3174 Porter Drive
                            Palo Alto, California 94303
                            Attention: Lee Bendekgey, General Counsel
                            Fax: 650-845-4166

If to Gene Logic:           Gene Logic Inc.
                            708 Quince Orchard Road
                            Gaithersburg, Maryland 20878
                            Attention: J. Barry Buzogany, Esq., General Counsel
                            Fax: 301-987-1863

11.4    ANNOUNCEMENTS; USE OF NAMES. Incyte and Gene Logic each intend to
        separately announce the existence of this Agreement promptly following
        its execution in the forms attached as Exhibit C, subject to prior
        mutual written approval of any such announcement, which approval will
        not be unreasonably withheld. Except as contemplated by the last
        sentence or as may otherwise be required by law or regulation, neither
        Party shall make any public announcement concerning this Agreement or
        the subject matter hereof without the prior written consent of the other
        Party. In particular, and subject to the terms of this Section 11.4,
        neither party shall make any public announcement or public disclosure
        about the nature and content of this Agreement beyond the scope of the
        statement attached as Exhibit C; and any failure of a party to abide by
        such restriction shall be considered a material breach of this
        Agreement. If this Agreement is determined to be material to the
        business of Incyte (or Gene Logic) so that its disclosure is required by
        law or regulation, Gene Logic ( or Incyte) shall have the right to
        review and comment on the text of the disclosure prior to its release to
        the public or the filing with any government agency and the Party making
        such disclosure or filing agrees, at its own expense, to seek
        confidential treatment of those portions of this Agreement or such
        terms, as may be reasonably requested by the other Party.

11.5    PATENT MARKINGS AND LABELS. Gene Logic agrees to mark any database,
        other product or service of Gene Logic that is subject to this
        Agreement, with appropriate patent notices with respect to the Licensed
        Patents as may be reasonably requested by Incyte.

11.6    ENTIRE AGREEMENT. This Agreement sets out the entire agreement and
        understanding between the Parties relating to its subject matter and
        supersedes all prior oral or written representations, agreements,
        arrangements or understandings between them relating to such subject
        matter.

11.7    ASSIGNMENT BY GENE LOGIC. Gene Logic shall not directly or indirectly
        assign or otherwise transfer any of its rights or obligations under this
        Agreement, in whole or in part, whether voluntarily, by operation of law
        or otherwise, to any Third Party without Incyte's prior written consent.
        Notwithstanding the foregoing, Gene Logic may, without Incyte's consent,
        assign its rights and

                                       13
<PAGE>

        obligations hereunder to a successor to substantially all of the
        business of Gene Logic, other than the entities listed below, whether in
        a merger, sale of stock, sale of assets or other transaction, provided
        that the licenses granted under this Agreement shall apply only to the
        continued operation of Gene Logic's business as conducted prior to the
        closing of such merger, sale of stock, sale of assets or other
        transaction, and to no other activities of the successor entity, and
        provided that the terms of Sections 4.3 and 4.4 shall be of no force or
        effect if this Agreement is assigned or transferred to such successor
        entity. Under no circumstances will Gene Logic have the right to assign
        any rights under this Agreement to any individual or corporate entity
        which is involved in litigation concerning the Licensed Patents or has
        threatened in writing Incyte or Incyte's affiliates or any entity
        acquiring Incyte with litigation concerning the Licensed Patents. In
        addition, under no circumstances shall Gene Logic have the right to
        assign any rights or obligations under this Agreement to Affymetrix,
        Perlegen or Applera. Any purported assignment or transfer in violation
        of this Section 11.7 shall be void.

11.8    ASSIGNMENT BY INCYTE. Incyte may directly or indirectly assign or
        otherwise transfer any of its rights or obligations under this
        Agreement, in whole or in part, whether voluntarily, by operation of law
        or otherwise, to any Third Party without Gene Logic's consent.

11.9    GOVERNING LAW. This Agreement shall be governed by and construed in
        accordance with the local laws of the State of California, USA, without
        regard to the conflicts of law principles thereof.

11.10   PARTIAL INVALIDITY. If and to the extent that any court or tribunal of
        competent jurisdiction holds any of the terms or provisions of this
        Agreement, or the application thereof to any circumstances, to be
        invalid or unenforceable in a final nonappealable order, the Parties
        shall use their best efforts to reform the portions of this Agreement
        declared invalid to realize the intent of the Parties as fully as
        practicable, and the remainder of this Agreement and the application of
        such invalid term or provision to circumstances other than those as to
        which it is held invalid or unenforceable shall not be affected thereby,
        and each of the remaining terms and provisions of this Agreement shall
        remain valid and enforceable to the fullest extent of the law.

11.11   HEADINGS. The headings appearing herein have been inserted solely for
        the convenience of the Parties hereto and shall not affect the
        construction, meaning or interpretation of this Agreement or any of its
        terms and conditions.

11.12   FORCE MAJEURE. No failure or omission by the Parties hereto in the
        performance of any obligation of this Agreement (other than non-payment)
        shall be deemed a breach of this Agreement nor shall it create any
        liability if the same shall arise from any cause or causes beyond the
        reasonable control of the affected Party, including, but not limited to,
        the following, which for purposes of this Agreement shall be regarded as
        beyond the control of the Party in question: acts of nature;

                                       14
<PAGE>

        acts or omissions of any government; any rules, regulations, or orders
        issued by any governmental authority or by any officer, department,
        agency or instrumentality thereof; fire; storm; flood; earthquake;
        plague of epic proportion; accident; war; rebellion; insurrection; riot;
        invasion; strikes; and labor lockouts; provided that the Party so
        affected shall use its reasonable efforts to avoid or remove such causes
        of nonperformance and shall continue performance hereunder with the
        utmost dispatch whenever such causes are removed.

11.13   AMENDMENTS. No amendment, change, modification or alteration of the
        terms and conditions of this Agreement shall be binding upon either
        Party unless in writing and signed by the Party to be charged.

11.14   COUNTERPARTS. This Agreement may be executed in any number of
        counterparts, each of which shall be deemed an original and all of which
        together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have executed this agreement as of the date
first set forth above.

GENE LOGIC, INC.

Signature:   /s/ Mark D. Gessler
          ------------------------------
             Mark D. Gessler
             President and Chief Executive Officer

INCYTE GENOMICS, INC.

Signature:   /s/ Lee Bendekgey
          ------------------------------
             Lee Bendekgey
             Exec Vice President, Corporate Secretary

                                       15
<PAGE>

                                LIST OF EXHIBITS

EXHIBIT A--STIPULATION AND [PROPOSED] ORDER OF DISMISSAL OF THE ACTIONS

EXHIBIT B--LIST OF DOCUMENTS AND DEPOSITION TRANSCRIPTS

EXHIBIT C--PRESS RELEASE

                                       16

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