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Exhibit 10.2
TRANSACTION AGREEMENT
by and between
LORAL SPACE & COMMUNICATIONS LTD.
and
FINMECCANICA S.p.A.
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Dated as of March 20, 1997
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TRANSACTION AGREEMENT
TRANSACTION AGREEMENT, dated as of March 20, 1997 ("Agreement"), by and
between LORAL SPACE & COMMUNICATIONS LTD., a company organized under the laws of
Bermuda ("Loral"), and FINMECCANICA S.p.A., a corporation organized under the
laws of Italy ("Finmeccanica").
W I T N E S S E T H :
WHEREAS, Aerospatiale SNI, a corporation organized under the
laws of France ("Aerospatiale"), ALCATEL ESPACE, a corporation organized under
the laws of France ("Alcatel"), Daimler-Benz Aerospace AG, a corporation
organized under the laws of Germany ("DASA"), and Finmeccanica (Aerospatiale,
Alcatel and Finmeccanica are referred to collectively herein as the
"Stockholders") are parties to that certain Stockholders Agreement, dated as of
April 22, 1991, by and among SS/L, the Stockholders, Loral Corporation, a New
York corporation ("Old Loral"), and Loral Aerospace Holdings, Inc., a Delaware
corporation ("Old Holdings"), as amended by Amendment No. 1 to Stockholders
Agreement, dated as of November 10, 1992, by and among the parties to the
aforementioned Stockholders Agreement and DASA and Loral Aerospace Corporation,
a Delaware corporation ("LAC") (such Stockholders Agreement, as amended by such
Amendment No. 1, hereinafter the "Stockholders Agreement"), relating to the
ownership by each of the Stockholders and DASA of 490 shares of Common Stock,
par value $.01 per share, of Space Systems/Loral, Inc., a Delaware corporation
("SS/L") (shares of such Common Stock the SS/L Shares"); and
WHEREAS, on October 2, 1996, Finmeccanica sent notice to Loral
exercising its put option under Section 2.7 of the Stockholders Agreement (the
"Put Option"); and
WHEREAS, pursuant to an Exchange Agreement, dated as of
December 19, 1996 between Loral and DASA, as amended by Amendment No. 1 to
Exchange Agreement dated as of February 6, 1997 between Loral and DASA (such
Exchange Agreement, as amended by such Amendment No. 1, the "DASA Agreement")
DASA agreed to assign and transfer to Loral all of DASA's SS/L Shares; and
WHEREAS, pursuant to the exercise of the Put Option, the
parties hereto desire that Finmeccanica transfer to Loral all of the SS/L Shares
held by Finmeccanica, as set forth in this Agreement, while at the same time
preserving its strategic alliance with SS/L in the field of Space Systems.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. THE TRANSFER
1.1. Exchange.
1.1.1. At the Closing described in Section 1.2. below,
Finmeccanica shall transfer to Loral, and Loral shall purchase, the 490 SS/L
Shares held by Finmeccanica (the "Finmeccanica SS/L Shares") for purchase
consideration (subject to adjustment as provided in Section 2.1 hereof) of $93.5
million consisting of such number of 6% Convertible Preferred Equivalent
Obligations due 2006, face value $50 per obligation, of Loral ("CPEOs") having a
value of $93.5 million, which number of CPEOs shall be determined by attributing
to each CPEO a value equal to the average of the high and low sales prices for
CPEOs on the PORTAL trading market on each of the five (5) Trading Days
immediately preceding the Closing Date. For purposes of this Agreement, a
"Trading Day" is a day on which regular trading is conducted on both the New
York Stock Exchange and the NASDAQ National Market System.
1.1.4. The CPEOs issued to Finmeccanica pursuant to this
Agreement shall be issued under an indenture (the "Indenture") in form and
substance substantially similar to the Indenture dated as of November 1, 1996
between Loral and The Bank of New York, as Trustee, relating to, and shall have
the same terms as, the $600,000,000 principal amount of CPEOs issued by Loral on
November 6, 1996, a copy of which indenture is attached hereto as Exhibit A.
Finmeccanica shall have all the rights of the "Initial Purchasers" provided in
the Indenture and the attachments thereto, including without limitation the
rights to cause Loral to register under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and other applicable securities laws the offer
and sale of CPEOs and Loral securities for which CPEOs may be exchanged or into
which they may be converted. Loral will cause the CPEOs issued to Finmeccanica
(and the Loral Common Stock into which such CPEOs are convertible) to be duly
registered under the Securities Act together with the $600 million of CPEOs
issued on November 6, 1996, which registration is expected to be filed no later
than May 6, 1997. The CPEOs issued to Finmeccanica hereunder and any CPEOs to be
issued to DASA, Alcatel and Aerospatiale will all be issued under the same
indenture, and all such CPEOs will bear the same CUSIP number.
1.2. Closing.
1.2.1. Time and Place of Closing. The closing ("Closing") of
the transaction contemplated by Section 1.1. (the "Transaction") shall take
place at the law offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place upon which the
parties hereto may agree and shall occur on March 31, 1997 or such other date as
shall be agreed by the parties ("Closing Date").
1.2.2. Deliveries at Closing. At the Closing,
(a) Loral will deliver to Finmeccanica the CPEOs to be issued
hereunder in certificated form, registered in the name or names and
denominations as Finmeccanica will have requested at least two (2) business days
prior to Closing;
(b) Finmeccanica will deliver to Loral certificates
representing the Finmeccanica SS/L Shares, duly endorsed for transfer or
accompanied by stock powers duly executed in blank;
(c) Loral will deliver to Finmeccanica the items
required by Section 4.1.1. as a condition to the obligations of Finmeccanica to
consummate the Transaction;
(d) Finmeccanica will deliver to Loral the items
required by Section 4.1.2. as a condition to Loral's obligation to consummate
the Transaction; and
(e) Loral and Finmeccanica shall enter into either (i) the
Registration Rights Agreement among Loral and the Stockholders contemplated by
Section 5.1 or (ii) a separate Registration Rights Agreement between
Finmeccanica and Loral granting to Finmeccanica the registration rights
contemplated by the Term Sheet (as defined in Section 5.1).
1.2.3. Stock Transfer Taxes. Loral will bear all United
States stock transfer taxes, direct or indirect, attributable to the share
transfers in the Transaction.
1.2.4. Dividends. Finmeccanica shall not have any right
to receive any dividends paid by SS/L with respect to the SS/L Shares with
respect to any period after October 2, 1996.
2. PRICE PROTECTION
2.1. Additional Consideration in Certain Events. In the event
that, at any time on or after February 21, 1997 and on or prior to the Price
Protection Termination Date (as defined below), Loral or any entity under its
control (including SS/L) purchases any SS/L Shares, or enters into a written
agreement or any agreement in principle or letter of intent to do so or an oral
agreement as to all material terms, at a price per SS/L Share exceeding $190,816
(as such amount shall be equitably adjusted from time to time to reflect stock
splits, stock dividends and the like), Loral will pay to Finmeccanica an amount
equal to the product of such excess and the number of SS/L Shares acquired from
Finmeccanica in the Transaction, such payment to be made, at Loral's election,
either in cash or in additional CPEOs (with the number of CPEOs to be issued
determined by attributing to each CPEO a value equal to the average of the high
and low sales prices for CPEOs on the PORTAL trading market on each of the five
(5) Trading Days immediately preceding the Adjustment Date (as defined below)).
In the event of successive purchases or agreements during the period from
February 21, 1997 until the Price Protection Termination Date, the adjustment
payable to Finmeccanica shall be made based upon the highest price so paid. The
"Price Protection Termination Date" shall mean (i) March 31, 1997 or (ii) such
later date, if any, to which Loral or any entity under its control (including
SS/L) shall have agreed to extend price protection similar to the provisions of
this Section 2.1 for the benefit of an SS/L stockholder other than Finmeccanica.
2.2. Adjustment Closing. The closing of the
transactions contemplated by Section 2.1. (the "Adjustment") shall occur on
the third business day after the date (the "Adjustment Date") of closing
of the transaction requiring the Adjustment. Any cash amounts payable in
connection with the Adjustment will be paid by wire transfer of immediately
available funds to the account or accounts specified by Finmeccanica.
3. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Loral.
Loral represents and warrants to Finmeccanica as follows:
3.1.1. Loral Organization; Capitalization. Loral is a company
duly organized, validly existing and in good standing under the laws of the
Islands of Bermuda and has all requisite corporate power and authority to own
its properties and assets and to conduct its business as now conducted. The
authorized capital stock of Loral consists of (a) 750,000,000 shares of Common
Stock, par value $.01 per share, of which 191,092,308 shares are issued and
outstanding and, without giving effect to the transactions contemplated hereby
or shares of Common Stock to be issued to Aerospatiale and Alcatel in connection
with the purchase by Loral of their SS/L Shares and Alcatel's interest in
Loral/Qualcomm Satellite Services, L.P., 93,096,077 additional shares are
reserved for issuance upon the exercise or conversion of outstanding options,
warrants or convertible securities; (b) 150,000,000 shares of Series A
Non-Voting Convertible Preferred Stock, par value $.01 per share, of which
45,896,977 shares are outstanding and none of which have been reserved for
issuance; and (c) 750,000 shares of Series B Preferred Stock, par value $.01 per
share, no shares of which are outstanding, and 250,000 shares of which have been
reserved for issuance upon the exercise of outstanding rights.
3.1.2. Authorization and Validity of Agreement. Loral has the
corporate power to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance of
Loral's obligations hereunder have been, or will have been on the Closing Date,
duly authorized by the Board of Directors of Loral, and no other corporate
proceedings on the part of Loral are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Loral and is
the legal, valid and binding obligation of Loral.
3.1.3. No Conflict or Violation. The execution, delivery and
performance by Loral of this Agreement and the Term Sheet do not and will not
violate or conflict with any provision of the charter documents or bye-laws of
Loral, and do not and will not violate any provision of any agreement or
instrument to which Loral is a party or by which it is bound, or any order,
judgment or decree of any court or other governmental or regulatory authority to
which Loral is subject.
3.1.4. Validity of Securities. The CPEOs to be issued
hereunder have been, or will have been as of the Closing Date, duly and validly
authorized and, when duly executed, authenticated, issued and delivered as
contemplated by the Indenture against payment therefor as provided herein, will
be duly and validly issued, fully paid and not subject to further calls, will be
eligible for trading by Finmeccanica on the PORTAL market, and will constitute
the valid and binding obligation of Loral entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor's rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.1.5. Repurchase of SS/L Shares from DASA. The DASA Agreement
is in full force and effect, without amendment or breach by any party; Loral is
not obligated to provide CPEOs or other consideration to DASA having an
aggregate value of more than $93.5 million, and Loral has made no purchases, or
entered into any agreements, understandings or letters of intent, from or with
any other party creating or leading to an obligation to pay additional
consideration to DASA under Section 2.3.1 of the DASA Agreement.
3.2. Representations and Warranties of Finmeccanica.
Finmeccanica represents and warrants to Loral as follows:
3.2.1. Organization. Finmeccanica is a corporation duly
organized, validly existing and in good standing under the laws of Italy,
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted.
3.2.2. Authorization and Validity of Agreement. Finmeccanica
has the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
performance of Finmeccanica's obligations hereunder have been, or will have been
on the Closing Date, duly authorized by the appropriate governing body of
Finmeccanica, and no other corporate proceedings on the part of Finmeccanica are
necessary to authorize such execution, delivery and performance. This Agreement
has been duly executed by Finmeccanica and is the legal, valid and binding
obligation of Finmeccanica.
3.2.3. No Conflict or Violation. The execution, delivery and
performance by Finmeccanica of this Agreement do not and will not violate or
conflict with any provision of the charter documents or by-laws (or
corresponding instruments under the laws of Italy) of Finmeccanica, and do not
and will not violate any provision of any agreement or instrument to which
Finmeccanica is a party or by which it is bound, or any order, judgment or
decree of any court or other governmental or regulatory authority to which
Finmeccanica is subject.
3.2.4. Title to SS/L Shares. Finmeccanica holds good and valid
title to the Finmeccanica SS/L Shares, which shares are owned by Finmeccanica
free and clear of any lien or other right or claim, except to the extent set
forth in the Stockholders Agreement, and when such SS/L Shares are acquired by
Loral in accordance with the terms of this Agreement, Loral will acquire good
and valid title to such SS/L Shares free of any lien or other right or claim
created or suffered by Finmeccanica.
4. CONDITIONS TO CLOSING
4.1. Conditions to the Closing.
4.1.1. Conditions to Obligations of Finmeccanica.
The obligations of Finmeccanica to consummate the Transaction are
subject to the satisfaction or waiver, at or prior to the Closing Date, of
the following conditions:
(a) the representations and warranties of Loral
contained herein shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date;
(b) Loral shall have performed and complied in all material
respects with all agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date;
(c) Finmeccanica shall have received a certificate signed by
an executive officer of Loral to the effect that the conditions set forth in
paragraphs (a) and (b) above have been satisfied;
(d) Finmeccanica shall have received an opinion, dated the
Closing Date, from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ as to due formation of Loral and
the legality of the CPEOs issued to Finmeccanica; and
(e) Loral and the trustee under the Indenture shall have
executed the Indenture and Loral shall have delivered to Finmeccanica a copy of
the Indenture and the Indenture shall be in full force and effect.
4.1.2. Conditions to Obligations of Loral. The
obligations of Loral to consummate the Transaction are subject
to the satisfaction or waiver, at or prior to the Closing Date, of the
following conditions:
(a) the representations and warranties of Finmeccanica
contained herein shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date;
(b) Finmeccanica shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date; and
(c) Loral shall have received from Finmeccanica a certificate
signed by an executive officer of Finmeccanica to the effect that the
conditions set forth in paragraphs (a) and (b) above have been
satisfied.
4.1.3. Conditions to Obligations of Loral and
Finmeccanica. The obligations of Loral and Finmeccanica to consummate the
Transaction are subject to the satisfaction or waiver, at or prior to the
Closing Date, of the following conditions:
(a) all consents, waivers, authorizations and approvals of any
governmental or regulatory authority required in connection with the
execution, delivery and performance of this Agreement shall have been
duly obtained and in full force and effect; and
(b) the Transaction shall not be prohibited by any
applicable law, court order or governmental regulation.
5. ALLIANCE AGREEMENTS
5.1. Alliance Agreements. Finmeccanica shall continue to have
all the rights set forth in the Term Sheet between Loral and Finmeccanica
attached as Exhibit B hereto (the "Term Sheet"), which Term Sheet incorporates
by reference the Term Sheet among Loral, Aerospatiale and Alcatel attached
thereto and grants to Finmeccanica all of the rights and obligations of a
Strategic Participant thereunder, including without limitation the right to have
a nominee elected and maintained as a member of the Board of Directors of SS/L.
The parties intend that the Term Sheet shall be replaced by definitive
agreements as soon as practicable after the Closing. Accordingly, as soon as
practicable after the Closing, Loral and the Stockholders shall enter into an
Alliance Agreement, Amendment No. 2 to the Operational Agreement (amending the
Operational Agreement dated April 22, 1991 as amended by Amendment No. 1, dated
November 10, 1992 (the "Operational Agreement")), Amendment No. 1 to Memorandum
of Agreement on Security Matters, and Amendment No. l to Visitation Procedures
Agreement, in each case in such form as shall be agreed by Loral and the
Stockholders, in order to implement the terms set forth in the Term Sheet, which
agreements shall provide Finmeccanica the same rights, subject to the same
obligations, as are granted to Aerospatiale and Alcatel under such agreements.
5.2. Satisfaction of Stockholders Agreement. Finmeccanica
agrees that the Transaction satisfies all obligations that either Loral or SS/L
have in connection with Finmeccanica's exercise of its Put Option, and
Finmeccanica shall have no further rights under Section 2.7 of the Stockholders
Agreement.
6. MISCELLANEOUS
6.1. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
giving effect to the doctrine of conflicts of laws.
6.2. No Waivers; Amendments.
6.2.1. No failure or delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
6.2.2. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
each party hereto.
6.3. Survival of Provisions. The representations and
warranties, covenants and agreements contained in this Agreement shall survive
and remain in full force and effect, regardless of any investigation made by or
on behalf of Finmeccanica or Loral, and shall survive delivery of the CPEOs and
the Finmeccanica SS/L Shares.
6.4. Entire Agreement. This Agreement constitutes the
entire agreement and understanding between the parties hereto and
supersedes any and all prior agreements and understandings, written or
oral, relating to the subject matter hereof.
6.5. Counterparts. This Agreement may be signed in
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
6.6. Section Headings. The section headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
6.7. Press Releases and Public Announcements. Any press
releases and public announcements or disclosures relating to the transactions
contemplated hereby shall be made only if mutually agreed upon by the parties
hereto, except to the extent a party has been advised in writing by counsel
(with a copy provided to the other parties) that failure to disclose would
violate applicable law or stock exchange regulation, provided that any such
required disclosure will, to the extent practicable, be subject to prior
consultation among the parties.
6.8. Expenses. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all the fees, costs and
expenses that are incurred by it in connection with the transactions
contemplated hereby, including, without limitation, attorneys' fees and fees of
financial advisors and investment bankers engaged by such party.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
LORAL SPACE & COMMUNICATIONS LTD.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Operating Officer
FINMECCANICA S.p.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-in-Fact