FIRST AMENDMENT TO SECTION 351 EXCHANGE AGREEMENT AND PLAN
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OF CONVERSION
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THIS FIRST AMENDMENT TO SECTION 351 EXCHANGE AGREEMENT AND
PLAN OF CONVERSION (this "Amendment") is entered into as of December __, 1996,
by and among International Private Satellite Partners, L.P., a Delaware limited
partnership ("Orion Atlantic"); Orion Network Systems, Inc., a Delaware
corporation ("ONS"); Orion Satellite Corporation, a Delaware corporation
("OrionSat"); and each of the following entities: British Aerospace
Communications, Inc., a Delaware corporation, COM DEV Satellite Communications
Limited, a Canadian corporation, Kingston Communications International Limited,
a company incorporated under the laws of England, Lockheed Xxxxxx Commercial
Launch Services, Inc., a Delaware corporation, MCN Sat US, Inc., a Delaware
corporation, and Trans Atlantic Satellite, Inc., a Delaware corporation
(collectively, the "Exchanging Partners") under the Section 351 Exchange
Agreement and Plan of Conversion, dated as of June __, 1996, between and among
Orion Atlantic, ONS, OrionSat and the Exchanging Partners (the "Exchange
Agreement").
WHEREAS, Orion Atlantic, ONS and OrionSat are currently
pursuing and will continue to pursue certain financing transactions that were
contemplated by the Exchange Agreement, and the parties hereto desire to amend
the Exchange Agreement to extend potentially the termination date to provide for
the possibility that such financings will not be completed by January 30, 1997
and to refund certain payments.
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
1. CLOSING TERMINATION DATE EXTENSION
The first paragraph of Section 13.1(b) of the
Exchange Agreement is hereby amended to read in its entirety as follows:
(b) by ONS and OrionSat or by the Exchanging
Partners collectively or (as to a particular Exchanging Partner), by such
Exchanging Partner, by written notice of termination to the other parties
hereto, if the Closing has not occurred by April 30, 1997 (the "Closing
Termination Date"); provided, however, that the terminating party is not in
breach of any obligations or agreements hereunder that are causing any of the
conditions precedent to Closing not to be satisfied.
2. REFUND OF CERTAIN PAYMENTS
Section 3.2(c) of the Exchange Agreement is hereby
amended by adding, at the end thereof, the following:
Notwithstanding the foregoing provisions of this Section
3.2(c), to the extent that amounts are paid by one or more Exchanging Partners
(or Affiliates of such Exchanging Partners) (i) pursuant to the Capacity
Agreements and which are subject to being refunded under the Refund Agreement
("Firm Capacity Payments") during the Adjustment Period for obligations of such
Exchanging Partners (or Affiliates) arising after January 29, 1997 and prior to
the Closing Date, and (ii) pursuant to the Contingent Capacity Agreements
("Contingent Capacity Payments") during the Adjustment Period for obligations of
such Exchanging Partners (or Affiliates) arising after the date hereof and prior
to the Closing Date (collectively, "Payments Subject to Refund"), then if (and
only if) ONS or Newco completes a Bond Offering prior to the Closing Termination
Date,
(x) to the extent that the gross proceeds from the Bond
Offering (excluding any amounts required to be set aside or pledged for the
purpose of pre-funding interest payments) for ONS or Newco, plus the gross
proceeds from the sale of Convertible Subordinated Debentures to BAe and Matra
Marconi Space UK Limited ("Matra Marconi Space") or their Affiliates, exceeds
the sum of (1) the amounts necessary to effect the Credit Facility Refinancing
and all other obligations relating thereto or arising therefrom, including
without limitation all principal and accrued interest due with respect to the
Credit Facility and all breakage fees and costs arising from termination of the
interest rate hedge relating to the Credit Facility, (2) $49.4 million,
representing the proposed initial payments to be made by ONS or Newco under the
Orion 2 Satellite Contract and related Orion 2 Option Agreement, (3) $13
million, representing the incentive payments that will be payable to Matra
Marconi Space or its Affiliates with respect to Orion 1 upon or immediately
following the Credit Facility Refinancing, (4) $3.5 million, representing the
amounts that will be payable to STET upon or immediately following the Credit
Facility Refinancing, (5) an amount reasonably determined by ONS or Newco to be
necessary working capital for ONS or Newco to conduct operations following the
Bond Offering and other transactions (not to exceed $10 million), and (6) the
costs and expenses of the Bond Offering, the Convertible Subordinated Debenture
financings and related transactions (not to exceed $14.3 million), the excess
(the "Available Funds") shall be used to refund the amounts of the Payments
Subject to Refund to the respective Exchanging Partners at the Closing (or, if
such excess is not sufficient to refund all of the Payments Subject to Refund to
the respective Exchanging Partners, the Available Funds shall be used first to
refund Contingent Capacity Payments to the extent of such Available Funds, and
second to refund Firm Capacity Payments to the extent of any remaining Available
Funds, in each case with partial refunds to be made pro rata among the
Exchanging Partners in proportion to their respective applicable
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Payments Subject to Refund), and amounts so refunded shall not be included in
clause (i)(A) of this Section 3.2(c); and
(y) any portions of the Payments Subject to Refund not so
refunded to the respective Exchanging Partners at the Closing shall be included
in clause (i)(A) of this Section 3.2(c) as part of the Adjustment Amounts of
such Exchanging Partners.
The refund of Available Funds shall be made at or within three
business days after the Closing. ONS and Newco shall deliver to the Exchanging
Partners simultaneously with such refund a certificate of their respective chief
financial officers setting forth in reasonable detail all calculations or
computations required or contemplated by this Section 3.2(c), including the
amount and application of the Available Funds. ONS and Newco shall provide
promptly, to any Exchanging Partner requesting the same, such additional detail
supporting such calculations and computations and such back-up or supporting
documentation as such Exchanging Partner may reasonably request.
3. TAX ADJUSTMENT
Section 3.2(c)(ii) of the Exchange Agreement is hereby amended
to read in its entirety as follows:
(ii) the product of the number of days in the Adjustment
Period through and including (but not beyond) January 29, 1997 multiplied by the
Tax Adjustment Factor for such Exchanging Partner, divided by
4. SALE OF CONVERTIBLE SUBORDINATED DEBENTURES
Notwithstanding the provisions of Section 5.8 of the Exchange
Agreement contemplating that Newco will, as of the Closing Date, complete a
Convertible Subordinated Debenture Offering of approximately $100 million, it is
presently intended that the Convertible Subordinated Debenture Offering consist
only of purchases of $50 million of Convertible Subordinated Debentures by BAe
and $10 million of Convertible Subordinated Debentures by Matra Marconi Space,
or Affiliates thereof. Accordingly, all references in the Exchange Agreement to
the Convertible Subordinated Debenture Offering shall refer only to the $60
million of Convertible Subordinated Debentures to be purchased by BAe and Matra
Marconi Space, or Affiliates thereof. While not intended to be legally binding,
BAe hereby reconfirms that it or its Affiliates intend to purchase from Newco
$50 million of Convertible Subordinated Debentures on terms being negotiated
between BAe and ONS, and MCN Sat hereby confirms that Matra Marconi Space or its
Affiliates intends to purchase from Newco $10 million of Convertible
Subordinated Debentures on terms substantially the same as those ultimately
agreed upon by
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BAe and ONS for the BAe investment. Section 10.8 of the Exchange Agreement is
hereby amended to read in its entirety as follows:
Newco shall have raised at least $60 million from the sale of
Convertible Subordinated Debentures, including the sale of $50 million of
Convertible Subordinated Debentures to BAe or its Affiliates and the sale of $10
million of Convertible Subordinated Debentures to Matra Marconi Space or its
Affiliates.
5. ELIMINATION OF KINGSTON INVESTMENT IN PPU INTEREST SHARES
Section 3.2(d) of the Exchange Agreement is hereby amended to
delete such Section in its entirety; Section 3.2(a)(iii) of the Exchange
Agreement is hereby amended to delete the language "other than interest paid to
Kingston under Section 3.2(d)" in its entirety; Section 3.2(b)(iii) of the
Exchange Agreement is hereby amended to delete the language "and PPU Interest
Shares calculated as set forth in Section 3.2(d)" in its entirety; the last
paragraph of Section 3.2(b) of the Exchange Agreement is hereby amended to
replace the language "Section 3.2(b), in Sections 3.2(c) and 3.2(d)" with the
language "Section 3.2(b) and in Section 3.2(c); and Section 3.2(c) of the
Exchange Agreement is hereby amended to delete the language "other than Kingston
(or an Affiliate of Kingston)" in its entirety.
6. ORION 2 SATELLITE CONTRACT
Section 9.7 of the Exchange Agreement shall be amended to read
in its entirety as follows:
The Option Agreement, dated December 10, 1996, between Orion
Atlantic and Matra Marconi Space ("Orion 2 Option Agreement"), shall be in full
force and effect; Orion Atlantic shall not be in default thereunder; and Orion
Atlantic shall have made all payments required to be made thereunder through the
earlier of the Closing Date and March 31, 1997. Restated Amendment #10, dated
December 10, 1996, to the Second Amended and Restated Purchase Contract, dated
as of September 26, 1991, between Orion Atlantic and Matra Marconi Space, as
amended, shall be in full force and effect, and Orion Atlantic shall not be in
default thereunder.
7. MISCELLANEOUS
7(a) Defined Terms
Capitalized terms used in this Amendment and not otherwise
defined in this Amendment shall have the meanings provided for in the Exchange
Agreement.
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7(b) Governing Law
This Amendment, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the same laws as govern the Exchange Agreement.
7(c) Counterparts
To facilitate execution, this Amendment may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Amendment to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
7(d) Facsimile Execution
To facilitate execution, this Amendment may be executed
through the use of facsimile transmission, and a counterpart of this Amendment
that contains the facsimile signature of a party, which counterpart has been
transmitted by facsimile transmission to each of the other parties hereto at
such facsimile numbers as such other parties shall request, shall constitute an
executed counterpart of this Amendment.
7(e) Ratification
The Exchange Agreement, as amended and modified by this First
Amendment, is in all respects ratified and confirmed and the terms, covenants
and agreements thereof shall be and remain in full force and effect. The parties
executing this First Amendment agree that the Exchange Agreement, as amended and
modified by this First Amendment, shall be remain valid and binding upon such
parties, notwithstanding the failure of one or more Exchanging Partners to
execute this First Amendment and notwithstanding any such non-executing
Exchanging Partner seeking to terminate the Exchange Agreement as to such
non-executing Exchanging Partner under Section 13.1(b) of the Exchange Agreement
after January 30, 1997 and before April 30, 1997.
7(f) Effectiveness of the Amendment
This First Amendment to Section 351 Exchange Agreement and
Plan of Conversion is being made pursuant to Section 14.5 of the Exchange
Agreement
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which provides that an amendment to the Exchange Agreement shall be valid and
binding when set forth in writing and duly executed and delivered by the party
against whom enforcement of the amendment is sought. The parties executing this
First Amendment agree that this First Amendment shall be valid and binding upon
such parties, notwithstanding the failure of one or more Exchanging Partners to
execute this First Amendment.
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IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment, or have caused this Amendment to be duly executed on their behalf, as
of the day and year first hereinabove set forth.
INTERNATIONAL PRIVATE
SATELLITE PARTNERS, L.P.
By: Orion Satellite Corporation, its
general partner
By:
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Title:
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ORION NETWORK SYSTEMS, INC.
By:
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Title:
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ORION SATELLITE CORPORATION
By:
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Title:
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BRITISH AEROSPACE
COMMUNICATIONS, INC.
By:
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Title:
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COM DEV SATELLITE
COMMUNICATIONS LIMITED
By:
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Title:
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KINGSTON COMMUNICATIONS
INTERNATIONAL LIMITED
By:
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Title:
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LOCKHEED XXXXXX
COMMERCIAL LAUNCH
SERVICES, INC.
By:
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Title:
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MCN SAT US, INC.
By:
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Title:
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TRANS-ATLANTIC SATELLITE,
INC.
By:
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Title:
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