EXHIBIT 10.5 OFFICERS' AND DIRECTORS' INDEMNIFICATION AGREEMENT

 

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                                                                    Exhibit 10.5

 

                            OFFICERS' AND DIRECTORS'

                            INDEMNIFICATION AGREEMENT

 

      This Indemnification Agreement ("Agreement") is made as of November 21,

2005 by and between Space Systems/Loral, Inc., a Delaware corporation (the

"Company"), and C. Patrick DeWitt ("Indemnitee").

 

                                    RECITALS

 

      WHEREAS, officers and directors of publicly held corporations are

increasingly exposed, in carrying out their duties and responsibilities on

behalf and for the benefit of such corporations, to claims and other actions

against them and are reluctant to serve unless they are provided with adequate

protection through insurance and/or indemnification against the risks of such

claims being asserted against them arising out of their service to and

activities on behalf of such corporations; and

 

      WHEREAS, the Board of Directors of the Company (the "Board") has

determined that the increased difficulty in attracting and retaining such

persons is detrimental to the best interests of the Company's stockholders and

that the Company should act to assure such persons that there will be increased

certainty of such protection in the future; and

 

      WHEREAS, the Board has determined that, in order to help attract and

retain qualified individuals as officers and directors and in other capacities,

the best interests of the Company and its stockholders will be served by

attempting to maintain, on an ongoing basis, at the Company's sole expense,

insurance to protect persons serving the Company and its subsidiaries as

officers and directors and in other capacities from certain liabilities.

Although the furnishing of such insurance has been a customary and widespread

practice among United States-based corporations and other business enterprises

for many years, the Company believes that, given current market conditions and

trends, such insurance may be available to it in the future only at higher

premiums and with more exclusions. At the same time, directors, officers and

other persons in service to corporations or business enterprises are being

increasingly subjected to expensive and time-consuming litigation; and

 

      WHEREAS, the Board has determined that, in order to help attract and

retain qualified individuals as officers and directors and in other capacities,

the best interests of the Company and its stockholders will be served by

assuring such individuals that the Company will indemnify them to the maximum

extent permitted by law; and

 

      WHEREAS, the Amended and Restated Certificate of Incorporation as in

effect on the date hereof (the "Certificate of Incorporation") of the Company

requires, in certain circumstances described therein, and in other circumstances

permits, but does not obligate the Company to provide for, the indemnification

of the officers and directors of the Company, subject to certain limitations

contained therein, and Indemnitee may also

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be entitled to indemnification pursuant to the Delaware General Corporation Law

("DGCL"); and

 

      WHEREAS, the Certificate of Incorporation and the DGCL expressly provide

that the indemnification provisions set forth therein are not exclusive, and

thereby contemplate that contracts may be entered into between the Company and

members of the Board, officers and other persons with respect to indemnification

and the advancement of defense costs; and

 

      WHEREAS, it therefore is reasonable, prudent and necessary for the Company

contractually to obligate itself to indemnify, and to advance defense costs on

behalf of, the Indemnitee to the extent, and only to the extent, provided herein

so that he or she will serve or continue to serve the Company free from undue

concern that he or she will not be so indemnified; and

 

      WHEREAS, this Agreement is a supplement to and in furtherance of the

Certificate of Incorporation and any resolutions of the Board adopted pursuant

thereto, and shall not be deemed a substitute therefore, nor shall it be deemed

to diminish or abrogate any rights of Indemnitee thereunder; provided, however,

that this Agreement shall be construed in accordance and consistent with, and in

the event of any conflict be superseded by, and in no way creates or be used to

create indemnification obligations of the Company which are inconsistent with,

Section 8 of this Agreement and Article VII of the Certificate of Incorporation;

and

 

      WHEREAS, Indemnitee is willing to serve, and continue to serve, and take

on additional service as an officer and/or in such other capacities on the

condition that he or she be indemnified as provided for herein.

 

      NOW, THEREFORE, in consideration of the premises and the covenants

contained herein, the Company and Indemnitee do hereby covenant and agree as

follows:

 

      1. SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve, at

the will of the Company, as an officer, director or key employee of the Company

for so long as Indemnitee is duly elected or appointed or until Indemnitee

tenders his or her resignation.

 

      2. DEFINITIONS. As used in this Agreement:

 

         (a) A "Change in Control" shall be deemed to occur upon the earliest to

occur after the date of this Agreement of any of the following events:

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            (i) Any Person (excluding any employee benefit plan of the Company)

is or becomes the Beneficial Owner, directly or indirectly, of securities of the

Company representing fifty percent (50%) or more of the combined voting power of

the Company's outstanding securities then entitled ordinarily to vote for the

election of directors; or

 

 

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            (ii) During any period of two (2) consecutive years commencing on or

after the effective date of a plan or reorganization with respect to the Company

and approved by the United States Bankruptcy Court ("Effective Date"), the

individuals who at the beginning of such period constitute the Board or any

individuals who would be Continuing Directors (as defined below) cease for any

reason to constitute at least a majority thereof; or

 

            (iii) The Board shall approve a sale of all or substantially all of

the assets of the Company; or

 

            (iv) The Board shall approve any merger, consolidation, or like

business combination or reorganization of the Company, the consummation of which

would result in the occurrence of any event described in clause (i) or (ii),

above.

 

      Notwithstanding the foregoing, none of the events or circumstances

described in clauses (i) through (iv) above shall be deemed to result in a

Change in Control if such event or circumstance results in any stockholder,

together with its affiliates, which beneficially owns 30% or more of the

outstanding common stock of the Company as of the Effective Date or any

affiliates of such stockholder increasing its equity interests in the Company,

acquiring all or substantially all of the assets of the Company or increasing

its representation on the Board.

 

         (b) "Continuing Directors" shall mean the original members of the Board

pursuant to the Plan and any successor to any such director and any additional

director who after the Effective Date was nominated or selected by a majority of

the Continuing Directors in office at the time of his or her nomination or

selection.

 

         (c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as

amended.

 

 

         (d) "Person" shall have the meaning set forth in Sections 13(d) and

14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the

Company and (ii) any trustee or other fiduciary holding securities under an

employee benefit plan of the Company.

 

         (e) "Beneficial Owner" shall have the meaning given to such term in

Rule 13d-3 issued under the Exchange Act; provided, however, that Beneficial

Owner shall exclude any Person becoming a Beneficial Owner by reason of the

stockholders of the Company approving a merger of the Company with another

entity.

 

         (f) "Corporate Status" shall describe the status of a Person who is or

was a director, officer, trustee, partner, member, fiduciary, employee or agent

of the Company or of any other Enterprise (as defined below), which such Person

is or was serving at the request of the Company.

 

 

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         (g) "Disinterested Director" shall mean a member of the Board who is

not and was not a party to the Proceeding (as defined below) in respect of which

indemnification is sought by Indemnitee.

 

          (h) "Enterprise" shall mean any corporation, limited liability company,

partnership, joint venture, trust, employee benefit plan or other enterprise of

which Indemnitee is or was serving at the request of the Company as a director,

officer, trustee, partner, member, fiduciary, employee or agent.

 

         (i) "Expenses" shall include all reasonable attorneys' fees, retainers,

court costs, transcript costs, fees of experts, witness fees, travel expenses,

duplicating costs, printing and binding costs, telephone charges, postage,

delivery service fees, and all other disbursements or expenses of the types and

amounts customarily incurred in connection with prosecuting, defending,

preparing to prosecute or defend, investigating, being or preparing to be a

witness in, or otherwise participating in, a Proceeding (as defined below).

Expenses also shall include costs incurred in connection with any appeal

resulting from any Proceeding (as defined below), including, without limitation,

the premium, security for, and other costs relating to any bond, supersedeas

bond, or other appeal bond or its equivalent. Expenses, however, shall not

include (i) amounts paid in settlement by Indemnitee or the amount of judgments

or fines against Indemnitee and (ii) except as expressly provided in Section

8(b), any amount payable by Indemnitee in connection with or related to

Proceedings in connection with events occurring before the Bankruptcy Filing or

that relate to or are in connection with Old Loral.

 

         (j) References to "fines" shall include any excise tax assessed on a

person with respect to any employee benefit plan pursuant to applicable law.

 

         (k) References to "serving at the request of the Company" shall include

, without limitation, any service provided at the request of the Company as a

director, officer, trustee, partner, member, fiduciary, employee or agent of the

Company and any duties or services by such director, officer, trustee, partner,

member, fiduciary, employee or agent with respect to an employee benefit plan or

its participants and beneficiaries.

 

         (l) Any action taken or omitted to be taken by a person for a purpose

which he or she reasonably believed to be in the interests of the Company or an

employee benefit plan or its participants and beneficiaries shall, without

limitation, be deemed to have been taken in "good faith" and for a purpose which

is "not opposed to the best interests of the Company", as such terms are

referred to in this Agreement and used in the DGCL.

 

         (m) The term "Proceeding" shall include any threatened, pending or

completed, in each case commenced after the Bankruptcy Filing (except as

expressly provided in Section 8(b)), action, suit, arbitration, alternate

dispute resolution mechanism, investigation, inquiry, administrative hearing or

any other actual, threatened or completed proceeding, whether brought in the

right of the Company or otherwise and

 

 

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whether of a civil, criminal, administrative or investigative nature, including

any related appeal, in which Indemnitee was, is or will be involved as a party

or witness or otherwise by reason of the fact that Indemnitee is or was a

director, officer, trustee, partner, member, fiduciary, employee or agent of the

Company, by reason of any action taken or not taken by him or her while acting

as director, officer, trustee, partner, member, fiduciary, employee or agent of

the Company, or by reason of the fact that he or she is or was serving at the

request of the Company as a director, officer, trustee, partner, member,

fiduciary, employee or agent of any other Enterprise, in each case whether or

not serving in such capacity at the time any liability or expense is incurred

for which indemnification, reimbursement, or advancement of expenses can be

provided under this Agreement.

 

         (n) "Independent Counsel" means a law firm, or a member of a law firm,

that is experienced in matters of corporation law and neither presently is, nor

in the past five (5) years has been, retained to represent: (i) the Company or

Indemnitee in any matter material to either such party (other than with respect

to matters concerning the Indemnitee under this Agreement, or other indemnitees

under similar indemnification agreements), or (ii) any other party to the

Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding

the foregoing, the term "Independent Counsel" shall not include any person who,

under the applicable standards of professional conduct then prevailing, would

have a conflict of interest in representing either the Company or Indemnitee in

an action to determine Indemnitee's rights under this Agreement.

 

      3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. The Company shall indemnify

Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is

made, or is threatened to be made, a party to or a participant in (as a witness

or otherwise) any Proceeding, other than a Proceeding by or in the right of the

Company to procure a judgment in its favor. Pursuant to this Section 3,

Indemnitee shall be indemnified against all judgments, fines, penalties, amounts

paid in settlement (if such settlement is approved in writing in advance by the

Company, which approval shall not be unreasonably withheld) (including, without

limitation, all interest, assessments and other charges paid or payable in

connection with or in respect of any of the foregoing) (collectively, "Losses")

and Expenses actually and reasonably incurred by Indemnitee or on his or her

behalf in connection with such Proceeding or any action, discovery event, claim,

issue or matter therein or related thereto, if Indemnitee acted in good faith,

for a purpose which he or she reasonably believed to be in or not opposed to the

best interests of the Company and, in the case of a criminal Proceeding, in

addition, had no reasonable cause to believe that his or her conduct was

unlawful.

 

      4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company

shall indemnify Indemnitee in accordance with the provisions of this Section 4

if Indemnitee is made, or is threatened to be made, a party to or a participant

in (as a witness or otherwise) any Proceeding by or in the right of the Company

to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall

be indemnified against all Expenses actually and reasonably incurred by him or

her or on his or her behalf in connection with the defense or settlement of such

Proceeding or any action, discovery

 

 

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event, claim, issue or matter therein or related thereto, if Indemnitee acted in

good faith, for a purpose which he or she reasonably believed to be in or not

opposed to the best interests of the Company. No indemnification, however, shall

be made under this Section 4 in respect of any claim, issue or matter as to

which Indemnitee shall have been adjudged to be liable to the Company, unless

and only to the extent that the court in which the Proceeding was brought or, if

no Proceeding was brought in a court, any court of competent jurisdiction,

determines upon application that, in view of all the circumstances of the case,

Indemnitee fairly and reasonably is entitled to indemnification for such portion

of the Expenses as the court deems proper.

 

      5. INDEMNIFICATION FOR EXPENSES WHERE INDEMNITEE IS WHOLLY OR PARTLY

SUCCESSFUL. Notwithstanding and in addition to any other provisions of this

Agreement, to the extent that Indemnitee is a party to a Proceeding and is

successful, on the merits or otherwise, in the defense of any claim, issue or

matter therein, the Company shall indemnify Indemnitee against all Expenses

actually and reasonably incurred by him or her or on his or her behalf in

connection with such successful defense. For the avoidance of doubt, if

Indemnitee is not wholly successful in such Proceeding but is successful, on the

merits or otherwise, as to one or more but less than all claims, issues or

matters in such Proceeding, the Company shall indemnify Indemnitee against all

Expenses actually and reasonably incurred by him or her or on his or her behalf

in connection with each successfully resolved claim, issue or matter. For

purposes of this Section 5 and, without limitation, the termination of any

claim, issue or matter in such a Proceeding by withdrawal or dismissal, with or

without prejudice, shall be deemed to be a successful result as to such claim,

issue or matter.

 

      6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding and in

addition to any other provision of this Agreement, to the extent that Indemnitee

is, by reason of his or her Corporate Status, a witness in or otherwise incurs

Expenses in connection with any Proceeding to which Indemnitee is not a party,

he or she shall be indemnified against all Expenses actually and reasonably

incurred by him or her or on his or her behalf in connection therewith.

 

      7. ADDITIONAL INDEMNIFICATION.

 

         (a) Notwithstanding any limitation in Sections 3, 4, or 5 hereof, but

subject to Article VII of the Certificate of Incorporation and Section 8 hereof,

the Company shall indemnify Indemnitee to the fullest extent permitted by law

and Article VII of the Certificate of Incorporation, if Indemnitee is made, or

is threatened to be made, a party to any Proceeding (including a Proceeding by

or in the right of the Company to procure a judgment in its favor) against all

Losses and Expenses actually and reasonably incurred by Indemnitee in connection

with the Proceeding. No indemnification shall be made under this Section 7(a) on

account of Indemnitee's conduct which constitutes a breach of Indemnitee's duty

of loyalty to the Company or its stockholders or is an act or omission not in

good faith or which involves intentional misconduct or a knowing violation of

the law.

 

 

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         (b) For purposes of Section 7(a), the meaning of the phrase "to the

fullest extent permitted by law" shall include, but not be limited to:

 

            i. to the fullest extent authorized or permitted by the

then-applicable provisions of the DGCL that authorize or contemplate

indemnification by agreement, or the corresponding provision of any amendment to

  or replacement of the DGCL, and ---

 

            ii. to the fullest extent authorized or permitted by any amendments

  to or replacements of the DGCL adopted after the date of this Agreement that

increase the extent to which a corporation may indemnify its officers and

directors.

 

      (c) Indemnitee shall be entitled to the prompt payment of all Expenses

reasonably incurred in enforcing successfully (fully or partially) this

Agreement.

 

      8. EXCLUSIONS.

 

         (a) Notwithstanding any provision in this Agreement, the Company shall

not be obligated under this Agreement to make any indemnity, including for

Expenses, in connection with any Proceeding against Indemnitee:

 

            (i) for which payment actually has been received by or on behalf of

Indemnitee under any insurance policy or other indemnity provision, except with

respect to any excess beyond the amount actually received under such

insurance policy or other indemnity provision; or

 

            (ii) for an accounting of profits made from the purchase and sale

(or sale and purchase) by Indemnitee or any member of the Indemnitee's

immediate family of securities of the Company within the meaning of

Section 16(b) of the Exchange Act, as amended, or similar provisions of state

blue sky law, state statutory law or common law; or

 

            (iii) based upon or attributable to the Indemnitee or any member of

the Indemnitee's immediate family gaining in fact any personal profit or

advantage to which the Indemnitee was not legally entitled; provided that

the Indemnitee shall be protected under this Agreement as to any claims

upon which suit may be brought against Indemnitee by reason of any alleged

personal profit or advantage to which the Indemnitee was not legally

entitled, unless a final and non-appealable adjudication thereof adverse

to the Indemnitee by a court of competent jurisdiction shall establish

that Indemnitee committed act(s) of personal profit or advantage to which

the Indemnitee was not legally entitled; or

 

            (iv) prior to a Change in Control, in connection with any Proceeding

(or any part of any Proceeding) initiated by Indemnitee, including any

Proceeding (or any part of any Proceeding) initiated by Indemnitee against

the Company (other than any Proceeding referred to in Sections 13(d) or

(e) below or any other

 

 

 

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Proceeding commenced to recover any Expenses referred to in Section 7(c) above)

or its directors, officers, employees or other indemnitees, unless (i) the Board

authorized the Proceeding (or any part of any Proceeding) prior to its

initiation or (ii) the Company provides the indemnification, in its sole

discretion, pursuant to the powers vested in the Company under applicable law;

or

 

            (v) if the funds at issue were paid pursuant to a settlement

approved by a court and indemnification would be inconsistent with any

condition with respect to indemnification expressly imposed by the court in

approving the settlement; or

 

            (vi) based upon or attributable to the fraud, willful misconduct or

dishonesty of the Indemnitee seeking payment hereunder; provided that the

Indemnitee shall be protected under this Agreement as to any claims upon which

suit may be brought against Indemnitee by reason of any alleged fraud, willful

misconduct or dishonesty on Indemnitee's part, unless a final and non-appealable

  adjudication thereof adverse to the Indemnitee by a court of competent

jurisdiction shall establish that Indemnitee committed fraud, willful misconduct

  or act(s) of active and deliberate dishonesty, with actual dishonest purpose

and intent, which act(s) were material to the cause of action so adjudicated; or

 

            (vii) for bodily injury, sickness, disease or death of any person,

or damage to or destruction of any tangible property, including loss of use

thereof, not in connection with performance of employment; or

 

            (viii) for which indemnification under this Agreement is determined

by a final and non-appealable adjudication of a court of competent jurisdiction

to be unlawful and violative of public policy.

 

         (b) Notwithstanding anything to the contrary set forth in or relied

upon by the Indemnitee in connection with this Agreement,

 

            (i) for the purposes of this Agreement, the term "Company" and

"Enterprise" shall specifically exclude Loral Space & Communications Ltd., a

Bermuda corporation, or any direct or indirect subsidiary thereof that at the

time was not or that is not a direct or indirect subsidiary of the Company

(collectively, "Old Loral"), and the Company shall not have any obligations

pursuant to this Agreement by virtue of any assertion by any person, entity or

governmental authority or any determination of a court of competent

jurisdiction, that it is a successor to Old Loral or any other entity;

 

            (ii) unless the Company expressly and unequivocably agrees hereafter

in writing otherwise, the Company shall not be obligated and shall not otherwise

be required to indemnify the Indemnitee for any Losses or Expenses or otherwise

incurred in his or h