EXHIBIT 10.9
NON-SENIOR MANAGEMENT
NON-QUALIFIED
STOCK OPTION AGREEMENT
UNDER
LORAL SPACE & COMMUNICATIONS INC.
2005 STOCK INCENTIVE PLAN
THIS AGREEMENT, made as of this ______ day of ________, ____ (the
"Grant Date"), by and between Loral Space & Communications Inc., a Delaware
corporation (the "Company"), and _______________ (the "Optionee").
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 $.01 per share (the "Stock"), so that Optionee may have
a direct proprietary interest in the Company's success;
WHEREAS, all capitalized terms not otherwise defined herein shall
have the same meaning as set forth in Company's 2005 Stock Incentive Plan (the
"Plan").
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. GRANT OF OPTION.
(a) Subject to the terms and conditions set forth herein
and in the Plan, the Company hereby grants to the Optionee, during the
period commencing on the Grant Date and ending on the date that is seven
years from the Grant Date (the "Option Period"), the right and option (the
right to purchase any one share of Stock hereunder being an "Option") to
purchase from the Company, at an exercise price of [$____] 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.
[NOTE: SUBJECT TO COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED ("SECTION 409A"), THE OPTIONS SHALL HAVE A PER
SHARE EXERCISE PRICE OF $19.00 (THE "TARGET EXERCISE PRICE"). SECTION
409A, PLACES CERTAIN RESTRICTIONS ON STOCK OPTIONS THAT HAVE A PER SHARE
EXERCISE PRICE LESS THAN THE FAIR MARKET VALUE OF A SHARE OF THE
UNDERLYING STOCK AT THE TIME OF GRANT. IF THE TARGET EXERCISE PRICE IS
LESS THAN THE FAIR MARKET VALUE OF A SHARE OF STOCK ON THE GRANT DATE (THE
"GRANT DATE VALUE"), THE OPTIONS SHALL HAVE AN OPTION PRICE EQUAL TO THE
GRANT DATE VALUE RATHER THAN THE TARGET EXERCISE PRICE.]
[NOTE: IF THE TARGET EXERCISE PRICE IS LESS THAN THE GRANT DATE VALUE, THE
COMPANY SHALL ESTABLISH A DEFERRED COMPENSATION BOOKKEEPING ACCOUNT FOR
THE OPTIONEE AND INCLUDE THE FOLLOWING SECTION IN THIS OPTION AGREEMENT.]
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
becomes 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
earlier to occur of (i) a termination of the Optionee's employment
or service with the Company and all Affiliates, (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
person," as defined in Section 409A of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated
thereunder, including Treasury Notice 2005-1 ("Notice 2005-1")
("Section 409A"), as of the date of the Optionee's termination of
employment or service, any distribution of the Deferred Compensation
Account scheduled to be made upon such termination shall be delayed
for six months or such other period as required to comply with
Section 409A; 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 Notice 2005-1 or
such distribution is otherwise an allowable distribution under
Section 409A.
(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-
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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.
(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 this Agreement be
structured so as to avoid any tax under Section 409A(a)(B). 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(a)(B), the Optionee may request that this Agreement be
restructured to avoid any such tax. To the extent the Optionee
requests any such restructuring, the Company agrees to enter into
good faith negotiations with the Optionee to accommodate such
restructuring to the extent possible so as to avoid any such tax.
(g) In no event shall this Agreement and any
restructuring 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.]
3. EXERCISE OF OPTIONS.
(a) Subject to the terms and conditions set forth herein
and provided the Optionee's employment continues, the Options shall vest
and become exercisable in accordance with the following schedule:
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(i) one-fourth of the Options shall vest and
become exercisable on the one-year anniversary of the Effective
Date;
(ii) an additional one-fourth of the Options shall
vest and become exercisable on the two-year anniversary of the
Effective Date;
(iii)an additional one-fourth of the Options shall
vest and become exercisable on the three-year anniversary of the
Effective Date; and
(iv) the remainder of the Options shall vest and
become exercisable on the four-year anniversary of the Effective
Date.
(b) The Options shall vest only as to full shares of
Stock rounded down to the nearest full share during the first three
vesting dates and all fractions shall be amalgamated and become
exercisable on the last vesting date. Except as otherwise stated in this
Agreement, the Options shall expire on the seven-year anniversary of the
Effective Date hereof.
4. TERMINATION OF EMPLOYMENT.
(a) If the Optionee's employment or service with the
Company and all Affiliates is terminated for Cause, all Options [and the
full value of the Deferred Compensation Account] (whether vested or not)
shall immediately expire.
(b) If the Optionee resigns from employment or service
with the Company and all Affiliates other than for "Good Reason," all
unvested Options [and the unvested portion of the Deferred Compensation
Account] shall expire and all vested Options shall remain exercisable for
the shorter of (i) three months following the date of termination or (ii)
the remainder of the Option Period.
(c) If the Optionee's employment or service with the
Company and all Affiliates is terminated by the Company or an Affiliate
other than for Cause or the Optionee resigns for "Good Reason", all
unvested Options [and the unvested portion of the Deferred Compensation
Account] shall vest immediately and all vested Options (including those
that vest upon such termination) shall remain exercisable for the shorter
of (i) the Post Termination Exercise Period (as defined below) or (ii) the
remainder of the Option Period. The Post Termination Exercise Period shall
mean (x) the period that is two years following the date of termination,
if the termination occurs prior to the third anniversary of the Grant
Date, (y) the period that is one year following the date of termination,
if the termination occurs on or following the third anniversary of the
Grant Date but prior to the fifth anniversary of the Grant Date, or (z)
the period that is three months following the date of termination, if the
termination occurs on or following the fifth anniversary of the Grant
Date; provided, however, that if the Optionee's employment is terminated
on account of death or Disability, the Post Termination Exercise Period
shall not be shorter than one year following the date of the Optionee's
termination of employment.
(d) If the Optionee's employment or service with the
Company and all Affiliates terminates on account of the Optionee's death
or Disability all unvested
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Options [and the unvested portion of the Deferred Compensation Account]
shall immediately expire and all vested Options will remain exercisable
for the shorter of (i) the Post Termination Exercise Period or (ii) the
Option Period.
(e) For purposes of clarification, neither a New FSS
Sale Event nor a New SS/L Sale Event, shall in and of itself, be
considered a termination of the Optionee's employment with the Company and
all Affiliates without Cause or an event constituting "Good Reason."
5. METHOD OF EXERCISING OPTION.
(a) Options which have become exercisable may be
exercised by delivery of written notice of exercise to the Committee
accompanied by payment of the Option Price. Payment for shares of Stock
acquired pursuant to Options shall be made in full, upon exercise of the
Options in immediately available funds in United States dollars, by
certified or bank cashier's check or, in the discretion of the Committee,
(i) by surrender to the Company of Mature Shares held by the Participant;
(ii) by delivering to the Committee a copy of irrevocable instructions to
a stockbroker to deliver promptly to the Company an amount of sale or loan
proceeds sufficient to pay the aggregate Option exercise price; (iii)
through a net exercise of the Options whereby the Participant instructs
the Company to withhold that number of shares of Stock having a fair
market value equal to the aggregate Option Price of the Options being
exercised and deliver to the Participant the remainder of the shares
subject to exercise or (iv) by any other means approved by the Committee.
For purposes of this paragraph, the term "Mature Shares" shall mean shares
of Stock for which the Optionee has good title, free and clear of all
liens and encumbrances, and which the Optionee either (i) has held for at
least six months or (ii) has purchased on the open market.
(b) At the time of exercise, (i) the Company shall have
the right to withhold from the number of shares of Stock to be issued upon
exercise, the minimum number of shares necessary or (ii) at the discretion
of the Committee, the Optionee shall be obligated to pay to the Company
such amount as the Company deems necessary, in either event, to satisfy
its obligation to withhold Federal, state or local income or other taxes
incurred by reason of the exercise or the transfer of shares thereupon.
6. ISSUANCE OF SHARES. As promptly as practical after receipt
by the Company of a written notice of exercise and full payment to the
Company of the aggregate Option Price and any required income tax
withholding amount, the Company shall issue or transfer to the Optionee
the number of shares of Stock with respect to which Options have been so
exercised, or the net number of shares of Stock in the event of an
exercise pursuant to Section 5(a)(iii), or to the extent applicable in
Section 5(a)(iv), or after application of Section 5(b), or both, and shall
deliver to the Optionee (or the Optionee's estate or beneficiary, if
applicable) a certificate or certificates therefore, registered in the
name of the Optionee (or such estate or beneficiary).
7. NON-TRANSFERABILITY. The Options are not transferable by
the Optionee otherwise than by will or the laws of descent and
distribution and are exercisable during the Optionee's lifetime only by
Optionee. No assignment or transfer of the Options, or of the rights
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represented thereby, whether voluntary or involuntary, by operation of law
or otherwise (except by will or the laws of descent and distribution),
shall vest in the assignee or transferee any interest or right herein
whatsoever, but immediately upon such assignment or transfer the Options
shall terminate and become of no further effect.
8. RIGHTS AS STOCKHOLDER. Neither the Optionee nor a permitted
transferee of the Options shall have any rights as a stockholder with
respect to any share of Stock covered by the Options until the Optionee or
any transferee shall have become the holder of record of such share, and
no adjustment shall be made for dividends or distributions or other rights
in respect of such share for which the record date is prior to the date
upon which the Optionee or any transferee shall become the holder of
record thereof.
9. COMPLIANCE WITH LAW. Notwithstanding any of the provisions
hereof, the Optionee hereby agrees that Optionee will not exercise the
Options, and that the Company will not be obligated to issue or transfer
any shares of Stock to the Optionee hereunder, if the exercise hereof or
the issuance or transfer of such shares shall constitute a violation by
the Optionee or the Company of any provisions of any law or regulation of
any governmental authority. Any determination in this connection by the
Committee shall be final, binding and conclusive. The Company shall in no
event be obliged to register any securities pursuant to the Securities Act
of 1933 (as now in effect or as hereafter amended) or to take any other
affirmative action in order to cause the exercise of the Options or the
issuance or transfer of shares of Stock pursuant thereto to comply with
any law or regulation of any governmental authority.
10. NOTICE. Every notice or other communication relating to
this Agreement shall be in writing, and shall be mailed to or delivered to
the party for whom it is intended at such address as may from time to time
be designated by it in a notice mailed or delivered to the other party as
herein provided, provided that, unless and until some other address be so
designated, all notices or communications by the Optionee to the Company
shall be mailed or delivered to the Company at its principal executive
office, and all notices or communications by the Company to the Optionee
may be given to the Optionee personally or may be mailed to Optionee at
the Optionee's last known address, as reflected in the Company's records.
11. BINDING EFFECT. Subject to Section 7 hereof, this
Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.
12. GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with the laws of the state of Delaware, without
regard to the principles of conflicts of law thereof.
13. PLAN. The terms and provisions of the Plan are
incorporated herein by reference. In the event of a conflict or
inconsistency between discretionary terms and provisions of the Plan and
the express provisions of this Agreement, this Agreement shall govern and
control. In all other instances of conflicts or inconsistencies or
omissions, the terms and provisions of the Plan shall govern and control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LORAL SPACE & COMMUNICATIONS INC.
By: ______________________________
Name:
Title:
Accepted:
______________________________
Optionee
______________________________
Address
______________________________
______________________________
Social Security Number
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