Execution Copy
Senior Management
AMENDED AND RESTATED
NON-QUALIFIED
STOCK OPTION AGREEMENT
LORAL SPACE & COMMUNICATIONS
INC.
2005 STOCK INCENTIVE PLAN
THIS
AGREEMENT is made as of the 21st day of December 2005 (the
“ Grant Date ”) by and between Loral Space &
Communications Inc., a Delaware corporation (the “
Company ”), and ____________ (the “
Optionee ”), and is amended and restated as of the
10th day of November 2008.
WHEREAS,
the Optionee is employed by or providing services to the Company or
an Affiliate in a key capacity, and the Company desires to have
Optionee remain in such employment or service and to afford
Optionee the opportunity to acquire, or enlarge, Optionee’s
stock ownership of the Company’s Common Stock, par value $.01
per share (the “ Stock ”), so that Optionee may
have a direct proprietary interest in the Company’s success;
and
WHEREAS,
all capitalized terms not otherwise defined herein shall have the
same meaning as set forth in Company’s 2005 Stock Incentive
Plan (the “ Plan ”).
NOW,
THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1.
Grant of Option . Subject to the terms and conditions
set forth herein and in the Plan, the Company hereby grants to the
Optionee, during the period commencing on the Grant Date and ending
on the date that is seven years from the Grant Date (the “
Option Period ”), the right and option (the right to
purchase any one share of Stock hereunder being an “
Option ”) to purchase from the Company, at an exercise
price of $28.441 per share (the “Option Price”), an
aggregate of ______ shares of Stock (the “ Share
Number ”). The Options are not intended to be
“incentive stock options”, as defined in
Section 422 of the Internal Revenue Code of 1986, as amended
(the “ Code ”).
2.
Deferred Compensation Account . As of the Grant Date,
the Company shall establish a deferred compensation bookkeeping
account for the Optionee (the “ Deferred Compensation
Account ”) and shall credit to the Deferred Compensation
Account a dollar amount equal to (A) the difference between the
Option Price and $19.00 (the “ Target Exercise Price
”), multiplied by (B) the Share Number. The Deferred
Compensation Account shall become vested in the same proportion as
the Options vest and become exercisable, including any accelerated
vesting upon (A) a termination of the Optionee’s
employment or service by the Company or an Affiliate without Cause,
(B) a termination of the Optionee’s employment
or
service with
the Company and all Affiliates by the Optionee for Good Reason,
(C) a Change in Control (as defined in the Plan), (D) a
New Skynet Sale Event (as defined in the Plan), but only to the
extent that the Optionee is an employee or service provider of New
Skynet, or (E) a New SS/L Sale Event (as defined in the Plan),
but only to the extent that the Optionee is an employee or service
provider of New SS/L.
(a) The
vested portion of the Deferred Compensation Account shall be
distributed to the Optionee upon the earliest to occur of
(i) the Optionee’s “separation from service”
(as such term is defined in Treasury Regulation §1.409A-1(h))
with the Company; provided , however , that the
Optionee shall be deemed to have suffered a “separation from
service” as of a given date for purposes of Treas. Reg.
§ 1.409A-1(h) to the extent that it is reasonably anticipated
that the Optionee’s level of bona fide services to the
Company, as an employee, independent contractor, or otherwise, will
permanently decrease to less than 50% of the average level of
services performed by the Optionee for the Company in the 36-month
period immediately preceding such date, (ii) a Change in
Control, (iii) a New Skynet Sale Event, but only to the extent
that the Optionee is an employee or service provider of New Skynet,
(iv) a New SS/L Sale Event, but only to the extent that the
Optionee is an employee or service provider of New SS/L, and
(v) the date which is the seventh anniversary of the Grant
Date; provided , however , that in the event the
Optionee is determined to be a “specified employee” (as
such term is defined in Treasury Regulation §1.409A-1(i)), as
of the date of the Optionee’s separation from service with
the Company, the distribution of the vested portion of the Deferred
Compensation Account scheduled to be made upon such separation from
service shall be delayed for six months and instead shall be made
upon the six-month anniversary of such separation from service; and
further provided , however , that there shall
be no distribution upon a Change in Control, a New Skynet Sale
Event or a New SS/L Sale Event unless such event also constitutes a
“change in control event” with respect to the Optionee
under Treasury Regulation §1.409A-3(i)(5), or such
distribution is otherwise an allowable distribution under
Section 409A of the Code.
(b) Amounts
in the Deferred Compensation Account shall be subject to forfeiture
upon termination of the Optionee’s employment with the
Company to the same extent as the Option is subject to forfeiture
pursuant to Section 4 herein.
(c) Except
as provided below, the value of the Deferred Compensation Account
shall not be credited with interest or be subject to any rate of
return. Upon any exercise of all or a portion of the Options, the
corresponding portion of the Deferred Compensation Account shall
automatically be converted into an interest-bearing account from
the date of such exercise through the date of distribution. For
example, if 50% of the Options are exercised, 50% of the Deferred
Compensation Account shall be converted into an interest-bearing
account. Once converted, the amounts credited to this
interest-bearing Deferred Compensation Account shall receive a rate
of return equal to the highest rate of return then available to the
Company in an interest-bearing account. To the extent possible, the
Company will seek to avoid or, if not avoidable, to minimize any
administrative expense incurred in maintaining the interest-bearing
Deferred Compensation Account. However, the balance in the
interest-bearing Deferred Compensation Account attributable to the
rate of return on the interest-bearing Deferred Compensation
Account shall be reduced, but not below the principal amount, by
any administrative expense incurred by the Company in maintaining
the interest-bearing Deferred Compensation Account.
-2-
(d) While
all or a portion of the Options remain unexercised and outstanding,
the corresponding portion of the Deferred Compensation Account
shall be linked to the value of the Stock as follows. To the extent
the value of the Stock declines to a level between the Option Price
and the Target Exercise Price (the “ Spread Value Zone
”), the corresponding portion of the Deferred Compensation
Account shall also decline in the same percentage as the Stock
declines as measured against the Target Exercise Price and the
value of the corresponding portion of the Deferred Compensation
Account shall track the percentage increase or decrease in the
value of the Stock while its value remains in the Spread Value Zone
such that if the value of the Stock declines to the Target Exercise
Price or below, the value of the corresponding portion of the
Deferred Compensation Account shall decline to zero and if the
value of the Stock rebounds to the Option Price, the corresponding
portion of the Deferred Compensation Account shall regain its
proportional full value. To the extent the Stock rises above the
Option Price the corresponding portion of the Deferred Compensation
Account shall not rise above its proportional full
value.
(e) The
amounts credited to the Deferred Compensation Account will be
subject to all applicable legally required tax withholding as
determined by the Company, unless such determination is
unreasonable.
(f) It
is intended that the provisions of this Section 2 and the
distribution of the Deferred Compensation Account hereunder to the
Optionee shall comply with the requirements of Section 409A of
the Code. To the extent that the Optionee has reason to believe
that the Deferred Compensation Account will subject the Optionee to
a tax under Section 409A of the Code, the Optionee may request
that this Agreement be amended in a manner that is compliant with
Section 409A in order to avoid or reduce such tax. To the
extent the Optionee requests any such amendment, the Company agrees
to enter into good faith negotiations with the Optionee to
accommodate such request to the extent possible so as to avoid or
reduce any such tax.
(g) In
no event shall this Agreement and any amendment thereof result in
the Company incurring any cost or expense to a greater extent than
the Company would have incurred had the Option been granted with an
Option Price equal to the Target Exercise Price.
(a) Subject
to the terms and conditions se
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