PRINCIPAL STOCKHOLDER AGREEMENT
THIS PRINCIPAL STOCKHOLDER AGREEMENT, dated as of October 7th, 1997 (this
"Agreement") among Loral Space & Communications Ltd., a Bermuda company
("Acquiror"), Loral Satellite Corporation, a Delaware corporation, a wholly
owned subsidiary of Acquiror ("Sub"), Orion Network Systems, Inc., a Delaware
corporation ("Company"), and each other person and entity listed on the
signature pages hereof (each, a "Stockholder").
WHEREAS, as of the date hereof, each Stockholder holds of record or
beneficially owns the number of shares of common stock, $.01 par value (the
"Common Stock") of the Company set forth opposite such Stockholder's name on
Exhibit A;
WHEREAS, as of the date hereof, certain Stockholders also hold of record or
beneficially own the number of shares of the Company's Series A 8% Cumulative
Redeemable Convertible Preferred Stock ("Series A Shares"), Series B 8%
Cumulative Redeemable Convertible Preferred Stock ("Series B Shares"), and/or
Series C 6% Cumulative Redeemable Convertible Preferred Stock ("Series C Shares,
and together with the Series A Shares and Series B Shares, the "Preferred
Stock"), set forth opposite such Stockholder's name on Exhibit A (all such
Preferred Stock, together with all shares of Common Stock currently held and all
shares of Common Stock and Preferred Stock hereafter acquired by the
Stockholders (including but not limited to shares acquired upon the exercise of
options, warrants or rights or the conversion or exchange of convertible or
exchangeable securities) being referred to herein as the "Shares");
WHEREAS, as of the date hereof, certain Stockholders also hold the
Company's Convertible Junior Subordinated Debentures due February 1, 2012 (the
"Debentures") in the principal amount set forth opposite such Stockholder's name
on Exhibit A;
WHEREAS, Acquiror, Sub and the Company have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement"; capitalized
terms used but not otherwise defined in this Agreement have the meanings
assigned to such terms in the Merger Agreement), which provides, upon the terms
and subject to the conditions set forth therein, for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, as a condition to the willingness of Acquiror and Sub to enter
into the Merger Agreement and in furtherance of the acquisition of the Company
by Acquiror, Acquiror and Sub have required that the Stockholders agree, and in
order to induce Acquiror and Sub to enter into the Merger Agreement, each
Stockholder has agreed, severally and not jointly, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
GRANT OF OPTION AND EXERCISE; TRANSFER AND
VOTING OF SHARES; DEBENTURES
SECTION 1.1. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, each Stockholder
hereby severally and not jointly grants to Acquiror an irrevocable option (the
"Option") to purchase all (but not less than all) of such Stockholder's Shares
held on the date of option exercise (and to require the conversion of all (but
not less than all) of such Stockholder's Debentures into Shares immediately
prior to the Closing (defined in Section 1.3 below) hereunder, and upon such
conversion such Shares shall be subject to the Option hereunder) for the number
of fully paid and nonassessable Acquiror Shares (as adjusted pursuant to Section
2.5 of the Merger Agreement) equal to the number of Shares to be purchased by
Acquiror multiplied by the Exchange Ratio (calculated using the Notice Date as
if it were the "Closing Date" (as defined in the Merger Agreement) for purposes
of calculating the Determination Price), together with the associated rights
under Acquiror's Rights Agreement ("Acquiror Rights Plan") dated as of March 27,
1996 between Acquiror and The Bank of New York, as Rights Agent (together, the
"Purchase Price").
SECTION 1.2. EXERCISE OF OPTION.
(a) Provided that neither Acquiror nor Sub shall be in material breach of
their respective agreements or covenants contained in the Merger Agreement,
Acquiror may exercise the Option, in whole (but not in part) with respect to all
of the Shares of all of the Stockholders covered hereby (but not less than all),
at any time following the occurrence of any event described in Section 1.9 (a
"Purchase Event"); provided that, the Option shall terminate and be of no
further force and effect upon the earliest to occur of (i) the Effective Time,
(ii) June 30, 1998, or (iii) termination of the Merger Agreement by Acquiror or
Sub in accordance wit h the terms thereof.
(b) If Acquiror exercises the Option
hereunder (except following termination of the Merger Agreement by the Company)
(i) neither Acquiror nor Sub shall terminate the Merger Agreement under any
circumstances except Section 9.1(a) (with approval of the Company) and Section
9.1(c) of the Merger Agreement, (ii) all conditions set forth in Section 8.2 and
Section 8.3 (other than Section 8.2(c) and Section 8.3(c), but it is understood
and agreed that receipt of an initial FCC order shall be deemed to satisfy
Section 8.2(c) and Section 8.3(c) for this purpose) of the Merger Agreement
shall be deemed waived by each of Acquiror, Sub, and the Company, respectively,
(iii) Acquiror and Sub shall each use their
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reasonable best efforts to consummate the Merger (or the Exchange Offer as
applicable) as promptly as practicable, except to the extent that (and so long
as) consummation of the Merger (or the Exchange Offer as applicable) would
violate applicable law (and if consummation of the Merger would violate
applicable law, but conducting the Exchange Offer would not violate applicable
law, Acquiror shall conduct the Exchange Offer pursuant to the requirements of
Section 7.15 (including Section 7.15(g)), except as otherwise provided in this
paragraph rather than the Merger).
(c) If following the exercise of the Option there is an Acquisition
Proposal pending prior to consummation of the Merger or the Exchange Offer, and
such Acquisition Proposal includes a per Share price higher than the per Share
consideration to be paid in the Merger or the Exchange Offer as applicable (a
"Topping Bid"), Acquiror shall have the right to tender the Shares purchased
under the Option into the Topping Bid or otherwise support the Topping Bid and
realize value therefrom, and Acquiror's obligations under the Merger Agreement
(and Section 1.6 hereof) shall (if not previously terminated) be suspended
during the pendency of the Topping Bid; provided, however, that such obligations
shall cease to be suspended if the Topping Bid ceases to be pending without a
majority of the Shares having been acquired pursuant to the Topping Bid.
SECTION 1.3. CLOSING DATE.
In the event Acquiror wishes to exercise the Option, which may only be
exercised in whole (but not in part), with respect to all of the Shares of all
of the Stockholders covered hereby it shall send to each Stockholder a written
notice (the date of which being herein referred to as the "Notice Date")
specifying a place and date not earlier than five business days nor later than
20 Business Days from the Notice Date for the closing of such purchase (the
"Closing Date"); provided that if the closing of the purchase and sale pursuant
to the Option (the "Closing") cannot be consummated by reason of any applicable
judgment, decree, order, law or regulation, Acquiror shall use its commercially
reasonable efforts to resolve such matters and close as promptly as practicable.
Without limiting the foregoing, if prior notification to or approval of any
regulatory authority is required in connection with such purchase, Acquiror and,
if applicable, a Stockholder shall promptly file the required notice or
application for approval and shall expeditiously process the same (and such
Stockholder shall cooperate with Acquiror in the filing of any such notice or
application and the obtaining of any such approval).
SECTION 1.4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties and covenants of each Stockholder contained
herein and in full payment for the Shares, at the Closing, Acquiror will
deliver, or cause to be delivered, to each Stockholder, certificates
representing the
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Acquiror Shares to be paid pursuant to Section 1.1 duly issued to each
Stockholder, together with any necessary stock transfer stamps properly affixed.
Subject to the terms and conditions in this Agreement, in reliance on the
representations, warranties and covenants of the Acquiror contained herein and
in the Merger Agreement, at the Closing, the Stockholders shall deliver to
Acquiror certificates representing the Shares sold by the Stockholders to
Acquiror at the Closing, duly endorsed in blank or accompanied by stock powers
duly executed by the Stockholders in blank, in proper form for transfer.
(b) No certificates or scrip representing less than one share of Acquiror
Shares shall be issued upon the exercise of the Option. In lieu of any such
fractional share, each Stockholder who would otherwise have been entitled to a
fraction of a share of Acquiror Shares upon exercise of the Option shall be paid
at the Closing cash (without interest) in an amount equal to such Stockholder's
fractional part of a share of Acquiror Shares multiplied by the last reported
sale price of Acquiror Shares, as reported on the NYSE, on the Closing Date.
SECTION 1.5. LEGENDS.
(a) Each Stockholder shall instruct the Company to cause each certificate
of any Stockholder evidencing the Shares to bear a legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS
AND CONDITIONS OF THE PRINCIPAL STOCKHOLDER AGREEMENT DATED AS OF OCTOBER
7, 1997 AS IT MAY BE AMENDED, AMONG LORAL SPACE & COMMUNICATIONS LTD.,
LORAL SATELLITE CORPORATION, ORION NETWORK SYSTEMS, INC. ("ISSUER") AND THE
REGISTERED HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
(b) In the event that the Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate evidencing such Shares without the legend required by Section
1.5(a).
SECTION 1.6. VOTING AGREEMENT; AGREEMENT TO TENDER.
(a) Each Stockholder and Acquiror hereby severally and not jointly agrees
that from the date hereof to the earlier to occur of the termination of the
Merger Agreement or the Effective Time, at any meeting of the stockholders of
the Company, however called, and in any action by consent of the stockholders of
the company, such Stockholder and Acquiror shall vote the Shares: (i) in favor
of the Merger, the Merger Agreement (as amended from time to time) and the
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transactions contemplated by the Merger Agreement (collectively, the "subject
transactions"), (ii) against any proposal for any recapitalization, merger
(other than the Merger), sale of assets or other business combination between
the Company and any person or entity (other than Acquiror or Sub) or any other
action or agreement that would result in a breach of any covenant or any other
obligation or agreement of the Company under the Merger Agreement or which would
result in any of the conditions to the Merger Agreement not being fulfilled and
(iii) against the following actions (other than pursuant to the terms of this
Agreement or the Merger Agreement): (A) any extraordinary corporate transaction,
such as a merger, consolidation or other business combination involving the
Company or any of it Subsidiaries; (B) any sale, lease or transfer by the
Company of a material amount of assets (including stock) of the Company or any
of its Subsidiaries; or a reorganization, restructuring, recapitalization,
special dividend, dissolution or liquidation of the Company or any of its
Subsidiaries; or (C)(1) any change in a majority of the persons who constitute
the boa the Company or any of its Subsidiaries; (2) any change in the present
capitalization of the Company or any of its Subsidiaries including any proposal
to sell a substantial equity interest in the Company or any of its Subsidiaries;
(3) any amendment to the Company or any of its Subsidiaries' charters or
By-laws; (4) any other change in the Company or any of its Subsidiaries'
corporate structure or business; or (5) any other action which, in the case of
each of the matters referred to in clauses (C)(1), (2), (3) or (4), is intended,
or could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement.
(b) Each Stockholder and Acquiror severally and not jointly agrees that it
shall not enter into any agreement or understanding the effect of which would be
inconsistent with or violative of the provisions and agreements contained
herein, including in this Section 1.6. Further, each Stockholder and Acquiror
severally and not jointly agrees that it will, if the Board of Directors of the
Company fails or refuses (other than as a result of breach by Acquiror or any of
its Affiliates of the Merger Agreement or because the Acquiror and its
Affiliates will not or cannot satisfy the conditions precedent thereto) to
submit the subject transactions to the Company's stockholders, vote all Shares
held of record or beneficially owned by it to (i) call or cause to be called a
special meeting of stockholders of the Company (or effect a written consent) to
remove the directors of the Company who have so failed or refused, or to
increase the size of the Board of Directors and elect a majority of new
directors who will submit the subject transactions to the stockholders of the
Company for a vote, and (ii) use its reasonable efforts to effect such removal
and replacement, or increase and election, and the submission of the subject
transactions to the stockholders of the Company; and (iii) at any time after
initial approval by the stockholders of the Company of the subject transactions,
if so requested by Acquiror, to approve all or any actions incident to the
subject transactions or the other matters referred to in this Section 1.6 by
stockholder written consent.
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(c) If there is an Exchange Offer pursuant to Section 7.15 of the Merger
Agreement, each Stockholder agrees to tender such Stockholder's Shares into the
Exchange Offer (including all Shares issusable upon conversion of the
Debentures; provided, however, that actual conversion need not be effected until
consummation of the Exchange Offer).
SECTION 1.7. NO DISPOSITION OR ENCUMBRANCE OF SHARES AND OPTIONS.
Except to the extent set forth in Exhibit B, each Stockholder hereby
severally and not jointly covenants and agrees that, from the date hereof to the
termination of the rights of Acquiror under this Agreement, it shall not, and
shall not offer or agree to, sell, transfer, tender, assign, hypothecate or
otherwise dispose of, or create or permit to exist any Encumbrance (as
hereinafter defined) on the Shares owned by such Stockholder at any time prior
to the Effective Time.
SECTION 1.8. VOTING OF SHARES; FURTHER ASSURANCES.
(a) Each Stockholder, by this Agreement, with respect to its Shares, does
hereby constitute and appoint Sub and Acquiror, or any nominee of Sub and
Acquiror, with full power of substitution, from the date hereof to the earlier
to occur of the termination of the Merger Agreement or the Effective Time, as
its true and lawful attorney and proxy (its "Proxy"), for and in its name, place
and stead, to vote each of such Shares as its Proxy, at every annual, special or
adjourned meeting of the stockholders of the Company, including the right to
sign its name (as stockholder) to any consent, certificate or oth require:
(i) in favor of the Merger, the Merger Agreement (as amended from time to
time) and the transactions contemplated by the Merger Agreement;
(ii) against any Acquisition Proposal for any recapitalization, merger
(other than the Merger), sale of assets or other business combination between
the Company and any person or entity (other than Acquiror or Sub) or any other
action or agreement that would result in a breach of any covenant or any other
obligation or agreement of the Company under the Merger Agreement or which could
result in any of the conditions to the Merger Agreement not being fulfilled; and
(iii) against (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or any
of its Subsidiaries, (B) any sale, lease, or transfer by the Company of a
material amount of assets (including stock) of the Company or any of its
Subsidiaries, or a reorganization, restructuring, recapitalization, special
dividend, dissolution or liquidation of the Company or any of its Subsidiaries;
or (C) (1) any
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change in a majority of the persons who constitute the board of directors of the
Company or any of its Subsidiaries; (2) any change in the present capitalization
of the Company or any of its Subsidiaries including any proposal to sell a
substantial equity interest in the Company or any of its Subsidiaries; any
amendment of the Company or any of its Subsidiaries' charters or By-laws; (4)
any other change in the Company or any of its Subsidiaries' corporate structure
or business; or (5) any other action which, in the case of each of the matters
referred to in clauses (C)(1), (2), (3) or (4), is intended, or could reasonably
be expected, to impede, interfere with, delay, postpone, or materially adversely
affect the Merger and the transactions contemplated by this Agreement.
THIS POWER OF ATTORNEY IS IRREVOCABLE, IS GRANTED IN CONSIDERATION OF
ACQUIROR AND SUB ENTERING INTO THE MERGER AGREEMENT AND IS COUPLED WITH AN
INTEREST SUFFICIENT IN LAW TO SUPPORT AN IRREVOCABLE POWER. This appointment
shall revoke all prior attorneys and proxies appointed by any Stockholder at any
time with respect to the Shares and no subsequent attorneys or proxies will be
appointed by such Stockholder, or be effective, with respect thereto during the
term of this Agreement.
(b) Each Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in Sub
and Acquiror the power to carry out and give effect to the provisions of this
Agreement.
(c) Nothing contained in this Section 1.8 shall be construed to invalidate
any action taken by a Stockholder in accordance with Section 1.8.
SECTION 1.9. PURCHASE EVENTS.
Acquiror may exercise the Option only if one or more of the following
events has occurred:
(a) the Board of Directors of the Company or any committee thereof shall
have withdrawn or modified its approval or recommendation of the Merger or the
Merger Agreement in any manner adverse to Acquiror, or approved or recommended
any Acquisition Proposal (as defined in the Merger Agreement), or shall have
adopted a resolution to take any of the foregoing actions;
(b) (i) the approval of the Merger Agreement by the stockholders of the
Company shall have not been obtained by reason of the failure to obtain the
required vote at the Stockholders' Meeting (as defined in the Merger Agreement)
and (ii) at the time of such negative vote there shall be pending an Acquisition
Proposal (as defined in the Merger Agreement);
(c) the Company or any of its Subsidiaries shall have entered into any
agreement with any person (other than Acquiror or any of its affiliates), the
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Board of Directors of such entity shall have approved, recommended or resolved
to enter into an agreement with any person, or the Company shall have publicly
announced its intention to take any of the foregoing actions, with respect to
the sale of 20% or more (in voting power) of the voting securities of the
Company or of 20% or more (in fair market value) of the assets of the Company
and its Subsidiaries, on a consolidated basis, however such transaction may be
effected; or
(d) any person (other than Acquiror or any of its affiliates), shall have
commenced (as such term is defined in Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or shall have filed a registration
statement under the Securities Act of 1933, as amended (the "Act"), with respect
to a tender or exchange offer for securities representing 35% or more of the
voting power of the Company; or the acquisition, by any person or group (as
defined in Section 13(d) of the Exchange Act), other than Acquiror or any of its
affiliates, of beneficial ownership of (as defined in the Rule 13d-3 under t to
acquire beneficial ownership of, securities representing 35% or more of the
voting power of the Company;
provided that no event set forth in this Section 1.9 shall be deemed to occur
solely by reason of any agreement, or any action that is taken, or of any event
that occurs, for which Acquiror has given its prior written consent. As used in
this Agreement, "person" shall have the meaning specified in Section 13(d)(3) of
the Exchange Act.
SECTION 1.10. CONVERTIBLE DEBENTURES.
Each Stockholder that holds Debentures agrees that all Debentures held by
such Stockholder shall be converted into shares of Common Stock (together with
any shares of Common Stock representing accrued but unpaid interest on the
Debentures) in accordance with Section 15.1 of the Debenture Purchase Agreement,
dated as of January 13, 1997, as amended as of January 31, 1997, among the
Company, British Aerospace Holdings, Inc. and Matra Marconi Space UK Limited
(the "Debenture Agreement") relating thereto immediately prior to the Effective
Time (except if converted prior to such date), and at such time, converted into
the right to receive in the Merger Acquiror Shares in accordance with the terms
of the Merger Agreement. In consideration for the foregoing, such Stockholder
waives its rights under Section 11.3 of the Debenture Agreement with respect to
the consummation of the Merger.
SECTION 1.11. CONTROL SHARES.
The Company hereby waives its rights under Article ELEVENTH, Section H, of
its Restated Certificate of Incorporation with respect to all Shares acquired
pursuant to exercise of the Option, and hereby agrees, promptly following any
such exercise, to exchange for such Shares an equal number of duly authorized,
but unissued Shares, which upon issuance will be validly issued, fully paid and
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nonassessable Shares, and which will not be "control shares" within the meaning
of such Article ELEVENTH.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and warrants
to Acquiror as follows:
SECTION 2.1. DUE ORGANIZATION, AUTHORIZATION, ETC.
Such Stockholder (if it is a corporation, partnership or other legal
entity) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization. Such Stockholder has
all requisite power (corporate or otherwise) to execute and deliver this
Agreement, to grant the Option and to consummate the transaction contemplated
hereby. The execution and delivery of this Agreement, the appointment of
Acquiror and Sub as such Stockholder's Proxy, the granting of the Option and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action (corporate or otherwise) on the part of such
Stockholder. This Agreement has been duly executed and delivered by or on behalf
of such Stockholder and, assuming its due authorization, execution and delivery
by Acquiror, constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
SECTION 2.2 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by such Stockholder does
not, and the performance of this Agreement by such Stockholder will not, (i)
conflict with or violate the Certificate of Incorporation by By-Laws or other
similar organizational documents of such Stockholder (in the case of a
Stockholder that is a corporation, partnership or other legal entity), (ii)
conflict with or violate any statute, law, ordinance, rule, regulation, order,
decree or judgment applicable to such Stockholder or by which it or any of its
properties is bound or affected, or (iii) result in any breach of or constitute
a default (with or without notice or lapse of time, or both) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the property or assets
of such Stockholder or (if such Stockholder is a corporation, partnership or
other legal entity) any of its subsidiaries, including, without limitation, the
Shares, pursuant to, any indenture or other loan document provision or other
contract, license, franchise, permit or other instrument or obligation to which
such Stockholder is a party or by which such Stockholder or any of its
properties is bound or affected, except, in the case of clauses (ii) and (iii),
for any such breaches, defaults or other occurrences that would
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not prevent the performance by such Stockholder of its obligations under this
Agreement.
(b) The execution and delivery of this Agreement by such Stockholder do
not, and the performance of this agreement by such Stockholder will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent the
performance by the Stockholder of its obligations under this Agreement.
SECTION 2.3. TITLE TO SHARES.
Such Stockholder has, and the transfer by the Stockholder of the Shares
hereunder will pass, good and marketable title to the Shares listed on Exhibit A
hereto, free and clear of any pledge, lien, security interest, mortgage, charge,
claim, equity, option, proxy, voting restriction, right of first refusal,
limitation on disposition, adverse claim of ownership or use or encumbrance of
any kind ("Encumbrances"), except to the extent disclosed on Exhibit B and for
Shares sold prior to the Closing as permitted under Section 1.8.
SECTION 2.4. NO BROKERS.
Except as contemplated in the Merger Agreement, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement.
SECTION 2.5. INVESTMENT INTENT, ETC.
Each Stockholder is acquiring the Acquiror Shares, together with the
associated rights, to be received in the Merger or pursuant to the exercise of
the Option, for its own account for investment and not with a view towards the
resale, transfer or distribution thereof, nor with any present intention of
distributing the Acquiror Shares. Each Stockholder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act. Each Stockholder
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in Acquiror and is
able to bear the economic risk of such investment for an indefinite period of
time.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 3.1. AUTHORITY RELATIVE TO THE AGREEMENT.
(a) Acquiror has the corporate power to execute and deliver this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by Acquiror's Board of Directors. The Agreement constitutes a
valid and binding obligation of Acquiror, enforceable against Acquiror in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. No other corporate proceedings on the part
of Acquiror are necessary to authorize the execution and delivery by Acquiror of
this Agreement or the consummation of the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, does not and will not result in the change
in conversion ratios, conversion rights or voting rights, or the breach,
violation, default (with or without notice or lapse of time, or both),
termination, cancellation or acceleration of any obligation, or the loss of a
material benefit, under (i) the Acquiror's Memorandum of Association or bye-laws
or (ii) any indenture or other loan document provision or other contract,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to Acquiror or
any of its Subsidiaries or their respective properties or assets, other than, in
the case of clause (ii) only, (A) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses which, either singly or in
the aggregate, will not have a Acquiror Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby.
SECTION 3.2. REPRESENTATIONS IN MERGER AGREEMENT.
Acquiror represents and warrants to each Stockholder that the
representations and warranties set forth in Article V of the Merger Agreement
were (or will be) true and correct when made and on and as of the date of any
action taken by Acquiror hereunder (including without limitation exercise of the
Option) with the same effect as though such representations and warranties had
been made on and as of such date (except for representations and warranties that
speak as of a specific date or time, which need only be true and correct as of
such date or time), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Acquiror Material Adverse Effect" set forth therein) does
not have an Acquiror Material Adverse Effect, and such representations and
warranties shall be deemed
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incorporated herein; provided, however, that incorporated representations and
warranties which relate to the Merger Agreement shall be deemed for purposes of
this Section to have been modified to relate only to this Agreement.
ARTICLE IV.
DISTRIBUTIONS; ADJUSTMENT UPON
CHANGES IN CAPITALIZATION.
(a) Any dividends or other distributions (whether payable in cash, stock or
otherwise) by the Company with respect to any Shares purchased hereunder with a
record date on or after the Closing Date will belong to Acquiror. If any such
dividend or distribution belonging to Acquiror is paid by the Company to the
Stockholder, the Stockholder shall hold such dividend or distribution in trust
for the benefit of Acquiror and shall promptly remit such dividend or
distribution to Acquiror in exactly the form received, accompanied by
appropriate instruments of transfer. If on or after the date of this Agreement
there shall occur any stock dividend, stock split, recapitalization, combination
or exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company, as a result of which shares of any class of
stock, other securities, cash or other property shall be issued in respect of
any Shares or if any Shares shall be changed into the same or another class of
stock or other securities, then, upon exercise of the Option, Acquiror shall
receive for the aggregate price payable upon exercise of the Option with respect
to the Shares, all such shares of stock, other securities, cash or other
property issued, delivered or received with respect to such Shares (or if the
Option shall not be exercised, appropriate adjustment shall be made for purposes
of the calculations set forth in this Agreement).
Any dividends or other distributions (whether payable in cash, stock or
otherwise) by Acquiror with respect to any Acquiror Shares issued hereunder with
a record date on or after the Closing Date will belong to the Stockholder to
which such Acquiror Shares were issued. If on or after the date of this
Agreement there shall occur any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or of stock, other securities, cash or other
property shall be issued in respect of any Acquiror Shares or if any Acquiror
Shares shall be changed into the same or another class of stock or other
securities, then, upon exercise of the Option, each Stockholder shall receive
for the aggregate price payable to such Stockholder upon exercise of the Option,
all such shares of stock, other securities, cash or other property issued,
delivered or received with respect to the Acquiror Shares to be delivered to
such Stockholder (or if the Option shall not be exercised, appropriate
adjustment shall be made for purposes of the calculations set forth in this
Agreement).
12
ARTICLE V.
NO SOLICITATION OF TRANSACTIONS.
Each Stockholder severally and not jointly covenants and agrees that in its
capacity as a stockholder of the Company it shall not, through any officer,
director, employee, representative, agent or direct or indirect stockholder of
the Company or any Company Subsidiary, directly or indirectly, take any action
to (i) encourage, initiate or solicit the submission of any proposal that
constitutes an Acquisition Proposal, (ii) enter into any agreement with respect
to or accept any Acquisition Proposal or (iii) facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal. The Stockholder shall promptly notify Acquiror in
writing of any request for information or Acquisition Proposal, specifying
reasonable details of any inquiry or Acquisition Proposal, and shall keep
Acquiror informed as to the status of any such discussions or negotiations. Each
Stockholder severally and not jointly further agrees to use its best efforts as
a stockholder to cause the Company not to, directly or indirectly, solicit,
initiate, seek, or encourage (including by way of furnishing information or
assistance), or take other action to facilitate, any inquiries or the making of
any proposal which constitutes or may reasonably be expected to lead to, an
Acquisition Proposal.
ARTICLE VI.
COVENANTS OF THE STOCKHOLDERS.
SECTION 6.1. NEGATIVE COVENANTS.
Each Stockholder agrees, until the Option has terminated, not to:
(a) sell, transfer, pledge, assign or otherwise dispose of, or enter into
any contract, option or other arrangement with respect to the sale, transfer,
pledge, assignment or other disposition of, the Shares owned by such Stockholder
to any person other than Acquiror or Acquiror's designee and except as
contemplated in Exhibit B;
(b) acquire any additional shares of Common Stock without the prior consent
of Acquiror other than pursuant to rights under the Company Stock Purchase
Plans, options outstanding on the date of this Agreement, or Shares issued in
payment of interest on the Debentures or dividends on the Series C Shares;
(c) deposit any Shares into a voting trust or grant a proxy or enter into a
voting agreement with respect to any Shares, except for this Agreement; or
13
(d) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or would result in a breach by
such Stockholder of its obligations under this Agreement or a breach by the
Company of its obligations under the Merger Agreement.
SECTION 6.2. RELIANCE; FURTHER ASSURANCES.
Each Stockholder understands and acknowledges that Acquiror and Sub are
entering into the Merger Agreement in reliance upon each Stockholder's execution
and delivery of this Agreement. If Acquiror shall exercise the Option in
accordance with the terms of this Agreement, from time to time and without
additional consideration the Stockholder will execute and deliver, or cause to
be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as Acquiror may reasonably request
for the purpose of effectively carrying out the transactions contemplated by
this Agreement, includi any and all Encumbrances with respect thereto.
SECTION 6.3. TRANSFER OF ACQUIROR SHARES BY BRITISH AEROSPACE.
British Aerospace Space Systems, Inc. and British Aerospace Holdings,
Inc. (collectively, "BAe") and Acquiror agree to consult and cooperate with
respect to the orderly disposition of Acquiror Shares obtained by BAe. BAe
agrees that for a period of twelve months from the date it acquires the Acquiror
Shares it will not, and will cause each of its affiliates not to, sell or
otherwise transfer any Acquiror Shares other than by means of a block trade (or
a series of block trades) with an entity that qualifies as a block trade
positioner (as that term is defined and/or interpreted under the federal
securities laws and the rules and regulations promulgated thereunder) who is
experienced in block trade transactions. BAe shall consult with Acquiror prior
to such sale and seek the consent of Acquiror to such sale, which consent shall
not be unreasonably withheld, conditioned or delayed. In the event of such
withholding of consent, BAe shall have the right to revise the proposed sale,
and Acquiror shall reconsider the revised sale in accordance with the standard
of this Section. No delay in any proposed sale shall be beyond the expiration of
the twelve-month period. As an alternative to conducting block trades, BAe shall
have the right to sell all (but not less than all) of its Acquiror Shares
pursuant to an underwritten sale with an underwriter reasonably acceptable to
Acquiror. In such event, Acquiror shall modify the registration statement filed
pursuant to Section 6.5 (or file a separate registration statement meeting the
requirements of Section 6.5) to enable BAe to effect such sale. Except as
provided in the prior sentence, Acquiror shall not be obligated to conduct a
"road show" or otherwise support such sale.
14
SECTION 6.4. AFFILIATE AGREEMENT.
Each Stockholder acknowledges that such Stockholder may be deemed an
affiliate (as defined in Rule 12b-2 of the rules promulgated under the Exchange
Act) of the Company, Acquiror or Sub, and further acknowledges and agrees to
transfer, sell or otherwise dispose of Acquiror Shares (including Acquiror
Shares acquired upon the exercise of options, warrants or rights or the
conversion or exchange of convertible or exchangeable securities) only (a) if
such transfer, sale or disposition is registered under the Act, (b) is in
compliance with the requirements of paragraphs (c) and (d) of Rule 145
promulgated under the Act ("Rule 145") (as indicated in the restrictive legend
that will appear on the stock certificate), or (c) pursuant to another exemption
from registration under the Act for such offer and sale. Each Stockholder agrees
not to make an illegal "distribution" (within the meaning of the Act and Rule
145) of Acquiror Shares. Acquiror shall be entitled to place restrictive legends
upon certificates for each Stockholder's Acquiror Shares to enforce the
applicable provisions of law and this Agreement and Acquiror shall not be
required to maintain the effectiveness of the Proxy Registration Statement (or
Exchange Registration Statement, as the case may be) under the Act for the
purposes of resale of Acquiror Shares by each Stockholder.
SECTION 6.5. REGISTRATION RIGHTS.
(a) In the event that Acquiror exercises the Option, as promptly as
practicable following the closing date for the exchange offer referred to in
Section 1.2 above (but not more than 60 days following the Closing Date),
Acquiror shall (i) file a shelf registration statement covering all Acquiror
Shares for the purposes of resale of Acquiror Shares by each Stockholder and
(ii) use its reasonable best efforts to cause such shelf registration statement
to become and remain effective for the resale of all Acquiror Shares issued
pursuant to this Agreement; provided, however, that Acquiror shall be required
to include in such registration statement only those Acquiror Shares as to which
the Stockholder holding such Acquiror Shares agrees to sell such shares in
compliance with the requirements of paragraphs (c) and (d) of Rule 145 that
would have been applicable to such sale if such Acquiror Shares had been
registered under the Proxy Registration Statement (or Exchange Registration
Statement, as the case may be) rather than such shelf registration statement.
(b) Registrations effected under this Section shall be effected at
Acquiror's expense, including the fees and expenses of one counsel to the
holders of Acquiror Shares, but excluding underwriting discounts and commissions
to brokers or dealers. In connection with each registration under this Section,
Acquiror shall indemnify and hold each holder of Acquiror Shares whose shares
are registered pursuant to such registration statement (a "Holder of Acquiror
Shares"), its underwriters and each of their respective affiliates harmless
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation,
15
investigation expenses and fees and disbursements of counsel and accountants),
joint or several, to which such Holder of Acquiror Shares, its underwriters and
each of their respective affiliates may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such
registration statement (including any prospectus therein), of any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, other than such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) which
arise out of are based upon an untrue statement or alleged untrue statement of a
material fact contained in written information furnished by a Holder of Acquiror
Shares to Acquiror expressly for use in such registration statement; provided,
however, that the foregoing indemnity shall not inure to the benefit of any
Holder of Acquiror Shares, its underwriters or respective affiliates, if a copy
of the prospectus was not sent or given by or on behalf of such person to the
person purchasing the Shares, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the Shares to such person,
and if the prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(c) In connection with any registration statement pursuant to this Section,
each Holder of Acquiror Shares agrees to furnish Acquiror with such information
concerning itself and the proposed sale or distribution as shall reasonably be
required in order to ensure compliance with the requirements of the Securities
Act. Each Holder of Acquiror Shares shall indemnify and hold Acquiror, its
underwriters and each of their respective affiliates harmless against any and
all losses, claims, damages, liabilities and expenses (including without
limitation investigation expenses and fees and disbursements of counsel and
accountants), joint or several, to which Acquiror, its underwriters and each of
their respective affiliates may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in written information
furnished by any Holder of Acquiror Shares to Acquiror expressly for use in such
registration statement. In no event shall the liability of any Holder of
Acquiror Shares or any affiliate thereof under this Section be greater in amount
than the dollar amount of the proceeds received by such Holder of Acquiror
Shares upon the sale of the Acquiror Shares giving rise to such indemnification
obligation.
(d) Upon the issuance of Acquiror Shares hereunder, Acquiror will use its
reasonable best efforts promptly to list such Acquiror Shares with the New York
Stock Exchange or on such national or other exchange on which Acquiror Shares
are at the time principally listed.
16
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
All representations, warranties and agreements made by the parties to this
Agreement shall terminate at the Closing except for those which by their terms
are to be performed after the Closing.
SECTION 7.2. EXPENSES.
All costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such costs
and EXPENSES.SECTION NOTICES. All notices or other communications under this
Agreement shall be in writing and shall be given by delivery in person, by
facsimile, cable, telegram, telex or other standard form of telecommunications,
or by registered or certified mail, postage prepaid, return receipt requested,
addressed as follows (or such other address for a party as shall be specified in
a notice given in accordance with this Section 7.3) and shall be deemed to have
been given one business day after transmission by facsimile of other standard
form of telecommunications or four days after deposit in the US mail:
If to the Company:
Orion Network Systems, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: President
With a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
17
If to a Stockholder, at the address or facsimile number of such Stockholder
set forth on Exhibit A, with a copy to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
If to Acquiror or Sub, at:
Loral Space & Communications Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
SECTION 7.4. SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and revisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall interpreted to be only so
broad as is enforceable.
SECTION 7.5. ENTIRE AGREEMENT.
This Agreement and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
18
SECTION 7.6 ASSIGNMENT, BINDING EFFECT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties,
except that Acquiror or Sub may assign all or any of their rights and
obligations hereunder to any affiliate of Acquiror, provided that no such
assignment shall relieve Acquiror or Sub of its obligations hereunder if such
assignee does not perform such obligations. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intend s and assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
SECTION 7.7. SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any Delaware Court, this being in addition to any other remedy to
which they are entitled at law or in equity.
SECTION 7.8. CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS.
The parties recognize that successful consummation of the transactions
contemplated by this Agreement may be dependent upon confidentiality with
respect to the matters referred to herein. In this connection, pending public
disclosure thereof, each of the parties hereto severally and not jointly agrees
not to disclose or discuss such matters with anyone not a party to this
Agreement (other than its counsel, advisors, corporate parents and Affiliates)
without the prior written consent of the other parties hereto, except for
filings required pursuant to the Exchange Act and the rules and regulations
thereunder or disclosures its counsel advises are necessary in order to fulfill
its obligations imposed by law or the requirements of any securities exchange.
At all times during the terms of this Agreement, the parties hereto will consult
with each other before issuing or making any reports, statements or releases to
the public with respect to this Agreement or the transactions contemplated
hereby and will use good faith efforts to agree on the text of public reports,
statements or releases. For purposes of this Section, any consultation or
consent required of from the Stockholders may be obtained from Xxxxxxx X.
Xxxxxx.
19
SECTION 7.9. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to its rules of conflict of laws.
SECTION 7.10. READINGS.
Headings of the Articles and Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
SECTION 7.11. COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each signed by less
than all, but together signed by all of the parties hereto.
20
IN WITNESS WHEREOF, the parties hereto have caused this Principal
Stockholder Agreement to be executed and delivered as of the date first written
above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, General
Counsel and Secretary
LORAL SATELLITE CORPORATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, General
Counsel and Secretary
ORION NETWORK SYSTEMS INC.
By: /s/ W. Xxxx Xxxxx
--------------------------------------
Name: W. Xxxx Xxxxx
Title: President and Chief Executive
Officer
BRITISH AEROSPACE SPACE SYSTEMS, INC.
By: /s/ W. Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxx Xxxx
Title: Director
BRITISH AEROSPACE HOLDINGS, INC.
By: /s/ W. Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxx Xxxx
Title: Director
FLEET VENTURE RESOURCES, INC.
By: /s/ Xxxxxx X. Xxx Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxx Xxxxx
Title: Chairman and Chief
Executive Officer
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
/s/ W. Xxxx Xxxxx
--------------------------------------
W. Xxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
--------------------------------------
Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
EXHIBIT A
Series A Series B Series C Convertible
Common Stock Preferred Preferred Preferred Debentures
------------ --------- --------- --------- ----------
British Aerospace Space Systems, Inc. 729,921 _____ _____ 3,007,770 3,571,429
British Aerospace Holdings, Inc.
Warwick House, PO Box 87
Farnborough Aerospace Centre
Xxxxxxxxxxx
Xxxxx, XX000XX
Telecopier No.: (000) 000-000-000000
Xxxx X. Xxxxxx 1,394,078 58,823 16,339 _____ _____
Medallion Enterprises, LLC
0000 Xxxxxx Xxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxx, XX 00000
Telecopier No.:(000) 000-0000
W. Xxxx Xxxxx(1)(2) _____ _____ _____ _____ _____
Orion
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Xxxxxxx X. Xxxxxx 352,355 58,823 16,339 _____ _____
Xxxxxx Communications, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Series A Series B Series C Convertible
Common Stock Preferred Preferred Preferred Debentures
------------ --------- --------- --------- ----------
Xxxxxx X. Xxxx 207,260 _____ 8,169 _____ _____
00 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Xxxx X. Xxxxxx(2) 321,501 1,411 392 _____ _____
00000 Xxxxxxxxxxx Xx.
Xxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Fleet Venture Resources, Inc. _____ 588,234 155,194 _____ _____
c/o Fleet Equity Partners
RI MO F12C
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
(1) Does not include shares purchased under Employee Stock Purchase Plan.
(2) Does not include shares beneficially owned by wife.
EXHIBIT B
Each of the Stockholders shall have the right to transfer Shares to (a) any
member of such Stockholder's immediate family, (b) any trust or similar
instrument for estate planning purposes or (c) any charitable organization,
foundation or similar entities; provided, however, such transfer may be made to
any such permitted transferee only if such permitted transferee shall agree in
writing to all of the terms, conditions and restrictions set forth in this
Agreement regarding Shares received by such permitted transferee.
