SECTION 351 EXCHANGE AGREEMENT AND PLAN OF CONVERSION
AMONG
INTERNATIONAL PRIVATE SATELLITE PARTNERS, L.P.
ORION NETWORK SYSTEMS, INC.,
ORION SATELLITE CORPORATION,
BRITISH AEROSPACE COMMUNICATIONS, INC.
COM DEV SATELLITE COMMUNICATIONS LIMITED
KINGSTON COMMUNICATIONS INTERNATIONAL LIMITED
LOCKHEED XXXXXX COMMERCIAL LAUNCH SERVICES, INC.
MCN SAT US, INC.
and
TRANS-ATLANTIC SATELLITE, INC.
Dated as of
June ___, 1996
TABLE OF CONTENTS
-----------------
Page
----
1. DEFINITIONS..........................................................2
2. NEWCO FORMATION......................................................2
2.1. Formation of New Corporation...................................2
2.2. Initial Ownership of Newco.....................................2
2.3. Replication of ONS Management..................................3
2.4. Newco Formation Documents......................................3
3. EXCHANGE OF INTERESTS................................................3
3.1. Newco Preferred Stock..........................................3
3.2. Terms of Exchange..............................................4
3.3. Allocation of Newco Preferred Stock............................8
4. MERGER...............................................................8
4.1. Formation of Subsidiary of Newco...............................8
4.2. Terms of Merger................................................8
4.3. Transfer of Certain Contracts..................................9
4.4. Merger Documents...............................................9
5. ADDITIONAL UNDERTAKINGS AND COVENANTS................................9
5.1. Consents and Approvals.........................................9
5.2. Approval by Stockholders of ONS................................10
5.3. Refinancing of Credit Facility; Cancellation of Capacity
Agreements..................................................11
5.4. Amendment and Restatement of Partnership Agreement.............12
5.5. Registration Rights............................................12
5.6. Access; Investigations by the Exchanging Partners..............13
5.7. Waiver of Right of First Refusal under the Partnership
Agreement...................................................13
5.8. Convertible Subordinated Debentures............................14
5.9. Agreement Regarding Transfer...................................14
5.10. Release of Claims..............................................14
5.11. Legend, Removal................................................15
5.12. Tax-Free Status................................................15
6. REPRESENTATIONS AND WARRANTIES OF EXCHANGING
PARTNERS.............................................................15
6.1. Title to LP Interests; Other LP Rights.........................16
6.2. Organization and Standing; Capacity............................16
6.3. Authorization..................................................16
6.4. Restrictions and Consents......................................17
6.5. Binding Obligation.............................................17
- i-
6.6. Transfer of Title..............................................17
6.7. Accredited Investors...........................................17
6.8. Name Change of Lockheed Xxxxxx.................................17
7. REPRESENTATIONS AND WARRANTIES OF ONS................................17
7.1. Organization and Standing......................................18
7.2. Authorization..................................................18
7.3. Restrictions and Consents......................................18
7.4. Binding Obligation.............................................18
7.5. Issuance of Shares.............................................19
7.6. Capitalization.................................................19
7.7. No Liabilities.................................................20
7.8. Taxes..........................................................20
7.9. Subsidiaries...................................................20
7.10. Books and Records..............................................21
7.11. Litigation.....................................................21
7.12. SEC Filings....................................................21
7.13. Transactions with Exchanging Partners..........................22
7.14. Absence of Violations..........................................22
8. RESTRICTED SECURITIES................................................22
8.1. No Registration Under the Securities Act.......................22
8.2. Acquisition for Investment.....................................22
8.3. Evaluation of Merits and Risks of Investment...................23
8.4. Review of Documents............................................23
8.5. Opportunity to Request Information.............................23
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXCHANGING
PARTNERS.............................................................24
9.1. Representations and Warranties.................................24
9.2. Performance....................................................24
9.3. Documents at Closing...........................................24
9.4. Refinancing of Credit Facility, Cancellation of Capacity
Agreements..................................................24
9.5. Consents.......................................................25
9.6. Registration...................................................25
9.7. Satellite Contract.............................................25
9.8. Launch Sub Contract............................................25
9.9. Newco Formation................................................25
9.10. Merger.........................................................26
9.11. Tax Opinion....................................................26
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF ONS AND
ORIONSAT.............................................................26
10.1. Representations and Warranties.................................26
- ii -
10.2. Performance...................................................26
10.3. Documents at Closing..........................................26
10.4. Consents......................................................27
10.5. Refinancing of Credit Facility, Cancellation of Capacity
Agreements..................................................27
10.6. Partnership Agreement Amendment...............................27
10.7. Consents of the ONS Stockholders..............................27
10.8. Completion of Financing for a Second Satellite................27
10.9. Satellite Contract............................................27
10.10. Newco Formation...............................................27
10.11. Merger........................................................28
11. CLOSING..............................................................28
11.1. Closings......................................................28
11.2. Deliveries by the Exchanging Partners.........................28
11.3. Deliveries by ONS and Newco...................................29
11.4. Order of Effectiveness........................................30
12. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION;
REMEDIES.............................................................30
12.1. Survival of Representations...................................30
12.2. Agreement of Newco, ONS and OrionSat to Indemnify.............30
12.3. Conditions of Indemnification.................................31
12.4. Specific Performance; No Consequential Damages................32
13. TERMINATION..........................................................32
13.1. Termination...................................................32
13.2. Effect of Termination.........................................33
14. MISCELLANEOUS........................................................33
14.1. Additional Actions and Documents..............................33
14.2. Broker's Fees or Liabilities..................................34
14.3. Expenses......................................................34
14.4. Assignment....................................................34
14.5. Entire Agreement; Amendment...................................34
14.6. Waiver........................................................34
14.7. Consent to Jurisdiction.......................................35
14.8. Severability..................................................35
14.9. Governing Law.................................................35
14.10. Notices.......................................................35
14.11. Headings......................................................37
14.12. Execution in Counterparts.....................................37
14.13. Limitation on Benefits........................................38
14.14. Binding Effect................................................38
- iii-
EXHIBITS:
Exhibit A Definitions
Exhibit B Certificate of Designations
Exhibit C Third Amended and Restated Partnership Agreement
Exhibit D Registration Rights Agreement
Exhibit E Agreement Regarding Transfer Restrictions
Exhibit F Assignment of LP Interests
Exhibit G Assignment of Other LP Rights
Exhibit H Termination of Guarantees
Exhibit I Legal Opinion of ONS and Newco Counsel
Exhibit J Escrow Agreement
Exhibit K Communications Memorandum
SCHEDULES:
Schedule 7.3 Restrictions and Consents
------------
Schedule 7.9 List of Subsidiaries of ONS
------------
Schedule 7.11 Skydata Litigation
-------------
- iv -
SECTION 351 EXCHANGE AGREEMENT AND PLAN OF CONVERSION
THIS SECTION 351 EXCHANGE AGREEMENT AND PLAN OF CONVERSION
(this "Agreement") is entered into as of June ___, 1996, between 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 that executes and delivers a signature page hereto on or
before July 12, 1996: British Aerospace Communications, Inc., a Delaware
corporation ("BAe"), COM DEV Satellite Communications Limited, a Canadian
corporation ("COM DEV"), Kingston Communications International Limited, a
company incorporated under the laws of England ("Kingston"), Lockheed Xxxxxx
Commercial Launch Services, Inc., a Delaware corporation ("Lockheed Xxxxxx"),
MCN Sat US, Inc., a Delaware corporation ("MCN Sat"), and Trans Atlantic
Satellite, Inc., a Delaware corporation ("TA Sat") (collectively, the
"Exchanging Partners").
WHEREAS, ONS and the Exchanging Partners (collectively, the
"Limited Partners") collectively own limited partnership interests in Orion
Atlantic;
WHEREAS, OrionSat is the sole general partner of Orion
Atlantic;
WHEREAS, ONS and the Exchanging Partners desire to (i) form a
new Delaware corporation to be named Orion Newco Services, Inc. ("Newco")
substantially identical in all material respects (including with respect to
certificate of incorporation, bylaws, capital structure, and similar matters) to
ONS in the Newco Formation (as defined below); (ii) have a newly created
subsidiary of Newco merge into ONS in a transaction in which all capital stock
of ONS is exchanged for equivalent capital stock (common or preferred, as
applicable, with the same relative rights and preferences) of Newco, and in
which ONS becomes a wholly owned subsidiary of Newco in the Merger (as defined
below); and (iii) have the Exchanging Partners transfer their limited
partnership interests in Orion Atlantic to Newco in exchange for shares of a
newly created class of Series C 6% Cumulative Convertible Redeemable Preferred
Stock of Newco (the "Newco Preferred Stock") on the terms and conditions set
forth herein in the Exchange (as defined below), all pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, in connection with the transactions described in the
prior paragraph, the Credit Facility Refinancing, Bond Offering, Bank Agreement
Termination, Capacity Agreement Termination and Convertible Subordinated
Debenture Offering (as defined below) will be pursued. The transactions
contemplated by this Agreement are believed to be necessary to accomplish the
Credit Facility Refinancing, Bond Offering, Bank Agreement Termination, Capacity
Agreement Termination and Convertible Subordinated Debenture Offering, and all
parties hereto, including the Exchanging Partners, which will be the
stockholders of Newco immediately after completion of the Exchange, believe that
they will benefit substantially from the Credit Facility Refinancing, Bond
Offering, Bank Agreement Termination, Capacity Agreement Termination and
Convertible Subordinated Debenture Offering.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. DEFINITIONS
For all purposes of this Agreement, certain capitalized terms
specified in Exhibit A shall have the meanings set forth in that Exhibit A,
except as otherwise expressly provided.
2. NEWCO FORMATION
2.1. FORMATION OF NEW CORPORATION
The parties hereto shall form a new Delaware corporation to be
named Orion Newco Services, Inc. which is substantially identical in all
material respects to ONS (the "Newco Formation"). In particular, Newco shall
have a certificate of incorporation and bylaws substantially identical in all
material respects to those of ONS (modified to reflect the different name and
Newco being a newly formed corporation). Pursuant to the certificate of
incorporation of Newco, the board of directors of Newco shall duly adopt,
authorize, execute and file Certificates of Designations, Rights and Preferences
of Series A 8% Cumulative Redeemable Convertible Preferred Stock of Newco
substantially identical in all material respects to the ONS Series A Preferred
Stock (as defined below) and of Series B 8% Cumulative Redeemable Convertible
Preferred Stock of Newco substantially identical in all material respects to the
ONS Series B Preferred Stock (as defined below).
2.2. INITIAL OWNERSHIP OF NEWCO
ONS shall be the initial stockholder of Newco, and shall own
one share of Newco common stock.
2
2.3. REPLICATION OF ONS MANAGEMENT
ONS shall take the steps necessary to make the management of
Newco identical to the management of ONS, including with respect to directors
and officers.
2.4. NEWCO FORMATION DOCUMENTS
ONS shall cause all necessary documents (the "Newco Formation
Documents") to effect the Newco Formation and other matters referred to in
Sections 2.1, 2.2 and 2.3 to be prepared and circulated to the Exchanging
Partners for review and comment. The Exchanging Partners agree to submit any
comments on the Newco Formation Documents, consistent with the requirement that
Newco be substantially identical in all material respects to ONS, within 10
Business Days after all Exchanging Partners have received the initial drafts of
such documents and within five Business Days after receipt of subsequent drafts.
ONS shall cause final drafts of the Newco Formation Documents to be prepared,
consistent with the requirement that Newco be substantially identical in all
material respects to ONS, and circulated to the Exchanging Partners. The
Exchanging Partners shall have a period of five Business Days after all
Exchanging Partners have received such final drafts to raise any objections to
the contents of such documents, consistent with the requirement that Newco be
substantially identical in all material respects to ONS, and the parties shall
negotiate in good faith to resolve any such objections. The resolution of any
such objections shall be reflected in the Newco Formation Documents, and such
documents shall be finalized and implemented. ONS shall cause the Newco
Formation Documents, as finalized and implemented, to be circulated to the
Exchanging Partners. If the finalized Newco Formation Documents are not
consistent with the requirement that Newco be substantially identical in all
material respects to ONS and any discrepancies are not reasonably acceptable to
the Exchanging Partners, each of the Exchanging Partners shall have the right to
terminate this Agreement pursuant to the final paragraph of Section 13.1. If all
of the Exchanging Partners shall not have terminated this Agreement pursuant to
the final paragraph of Section 13.1 within a period of five Business Days after
all Exchanging partners have received such finalized and implemented Newco
Formation Documents, the "Newco Finalization Date" shall be deemed to have
occurred on the last day of such period.
3. EXCHANGE OF INTERESTS
3.1. NEWCO PREFERRED STOCK
Newco shall duly adopt, authorize, execute and file the
Certificate of Designations, Rights and Preferences of Series C 6% Cumulative
Redeemable Convertible Preferred Stock establishing the terms and relative
rights and
3
preferences of such series of Newco Preferred Stock in the form set
forth as Exhibit B to this Agreement (the "Certificate of Designations") and
authorize the issuance and sale to the Exchanging Partners of the aggregate
number of shares of Newco Preferred Stock to be issued to the Exchanging
Partners hereunder (and Newco shall authorize the issuance and sale of such
additional shares of Newco Preferred Stock in an amount equal to the aggregate
of the Adjustment Amounts referred to in Section 3.2(c) hereof). The Certificate
of Designations shall be in full force and effect under the laws of the State of
Delaware as of the Closing Date.
3.2. TERMS OF EXCHANGE
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions hereof, each of the
Exchanging Partners hereby agrees to transfer to Newco at the Closing all of its
limited partnership interests in Orion Atlantic (individually, an "LP Interest"
and collectively the "LP Interests") and other rights relating thereto as
specified below ("Other LP Rights") in exchange for shares of Newco Preferred
Stock (collectively, the "Exchange"), as follows:
(a) Transfers by the Exchanging Partners to Newco.
(i) If BAe is an Exchanging Partner, BAe agrees to
transfer to Newco at the Closing its 25.00% LP Interest; all of its rights and
obligations under the Partnership Agreement, including all of its rights to
receive distributions and allocations thereunder, and all other rights it may
have as a limited partner of Orion Atlantic under applicable law; all of its
rights and obligations under the Refund Agreement, including all of its rights
to receive refunds thereunder; all of its rights and obligations under the
Consent and Agreement, including all of its rights to transfer LP Interests
thereunder; all of its rights and obligations under the Preferred Bidders
Agreement; all of its rights under the Option Agreement; all of its rights under
the Subscription Agreement; and all of its rights and obligations under the
Agreement of Principles (collectively, the "BAe Exchange Assets").
(ii) If COM DEV is an Exchanging Partner, COM DEV
agrees to transfer to Newco at the Closing its 4.17% LP Interest; all of its
rights and obligations under the Partnership Agreement, including all of its
rights to receive distributions and allocations thereunder, and all other rights
it may have as a limited partner of Orion Atlantic under applicable law; all of
its rights and obligations under the Refund Agreement, including all of its
rights to receive refunds thereunder; all of its rights and obligations under
the PPU Agreement, including all of its rights to receive repayment of amounts
advanced thereunder and interest accrued on such advances; all of its rights and
obligations under the Preferred Bidders Agreement; all of its rights under the
Option Agreement; all of its rights under the Subscription Agreement; and all of
its rights and obligations under the Agreement of Principles (collectively, the
"COM DEV Exchange Assets").
4
(iii) If Kingston is an Exchanging Partner, Kingston
agrees to transfer to Newco at the Closing its 4.17% LP Interest; all of its
rights and obligations under the Partnership Agreement, including all of its
rights to receive distributions and allocations thereunder, and all other rights
it may have as a limited partner of Orion Atlantic under applicable law; all of
its rights and obligations under the PPU Agreement, including all of its rights
to receive repayment of amounts advanced thereunder and interest accrued on such
advances, other than interest paid to Kingston under Section 3.2(d); all of its
rights and obligations under the Preferred Bidders Agreement; all of its rights
under the Option Agreement; all of its rights under the Subscription Agreement;
and all of its rights and obligations under the Agreement of Principles
(collectively, the "Kingston Exchange Assets"). The Kingston Sales
Representative Agreements shall remain in full force without any modifications
being effected by this Agreement, and Orion Atlantic, OrionSat and Kingston
agree that even after the Closing and the transfer of the Kingston LP Interest
to Newco, Kingston shall continue to be treated as if it were a limited partner
of Orion Atlantic for purposes of payment of the Override Commissions under the
Kingston Sales Representative Agreements only.
(iv) If Lockheed Xxxxxx is an Exchanging Partner,
Lockheed Xxxxxx agrees to transfer to Newco at the Closing its 8.33% LP
Interest; all of its rights and obligations under the Partnership Agreement,
including all of its rights to receive distributions and allocations thereunder,
and all other rights it may have as a limited partner of Orion Atlantic under
applicable law; all of its rights and obligations under the Refund Agreement,
including all of its rights to receive refunds thereunder; all of its rights and
obligations under the PPU Agreement, including all of its rights to receive
repayment of amounts advanced thereunder and interest accrued on such advances;
all of its rights and obligations under the Preferred Bidders Agreement; all of
its rights under the Option Agreement; all of its rights under the Subscription
Agreement; and all of its rights and obligations under the Agreement of
Principles (collectively, the "Lockheed Xxxxxx Exchange Assets").
(v) If MCN Sat is an Exchanging Partner, MCN Sat
agrees to transfer (or cause to be transferred) to Newco at the Closing its
8.33% LP Interest; all of its rights and obligations under the Partnership
Agreement, including all of its rights to receive distributions and allocations
thereunder, and all other rights it may have as a limited partner of Orion
Atlantic under applicable law; all of the rights and obligations of its
Affiliate, MCN Sat Service S.A., under the Refund Agreement, including all of
such Affiliate's rights to receive refunds thereunder; all of its rights and
obligations under the PPU Agreement, including all of its rights to receive
repayment of amounts advanced thereunder and interest accrued on such advances;
all of its rights and obligations under the Preferred Bidders Agreement; all of
its rights under the Option Agreement; all of its rights under the Subscription
Agreement; and all of its rights and obligations under the Agreement of
Principles (collectively, the "MCN Sat Exchange Assets"). (All references herein
to rights or obligations of MCN Sat shall include those which may still be
retained by MMB, the
5
transferor of MCN Sat's LP Interest.) The MCN Sat Sales Representative
Agreements shall remain in full force without any modifications being effected
by this Agreement, and Orion Atlantic, OrionSat and MCN Sat agree that even
after the Closing and the transfer of the MCN Sat LP Interest to Newco, MCN Sat
shall continue to be treated as if it were a limited partner of Orion Atlantic
for purposes of payment of the Override Commissions under the MCN Sat Sales
Representative Agreements only.
(vi) If TA Sat is an Exchanging Partner, TA Sat shall
transfer to Newco at the Closing its 8.33% LP Interest; all of its rights and
obligations under the Partnership Agreement, including all of its rights to
receive distributions and allocations thereunder, and all other rights it may
have as a limited partner of Orion Atlantic under applicable law; all of its
rights and obligations under the Refund Agreement, including all of its rights
to receive refunds thereunder; all of its rights and obligations under the
Preferred Bidders Agreement; all of its rights under the Option Agreement; all
of its rights under the Subscription Agreement; and all of its rights and
obligations under the Agreement of Principles (collectively, the "TA Sat
Exchange Assets").
(b) Transfers by Newco to the Exchanging Partners.
(i) If BAe is an Exchanging Partner, Newco shall
transfer to BAe at the Closing, in exchange for the BAe Exchange Assets, 43,953
shares of Newco Preferred Stock, plus its respective Adjustment Amount,
calculated as set forth in Section 3.2(c).
(ii) If COM DEV is an Exchanging Partner, Newco shall
transfer to COM DEV at the Closing, in exchange for the COM DEV Exchange Assets,
8,302 shares of Newco Preferred Stock, plus its respective Adjustment Amount,
calculated as set forth in Section 3.2(c).
(iii) If Kingston is an Exchanging Partner, Newco
shall transfer to Kingston at the Closing, in exchange for the Kingston Exchange
Assets, 10,222 shares of Newco Preferred Stock, plus its respective Adjustment
Amount, calculated as set forth in Section 3.2(c) and PPU Interest Shares
calculated as set forth in Section 3.2(d).
(iv) If Lockheed Xxxxxx is an Exchanging Partner,
Newco shall transfer to Lockheed Xxxxxx at the Closing, in exchange for the
Lockheed Xxxxxx Exchange Assets, 17,143 shares of Newco Preferred Stock, plus
its respective Adjustment Amount, calculated as set forth in Section 3.2(c).
(v) If MCN Sat is an Exchanging Partner, Newco shall
transfer to MCN Sat at the Closing, in exchange for the MCN Sat Exchange Assets,
15,746 shares of Newco Preferred Stock, plus its respective Adjustment Amount,
calculated as set forth in Section 3.2(c).
6
(vi) If TA Sat is an Exchanging Partner, Newco shall
transfer to TA Sat at the Closing, in exchange for the TA Sat Exchange Assets,
12,426 shares of Newco Preferred Stock, plus its respective Adjustment Amount,
calculated as set forth in Section 3.2(c).
The number of shares of Newco Preferred Stock specified in
this Section 3.2(b), in Sections 3.2(c) and 3.2(d) shall be adjusted
proportionately to reflect any subdivision, stock split, stock dividend,
recapitalization, combination or reverse stock split of ONS capital stock or
similar transaction by ONS between the date hereof and the Closing Date.
(c) Adjustment Amounts.
The numbers of shares of Newco Preferred Stock to be issued to
the respective Exchanging Partners as listed in Section 3.2(b) shall be
increased by the Adjustment Amount for such Exchanging Partner, calculated as
set forth below. The "Adjustment Amount" for an Exchanging Partner shall equal
(i) the sum of (A) the amounts paid by such Exchanging Partner for obligations
(or an Affiliate of such Exchanging Partner) pursuant to the Capacity Agreement
(as defined below) and which is subject to being refunded under the Refund
Agreement, and by such Exchanging Partner pursuant to the Contingent Capacity
Agreement (as defined below), in each case to which such Exchanging Partner (or
an Affiliate of such Exchanging Partner) is a party, during the period from July
1, 1996 through the Closing Date (the "Adjustment Period"), plus (B) the amount
of interest accrued with respect to funds advanced by such Exchanging Partner
(or an Affiliate of such Exchanging Partner) other than Kingston (or an
Affiliate of Kingston) pursuant to the PPU Agreement during the Adjustment
Period, minus (ii) the product of the number of days in the Adjustment Period
multiplied by the Tax Adjustment Factor for such Exchanging Partner, divided by
(iii) $1,000. To the extent that amounts are due or payable from an Exchanging
Partner or Affiliate under its Capacity Agreement or Contingent Capacity
Agreement during the Adjustment Period, but are not actually paid prior to the
Closing Date, such amounts shall not be included in clause (i)(A) of this
paragraph. Similarly, to the extent that amounts are paid by an Exchanging
Partner or Affiliate under its Capacity Agreement or Contingent Capacity
Agreement during the Adjustment Period for obligations of such Exchanging
Partner arising after the Closing, such amount shall be refunded to the
Exchanging Partner at the Closing. Nothing in this paragraph shall affect the
obligations of any Exchanging Partner to make any payment under its Capacity
Agreement or Contingent Capacity Agreement during the Adjustment Period or
otherwise, or affect the amount of interest accruing under the PPU Agreement.
(d) Kingston Investment in PPU Interest Shares.
Notwithstanding the exchange of Kingston Exchange Assets
pursuant to Sections 3.2(a)(iii) and 3.2(b)(iii), at the Closing Orion Atlantic
shall pay to
7
Kingston in cash the total interest accrued until Closing with respect to funds
advanced by Kingston pursuant to the PPU Agreement (the "Total Accrued PPU
Interest"). Kingston shall at the Closing invest an amount equal to the Total
Accrued PPU Interest in shares of Newco Preferred Stock (the "PPU Interest
Shares"). Since the amount to be paid to Kingston under this paragraph is the
same as the amount to be invested by Kingston, Orion Atlantic shall pay the
Total Accrued PPU Interest directly to Newco at the Closing. The total number of
shares of Newco Preferred Stock to be issued to Kingston for its investment
under this paragraph shall equal (i) the Total Accrued PPU Interest, minus (ii)
the product of the number of days in the Adjustment Period multiplied by the Tax
Adjustment Factor for such Exchanging Partner (to the extent Tax Adjustment
Factor was not fully applied in (c) above), divided by (iii) $1,000.
3.3. ALLOCATION OF NEWCO PREFERRED STOCK
The Newco Preferred Stock to be issued to each
Exchanging Partner at the Closing shall be allocated among such Exchanging
Partner's Exchange Assets as follows: first, to the rights under the PPU
Agreement, including rights to receive repayment of amounts advanced thereunder
and interest accrued on such advances, and the rights under the Refund
Agreement, including rights to receive refunds thereunder, until such Exchanging
Partner has received Newco Preferred Stock with a fair market value equal to
such rights; and second, to such Exchanging Partner's LP Interest and other
Exchange Assets.
4. MERGER
4.1. FORMATION OF SUBSIDIARY OF NEWCO
Newco shall form a new Delaware corporation to be named Orion
Merger Company, Inc. ("Merger Sub"), and Newco shall be the sole stockholder of
Merger Sub.
4.2. TERMS OF MERGER
On the basis of the representations, warranties and agreements
contained in a merger agreement, and subject to the terms and conditions hereof,
at the Closing Merger Sub shall be merged into ONS pursuant to the Delaware
General Corporation Law in a merger in which ONS shall be the surviving company
and all of the assets, rights, property, liabilities and obligations of Merger
Sub and ONS shall be vested in ONS as the surviving company (the "Merger").
Pursuant to the Merger, holders of all of the capital stock of ONS shall
receive, as consideration for their capital stock of ONS, an identical number of
shares of substantially identical capital stock (common or preferred, as
applicable, with the same relative rights and preferences) of Newco.
8
4.3. TRANSFER OF CERTAIN CONTRACTS
In connection with the Merger, all contracts and agreements
relating to capital stock of ONS in effect at the Closing shall be replaced with
contracts and agreements substantially equivalent in all material respects
relating to the capital stock of Newco, including without limitation, all
options, warrants and other rights to purchase capital stock and all contracts
relating to registration rights, voting of shares, transfer of shares and
similar matters.
4.4. MERGER DOCUMENTS
ONS shall cause all necessary documents (the "Merger
Documents") to effect the Merger and other matters referred to in Section 4 to
be prepared and circulated to the Exchanging Partners for review and comment.
The Exchanging Partners agree to submit any comments on the Merger Documents
within 10 Business Days after receipt of the initial drafts of such documents
and within five Business Days after receipt of subsequent drafts. ONS shall
cause final drafts of the Merger Documents to be prepared and circulated to the
Exchanging Partners. The Exchanging Partners shall have a period of five
Business Days after receipt of such final drafts to raise any objections to the
contents of such documents, and the parties shall negotiate in good faith to
resolve any such objections. The resolution of any such objections shall be
reflected in the Merger Documents, and such documents shall be put in final form
for execution at the Closing.
5. ADDITIONAL UNDERTAKINGS AND COVENANTS
ONS and OrionSat, jointly and severally on the one hand, and
the Exchanging Partners, severally and not jointly on the other hand, hereby
covenant and agree with each other as follows:
5.1. CONSENTS AND APPROVALS
ONS and OrionSat shall take all measures reasonably necessary
or advisable to secure such consents, authorizations and approvals of
governmental authorities and of private persons or entities with respect to the
transactions contemplated by this Agreement, and to the performance of all other
obligations of such parties hereunder, as may be required by any applicable
statute or regulation of the United States or any country, state or other
jurisdiction or by any agreement of any kind whatsoever to which any of them is
a party or by which any of them is bound and which are set forth on Schedule
7.3. Notwithstanding Sections 6.4 and 7.3, subsequent to the execution of this
Agreement and prior to the Closing Date, ONS, OrionSat and the Exchanging
Partners shall take all measures reasonably necessary or advisable to secure
such consents, authorizations and approvals of governmental authorities and of
private persons or entities with respect to the
9
transactions contemplated by this Agreement, and to the performance of all other
obligations of such parties hereunder, as may be required by any applicable
statute or regulation of the United States or any country, state or other
jurisdiction or by any agreement of any kind whatsoever to which any of them is
a party or by which any of them is bound. ONS, OrionSat and the Exchanging
Partners shall (a) cooperate in the filing of all forms, notifications, reports
and information, if any, required or reasonably deemed advisable pursuant to
applicable statutes, rules, regulations or orders of any governmental or
supragovernmental authority in connection with the transactions contemplated by
this Agreement and (b) use their respective good faith efforts to cause any
applicable waiting periods thereunder to expire and any objections to the
transactions contemplated hereby to be withdrawn before the Closing.
5.2. APPROVAL BY STOCKHOLDERS OF ONS
In addition to the consents and approvals referred to in
Section 5.1 above, ONS shall take all measures reasonably necessary or advisable
to secure all required consents of the stockholders of ONS (including the
consent of holders of ONS' preferred stock) to the Merger, the Exchange and any
related transactions requiring stockholder consent (collectively, with any
required consent of ONS' preferred stockholders, the "ONS Stockholder Consent").
The parties acknowledge that in order to obtain the ONS Stockholder Consent, ONS
will need to file a merger proxy statement with the United States Securities and
Exchange Commission ("SEC"), revise the merger proxy statement in response to
comments from the SEC, obtain approval of the SEC of the final version of the
merger proxy statement before it is mailed to ONS stockholders, call a meeting
of stockholders of ONS for approximately 30 days after such merger proxy
statement is mailed to ONS stockholders and obtain the requisite stockholder
vote at the meeting (such merger proxy statement, including all amendments
thereto is referred to herein as the "Merger Proxy Statement"). The Exchanging
Partners shall cooperate with ONS in preparing and filing the Merger Proxy
Statement with the SEC and in obtaining SEC clearance of the Merger Proxy
Statement, including supplying information on each Exchanging Partner which is
reasonably necessary or advisable for ONS to include in the Merger Proxy
Statement or to be provided to any government agency or authority pursuant to
applicable statutes, rules, regulations or orders of any governmental or
supragovernmental authority in connection with the Merger and other transactions
contemplated by this Agreement; provided, however, that none of the Exchanging
Partners shall be required to supply any confidential or proprietary
information. ONS shall use its good faith efforts to cause the ONS Stockholder
Consent to be obtained expeditiously and any objections of ONS Stockholders to
the Merger and other transactions contemplated hereby to be withdrawn before the
Closing.
10
5.3. REFINANCING OF CREDIT FACILITY; CANCELLATION OF CAPACITY
AGREEMENTS
It is presently contemplated that Newco, Orion Atlantic, ONS
and OrionSat will, as of the Closing Date, complete a refinancing (the "Credit
Facility Refinancing") of the indebtedness of Orion Atlantic outstanding under
the Credit Agreement (the "Credit Facility") dated December 6, 1991 among Orion
Atlantic, the Banks named therein (the "Lenders") and The Chase Manhattan Bank
(National Association), as Agent ("Chase") using proceeds of an underwritten
offering of notes or debentures of Newco to the public (a "Bond Offering"). The
Credit Facility Refinancing is to effect the Capacity Agreement Termination and
release of the Capacity Guarantees, as discussed (and defined) below in this
Section 5.3. ONS shall use its good faith efforts to cause Newco to complete a
Bond Offering on reasonable commercial terms. Notwithstanding the foregoing, the
parties acknowledge and agree that the terms of a Bond Offering are likely to be
determined in large part by the requirements of prospective investors in that
Bond Offering, and that Newco and ONS reserve the right not to proceed with a
Bond Offering if they determine that such Bond Offering would not be in the best
interest of the stockholders of Newco or the stockholders of ONS (who would
become stockholders of Newco in the Merger) generally, including the entities
who would be becoming stockholders of Newco pursuant to the Exchange). ONS
agrees to inform the Exchanging Partners periodically and in a timely fashion of
the progress of the Bond Offering, including the terms being proposed by the
underwriters thereof, and the Exchanging Partners may advise ONS of their views
regarding the terms of the Bond Offering. Newco is to use the proceeds of the
Bond Offering first for the Credit Facility Refinancing (including costs of such
transaction and the costs of terminating the interest rate protection agreements
entered into in connection with the Credit Facility), and if any proceeds
remain, then for financing of a second satellite with coverage of the Atlantic
Ocean region and Europe ("Orion 2") or for working capital.
In connection with the Credit Facility Refinancing, Newco,
Orion Atlantic, ONS, OrionSat and the Exchanging Partners shall take all
measures reasonably necessary or advisable to cause the termination (the "Bank
Agreement Termination"), concurrently with the completion of the Credit Facility
Refinancing, of all agreements between or among the Lenders and Chase, on the
one hand, and one or more of Newco, Orion Atlantic, OrionSat, ONS and the
Exchanging Partners and/or their affiliates on the other hand, relating to the
Credit Facility or the security or credit support thereof, including without
limitation, in the case of each Exchanging Partner and/or their affiliates, a
Consent and Agreement, an Assignment and Security Agreement and a Guarantee
Agreement (the "Credit Facility Documents"). However, the previous sentence will
not oblige the Exchanging Partners to incur any liability in connection with the
Bank Agreement Termination.
11
In connection with the Credit Facility Refinancing and the
Bank Agreement Termination, Newco, Orion Atlantic, ONS, OrionSat and the
Exchanging Partners shall take all measures reasonably necessary or advisable to
cause the termination (the "Capacity Agreement Termination"), concurrently with
the completion of the Credit Facility Refinancing and the Bank Agreement
Termination, of all obligations under the Communications Satellite Capacity
Agreements and the Contingent Communications Satellite Capacity Agreements
between Orion Atlantic and each of the Exchanging Partners and/or their
affiliates (the "Capacity Agreements" and the "Contingent Capacity Agreements,"
respectively) arising from and after the Capacity Agreement Termination, and all
guarantees or other credit support of such obligations ("Capacity Guarantees");
provided, however, that (i) the Capacity Agreements of Kingston and MCN Sat
Service S.A. (but not the associated Capacity Guarantees) shall remain in full
force and effect, (ii) the Kingston Capacity Agreement shall be deemed amended,
effective as of the Closing (and Kingston and Orion Atlantic shall execute and
deliver such written documents evidencing such amendment as either may
reasonably request), to reduce to 17 MHz the amount of capacity subject to the
Kingston Capacity Agreement (of which 8 MHz shall be the capacity presently used
by Kingston under the Kingston Capacity Agreement and of which 9 MHz shall be
the capacity presently used by Kingston under one of the BAe Capacity
Agreements), with an option (subject to availability) to increase the amount of
capacity subject to the Kingston Capacity Agreement for use by Kingston in
providing its network service products, but not for resale, up to a maximum of
27 MHz at the same rate and on the same terms and conditions as set forth in the
Kingston Capacity Agreement, but (to the extent easily effected technically)
without any obligation to take such capacity in 9 MHz units or any other
pre-determined denomination, and (iii) the MCN Sat Service S.A. Capacity
Agreement shall be deemed amended, effective as of the Closing (and MCN Sat
Service S.A. and Orion Atlantic shall execute and deliver such written documents
evidencing such amendment as either may reasonably request), to reduce to 18 MHz
the amount of capacity subject thereto.
5.4. AMENDMENT AND RESTATEMENT OF PARTNERSHIP AGREEMENT
The Partnership Agreement shall be amended and restated as of
the Closing Date to read in its entirety as set forth in Exhibit C (the "Third
Amended and Restated Partnership Agreement"), and each of ONS, OrionSat and the
Exchanging Partners agree to execute, and deliver at the Closing, counterparts
to the Third Amended and Restated Partnership Agreement.
5.5. REGISTRATION RIGHTS
Concurrently with the Closing, Newco and each of the
Exchanging Partners shall execute and deliver a Registration Rights Agreement in
the form set forth as Exhibit D (the "Registrations Rights Agreement").
12
5.6. ACCESS; INVESTIGATIONS BY THE EXCHANGING PARTNERS
ONS shall, through the Closing Date, provide to
representatives of the Exchanging Partners reasonable access to the offices,
books, agreements and records of ONS and its Subsidiaries and Newco, and furnish
to representatives of the Exchanging Partners such financial and operational
data and other information with respect to the business and assets of ONS and
its Subsidiaries and Newco as the Exchanging Partners may reasonably request.
The Exchanging Partners agree at all times through the Closing Date to use
reasonable efforts, at least as stringent as those employed by them with respect
to their own confidential information, (a) to keep confidential all such
information that is identified as being of a confidential nature, (b) not to use
such confidential information on their own behalf, except in connection with the
transactions contemplated hereby, or on behalf of any other person, firm or
entity, and (c) not to disclose such confidential information to any third party
(other than to the Exchanging Partners' various counsel, accountants and other
consultants in connection with the transactions contemplated hereby) without
ONS' advance written authorization; provided, however, that the Exchanging
Partners shall have no such obligations with respect to confidential information
that (i) was lawfully obtained by them not subject to restrictions of
confidentiality; (ii) is a matter of public knowledge; or (iii) has been or is
hereafter publicly disclosed other than by or through the Exchanging Partners.
In the event this Agreement is terminated, the Exchanging Partners will return
to ONS all documents and other materials furnished to any one or more of the
Exchanging Partners relating to the transactions contemplated hereunder, whether
obtained before or after the execution of this Agreement. In the event of a
breach or threatened breach by the Exchanging Partners of the provisions of this
Section 0, ONS shall be entitled to an injunction restraining such Exchanging
Partners from disclosing, in whole or in part, such information. The Exchanging
Partners investigation of the financial and operating data, assets, real
property and other information with respect to the business and assets of ONS
and its Subsidiaries and Newco shall in no way affect the obligations of ONS
with respect to the agreements, representations, warranties, covenants and
indemnification provisions set forth in this Agreement.
5.7. WAIVER OF RIGHT OF FIRST REFUSAL UNDER THE PARTNERSHIP
AGREEMENT
Pursuant to Section 13.09(b) of the Partnership Agreement,
ONS, OrionSat and each of the Exchanging Partners hereby amend the Partnership
Agreement, as of the date hereof, to the extent necessary to cause Section 10.04
thereof, which section contains the partners' right of first refusal with
respect to the sale of limited partnership interests of Orion Atlantic, not to
apply to the Exchange or any of the transactions referred to in this Agreement,
and hereby waives any rights it may have under Section 10.04 of the Partnership
Agreement, with respect to the Exchange or any of the transactions referred to
in this Agreement.
13
5.8. CONVERTIBLE SUBORDINATED DEBENTURES
It is presently contemplated that Newco will, as of the
Closing Date, complete an offering (the "Convertible Subordinated Debenture
Offering") of approximately $100 million of convertible subordinated debentures
of Newco ("Convertible Subordinated Debentures"). ONS shall use its good faith
efforts to cause Newco to complete the Convertible Subordinated Debenture
Offering. Notwithstanding the foregoing, the parties acknowledge and agree that
the terms of a Convertible Subordinated Debenture Offering are likely to be
determined in large part by the requirements of prospective investors in
Convertible Subordinated Debenture Offering, and that Newco and ONS reserve the
right not to proceed with a Convertible Subordinated Debenture Offering if they
determine that such Convertible Subordinated Debenture Offering would not be in
the best interest of the stockholders of Newco or the stockholders of ONS (who
would become stockholders of Newco in the Merger) generally, including the
entities who would be becoming stockholders of Newco pursuant to the Exchange).
ONS agrees to inform the Exchanging Partners periodically and in a timely
fashion of the progress of the Convertible Subordinated Debenture Offering,
including the terms being proposed by the underwriters or placement agents
thereof, and the Exchanging Partners may advise ONS of their views regarding the
terms of the Convertible Subordinated Debenture Offering. ONS intends for Newco
to use BAe's $50 million expected payment for Convertible Subordinated
Debentures and an additional $10 million of the proceeds of the offering for the
financing of Orion 2. While not intended to be legally binding, BAe hereby
confirms that it intends to purchase from Newco $50 million of Convertible
Subordinated Debentures on substantially the same terms as the remainder of the
offering of the Convertible Subordinated Debentures.
5.9. AGREEMENT REGARDING TRANSFER
Concurrent with the Closing, each Exchanging Partner will
enter into an agreement, in the form set forth as Exhibit E hereto, regarding
the transfer of the shares of Newco Common Stock issuable upon conversion of the
Newco Preferred Stock.
5.10. RELEASE OF CLAIMS
Concurrently with the Closing, each of the parties hereto
agrees to release and forever discharge each of the other parties hereto and
each of their Affiliates from and after the Closing, from and against any and
all rights, causes of action, claims, suits, obligations, liabilities, and
demands whatsoever (other than those arising from fraud or misrepresentation),
in law or in equity, whether presently known or unknown, to the fullest extent
permitted by law by reason of, related to, or arising out of any one or more of
the agreements referred to in Section 3.2 hereof (other than this Agreement).
14
5.11. LEGEND, REMOVAL
Each certificate or instrument representing Newco Preferred
Stock (or Newco Common Stock received upon the conversion thereof or as
dividends thereon) shall be imprinted with a legend to the effect that the
securities have not been registered under the Securities Act and may not be
transferred or sold except pursuant to an effective registration under the
Securities Act and applicable state securities laws or an available exemption
from such registration. In connection with the transfer of any Newco Preferred
Stock (or Newco Common Stock received upon the conversion thereof or as
dividends thereon) other than pursuant to an effective registration statement
filed by ONS, the holder thereof shall deliver written notice to Newco
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of counsel which (to Newco's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of such
securities may be effected without registration of such securities under the
Securities Act. Upon issuance of such opinion (to the extent it relates to Newco
Preferred Stock) or acceptance of such opinion by Newco's transfer agent (to the
extent it relates to Newco Common Stock), Newco shall promptly upon such
contemplated transfer deliver or caused to be delivered new certificates for
such securities which do not bear the Securities Act legend referred to above in
this paragraph. If any Newco Preferred Stock (or Newco Common Stock received
upon the conversion thereof or as dividends thereon) becomes eligible for sale
pursuant to Rule 144(k), Newco shall, upon the request of the holder of such
securities (together with the opinion referred to above in this paragraph, which
shall state that the provisions of Rule 144(k) have been complied with), remove
the legend referred to above in this paragraph from the certificates for such
securities.
5.12. TAX-FREE STATUS
No party hereto shall, nor shall any party hereto permit any
of its affiliates to, take any action, or omit to take any required action, that
would, or would be reasonably likely to, adversely affect the qualification of
the Merger and the Exchange, taken together, as a tax-free transaction described
in Code Section 351(a). Each party hereto shall, for all tax purposes, treat the
Merger and the Exchange, taken together, as a tax-free transaction described in
Code Section 351(a).
6. REPRESENTATIONS AND WARRANTIES OF EXCHANGING PARTNERS
Each of the Exchanging Partners hereby severally represents
and warrants to ONS as follows (provided that the representations and warranties
in Section 6.8 are made solely by Lockheed Xxxxxx):
15
6.1. TITLE TO LP INTERESTS; OTHER LP RIGHTS
Such Exchanging Partner is, and on the Closing Date will be,
the lawful owner of the LP Interest of such Exchanging Partner, and such
Exchanging Partner (or such Exchanging Partner's Affiliate, as the case may be),
is and on the Closing Date will be, the lawful owner of such Exchanging
Partner's (or Affiliate's) Other LP Rights, as listed in Section 3.2. Except as
set forth below, such Exchanging Partner has, and on the Closing Date such
Exchanging Partner will have, good, valid and marketable title, free and clear
of all Encumbrances, to the LP Interest of such Exchanging Partner, and such
Exchanging Partner (or such Exchanging Partner's Affiliate, as the case may be),
has, and on the Closing Date will have, good, valid and marketable title, free
and clear of all Encumbrances, to such Exchanging Partner's (or Affiliate's)
Other LP Rights, as listed in Section 3.2, in each case with full right and
lawful authority to transfer the LP Interest and Other LP Rights to Newco
pursuant to this Agreement. Notwithstanding the foregoing, the parties
acknowledge that the LP Interests and certain of the Other LP Rights are pledged
to the Lenders under the Credit Facility Documentation, and that the LP
Interests are pledged to Orion Atlantic under the respective Contingent Capacity
Agreements.
6.2. ORGANIZATION AND STANDING; CAPACITY
Such Exchanging Partner is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction, and has the full corporate power and authority to carry on its
business as currently conducted. Each Exchanging Partner has full legal right,
capacity, power and authority (corporate or otherwise) to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
6.3. AUTHORIZATION
The execution, delivery and performance by the Exchanging
Partner of this Agreement and all other documents contemplated hereby, the
fulfillment of and the compliance with the respective terms and provisions
hereof and thereof, and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of such
Exchanging Partner (which authorization has not been modified or rescinded and
is in full force and effect), and will not: (a) conflict with, or materially
violate any provision of, any law having applicability to such Exchanging
Partner or any of its Affiliates which is a party to any agreement with or
relating to Orion Atlantic or any term or provision of the articles of
incorporation or organization, or bylaws or operating agreement of such
Exchanging Partner or any of such Affiliates, as applicable; or (b) conflict
with, or result in any material breach of, or constitute a material default
under, any agreement to which such Exchanging Partner or any of such Affiliates
is a party or by which such Exchanging Partner or any of such Affiliates may be
bound.
16
6.4. RESTRICTIONS AND CONSENTS
Except for certain approvals which may be required by the
Japanese government if TA Sat becomes an Exchanging Partner, there are no
agreements, laws or other restrictions of any kind to which such Exchanging
Partner is party or subject that would prevent or restrict the execution,
delivery or performance of this Agreement.
6.5. BINDING OBLIGATION
This Agreement constitutes a valid and binding obligation of
such Exchanging Partner, enforceable in accordance with its terms. Each document
to be executed by such Exchanging Partner pursuant hereto, when executed and
delivered in accordance with the provisions hereof, will be a valid and binding
obligation of such Exchanging Partner, enforceable in accordance with its terms.
6.6. TRANSFER OF TITLE
At the Closing, Newco will acquire good, valid and marketable
title to such Exchanging Partner's LP Interest and such Exchanging Partner's
Other LP Rights, free and clear of all Encumbrances, other than those imposed by
the terms of the Partnership Agreement and restrictions on resale contained in
federal and state securities laws.
6.7. ACCREDITED INVESTORS
Each Exchanging Partner and any Affiliate of such Exchanging
Partner who will be receiving Newco Preferred Stock is an "accredited investor"
as such term is defined in Rule 501 of the Securities Act.
6.8. NAME CHANGE OF LOCKHEED XXXXXX
Lockheed Xxxxxx only hereby represents and warrants that it
was formerly named Xxxxxx Xxxxxxxx Commercial Launch Services, Inc., that it is
a limited partner of Orion Atlantic and a party to the agreements referred to in
Section 3.2(a)(iv) and that it has provided evidence of its name change to the
other parties hereto.
7. REPRESENTATIONS AND WARRANTIES OF ONS
ONS hereby represents and warrants to the Exchanging Partners
as follows:
17
7.1. ORGANIZATION AND STANDING
ONS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the full
corporate power and authority to carry on its business as currently conducted.
ONS has the full legal right, capacity, power and authority (corporate or
otherwise) to execute and deliver this Agreement and the other documents called
for herein and to consummate the transactions contemplated hereby. ONS is
qualified as a foreign corporation in the State of Maryland, and in every other
jurisdiction in which the failure to so qualify would have a Material Adverse
Effect.
7.2. AUTHORIZATION
The execution, delivery and performance by ONS of this
Agreement and the other documents contemplated hereby, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof, and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors of ONS (which authorization has not
been modified or rescinded and is in full force and effect), and will not: (a)
conflict with, or materially violate any provision of, any law having
applicability to ONS or any of its Affiliates or any term or provision of the
articles of incorporation or organization, or bylaws or operating agreement of
ONS, as applicable; or (b) conflict with, or result in any material breach of,
or constitute a material default under, any agreement to which ONS or any of its
Affiliates is a party or by which ONS or any of its Affiliates may be bound.
7.3. RESTRICTIONS AND CONSENTS
Except for certain approvals which are set forth on Schedule
7.3, which ONS will use its reasonable efforts to obtain prior to Closing, there
are no agreements, laws or other restrictions of any kind to which ONS is party
or subject that would prevent or restrict the execution, delivery or performance
of this Agreement. ONS has no reason to believe, as of the date hereof, that any
of the conclusions reached in the memorandum from ONS's communications counsel
previously circulated to the Exchanging Partners and attached hereto as Exhibit
K indicating that the Exchange will not constitute a change of control of ONS
that would require the consent of the U.S. Federal Communications Commission
("FCC"), or otherwise require the consent of that Commission, are incorrect in
any material respect and will promptly notify each Exchanging Partner if ONS
becomes aware of any reason why any such conclusions may become incorrect. If,
notwithstanding such memorandum, such FCC consent is required, ONS will use its
reasonable good faith efforts to obtain such consent prior to Closing.
18
7.4. BINDING OBLIGATION
This Agreement constitutes, and the Registration Rights
Agreement when executed will constitute, valid and binding obligations of ONS
and Newco, as the case may be, enforceable in accordance with its terms. Each
document to be executed by ONS or Newco pursuant hereto, when executed and
delivered in accordance with the provisions hereof, will be a valid and binding
obligation of ONS or Newco, enforceable in accordance with its terms.
7.5. ISSUANCE OF SHARES
Upon consummation of the transactions contemplated by this
Agreement at Closing, the Newco Preferred Stock will be duly and validly issued,
fully paid and nonassessable and no personal liability attaches to the ownership
thereof, and the Exchanging Partners will acquire the legal, valid and
marketable title to the Newco Preferred Stock, free and clear of all
Encumbrances, except as set forth in this Agreement.
7.6. CAPITALIZATION
As of the date hereof, the authorized capital stock of ONS
consists of 40,000,000 shares of ONS Common Stock and 1,000,000 shares of
preferred stock, par value $.01 per share, of which 10,945,133 shares of ONS
Common Stock, 13,961 shares of ONS Series A Preferred Stock and 4,211,001 shares
of ONS Series B Preferred Stock are duly authorized and validly issued and
outstanding, fully paid and nonassessable. ONS has no other class of stock
authorized or outstanding. Options and warrants to purchase 1,396,851 shares of
ONS Common Stock are outstanding on the date hereof, and when such options are
exercised and the prescribed exercise price paid, the shares of ONS Common Stock
issued with respect to such options will be duly authorized, validly issued,
fully paid and nonassessable. Options to purchase 350.666 shares of ONS
preferred stock are outstanding on the date hereof, the terms of which are to be
substantially identical to the ONS Series A Preferred Stock and the ONS Series B
Preferred Stock other than the conversion price. Except as set forth above, or
in the certificates of designations of the ONS Series A Preferred Stock and ONS
Series B Preferred Stock, as of the date hereof there are no existing options,
warrants or rights to purchase or otherwise acquire from ONS capital stock of
ONS of any class, no outstanding securities of ONS that are convertible into
shares of capital stock of ONS of any class, and no options, warrants or rights
to purchase from ONS any such convertible securities, and ONS has no outstanding
contractual or other obligation to repurchase, redeem or otherwise acquire any
outstanding shares of its capital stock. Upon the issuance of Newco Common Stock
upon the conversion of the Newco Preferred Stock in accordance with the
Certificate of Designations, such Newco Common Stock will be duly and validly
issued, fully paid and non-assessable and no personal liability will attach to
the ownership thereof. As of the Closing Date, Newco will have reserved
19
out of its authorized but unissued shares of Newco Common Stock, solely for
issue upon such conversion, the number of shares necessary for such purpose. As
of the Closing Date, Newco will have sufficient authorized capital stock
(including Newco Preferred Stock) to meet its obligations hereunder. The issued
and outstanding shares of ONS capital stock have not been, and the Newco
Preferred Stock to be issued to the Exchanging Partners hereunder (and Newco
Common Stock issuable upon the conversion thereof) will not be, issued in
violation of any preemptive or other rights of any person, whether arising by
statute, under the Certificate of Incorporation or By-Laws of Newco or in any
other manner.
7.7. NO LIABILITIES
Except as set forth in the consolidated audited financial
statements of ONS as of December 31, 1995, and for the period ended on such date
(the "Current Financial Statements"), or included in the Disclosure Materials,
there exist no material liabilities (whether contingent or absolute, matured or
unmatured, known or unknown) of ONS or any Subsidiary. Immediately prior to the
Closing, Newco will have no liabilities (other than de minimis liabilities
relating to Newco's formation, any liabilities or obligations relating to
transactions contemplated by this Agreement, and any liabilities for expenses
relating to the Credit Facility Refinancing, Bond Offering, Bank Agreement
Termination, Capacity Agreement Termination and Convertible Subordinated
Debenture Offering).
7.8. TAXES
ONS and each Subsidiary has filed or has caused to be filed
(or has obtained extensions with respect to) all material federal, state and
local tax returns which are required to be filed and has paid in full or accrued
all material federal, state and local taxes, estimated taxes, interest,
penalties, assessments and deficiencies assessed in connection with such
returns. Neither ONS nor any Subsidiary is a party to any pending action or
proceeding, and to the knowledge of ONS there is no action or proceeding
threatened, by any governmental authority for assessment or collection of taxes,
and no unresolved claim for assessment or collection of taxes has been asserted
against ONS or any Subsidiary, which would have a Material Adverse Effect.
7.9. SUBSIDIARIES
Schedule 7.9 hereto sets forth the name of each Subsidiary and
ONS' ownership in such entity. Each Subsidiary is a corporation, or partnership,
duly organized, validly existing and in good standing under the laws of its
state of incorporation or organization, and each has the full corporate power
and authority to carry on its business as it is now being conducted. Each
Subsidiary is qualified
20
in every jurisdiction in which the failure to so qualify would have a Material
Adverse Effect.
7.10. BOOKS AND RECORDS
The books of account, stock record, minute books and other
records of ONS and its Subsidiaries have been maintained in accordance with good
business practices, and the matters contained therein are appropriately and
accurately reflected in the Current Financial Statements.
7.11. LITIGATION
Except as set forth in the Disclosure Materials and Schedule
7.11 regarding the Skydata matter, there are no material claims, actions, suits,
proceedings or investigations pending or, to the knowledge of ONS, threatened or
anticipated against, affecting or involving ONS or any Subsidiary or the
transactions contemplated by this Agreement, at law or in equity, or before any
court, arbitrator or governmental authority, domestic or foreign. Neither ONS
nor any Subsidiary is operating under, subject to or in default with respect to
any order, judgment, injunction or decree of any court, arbitrator or
governmental authority, domestic or foreign that would have a Material Adverse
Effect, except for orders of the Federal Communications Commission pertaining to
the authority of ONS to conduct its operations, and with respect to such orders
ONS is in full compliance.
7.12. SEC FILINGS
Since August 1, 1995, all reports, proxy statements and
registration statements required to be filed by ONS with the SEC pursuant to the
Securities Act, and the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), have been timely filed with the SEC and complied in all material
respects with the requirements of the Securities Act, the 1934 Act and the rules
and regulations under the Securities Act and 1934 Act, and none of such reports,
proxy statements or registration statements contained as of their respective
dates any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. In addition, the Merger Proxy Statement insofar as it relates to
ONS, as of the date of mailing of the Merger Proxy Statement by ONS to its
stockholders and as of the date of the ONS stockholders meeting to which such
Merger Proxy Statement relates, (i) will comply in all material respects with
the provisions of the 1934 Act and the rules and regulations thereunder and (ii)
except with respect to any information relating to the Exchanging Partners
provided to ONS by the Exchanging Partners in writing specifically for use in
the Merger Proxy Statement, will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
21
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
7.13. TRANSACTIONS WITH EXCHANGING PARTNERS
Neither ONS nor any of its Affiliates currently is a party to
any transaction or agreement with any of the Exchanging Partners or their
Affiliates relating to the Exchange, other than this Agreement and the
agreements contemplated hereby, that has not been disclosed to each of the
Exchanging Partners or otherwise publicly disclosed by ONS.
7.14. ABSENCE OF VIOLATIONS
Neither ONS nor any of its Subsidiaries is in default under,
nor has it breached, any material term or material provision of its Certificate
of Incorporation or By-laws or any Material Contract. ONS and its Subsidiaries
have complied with and are in full compliance with all Laws, where the failure
to so comply would have a Material Adverse Effect.
8. RESTRICTED SECURITIES
Each Exchanging Partner hereby severally represents, warrants
and covenants to ONS as follows:
8.1. NO REGISTRATION UNDER THE SECURITIES ACT
Such Exchanging Partner understands that the Newco Preferred
Stock to be acquired by it under this Agreement, and the Newco Common Stock
issuable upon the conversion thereof, have not been registered under the
Securities Act, in reliance upon exemptions contained in the Securities Act or
interpretations thereof, and cannot be offered for sale, sold or otherwise
transferred unless subsequently so registered or qualify for exemption from
registration under the Securities Act. The Newco Preferred Stock, and the Newco
Common Stock issuable upon the conversion thereof, will not be offered for sale,
sold or otherwise transferred by such Exchanging Partner without either
registration or exemption from registration under the Securities Act.
8.2. ACQUISITION FOR INVESTMENT
The Newco Preferred Stock being acquired under this Agreement
by such Exchanging Partner is being acquired in good faith solely for such
Exchanging Partner's own account, for investment and not with a view toward
distribution within the meaning of the Securities Act. Such Exchanging Partner
has, and at the time of Closing such Exchanging Partner will have, no present
plan or intention to
22
sell or otherwise dispose of the Newco Preferred Stock being acquired under this
Agreement or any Newco Common Stock issuable upon the conversion of such Newco
Preferred Stock; provided, however, that such Exchanging Partner may decide,
from time to time, to sell some or all of such stock based upon a change in the
investment policy of such Exchanging Partner and provided further, that this
provision shall not restrict MCN Sat from transferring a portion of its Newco
Preferred Stock to BAe.
8.3. EVALUATION OF MERITS AND RISKS OF INVESTMENT
Such Exchanging Partner has such knowledge and experience in
financial and business matters that such Exchanging Partner is capable of
evaluating the merits and risks of its investment in the Newco Preferred Stock
being acquired hereunder. Such Exchanging Partner understands and is able to
bear any economic risks associated with such investment (including, without
limitation, the necessity of holding the Newco Preferred Stock for an indefinite
period of time, inasmuch as the Newco Preferred Stock have not been registered
under the Securities Act).
8.4. REVIEW OF DOCUMENTS
Such Exchanging Partner and its advisers, if any, have
received, and have had a reasonable opportunity to review, the following
documents (collectively, the "Disclosure Materials"): (i) Annual Report on Form
10-K for ONS for the fiscal year ended December 31, 1995; (ii) Quarterly Report
on Form 10-Q for ONS for the fiscal quarter ended March 31, 1996; (iii) Proxy
Statement of ONS relating to the Annual Meeting of Stockholders to be held on
May 23, 1996; and (iv) Risk Factors Relating to Orion and Description of Capital
Stock of Orion.
8.5. OPPORTUNITY TO REQUEST INFORMATION
Such Exchanging Partner and its advisers, if any, have had a
reasonable opportunity to ask questions of and receive information and answers
from a person or persons acting on behalf of ONS concerning the transactions
contemplated by this Agreement and all such questions have been answered and all
such information has been provided to their full satisfaction. If this Agreement
is not terminated on or before the Newco Finalization Date, such Exchanging
Partner and its advisers, if any, as of the Newco Finalization Date, will have
had a reasonable opportunity to ask questions of and receive information and
answers from a person or persons acting on behalf of Newco concerning the
transactions contemplated by this Agreement and all such questions will have
been answered and all such information will have been provided to their full
satisfaction. In making their investment, the Exchanging Partners will be
relying solely on their review of the Disclosure Materials (other than any
projections included therein,
23
which are not being relied upon), the representations and warranties set forth
herein, the Newco Formation Documents and the Merger Documents, and the
documents made available for inspection and the answers to questions referred to
in this Section 8.5.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE EXCHANGING PARTNERS
The obligations of each of the Exchanging Partners (and of
Lockheed Xxxxxx, in the case of the condition in Section 9.8) under this
Agreement are subject to the fulfillment, at or prior to the Closing, of each of
the following conditions (other than those in Section 9.8, which are a condition
only to the obligations of Lockheed Xxxxxx), and failure to satisfy any such
condition shall excuse and discharge all obligations of each of the Exchanging
Partners (and of Lockheed Xxxxxx only, in the case of failure of the condition
in Section 9.8) to carry out the provisions of this Agreement, unless such
failure is agreed to in writing by each of the Exchanging Partners (and of
Lockheed Xxxxxx only, in the case of the condition in Section 9.8):
9.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties made by ONS in this
Agreement shall be true and complete in all material respects when made, and on
and as of the Closing Date as though such representations and warranties were
made on and as of such date.
9.2. PERFORMANCE
ONS and OrionSat shall have performed and complied in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by ONS and/or OrionSat prior to the Closing
Date.
9.3. DOCUMENTS AT CLOSING
All documents required to be furnished by Newco, ONS and
OrionSat to the Exchanging Partners prior to or at the Closing shall have been
so furnished.
9.4. REFINANCING OF CREDIT FACILITY, CANCELLATION OF CAPACITY
AGREEMENTS
The Credit Facility Refinancing and Capacity Agreement
Termination shall have been completed, other than any actions to be taken by
such Exchanging Partner, and the documents effecting the Capacity Agreement
Termination shall be substantially in the form of Exhibit H hereto or otherwise
in form and substance
24
reasonably satisfactory to each Exchanging Partner. Evidence of the completion
of the Capacity Agreement Termination and Credit Facility Refinancing shall be
the execution of Exhibit H by Chase and the unconditional delivery of the same
at Closing.
9.5. CONSENTS
ONS and OrionSat shall have received all material consents,
authorizations and approvals of governmental, supragovernmental and private
parties listed on Schedule 7.3 which are required to be obtained in order to
consummate the transactions contemplated hereby.
9.6. REGISTRATION
The Registration Rights Agreement shall have been executed and
delivered by Newco.
9.7. SATELLITE CONTRACT
ONS or one of its affiliates shall have entered into a
satellite procurement contract (the "Orion 2 Satellite Contract") with Matra
Marconi Space or an affiliate thereof ("Matra Marconi Space") for the
construction and launch of Orion 2, ONS or one of its affiliates shall have
given Matra Marconi Space notice to proceed under such contract and Amendment
No. 10 between Matra Marconi Space and Orion Atlantic to the Second Amended and
Restated Contract, dated September 26, 1991, as amended shall have become
effective and Orion Atlantic shall not be in default under such Amendment No.
10.
9.8. LAUNCH SUB CONTRACT
Lockheed Xxxxxx and Matra Marconi Space shall have entered
into a subcontract to the Orion 2 Satellite Contract relating to the launch of
Orion 2.
9.9. NEWCO FORMATION
The Newco Formation Documents shall be consistent with the
requirement that Newco be substantially identical in all material respects to
ONS, or any discrepancies shall be reasonably acceptable to the Exchanging
Partners (provided, however, that such condition shall be deemed to have been
satisfied, and shall terminate, and be of no further force and effect, if this
Agreement shall not have been terminated on or before the Newco Finalization
Date); and the Newco Formation shall have occurred in accordance with Section 2.
25
9.10. MERGER
The Merger shall have occurred, or shall occur concurrently
with the Closing, in accordance with Section 4.
9.11. TAX OPINION
The Exchanging Partners shall have received an opinion from
Ernst & Young, L.L.P., tax advisors to Newco, in form and substance reasonably
satisfactory to the Exchanging Partners, dated the Closing Date, which opinion
may be based on appropriate representations of the parties hereto, in form and
substance reasonably satisfactory to such tax advisors, to the effect that the
Merger and the Exchange, taken together, will be a tax-free exchange described
in Code Section 351(a).
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF ONS AND ORIONSAT
The obligations of ONS and OrionSat under this Agreement are
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of ONS and OrionSat to carry out the provisions of this
Agreement, unless such failure is agreed to in writing by ONS and OrionSat:
10.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the Exchanging
Partners in this Agreement shall be true and complete in all material respects
when made, and on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except for any changes expressly
permitted by this Agreement.
10.2. PERFORMANCE
The Exchanging Partners shall have performed and complied with
all material agreements and covenants required by this Agreement to be performed
or complied with prior to the Closing Date.
10.3. DOCUMENTS AT CLOSING
All documents required to be furnished by the Exchanging
Partners to ONS and OrionSat prior to or at the Closing shall have been so
furnished.
26
10.4. CONSENTS
The Exchanging Partners shall have received all material
consents, authorizations and approvals of governmental, supragovernmental and
private parties which are required to be obtained in order to consummate the
transactions contemplated hereby.
10.5. REFINANCING OF CREDIT FACILITY, CANCELLATION OF CAPACITY
AGREEMENTS
The Credit Facility Refinancing, Bank Agreement Termination
and Capacity Agreement Termination shall have been completed, other than any
actions to be taken by ONS and OrionSat.
10.6. PARTNERSHIP AGREEMENT AMENDMENT
The Partnership Agreement shall have been amended as
contemplated by Section 5.4, other than due to any actions to be taken by ONS
and OrionSat.
10.7. CONSENTS OF THE ONS STOCKHOLDERS
The ONS Stockholder Consent has been obtained for the Merger,
the Exchange and any related transactions requiring stockholder consent.
10.8. COMPLETION OF FINANCING FOR A SECOND SATELLITE
Newco shall have raised at least $100 million from the sale of
Convertible Subordinated Debentures, not including any amounts representing or
in satisfaction of any amounts due by ONS or Orion Atlantic to any Exchanging
Partner or Affiliate thereof, and BAe shall have purchased at least $50 million
of Convertible Subordinated Debentures from Newco.
10.9. SATELLITE CONTRACT
ONS or one of its affiliates shall have entered into the Orion
2 Satellite Contract with Matra Marconi Space for the construction and launch of
Orion 2.
10.10. NEWCO FORMATION
The Newco Formation shall have occurred in accordance with
Section 2.
27
10.11. MERGER
The Merger shall have occurred, or be occurring concurrently
with the Closing, in accordance with Section 4; and no ONS stockholder (or
former stockholder of ONS, if the Merger already shall have occurred) shall have
delivered to ONS a written notice of such stockholder's (or former
stockholder's) intention, or otherwise indicated an intention, to dissent to the
Merger or otherwise seek to exercise any right to sell to ONS, or obtain payment
from ONS for, such stockholder's stock in ONS in lieu of such stock being
converted in the Merger to stock of Newco.
11. CLOSING
11.1. CLOSINGS
(a) Deposit into Escrow
Simultaneously with execution and delivery of this Agreement,
the Exchanging Partners are entering into an Escrow Agreement in the form
attached as Exhibit J and depositing into escrow with one counsel selected by
the Exchanging Partners (which may be counsel representing one or more of the
Exchanging Partners in other capacities), acting as escrow agent, executed
copies of each of the documents to be delivered by the Exchanging Partners to
Newco, ONS or OrionSat at the Closing. Each of the parties hereto agrees to
abide by the terms of such Escrow Agreement.
(b) Closing
Subject to the terms and conditions of this Agreement, the
Closing shall take place at the offices of Xxxxx & Xxxxxxx L.L.P., 000
Xxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000 on the Closing Date.
11.2. DELIVERIES BY THE EXCHANGING PARTNERS
At or prior to the Closing, the Exchanging Partners shall
deliver to Newco, ONS or OrionSat, as applicable, the following:
(a) documents of transfer of partnership interests and
substitution of limited partners with respect to the LP Interests being
transferred to Newco pursuant to Section 0, in the form attached as Exhibit F;
(b) documents transferring the rights included in the Other LP
Rights, in the form attached as Exhibit G.
28
(c) counterparts to the Third Amended and Restated Partnership
Agreement duly executed by each of the Exchanging Partners;
(d) a certified copy of the resolutions adopted by the Board
of Directors of each of the Exchanging Partners authorizing the transactions
contemplated by this Agreement; and
(e) such other documents as Newco, ONS or OrionSat may
reasonably request, including without limitation certificates of the officers of
the Exchanging Partners as to the matters set forth in Sections 10.1 and 10.2.
11.3. DELIVERIES BY ONS AND NEWCO
At or prior to the Closing, Newco, ONS or OrionSat, as
applicable, shall deliver to the Exchanging Partners the following:
(a) certificates representing the Newco Preferred Stock being
issued to the Exchanging Partners pursuant to Section 2;
(b) the Registration Rights Agreement, duly executed by Newco;
(c) evidence in the form of the documents included as Exhibit
H hereto, duly executed and delivered by all parties thereto other than
Exchanging Partners, that the Capacity Termination Agreement has been effected
and that the Capacity Guarantees have been terminated in their entirety;
(d) a certified copy of the resolutions adopted by the Boards
of Directors of Newco, ONS and OrionSat authorizing the transactions
contemplated by this Agreement;
(e) evidence of receipt of the ONS Stockholder Consent;
(f) good standing certificates as of a date not more than
fifteen days prior to the Closing Date issued by the Secretary of State of the
State of Delaware with respect to Newco, ONS and OrionSat;
(g) opinion(s) of counsel to Newco and ONS, dated the Closing
Date and addressed to the Exchanging Partners, substantially to the effect set
forth on Exhibit I;
(h) an agreement by Newco to be bound by the indemnity
provisions of Section 12 (the "Newco Indemnity"); and
(i) such other documents as the Exchanging Partners may
reasonably request, including without limitation certificates of the officers of
Newco and ONS as to the matters set forth in Sections 9.1 and 9.2.
29
11.4. ORDER OF EFFECTIVENESS
Of the documents being delivered by the Exchanging Partners at
the Closing, the counterparts to the Third Amended and Restated Partnership
Agreement duly executed by each of the Exchanging Partners shall be deemed
delivered first, and upon signature by ONS and OrionSat the Third Amended and
Restated Partnership Agreement shall be deemed in full force and effect, prior
to delivery of the (i) documents of transfer of partnership interests and
substitution of limited partners with respect to the LP Interests being
transferred to Newco pursuant to Section 2, in the form attached as Exhibit F,
and (ii) documents transferring the rights included in the Other LP Rights, in
the form attached as Exhibit G.
12. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES
12.1. SURVIVAL OF REPRESENTATIONS
All representations, warranties, covenants, indemnities and
other agreements made by any party to this Agreement herein or pursuant hereto
shall also be deemed made on and as of the Closing Date as though such
representations, warranties, covenants, indemnities and other agreements were
made on and as of such date, and all such representations, warranties,
covenants, indemnities and other agreements shall survive the Closing and any
investigation, audit or inspection at any time made by or on behalf of any party
hereto, including the review of the Disclosure Materials under Section 8.4.
12.2. AGREEMENT OF NEWCO, ONS AND ORIONSAT TO INDEMNIFY
Subject to the conditions and provisions of this Section 12.2,
ONS and OrionSat jointly and severally shall (and Newco shall, pursuant to the
Newco Indemnity) jointly and severally indemnify, defend and hold harmless each
of the EP Indemnified Persons from and after the Closing Date against and in
respect of all Claims asserted against, resulting to, imposed upon or incurred
by any of the EP Indemnified Persons (whether such Claims are by, against or
relate to Newco, ONS or OrionSat or any other party, including, without
limitation, a governmental entity), directly or indirectly, by reason of or
resulting from any of the following:
(i) any of the matters with respect to which they would be
obligated to indemnify the EP Indemnified Persons under Section 7.09(e) of the
Partnership Agreement and which arose before or after the Closing Date,
notwithstanding the Exchanging Partners ceasing to be limited partners of Orion
Atlantic as of the Closing Date; or
30
(ii) any Claims asserted by one or more of the Lenders or
Chase, or their successors or assigns, arising from and after the Closing Date
under (A) any of the Capacity Agreements, Contingent Capacity Agreements or
Capacity Guarantees which are terminated on or prior to the Closing Date, (B)
any agreements or other documents terminated or to be terminated in connection
with the Bank Agreement Termination, or (C) this Agreement, in each case
excluding any Claims arising from or relating to any breach of any
representation or warranty, or noncompliance with any conditions or other
agreements, given or made by any EP Indemnified Person under any of the
agreements or documents referred to above in this paragraph or any document
furnished by or on behalf of any EP Indemnified Person pursuant thereto.
12.3. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Newco, ONS and OrionSat
with respect to their respective indemnities pursuant to the Newco Indemnity and
Section 12.2, resulting from any Claims, shall be subject to the following terms
and conditions:
12.3.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Claims promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.3.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing, the defense
of such Claims at the Indemnifying Party's risk and expense.
12.3.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Claims, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Claims, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Claims at any time prior to
settlement, compromise or final determination thereof). In such event, the
Indemnifying Party shall pay to the Indemnified Party, in addition to the other
sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
31
12.3.4. Anything in this Section 12.3 to the contrary
notwithstanding, (a) if there is a reasonable probability that Claims may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Claims, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Claims or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Claims in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Claims, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Claims and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Claims and (d) in the event
that the Indemnifying Party undertakes defense of any Claims, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Claims and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified party shall
reasonably request in connection therewith.
12.4. SPECIFIC PERFORMANCE; NO CONSEQUENTIAL DAMAGES
In addition to any other remedies which the parties hereto may
have at law or in equity, the parties hereto hereby acknowledge that the LP
Interests, the Other LP Rights and the Newco Preferred Stock are unique, and
that the harm to Newco, ONS and OrionSat, and the Exchanging Partners resulting
from breaches by the other parties of their respective obligations cannot be
adequately compensated by damages. Accordingly, the parties hereto agree that
each party shall have the right to have all obligations, undertakings,
agreements, covenants and other provisions of this Agreement specifically
performed by the other parties, and that the parties hereto shall have the right
to obtain an order or decree of such specific performance in any of the courts
of the United States or of any state or other political subdivision thereof.
Notwithstanding any other provision of this Agreement to the contrary, in no
event shall remedies for breach of this Agreement include a party's incidental
or consequential damages.
13. TERMINATION
13.1. TERMINATION
This Agreement may be terminated at any time before the
Closing Date under any one or more of the following circumstances:
32
(a) by the mutual written consent of the parties hereto; or
(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 January 30, 1997; 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.
In addition, following circulation by ONS to the Exchanging
Partners of the finalized and implemented Newco Formation Documents, if the
finalized and implemented Newco Formation Documents are not consistent with the
requirement that Newco be substantially identical in all material respects to
ONS, and any discrepancies are not reasonably acceptable to such Exchanging
Partner(s), then this Agreement may be terminated at any time on or before the
Newco Finalization Date 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 on or before the close of business on
the Newco Finalization Date.
13.2. EFFECT OF TERMINATION
In the event this Agreement is terminated as provided in this
Section 13 (other than as to less than all the Exchanging Partners), this
Agreement shall forthwith become wholly void and of no effect, and the parties
shall be released from all future obligations hereunder; provided, however, that
the obligations of the Exchanging Partners as to confidentiality provided in
Section 5.6, and the provisions of Section 14.3 relating to the payment of
expenses, shall not be extinguished but shall survive such termination;
provided, further, however, that no party shall be relieved from its liabilities
for breach of representations, warranties, obligations or agreements prior to
termination of this Agreement. The parties hereto shall have any and all
remedies to enforce such obligations provided at law or in equity (including,
without limitation, specific performance).
14. MISCELLANEOUS
14.1. ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to
be taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents, and will obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement.
33
14.2. BROKER'S FEES OR LIABILITIES
The fees and expenses of Salomon Brothers shall be borne by
ONS. Except for such fees and expenses, each party agrees to indemnify, defend
and hold harmless each of the other parties from and against any and all claims
asserted against such parties for any unpaid liability to any broker, finder or
agent for any brokerage fees, finders' fees or commissions, with respect to the
transactions contemplated by this Agreement.
14.3. EXPENSES
Subject to the provisions of Section 14.2, each party hereto
shall pay its own expenses incident to this Agreement and the transactions
contemplated hereunder.
14.4. ASSIGNMENT
The Exchanging Partners shall have the right to assign their
respective rights under the Agreement, in whole or in part, to any of their
respective Affiliates or to designate any of their respective Affiliates to
receive directly the Newco Preferred Stock to be acquired hereunder (in each
case, to the extent permitted by applicable law). ONS, OrionSat and Orion
Atlantic shall have the right to assign their rights under the Agreement, in
whole or in part, to any of their respective Affiliates (to the extent permitted
by applicable law). In no event shall the assignment by ONS, OrionSat, or any
Exchanging Partner of its respective rights under this Agreement, whether before
or after the Closing, release ONS, OrionSat, or any Exchanging Partner from its
respective liabilities and obligations hereunder.
14.5. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Schedules, Exhibits and other
documents referred to herein or furnished pursuant hereto constitute the entire
agreement among the parties hereto with respect to the transactions contemplated
herein and therein, and supersede all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein
and therein. No amendment or modification of this Agreement shall be valid or
binding unless set forth in writing and duly executed and delivered by the party
against whom enforcement of the amendment or modification is sought.
14.6. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
documents
34
furnished in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein.
14.7. CONSENT TO JURISDICTION
This Agreement and the duties and obligations of ONS,
OrionSat, the Exchanging Partners hereunder and under each of the documents
referred to herein shall be enforceable against any of ONS, OrionSat, or one or
more of the Exchanging Partners, as the case may be, in the courts of the United
States and of the States of Maryland and Delaware. For such purpose, ONS,
OrionSat and each of the Exchanging Partners hereby irrevocably submit to the
non-exclusive jurisdiction of such courts, and agrees that all claims in respect
of this Agreement and such other documents may be heard and determined in any of
such courts.
14.8. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement or document given pursuant to or in connection with this Agreement
shall be invalid or unenforceable in any respect, such part shall be ineffective
to the extent of such invalidity or unenforceability only, without in any way
affecting the remaining parts of such provision or the remaining provisions of
this Agreement.
14.9. GOVERNING LAW
This Agreement, 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 laws of the State of Delaware (excluding the
choice of law rules thereof).
14.10. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telegram, telecopy or telex, addressed as follows:
35
(i) If to Orion Atlantic, ONS or OrionSat:
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
(ii) If to the Exchanging Partners, to each of the
following who is an Exchanging Partner:
British Aerospace
Holding, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Gaba
COM DEV Satellite
Communications Limited
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attn: Xxxxx Xxxxxxx
Kingston Communications
International Limited
Xxxxxxxxx Xxxxx
Xxxx Xxxx
Xxxxxxxx-xxxx-Xxxx
XX0 0XX Xxxxxxx
Attn: Xxxx Xxxxxx
Lockheed Xxxxxx Commercial
Launch Services, Inc.
Attention: Xxxxxxx Xxxxxxx
Lockheed Xxxxxx Commercial
Launch Services, Inc.
X.X. Xxx 000
XXX XX-0000
Xxxxxx, Xxxxxxxx 00000-0000
36
MCN Sat US, Inc.
00, Xxxxxx Xxxxx Xxxxxxx X.X.0
00000 Xxxxxx Villacoublay Cedex
France
Attn: Xxxxxx Xxxxx
Trans-Atlantic Satellite, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxx
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand delivered,
sent, mailed, telecopied or telexed in the manner described above, or which
shall be delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as it is
delivered to the addressee (with the return receipt, the delivery receipt, or
(with respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
14.11. HEADINGS
Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
14.12. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required. 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 Agreement 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.
37
14.13. LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns, except that (i) the
agreements set forth in Section 10 also shall be for the benefit of, and
enforceable by, EP Indemnified Persons and their respective successors, heirs,
executors, administrators, legal representatives or permitted assigns, and (ii)
agreements relating to Affiliates of the Exchanging Partners named or referred
to specifically herein also shall be for the benefit of, enforceable by and (to
the extent permitted by law) enforceable against such Affiliates and their
respective successors, heirs, executors, administrators, legal representatives
or permitted assigns.
14.14. BINDING EFFECT
Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, executors, administrators, legal
representatives and assigns.
38
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the day and year first above written.
INTERNATIONAL PRIVATE SATELLITE PARTNERS, L.P.
By: Orion Satellite Corporation, its
general partner
By:
--------------------------------
Title:
------------------------------
ORION NETWORK SYSTEMS, INC.
By:
--------------------------------
Title:
------------------------------
ORION SATELLITE CORPORATION
By:
--------------------------------
Title:
------------------------------
39
BRITISH AEROSPACE
COMMUNICATIONS, INC.
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
COM DEV SATELLITE
COMMUNICATIONS LIMITED
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
KINGSTON COMMUNICATIONS
INTERNATIONAL LIMITED
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
LOCKHEED XXXXXX
COMMERCIAL LAUNCH
SERVICES, INC.
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
MCN SAT US, INC.
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
40
TRANS-ATLANTIC SATELLITE,
INC.
By:
--------------------------------
Date: Title:
--------------------------------- ------------------------------
41
EXHIBIT A
---------
DEFINITIONS
"Affiliate" means: (a) with respect to a person, any member of
such person's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a person or entity, any person or entity
which directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such person or entity.
"Agreement" means the Exchange Agreement, including each of
the Schedules and Exhibits hereto.
"Agreement of Principles" means the Agreement of Principles
dated as of April 2, 1992, among Orion Atlantic, OrionSat, ONS and the
Exchanging Partners.
"BAe" means British Aerospace Communications, Inc., a Delaware
corporation.
"Business Day" means any day on which commercial banks in New
York City are not required or authorized to close.
"Certificate of Designations" means the Certificate of
Designations, Rights and Preferences establishing the terms and relative rights
and preferences of the Newco Preferred Stock in substantially the form set forth
as Exhibit B to this Agreement.
"Claims" means all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation, diminution
in value), liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys' fees and disbursements.
"Closing" means the closing of the exchange of interests
pursuant to the Agreement.
"Closing Date" means such time and date as shall be as
proposed by ONS not more than ten days after satisfaction or waiver of all the
conditions specified in Sections 9 and 10.
"COM DEV" means COM DEV Satellite Communications Limited, a
Canadian corporation.
"Consent and Agreement" means the Consent and Agreement
effective as of December 20, 1991, among Orion Atlantic, OrionSat, ONS and the
Exchanging Partners.
"Control" means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether through
ownership of voting securities, by agreement or otherwise).
"Encumbrance" means any mortgage, lien, pledge, encumbrance,
security interest, deed of trust, option, encroachment, reservation, order,
decree, judgment, condition, restriction, charge, agreement, claim or equity of
any kind.
"EP Indemnified Persons' means the Exchanging Partners and
their respective Affiliates, employees, representatives, agents, officers and
directors.
"Exhibit" means an exhibit attached to the Agreement.
"Exchange Act" means the Exchange Act of 1934, as amended.
"Kingston" means Kingston Communications International
Limited, a company organized under the laws of England.
"Kingston Sales Representative Agreements" means the Sales
Representative Agreement dated as of June 30, 1994, between Orion Atlantic and a
Kingston Affiliate, Kingston Satellite Systems Limited, as amended, and the
Ground Operations Agreement dated as of June 30, 1994, between Orion Atlantic
and Kingston, as amended.
"Laws" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection).
"Limited Partner" means ONS and the Exchanging Partners as
limited partners of Orion Atlantic.
"LP Interest" means a limited partnership interest in Orion
Atlantic.
"Lockheed Xxxxxx" means Lockheed Xxxxxx Commercial Launch
Services, Inc., a Delaware corporation.
2
"Material Adverse Effect" means a material adverse effect on
the business, results of operations, liabilities, properties, assets or
financial condition of ONS and its Subsidiaries, taken as a whole, or a material
adverse effect on the transactions contemplated by this Agreement.
"Material Contract" means any contract, instrument, commitment
or arrangement of ONS which ONS would be required to file with the SEC as an
exhibit to a registration statement on Form S-1 pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act.
"MCN Sat" means MCN Sat US, Inc., a Delaware corporation.
"MCN Sat Sales Representative Agreements" means the Sales
Representative Agreement dated as of June 30, 1995 between Orion Atlantic and
MCN Sat Service, S.A., as amended, and the Ground Operations Agreement dated as
of June 30, 1995 between Orion Atlantic and MCN Sat Service, S.A., as amended.
"Newco Common Stock" means shares of common stock, par value
$.01 per share, of Newco.
"Newco Preferred Stock" means shares of Series C 6% Cumulative
Redeemable Convertible Preferred Stock of Newco, par value $.01 per share,
having the rights and preferences set forth in the Certificate of Designations.
"ONS" means ONS Network Systems, Inc., a Delaware corporation.
"ONS Common Stock" means shares of common stock, par value
$.01 per share, of ONS.
"ONS Series A Preferred Stock" means the Series A 8%
Cumulative Redeemable Convertible Preferred Stock of ONS.
"ONS Series B Preferred Stock" means the Series B 8%
Cumulative Redeemable Convertible Preferred Stock of ONS.
"Orion Atlantic" means International Private Satellite
Partners, L.P., a Delaware limited partnership.
"Option Agreements" means the applicable Option Agreement
effective as of December 20, 1991, among Orion Atlantic, OrionSat and each of
the Exchanging Partners.
"OrionSat" means Orion Satellite Corporation, a Delaware
corporation.
3
"Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of International Private Satellite Partners,
L.P., as amended.
"PPU Agreement" means the Preferred Participating Unit
Agreements dated as of October 7, 1993, among Orion Atlantic, OrionSat, and each
of ONS, COM DEV, Kingston, Lockheed Xxxxxx and MCN Sat.
"Preferred Bidder Agreement" means the Preferred Bidder
Agreement effective as of December 20, 1991, among Orion Atlantic, OrionSat, ONS
and the Exchanging Partners.
"Refund Agreement" means the Refund Agreement, dated December
31, 1994, among Orion Atlantic, OrionSat, ONS and certain of the Exchanging
Partners.
"SEC" means the U.S. Securities and Exchange Commission.
"Section" means a Section (or a subsection) of the Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and all laws promulgated pursuant thereto or in connection therewith.
"Subscription Agreement" means the Subscription Agreements
effective as of December 20, 1991, between Orion Atlantic and each of the
Exchanging Partners.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control a general partner of such partnership, association or other business
entity. Without limiting the foregoing, International Private Satellite
Partners, L.P., a Delaware limited partnership, shall be deemed to be a
Subsidiary of the Corporation for so long as the Corporation or any of its other
Subsidiaries is the general partner thereof.
4
"TA Sat" means Trans-Atlantic Satellite, Inc., a Delaware
corporation.
"Tax Adjustment Factor" means, with respect to (i) BAe,
$11,634; (ii) COM DEV, $1,940; (iii) Kingston, $1,940; (iv) Lockheed Xxxxxx,
$3,878; (v) MCN Sat, $3,878; and (vi) TA Sat, $3,878.
5
EXHIBIT B
---------
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES
OF
SERIES C 6% CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
OF
ORION NEWCO SERVICES, INC.
--------------------------------------------------------------------------------
Pursuant to Section 151
of the General Corporation Law
of the State of Delaware
--------------------------------------------------------------------------------
The undersigned DOES HEREBY CERTIFY that, pursuant to the authority
contained in Article FOURTH of the Certificate of Incorporation of Orion Newco
Services, Inc., a Delaware corporation (the "Corporation"), and in accordance
with Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation has authorized the creation of a series of
Preferred Stock of the Corporation having the designation Series C 6% Cumulative
Redeemable Convertible Preferred Stock and having the powers, rights and
preferences, and the qualifications, limitations and restrictions thereof, as
are set forth in Exhibit A hereto and made a part hereof and that the following
resolution was duly adopted by the Board of Directors of the Corporation:
RESOLVED, that a series of authorized Preferred
Stock, par value $0.01 per share, of the Corporation be, and
it hereby is, created; that the shares of such series shall
be, and they hereby are, designated as "Series C 6%
Cumulative Redeemable Convertible Preferred Stock;" that the
number of shares constituting such series shall be, and it
hereby is, fixed at _______,000; and that the powers, rights
and preferences and the qualifications, limitations and
restrictions thereof, of the shares of such series are as set
forth in Exhibit A attached hereto and made a part hereof.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by its President and Chief
Executive Officer and attested to by its Vice President, Corporate and Legal
Affairs, and Secretary this ____ day of __________, 1996.
ORION NEWCO SERVICES, INC.
By:
---------------------------
[SEAL] Name: W. Xxxx Xxxxx
Title: President/Chief Executive
Officer
ATTEST:
-----------------------------------------
Name: Xxxxxxx X. Xxxx, Esq.
Title: Vice President, Corporate and
Legal Affairs/Secretary
-2-
EXHIBIT A
---------
SERIES C 6% CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
The following sections set forth the powers, rights and
preferences, and the qualifications, limitations and restrictions thereof, of
the Corporation's Series C 6% Cumulative Redeemable Convertible Preferred Stock.
Capitalized terms used herein are defined in Section 10 below.
Section 1. Dividends.
---------
1A. General Obligation. Subject to the preferential rights of
Series A Preferred Stock or Series B Preferred Stock ranking senior to the
Preferred Stock, the record holders of Preferred Stock shall be entitled to
receive dividends, when, as and if declared by the Corporation's board of
directors (the "Board") and to the extent permitted under the General
Corporation Law of Delaware, as amended, as provided in this Section 1, subject
to paragraph 1F. Dividends shall accrue on a daily basis commencing on the Date
of Issuance of each Preferred Share at the simple interest rate of 6% per annum
of the Liquidation Value thereof, and shall be payable as provided in paragraph
1B. Dividends shall cease accruing upon the earliest to occur of (i) the date on
which the Liquidation Value of such Preferred Share is paid, (ii) the date on
which such Preferred Share is converted into shares of Common Stock hereunder,
or (iii) the Maturity Date. Such dividends shall accrue whether or not they have
been declared and whether or not there are net profits, surplus or other funds
of the Corporation legally available for the payment of dividends.
1B. Payment of Dividends. Subject to the provisions of
paragraph 1A and paragraph 1F, dividends shall be payable, in arrears, following
each Dividend Reference Date within twenty days after such Dividend Reference
Date. The amount of the dividend on each share of Preferred Stock payable
following each Dividend Reference Date shall equal the aggregate amount of all
accrued and unpaid dividends on such share of Preferred Stock from the Prior
Dividend Date (or, in the case of the first dividend paid with respect to such
share, the Date of Issuance of such Preferred Share) through such Dividend
Reference Date. To the extent any dividend is not paid within twenty days after
a Dividend Reference Date, all dividends which have accrued and remain unpaid on
each outstanding Preferred Share through such Dividend Reference Date shall be
accumulated and shall remain accumulated dividends with respect to such
Preferred Share until the date paid. No interest, dividend or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments that may be accrued and unpaid.
1C. Distribution of Partial Dividend Payments. Except in
connection with redemptions or repurchases pursuant to paragraph 3A or 3B below,
if at any time the Corporation pays less than the total amount of dividends then
accrued with respect to the Preferred Stock such payment shall be distributed
ratably among the holders thereof based upon the aggregate accrued but unpaid
dividends on the Preferred Shares held by each such holder and such payment
shall be applied first to dividends which have accrued on such Preferred Shares
during the period since the latest preceding Dividend Reference Date and second
to reduce any previously accumulated dividends with respect to such Preferred
Shares.
1D. Payment of Dividends in Common Stock. Except as
specifically provided herein, the Corporation shall pay all dividends with
respect to the Preferred Stock (including, in the case of a redemption, any
amount equal to accrued and unpaid dividends constituting a portion of the
Redemption Price) in fully paid and non-assessable shares of Common Stock. The
number of shares of Common Stock distributable in a dividend on each share of
Preferred Stock shall be equal to the quotient obtained by dividing (a) the
amount of such dividend, as determined under paragraph 1B, by (b) the higher of
(i) the Market Price of the Common Stock on the Dividend Reference Date
immediately preceding the dividend payment and (ii) the Series A/B Dilution
Price. When the Corporation pays a dividend to the holders of Preferred Stock,
the Corporation shall provide each holder of Preferred Stock with a calculation
of the aggregate number of shares of Common Stock payable in such dividend,
including the computation of the Market Price. If any fractional interest in a
share of Common Stock would, except for the provisions of this sentence, be
deliverable upon payment of any dividend in shares of Common Stock, the
Corporation, in lieu of delivering the fractional share therefor, shall pay an
amount to the holder thereof equal to the Market Price of such fractional
interest, calculated as set forth above in this paragraph 1D.
1E. Dividends on Junior Securities. The Corporation shall not
declare and pay any dividends on Junior Securities unless all accrued and unpaid
dividends on the Preferred Stock have been paid in full.
1F. Certain Withholding Provisions. Notwithstanding any other
provision of Section 1, and without limiting the generality of the Board's power
and authority with respect to the declaration and payment of dividends, the
Board shall have and may exercise the power and authority to provide that the
receipt by each record holder of Preferred Shares entitled thereto of any
dividend paid by the Corporation as declared on the issued and outstanding
Preferred Shares shall be subject to the condition (the "Tax Payment Condition")
that the Corporation receive, at or prior to the time for payment of such
dividend (the "Payment Time"), from or on behalf of such record holder, payment
in full of the taxes, fees, duties, assessments, or other amounts, if any (the
"Tax"), that the Corporation is required under applicable law to pay or withhold
in connection with the declaration and payment to such record holder of such
dividend. If the Tax Payment Condition
-2-
applies and has been satisfied, or has been duly waived by the Corporation, at
or prior to the Payment Time, at the Payment Time the Corporation shall pay such
dividend to such record holder. If the Tax Payment Condition applies but has not
been satisfied, and has not been duly waived by the Corporation, at or prior to
the Payment Time, at the Payment Time the Corporation shall pay the dividend to
which such record holder is entitled by irrevocably depositing and setting aside
such dividend with the Secretary of the Corporation as escrow holder (the
"Escrow Holder"). Upon the Escrow Holder's receipt, from or on behalf of such
record holder, of payment in full of the Tax, plus any interest, penalty, or
additional amount to be paid or withheld as a result of the passage of time from
and after the Payment Time (the "Escrow Termination Time"), the Escrow Holder
shall release such dividend to such record holder and shall release such Tax,
and such additional amount if any, to the Corporation. If such dividend is paid
in shares of Common Stock and is not received at or prior to the Payment Time by
the record holder of Preferred Shares entitled to payment thereof, then
(notwithstanding any provision hereof to the contrary) until the Escrow
Termination Time (and only until such time, whether or not the dividend has been
released by the Escrow Holder), such record holder shall not be entitled to vote
such shares of Common Stock for any purpose, to receive payment of dividends or
other distributions on such shares of Common Stock, or to exercise any other
rights or privileges in respect of such shares of Common Stock, and the Escrow
Holder shall have no right to vote such shares of Common Stock or to exercise
any other right or privilege in respect thereof (whether in accordance with the
wishes or directions of such record holder or otherwise), but the Escrow Holder
shall receive and hold in escrow until the Escrow Termination Time together with
such shares of Common Stock any dividends paid or other distributions made on
such shares of Common Stock and at the Escrow Termination Time shall release
such dividends paid or other distributions made on such shares of Common Stock,
if any, along with such shares of Common Stock.
Section 2. Liquidation.
-----------
Subject to the provisions of Section 2 of each of the Series A
Certificate and the Series B Certificate: upon any Liquidation, each holder of
Preferred Stock shall be entitled to be paid, before any distribution or payment
is made upon any Junior Securities, an amount in cash equal to the greater of
(a) the aggregate Liquidation Value (plus an amount equal to all accrued and
unpaid dividends) of all shares of Preferred Stock held by such holder or (b)
the amount which would be distributed with respect to the shares of Common Stock
(including fractional shares for purposes of this calculation) into which such
shares of Preferred Stock are convertible (assuming conversion of all
outstanding Preferred Stock) immediately prior to the record date for such
distribution (or, if there is no such record date, then the date as of which the
holders of Common Stock entitled to such distribution are determined), and the
holders of Preferred Stock shall not be entitled to any further payment; and if
upon any such Liquidation the Corporation's assets to be distributed among the
holders of the Preferred Stock are insufficient to permit
-3-
payment to such holders of the aggregate amount which they are entitled to be
paid, then the entire assets to be distributed shall be distributed ratably
among such holders based upon the aggregate Liquidation Value (plus all accrued
and unpaid dividends) of the Preferred Shares held by each such holder. Prior to
such Liquidation, the Corporation shall (to the extent permitted by law) declare
for payment all accrued and unpaid dividends with respect to the Preferred
Stock, which dividends shall be payable in cash notwithstanding the provisions
of paragraph 1D. (Payment of the greater of the amounts specified in clauses (a)
and (b) of this Section 2 in respect of such Preferred Shares shall constitute
payment of such declared dividends.) The Corporation shall mail written notice
of such Liquidation, not less than 60 days prior to the payment date stated
therein, to each record holder of Preferred Stock.
Section 3. Redemptions.
-----------
3A. Redemption at the Maturity Date. At the Maturity Date the
Corporation shall redeem all of the Preferred Shares then outstanding for a
price equal to the Redemption Price. The Corporation shall pay the Redemption
Price for the Preferred Shares within thirty (30) days after the Maturity Date
(or such later date upon which the certificates evidencing the Preferred Shares
are surrendered to the Corporation).
3B. Redemption at the Option of the Corporation. At any time
after the Initial Redemption Date, or, if prior to the Initial Redemption Date,
immediately prior to the consummation of any consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Corporation,
to the extent that it has funds legally sufficient therefor, the Corporation may
redeem all or, subject to the last sentence of this paragraph, a portion of the
Preferred Shares then outstanding for the Redemption Price. The number of
Preferred Shares to be redeemed from each holder thereof in a partial redemption
pursuant to this paragraph 3B shall be the number of Preferred Shares determined
by multiplying the total number of Preferred Shares to be redeemed by a
fraction, the numerator of which shall be the total Redemption Price of
Preferred Shares then held by such holder and the denominator of which shall be
the aggregate Redemption Price of Preferred Shares then outstanding.
3C. Redemption Payment. For each Preferred Share which is to
be redeemed, the Corporation shall be obligated to pay the Redemption Price to
the holder thereof on the Redemption Date or such later date upon which occurs
the surrender by such holder at the Corporation's principal office of the
certificate representing such Preferred Share. Subject to the provisions of
paragraph 4C of the Series A Certificate and paragraph 4C of the Series B
Certificate, if the funds of the Corporation legally available for payment of
the cash portion of the Redemption Price of Preferred Shares on any Redemption
Date are insufficient to pay the cash portion of the Redemption Price for the
total number of Preferred Shares to be
-4-
redeemed on such date, those funds which are legally available shall be used to
redeem the maximum possible number of such Preferred Shares ratably among the
holders of the Preferred Shares to be redeemed based upon the aggregate
Redemption Price of the Preferred Shares held by each such holder and the
remaining Preferred Shares called for redemption will remain outstanding; and at
any time thereafter when additional funds of the Corporation are legally
available for the redemption of Preferred Shares, such funds shall immediately
be used to redeem the balance of the Preferred Shares which the Corporation has
become obligated to redeem on any Redemption Date but which it has not redeemed.
Payment of the Redemption Price in respect of such Preferred Shares shall
extinguish all rights to dividends that are accrued and unpaid as of the
Redemption Date with respect to the Preferred Shares which are redeemed on such
Redemption Date.
3D. Notice of Redemption. The Corporation shall mail written
notice of each redemption of any Preferred Stock to each record holder of
Preferred Stock not more than 60 nor less than 30 days prior to the date on
which such redemption is to be made specifying (a) the number of shares of
Preferred Stock to be redeemed by the Corporation and (b) the Redemption Date.
Upon mailing any such notice of redemption, the Corporation shall become
obligated to redeem the total number of Preferred Shares specified in such
notice at the time of redemption specified therein and upon the surrender on or
before such time of the certificates representing such Preferred Shares. If one
or more holders of Preferred Shares being redeemed shall fail to surrender the
certificates representing such Preferred Shares by the Redemption Date, the
Corporation shall pay the Redemption Price by irrevocably depositing or setting
aside the required amount to be paid promptly upon surrender of such
certificates. Such deposit or set aside shall be deemed payment of the
Redemption Price to the holder for whom it is deposited or set aside. In case
fewer than the total number of Preferred Shares represented by any certificate
are redeemed, a new certificate representing the number of unredeemed Preferred
Shares shall be issued to the holder thereof without cost to such holder within
three Business Days after surrender of the certificate representing the redeemed
Preferred Shares.
3E. Dividends after Redemption Date. No Preferred Share that
is redeemed is entitled to any dividends accruing after the Redemption Date. On
the Redemption Date of any Preferred Share, all rights of the holder of such
Preferred Share shall cease, and such Preferred Share shall be deemed to be no
longer outstanding.
3F. Redeemed or Otherwise Acquired Preferred Shares. Any
Preferred Shares which are redeemed, converted or otherwise acquired by the
Corporation thereupon shall be retired. All such shares shall upon their
retirement become authorized but unissued shares of preferred stock of the
Corporation and may not be reissued as Preferred Stock but may be reissued as
part of a new series
-5-
of preferred stock to be created by resolution or resolutions of the board of
directors, subject to the conditions or restrictions on issuance set forth in
the certificate of incorporation of the Corporation.
Section 4. Voting Rights.
-------------
The holders of the Preferred Stock shall be entitled to notice
of all stockholders meetings in accordance with the Corporation's bylaws, and
except as otherwise required by law, the holders of the Preferred Stock shall be
entitled to vote on all matters submitted to the stockholders for a vote
together with the holders of the Common Stock voting together as a single class
with each share of Common Stock entitled to one vote per share, and each
Preferred Share (including fractional shares) entitled to one vote for each
whole share of Common Stock that would be issuable upon conversion of such
Preferred Share at the time the vote is taken.
Section 5. Conversion.
----------
5A. Conversion Procedure.
--------------------
(i) At any time and from time to time after the issuance
thereof, any holder of Preferred Stock may convert all or any of the Preferred
Shares (including any fraction of a Preferred Share) held by such holder into a
number of shares of Common Stock equal to the sum of: (a) the number of shares
of Common Stock computed by multiplying the number of Preferred Shares to be
converted by the Liquidation Value of a Preferred Share, and dividing the result
by the Conversion Price then in effect, plus (b) the number of shares of Common
Stock that would be payable if all accrued but unpaid dividends were declared
and paid on the Preferred Shares to be converted. For purposes of determining
the amount of dividends payable or that would be payable with respect to a
conversion under Section 5, the date for determining the Market Price shall be
the Business Day immediately preceding the date on which conversion is deemed to
have been effected.
(ii) Each conversion of Preferred Stock shall be deemed to
have been effected as of the close of business on the date on which the
certificate or certificates representing the Preferred Shares to be converted
have been surrendered at the principal office of the Corporation, together with
written notice of the holder's desire to convert such Preferred Shares. At such
time as such conversion has been effected, the rights of the holder of such
Preferred Shares as such holder shall cease, and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock are to
be issued upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Common Stock represented thereby, which
Common Stock shall be deemed to have been issued as of such time. Issuance of
Common Stock by the Corporation to effect any conversion shall extinguish all
rights to dividends that are accrued and unpaid as of the date
-6-
on which conversion is to be made with respect to the Preferred Shares which are
to be converted on such date.
(iii) The conversion rights of any Preferred Share subject to
redemption hereunder shall terminate on the Redemption Date for such Preferred
Share unless the Corporation has failed to pay to the holder thereof the
Redemption Price thereof.
(iv) Notwithstanding any other provision hereof, if a
conversion of any Preferred Shares is to be made in connection with a Public
Offering or prior to a redemption, such conversion may, at the election of the
holder of such Preferred Shares, be conditioned upon the consummation of the
Public Offering or the redemption occurring on or before a specified date, in
which case such conversion shall not be deemed to be effective until the
consummation of the Public Offering or unless the redemption occurs on or before
the specified date.
(v) As soon as possible after a conversion has been effected
(but in any event within three Business Days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number
of shares of Common Stock issuable by reason of such
conversion in such name or names and such
denomination or denominations as the converting
holder has specified;
(b) payment of the amount payable under subparagraph
(viii) below with respect to such conversion; and
(c) a certificate representing any Preferred Shares which
were represented by the certificate or certificates
delivered to the Corporation in connection with such
conversion but which were not converted.
(vi) The issuance of certificates for shares of Common Stock
upon conversion of Preferred Stock shall be made without charge to the holders
of such Preferred Stock for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Common Stock.
(vii) The Corporation shall not close its books against the
transfer of Preferred Stock or of Common Stock issued or issuable upon
conversion of Preferred Stock in any manner which interferes with the timely
conversion of Preferred Stock. The Corporation shall assist and cooperate (but
the Corporation shall not be required to expend substantial efforts or funds)
with any holder of Preferred Shares required to make any governmental filings or
obtain any governmental approval prior to or in connection with any conversion
of Preferred Shares hereunder
-7-
(including, without limitation, making any filings required to be made by the
Corporation).
(viii) If any fractional interest in a share of Common Stock
would, except for the provisions of this subparagraph, be deliverable upon any
conversion of shares of a holder's Preferred Stock, the Corporation, in lieu of
delivering the fractional share therefor, shall pay an amount to the holder
thereof equal to the Market Price of such fractional interest as of the Business
Day immediately preceding the date of conversion.
(ix) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon the conversion of the Preferred Stock, not less
than the number of shares of Common Stock issuable upon the conversion of all
outstanding Preferred Stock which may then be exercised. All shares of Common
Stock which are so issuable shall, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Corporation shall take all such actions as may be necessary to ensure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange upon which shares of Common Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Corporation upon
each such issuance).
5B. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) the outstanding shares of one or more classes of
Common Stock into a greater number of shares, the Conversion Price (and the
Trigger Price and Series A/B Dilution Price) in effect immediately prior to such
subdivision shall be proportionately reduced, and if the Corporation at any time
combines (by reverse stock split or otherwise) the outstanding shares of one or
more classes of Common Stock into a smaller number of shares, the Conversion
Price (and the Trigger Price and Series A/B Dilution Price) in effect
immediately prior to such combination shall be proportionately increased.
5C. Reorganization, Reclassification, Consolidation, Merger or
Sale. In connection with any Reorganization, (i) the holders of Preferred Stock
shall thereafter have the right to acquire and receive, in lieu of or in
addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Stock, such shares of stock, securities, cash or other assets (or, if
not practicably attainable, the reasonable equivalent thereof) as such holder
would have received in connection with such Reorganization if such holder had
converted its Preferred Stock immediately prior to such Reorganization, and (ii)
dividends and amounts in respect of dividends hereunder payable in shares of
Common Stock prior to such Reorganization shall be payable, in lieu of each
share of Common Stock, in such
-8-
shares of stock, securities, cash or other assets (or reasonable equivalent
thereof) as the holder of one share of Common Stock received in connection with
such Reorganization. The Corporation shall make appropriate provisions to ensure
that the requirements of the previous sentence are effected. In each such case,
the Corporation shall also make appropriate provisions to ensure that the
provisions of this Section 5 and Sections 6 and 7 shall thereafter be applicable
to the Preferred Stock.
5D. Notices.
-------
(i) Immediately upon any adjustment of the Conversion Price,
the Corporation shall give written notice thereof to all holders of Preferred
Stock, setting forth in reasonable detail and certifying the calculation of such
adjustment.
(ii) The Corporation shall give written notice to all holders
of Preferred Stock at least 20 days prior to the date on which the Corporation
closes its books or fixes a record date (a) with respect to any dividend or
distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock or (c) for determining rights to vote with
respect to any Liquidation or Reorganization.
5E. Mandatory Conversion. The Corporation may require, by
written notice to all holders of Preferred Stock, the conversion of all of the
outstanding Preferred Stock into a number of shares of Common Stock equal to the
sum of: (a) the number of shares of Common Stock computed by multiplying the
number of Preferred Shares to be converted by the Liquidation Value of a
Preferred Share, and dividing the result by the applicable Conversion Price then
in effect, plus (b) the number of shares of Common Stock that would be payable
if all accrued but unpaid dividends were declared and paid on the Preferred
Shares to be converted; provided that the Closing Price of the Common Stock
(adjusted proportionately for stock dividends, stock splits, combinations, and
similar changes in the Common Stock occurring after the Closing) on at least
twenty (20) of the thirty (30) latest trading days preceding the date of the
Corporation's notice has been greater than or equal to the Conversion Price. If
the Corporation shall require the conversion of the Preferred Stock under this
Section 5E within two years from the Initial Date of Issuance, then the number
of shares of Common Stock into which the shares of Preferred Stock are converted
shall be increased by the number of shares of Common Stock that would be payable
if the Corporation were immediately to declare and pay all dividends that in the
absence of conversion would have accrued on such shares of Preferred Stock over
the six-month period immediately following the date of conversion; provided,
however, that the total dividends and amounts in respect of dividends paid on
the Preferred Stock after the Date of Issuance thereof, including any additional
amounts in respect of dividends paid as a result of a required conversion under
this Section 5E, shall not be less than the
-9-
amount of dividends that would have accrued on all outstanding shares of the
Preferred Stock for one full year following the Initial Date of Issuance.
Any conversion of shares of Preferred Stock under this
Paragraph 5E shall be effected and be deemed to have been effected as of the
close of business on the date on which the Corporation provides written notice
of such conversion to the holders of such shares of Preferred Stock (the
"Mandatory Conversion Time"), and as of the Mandatory Conversion Time, the
rights of the holders of the converted shares of Preferred Stock, as such, shall
cease and terminate, such converted shares of Preferred Stock shall be retired
in accordance with paragraph 3F, the shares of Common Stock into which such
shares of Preferred Stock are converted shall be issued and deemed to have been
issued, the certificate(s) that theretofore represented shares of Preferred
Stock thereafter shall represent the number of shares of Common Stock into which
the shares of Preferred Stock theretofore represented thereby shall have been
converted, and the holder of any such certificate, upon the surrender thereof to
the Corporation, shall be entitled to receive from the Corporation a new
certificate representing the number of shares of Common Stock into which the
shares of Preferred Stock theretofore represented thereby shall have been
converted.
5F. Effect on Conversion Price of Certain Events.
--------------------------------------------
(i) General. In order to prevent dilution of the conversion
rights granted under this Section 5, the Conversion Price shall be subject to
adjustment from time to time pursuant to this paragraph 5F.
(ii) Adjustment of Conversion Price. If and whenever on or
after the Date of Issuance the Corporation issues or sells, or in accordance
with this paragraph 5F is deemed to have issued or sold, other than in an
Excluded Issuance, any share of Common Stock for a consideration per share less
than the Trigger Price in effect immediately prior to such time (a "Dilutive
Event"), then forthwith upon such issue or sale in the Dilutive Event the
Conversion Price shall be reduced by multiplying the Conversion Price in effect
immediately before the Dilutive Event by a fraction, the numerator of which is
the number of shares of Common Stock that are Outstanding on an As-Converted
Basis (as defined below) immediately before the Dilutive Event plus the number
of shares of Common Stock that could be purchased at the Trigger Price at the
time of the Dilutive Event for the aggregate consideration paid or payable upon
the sale or issuance of Common Stock in the Dilutive Event, and the denominator
of which is the number of shares of Common Stock that are Outstanding on an
As-Converted Basis immediately before the Dilutive Event plus the number of
shares that are acquired or to be acquired upon the sale or issuance of the
Common Stock in the Dilutive Event. For purposes of this paragraph 5F(ii),
"Outstanding on an As-Converted Basis" immediately before the Dilutive Event
means the sum of (i) all Common Stock issued and outstanding immediately before
the Dilutive Event plus (ii) all Common Stock issuable upon the
-10-
exercise of Options or conversion of Convertible Securities outstanding
immediately before the Dilutive Event (other than Preferred Stock).
(iii) Issuance of Rights or Options. If the Corporation in any
manner grants any Options and the price per share for which shares of Common
Stock are issuable upon the exercise of any such Option is less than the Trigger
Price in effect immediately prior to the time of the granting of such Option,
then such shares of Common Stock shall be deemed to have been issued and sold by
the Corporation at the time of the granting of such Options for such price per
share and the Conversion Price shall be adjusted in accordance with paragraph
5F(ii) above. For purposes of this paragraph, the "price per share" for which
shares of Common Stock are issuable upon the exercise of any Option shall be
equal to the sum of the amounts of consideration (if any) received or receivable
by the Corporation with respect to such shares of Common Stock upon the granting
of the Option and upon exercise of the Option. No further adjustment of the
Conversion Price shall be made upon the actual issue of such Common Stock upon
the exercise of such Options.
(iv) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Security (or Options to purchase any
Convertible Security) and the price per share for shares of Common Stock that
are issuable upon conversion or exchange thereof is less than the Trigger Price
in effect immediately prior to the time of such issue or sale (or the granting
of such Option), then such shares of Common Stock shall be deemed to have been
issued and sold by the Corporation at the time of the issuance or sale of such
Convertible Securities (or the granting of such Option) for such price per share
and the Conversion Price shall be adjusted in accordance with paragraph 5F(ii)
above. For the purposes of this paragraph, the "price per share" for which
shares of Common Stock are issuable upon conversion or exchange of any
Convertible Security (or exercise of any Option therefor) shall be equal to the
sum of the amounts of consideration (if any) received or receivable by the
Corporation upon the issuance of the Convertible Security (or such Option) and
upon the conversion or exchange of such Convertible Security (or exercise of
such Option). No further adjustment of the Conversion Price shall be made upon
the actual issue of such Common Stock upon conversion or exchange of any
Convertible Security, and if any such issue or sale of such Convertible Security
is made upon exercise of any Options for which adjustments of the Conversion
Price had been or are to be made pursuant to other provisions of this Section 5,
no further adjustment of the Conversion Price shall be made by reason of such
issue or sale.
(v) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Option, the additional consideration (if any) payable
upon the issue, conversion or exchange of any Convertible Security, or the rate
at which any Convertible Security is convertible into or exchangeable for Common
Stock change at any time, any Conversion Price previously adjusted with respect
to such Option or Convertible Security and in effect at the time of such change
shall be
-11-
readjusted to the Conversion Price which would have been in effect at such time
had such Option or Convertible Security originally provided for such changed
purchase price, additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold.
(vi) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, any Conversion Price then in effect hereunder shall be adjusted
to the Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(vii) Calculation of Consideration Received. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Corporation shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Corporation shall be the Market Price thereof as of the date of
receipt. If any Common Stock, Option or Convertible Security is issued to the
owners of the non-surviving entity in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the assets and business
of the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash and securities shall be as determined in good faith by the Board
of Directors of the Corporation.
(viii) Integrated Transactions. In case any Option is issued
in connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $.01.
(ix) Treasury Shares. For purposes of calculating under this
paragraph 5F the number of shares of Common Stock outstanding at any given time,
the number of shares of Common Stock outstanding at such time does not include
shares owned or held by or for the account of the Corporation or any subsidiary
thereof, and the disposition of any shares so owned or held shall be considered
an issue or sale of Common Stock.
(x) De Minimis Adjustments. Notwithstanding any other
provisions of this Section 5, the Corporation shall not be required to make any
-12
adjustment of the Conversion Price unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Conversion Price as
then in effect. Any lesser adjustment shall be carried forward and shall be made
no later than the time of, and together with, the next subsequent adjustment
which, together with any adjustment or adjustments so carried forward, shall
amount to an increase or decrease of at least one percent (1%) of the Conversion
Price as then in effect. If any action would require adjustment of the
Conversion Price pursuant to more than one subparagraph of this paragraph 5F,
only one adjustment shall be made as determined in good faith by the Board of
Directors of the Corporation.
Section 6. Liquidating Dividends.
---------------------
If the Corporation declares or pays a Liquidating Dividend
upon the Common Stock, then the Corporation shall pay to the holders of
Preferred Stock at the time of payment thereof the Liquidating Dividend which
would have been paid to such holders had such Preferred Stock been converted
immediately prior to the record date fixed for determining the stockholders
entitled to receive payment of such Liquidating Dividend, or, if no record date
is fixed, the date as of which the record holders of Common Stock entitled to
such dividends are to be determined.
Section 7. Purchase Rights.
---------------
If at any time the Corporation grants, issues or sells any
Purchase Rights pro rata to the record holders of any class of Common Stock,
then each holder of Preferred Stock shall be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder would have acquired if such holder had held the number of shares of
Common Stock acquirable upon conversion of such holder's Preferred Shares
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
Section 8. Registration of Transfer.
------------------------
The Corporation shall keep at its principal office a register
for the registration of issuances and transfers of Preferred Stock. Upon the
surrender of any certificate representing Preferred Stock at such place, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
Preferred Shares represented by the surrendered certificate. Each such new
certificate shall be registered in such name and shall represent such number of
Preferred Shares as is requested by the holder of the surrendered certificate
and shall be substantially identical in form to the surrendered certificate, and
dividends shall accrue on the Preferred Stock
-13-
represented by such new certificate from the date to which dividends have been
fully paid on such Preferred Stock represented by the surrendered certificate.
Section 9. Replacement.
-----------
Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing Preferred Shares, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor, its own agreement shall be satisfactory), or, in the
case of any such mutilation upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of Preferred Shares represented
by such lost, stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate, and dividends shall
accrue on the Preferred Stock represented by such new certificate from the date
to which dividends have been fully paid on the Preferred Shares represented by
such lost, stolen, destroyed or mutilated certificate.
Section 10. Definitions.
-----------
"Bond Offering" means an underwritten offering of notes or
debentures of the Corporation to the public, with or without Options, primarily
for the purpose of refinancing the indebtedness of International Private
Satellite Partners, L.P. ("Orion Atlantic") outstanding under the Credit
Agreement dated December 6, 1991 among Orion Atlantic, the Banks named therein
and The Chase Manhattan Bank (National Association), as Agent.
"Business Day" means a day on which banks are generally open
for business in New York City.
"Closing" means ______ ___, 1996.
"Closing Price" of each share of Common Stock or other
security means the composite closing price of the sales of the Common Stock or
such other security on all securities exchanges on which such security may at
the time be listed (as reported in The Wall Street Journal), or, if there has
been no sale on any such exchange on any day, the average of the highest bid and
lowest asked prices of the Common Stock or such other security on all such
exchanges at the end of such day, or, if such security is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock or
such other security in the Nasdaq National Market (as reported in The Wall
Street Journal) on such day, or if such security is not quoted in the Nasdaq
National Market but is traded over-the-counter, the average of the highest bid
and lowest asked prices on such day in the over-the-counter
-14-
market as reported by the National Quotation Bureau Incorporated, or any similar
successor organization.
"Common Stock" means, collectively, the Corporation's common
stock, par value $0.01 per share, and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
Liquidation of the Corporation; and if there is a change such that the
securities issuable upon conversion of the Preferred Stock are issued by an
entity other than the Corporation or there is a change in the class of
securities so issuable, then the term "Common Stock" shall mean one share of the
security issuable upon conversion of the Preferred Stock if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Conversion Price" shall mean, with respect to any Series C
Share, $17.50 (subject to adjustment as provided in Section 5 for events
occurring after its Date of Issuance).
"Convertible Securities" means any stock or other securities
of the Corporation convertible into or exchangeable for Common Stock.
"Convertible Subordinated Debenture Offering" means an
offering of convertible subordinated debentures of the Corporation to the
public, which debentures would be convertible into Common Stock.
"Corporation" means Orion Newco Services, Inc., a Delaware
corporation.
"Date of Issuance," with respect to any Preferred Share, means
the date on which the Corporation initially issues such Preferred Share,
regardless of the number of times transfer of such Preferred Share is made on
the stock records maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such Preferred Share.
"Dividend Reference Date" mean [___________] of each year,
commencing __________, 1996, and each of the following: (i) the date on which
the Liquidation Value of such Preferred Share is paid, (ii) the date on which
such Preferred Share is converted into shares of Common Stock hereunder, and
(iii) the Maturity Date.
"Excluded Issuance" means the issue or sale of (i) shares of
Common Stock in respect of any transaction described in paragraph 5B (including
without limitation any stock split, stock dividend or recapitalization), (ii)
shares of Common Stock by the Corporation pursuant to the exercise of Options
and Convertible Securities outstanding immediately prior to the Closing at
exercise prices that are
-15-
greater than or equal to the respective exercise prices in effect as of Closing
(as adjusted pursuant to the terms of such securities to give effect to stock
dividends or stock splits or a combination of shares in connection with a
recapitalization, merger, consolidation or other reorganization occurring after
the Closing), (iii) up to an aggregate of 150,000 shares of Common Stock by the
Corporation for any purpose, (iv) Options to acquire Common Stock by the
Corporation pursuant to a resolution of, or a stock option plan approved by a
resolution of, the Board of Directors of the Corporation (or the compensation
committee thereof) to the Corporation's employees or directors, (v) shares of
Common Stock, Options or Convertible Securities (or shares of Common Stock
pursuant to the exercise of Options and Convertible Securities) as part of or in
connection with a Bond Offering or a Convertible Subordinated Debenture
Offering.
"Initial Date of Issuance" means the Date of Issuance of the
first share of Preferred Stock to be issued.
"Initial Redemption Date" means the earlier of (i) the close
of business on ______, 1998. [two years from the Date of Issuance] or (ii) the
effective date of a Reorganization.
"Junior Securities" means Common Stock and any other capital
stock or other equity securities issued by the Corporation, whether currently
existing or hereafter authorized or issued (other than Series A Preferred or
Series B Preferred or any other series of preferred stock of the Corporation
issued pursuant to an option granted to purchasers of Series A Preferred in
connection with the initial issuances of Series A Preferred by the Corporation).
"Liquidation" means the liquidation, dissolution or winding up
of the Corporation; provided, however, that neither the consolidation or merger
of the Corporation into or with any other entity or entities, nor the sale or
transfer by the Corporation of all or any part of its assets, nor the reduction
of the capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation.
"Liquidating Dividend" means a dividend upon the Common Stock
payable otherwise than in cash out of legally available funds (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock.
"Liquidation Value" of any Preferred Share shall be equal to
$1,000.
"Market Price" of each share of Common Stock or other security
means, with respect to a specified date, the Closing Price of such share or
other security, averaged over a period of the 20 consecutive Business Days prior
to such date. If during this period such security is not listed on any
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market,
-16-
the Market Price will be the fair value of such shares of Common Stock or
security determined by agreement between the Corporation and the holders of a
majority of the outstanding Preferred Shares. If such parties are unable to
reach agreement within a reasonable period of time, the fair value of such
security shall be determined by an independent appraiser experienced in valuing
such type of consideration jointly selected by the Corporation and the holders
of a majority of the outstanding Preferred Shares. The determination of such
appraiser shall be final and binding upon the parties, and the fees and expenses
of such appraiser shall be borne by the Corporation.
"Maturity Date" means the close of business on ______ __,
2021. [25 years from the Date of Issuance]
"Options" means any options, warrants or rights to subscribe
for or to purchase Common Stock or any Convertible Securities.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Share" means a share of Series C Preferred.
"Preferred Stock" means the Series C Preferred.
"Prior Dividend Date" means, with respect to a Dividend
Reference Date, the previous Dividend Reference Date following which dividends
were paid on shares of Preferred Stock hereunder (or, if there is no such
previous Dividend Reference Date, the Date of Issuance).
"Public Offering" means any offering by the Corporation of its
equity securities to the public pursuant to an effective registration statement
under the Securities Act of 1933, as then in effect, or any comparable statement
under any similar federal statute then in force; provided, that "Public
Offering" shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Purchase Rights" means any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property.
"Redemption Date" means the date on which the Redemption Price
of a Preferred Share is paid to the holder thereof.
"Redemption Price" means the Liquidation Value of such
Preferred Share, payable in cash, plus an amount equal to all accrued and unpaid
dividends thereon, payable in shares of Common Stock pursuant to paragraph 1D.
-17-
"Reorganization" means any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Corporation's assets to another Person or other transaction which is effected in
such a manner that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock.
"Series A Certificate" means the Certificate of Designations,
Rights and Preferences for the Series A Preferred.
"Series B Certificate" means the Certificate of Designations,
Rights and Preferences for the Series B Preferred.
"Series A Preferred" means the Corporation's Series A 8%
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share.
"Series B Preferred" means the Corporation's Series B 8%
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share.
"Series C Preferred" means the Corporation's Series C 6%
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share.
"Series A/B Dilution Price" means, at any time, the conversion
price for the Series B Preferred as then in effect under the Series B
Certificate.
"Series A Share" means a share of Series A Preferred.
"Series B Share" means a share of Series B Preferred.
"Series C Share" means a share of Series C Preferred.
"Trigger Price" shall mean, with respect to any Series C
Share, $14.00 (subject to adjustment as provided in Section 5B for events
occurring after its Date of Issuance).
Section 11. Amendment and Waiver.
--------------------
No amendment, modification or waiver shall be binding or
effective with respect to any provision hereof without the prior affirmative
vote or written consent of the holders of a majority of the Preferred Shares
outstanding at the time such action is taken; provided, however, that without
the prior affirmative vote or written consent of each holder individually
holding at least 51% of the Preferred Stock then outstanding, no such action
shall change (i) the rate at which or the manner in which dividends on the
Preferred Stock accrue or the form of consideration in which such dividends are
payable or the times at which such dividends become payable or the amount
payable on redemption of the Preferred
-18-
Stock or the times at which redemption of Preferred Stock is to occur, (ii) any
Conversion Price of the Preferred Stock or the number of shares or class of
stock into which the Preferred Stock is convertible, (iii) the priority of
payment of dividends to the Preferred Stock, (iv) the Liquidation Value, (v) the
voting rights of the Preferred Stock, (vi) the rights of the Preferred Stock
upon a reorganization, (vii) the provisions for mandatory conversion of the
Preferred Stock, (viii) the rights of holders of the Preferred Stock to acquire
Purchase Rights, or (ix) the percentage required to approve any change in this
Section 11.
Section 12. Notices.
-------
Except as otherwise expressly provided hereunder, all notices
referred to herein shall be in writing and shall be delivered by registered or
certified mail, return receipt requested and postage prepaid, or by reputable
overnight courier service, charges prepaid, and shall be deemed to have been
given when so mailed or sent (i) to the Corporation, at its principal executive
offices and (ii) to any stockholder, at such holder's address as it appears in
the stock records of the Corporation (unless otherwise indicated by any such
holder).
-19-
EXHIBIT D
---------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of _______, 199__, between and among Orion Network Systems,
Inc., a Delaware corporation ("ONS"); British Aerospace Communications, Inc., a
Delaware corporation ("BAe"); COM DEV Satellite Communications Limited, a
Canadian corporation ("COM DEV"); Kingston Communications International Limited,
a company incorporated under the laws of England ("Kingston"); Lockheed Xxxxxx
Commercial Launch Services, Inc., a Delaware corporation ("Lockheed Xxxxxx");
MCN Sat US, Inc., a Delaware corporation ("MCN Sat"); and Trans-Atlantic
Satellite, Inc., a Delaware corporation ("TA Sat") (collectively, BAe, COM DEV,
Kingston, Lockheed Xxxxxx, MCN Sat, and TA Sat are referred to as the
"Exchanging Partners").
This Agreement is made in connection with and is conditioned upon the
consummation by ONS and the Exchanging Partners of (i) the formation of a new
Delaware corporation to be named Orion Newco Services, Inc. ("Newco" or the
"Company") substantially identical in all material respects to ONS; (ii) the
merger of a newly created subsidiary of Newco into ONS in a transaction in which
all capital stock of ONS is exchanged for equivalent capital stock (common or
preferred, as applicable, with the same relative rights and preferences) of
Newco, and in which ONS becomes a wholly owned subsidiary of Newco; and (iii)
the Exchanging Partners' transfer of their limited partnership interests in
International Private Satellite Partners, L.P., a Delaware limited partnership
("Orion Atlantic"), to Newco in exchange for shares of a newly created series of
the preferred stock of Newco having the designation Series C 6% Cumulative
Redeemable Convertible Preferred Stock (the "Series C Preferred Stock") pursuant
to a Section 351 Exchange Agreement and Plan of Conversion, dated as of June
___, 1996, between ONS, Orion Atlantic, Orion Satellite Corporation, a Delaware
corporation, and the Exchanging Partners ("Exchange Agreement"). The Series C
Preferred Stock issued to the Exchanging Partners pursuant to the Exchange
Agreement will be convertible into shares of common stock, par value $.01 per
share, of Newco ("Common Stock"), and is to have certain registration rights set
forth herein.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
-----------
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Business Day" shall mean a day on which banks are generally
open for business in New York City.
"Closing Date" shall mean the date of closing of Newco's sale
of its Series C Preferred Stock to the Exchanging Partners as contemplated by
the Exchange Agreement.
"Certificate of Designations" means the Certificate of
Designations, Rights and Preferences establishing the terms and relative rights
and preferences of the Series C Preferred Stock.
"Common Stock" means common stock, par value $.01 per share,
of Newco, and any capital stock of Newco into which the Common Stock is
converted or convertible.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors or other parties who succeed to the
Company's obligations hereunder.
"Eligible Registrable Securities" means the Registrable
Securities which a Holder is permitted to sell under the terms of the Transfer
Restriction Agreements.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Exchange Agreement" shall have the meaning set forth in the
preamble.
"Exchanging Partner" shall have the meaning set forth in the
preamble.
"Holder" shall mean any holder of Registrable Securities.
"Initial Shelf Registration Statement" shall mean the Shelf
Registration Statement filed by the Company pursuant to Section 2(a).
"Losses" means any losses, claims, damages, liabilities, costs
and expenses, including, but not limited to reasonable attorney's fees.
"Majority Holders" shall mean the Holders of a majority of the
Eligible Registrable Securities.
"Market Value" shall mean, with respect to a specified date,
the aggregate closing price of such shares of Common Stock, averaged over a
period of 20 consecutive Business Days prior to such date. If during this period
the Common Stock is not listed on any securities exchange, quoted on the Nasdaq
National Market, or quoted in the over-the-counter market, the Market Value will
be the fair value of the Common Stock determined by agreement between the
Company and
-2-
the Holders of a majority of the Eligible Registrable Securities. If such
parties are unable to reach agreement within a reasonable period of time, the
fair value of the Common Stock shall be determined by an independent appraiser
experienced in valuing such type of consideration jointly selected by the
Company and the Holders of a majority of the Eligible Registrable Securities.
The determination of such appraiser shall be final and binding upon the parties,
and the fees and expenses of such appraiser shall be borne by the Company.
"Person" shall mean an individual, partnership, corporation,
trust, or unincorporated organization, or a government or agency or political
subdivision thereof.
"Piggyback Registration" shall mean the registration by Newco
of the Common Stock (whether for its own account or for the account of others)
under the Securities Act, other than a registration statement filed pursuant to
the provisions of Section 2 or Section 3 hereof or a registration of securities
in connection with a business acquisition or combination or an employee benefit
plan.
"Prior Registration Rights Agreement" shall mean the following
agreements entered into by ONS on or before the date of the Exchange Agreement
under which ONS is obligated to register, or include in a registration statement
under the Securities Act, shares of capital stock of ONS, and all amendments and
supplements to any such agreement entered into on or before the date of the
Exchange Agreement, in each case as such agreement will be amended prior to the
closing under the Exchange Agreement to transfer all of ONS's rights and
obligations under each of such agreements to Newco: (i) the Registration Rights
Agreement dated as of June 17, 1994, among ONS and the Schedule of Investors set
forth therein, as amended (including without limitation the amendment dated June
__, 1996, a copy of which is attached hereto (the "Recent PRRAA")); (ii) the
Registration Rights Agreement, dated as of April 29, 1994, between ONS and Space
Systems/Loral, Inc. (the "SS/L RR Agreement"); and (iii) the respective Warrants
of ONS dated as of December 20, 1991, granted to British Aerospace
Communications, Inc. and Kingston Communications (Hull) plc.
"Proceeding" means any action, suit, proceeding or
investigation or written threat thereof.
"Registrable Securities" shall mean, regardless of who holds
such securities at the applicable time, the shares of Common Stock or other
securities issued or issuable upon conversion of the Series C Preferred Stock
purchased by the Exchanging Partners pursuant to the Exchange Agreement or
issued as dividends or distributions pursuant to the Certificate of
Designations; provided, however, that such securities shall cease to be
Registrable Securities when a registration statement with respect to the
registration of such securities shall have been
-3-
declared effective under the Securities Act and such securities shall have been
disposed of pursuant to such registration statement.
"Registration Expenses" shall mean any and all expenses
incident to the filing and effectiveness of each registration statement and
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. ("NASD") registration and filing fees, (ii) all fees
and expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualification of any of the Eligible Registrable
Securities and the preparation of a Blue Sky memorandum and compliance with the
rules of the NASD, (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any registration
statement, any prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements, certificates and other
documents relating to the performance of and compliance with this Agreement,
(iv) all fees and expenses incurred in connection with the listing of any of the
Eligible Registrable Securities on any securities exchange or The Nasdaq
National Market System, (v) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, (vi) the fees and disbursements of one
special counsel representing the Holders of Eligible Registrable Securities,
such special counsel to be selected by the Holders of a majority of the Eligible
Registrable Securities being registered, (vii) the fees and expenses of a
"qualified independent underwriter" if required by Schedule E of the By-Laws of
the NASD in connection with the offering of any of the Eligible Registrable
Securities, (viii) the fees and expenses of any escrow agent or custodian, and
(ix) any fees and disbursements of any Underwriters customarily paid by issuers
or sellers of securities and the reasonable fees and expenses of any special
experts retained by the Company in connection with any registration statement,
but excluding underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Registrable Securities by a Holder.
"Registration Period" shall mean a period terminating five (5)
years following the Closing Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Series C Preferred Stock" shall mean Series C 6% Cumulative
Redeemable Convertible Preferred Stock of Newco.
-4-
"Shelf Registration" shall mean a registration required to be
effected pursuant to Section 2(a).
"Shelf Registration Statement" shall mean a "shelf"
registration statement of Newco which covers the registration of Registrable
Securities on a Form S-3, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein; "Shelf Registration Statement" shall
include the Initial Shelf Registration Statement and each Top-up Shelf
Registration Statement.
"Top-up Period" shall have the meaning set forth in Section
2(c).
"Top-up Shelf Registration Statement" shall have the meaning
set forth in Section 2(c).
"Transfer Restriction Agreement" means (i) each agreement,
dated on or about the Closing Date, between Newco and any Exchanging Partner and
(ii) each subsequent agreement entered into between Newco and any of an
Exchanging Partner, any affiliate thereof, any transferee of Series C Preferred
Stock or Common Stock into which such Series C Preferred Stock is converted or
which is issued as a dividend on such Series C Preferred Stock or any other
party pursuant to the terms of another Transfer Restriction Agreement, in each
case which provides for restrictions on transfer of the Series C Preferred Stock
or Common Stock into which such Series C Preferred Stock is converted or which
is issued as a dividend on such Series C Preferred Stock.
"Underwriter" shall mean each Person who participates as an
underwriter of securities in a registered offering under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
2. Shelf Registration.
------------------
2(a) Filing of Initial Shelf Registration Statement. The
Company shall prepare and cause to be filed as soon as practicable (but no later
than 15 days after) the expiration of the 180 day period referred to under
paragraph 1 of the Transfer Restriction Agreement, the Initial Shelf
Registration Statement providing for the registration of any and all of the
Eligible Registrable Securities each Holder elects to include in the Initial
Shelf Registration Statement. The Company shall use all its reasonable best
efforts to have the Initial Shelf Registration Statement declared effective by
the SEC as soon as practicable after filing. Subject to Section 7 hereof, the
Company shall use its reasonable best efforts to keep the Initial Shelf
Registration Statement continuously effective for the Registration Period, or
such shorter period which will terminate when all of the
-5-
Eligible Registrable Securities covered by the Initial Shelf Registration
Statement, as amended from time to time pursuant to Section 2(c), have been sold
pursuant to the Initial Shelf Registration Statement.
2(b) Election to Include Eligible Registrable Securities in
Initial Shelf Registration Statement. The Company shall include in the Initial
Shelf Registration Statement all Eligible Registrable Securities, other than
Eligible Registrable Securities as to which a Holder advises the Company in
writing, at least 15 days prior to the expiration of the 180 day period referred
to under paragraph 1 of the Transfer Restriction Agreement, that such Holder
does not wish to have included in the Initial Shelf Registration Statement. Any
Holder who does not advise the Company in writing that such Holder does not wish
to have such Holder's Eligible Registrable Securities included in the Initial
Shelf Registration Statement shall be deemed to have assented to the inclusion
thereof. Notwithstanding the foregoing, except as set forth below, any Holder
who does not provide the information reasonably requested by the Company in
connection with the Initial Shelf Registration Statement shall not be entitled
to have its Eligible Registrable Securities included in the Initial Shelf
Registration Statement.
2(c) Filing of Subsequent Shelf Registration Statements or
Amendments. The Company shall use all reasonable efforts to cause to be filed,
during each successive period of not less than 60 days and not more than 90 days
(as determined by the Company, having regard principally to coordination of such
registration with ongoing business matters and disclosure requirements)
following effectiveness of the Initial Shelf Registration Statement which
terminates on or before the end of the Registration Period (each, a "Top-up
Period"), an additional Shelf Registration Statement or, at the Company's
option, a post-effective amendment to any then-effective Shelf Registration
Statement (a "Top-up Shelf Registration Statement") providing for the
registration of any and all of the Eligible Registrable Securities each Holder
elects to include in such Top-up Shelf Registration Statement which have not
been registered previously. The Company shall use all reasonable efforts to have
each such Shelf Registration Statement or post-effective amendment declared
effective by the SEC as soon as practicable after filing. Subject to Section 7
hereof, the Company shall use all reasonable efforts to keep each Top-up Shelf
Registration Statement continuously effective for the Registration Period, or
such shorter period which will terminate when all of the Eligible Registrable
Securities covered by such Top-up Shelf Registration Statement, as amended from
time to time pursuant to this Section 2(c), have been sold pursuant to such
Top-up Shelf Registration Statement.
2(d) Election to Include Eligible Registrable Securities in
Top-up Shelf Registration Statements. The Company shall give written notice to
all Holders of record of its intention to file a Top-up Shelf Registration
Statement with the SEC as far in advance of (and in no event less than 20 days
prior to) the anticipated filing date, and set forth in such notice the
anticipated filing date. The
-6-
Company shall include in the Top-up Shelf Registration Statement all Eligible
Registrable Securities as to which a Holder advises the Company in writing, at
least 10 days prior to the Top-up Shelf Registration Statement's anticipated
filing date, that such Holder wishes to have included in the Top-up Shelf
Registration Statement. In addition, any Holder who does not advise the Company
in writing that such Holder does not wish to have such Holder's Eligible
Registrable Securities included in the Top-up Shelf Registration Statement shall
be deemed to have assented to the inclusion thereof. Except as set forth below,
any Holder who has requested or assented to inclusion of its Eligible
Registrable Securities in the Top-up Shelf Registration Statement but who does
not provide the information reasonably requested by the Company in connection
with the Top-up Shelf Registration Statement shall not be entitled to have its
Eligible Registrable Securities included in the Top-up Shelf Registration
Statement.
2(e) Effective Registration Statement, Amendments. A Shelf
Registration Statement pursuant to this Section 2 will not be deemed to have
become effective unless it has been declared effective by the SEC; provided,
however, that if, after it has been declared effective, the offering of any
Registrable Securities pursuant to such registration statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such registration statement will be
deemed not to have become effective, and the Company shall be required to
continue to use its reasonable best efforts to have such registration statement
declared effective. Further, the Company shall, if necessary, to supplement or
amend each Shelf Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration.
2(f) Expenses. The Company shall pay any and all Registration
Expenses incident to the filing of each Shelf Registration Statement or
otherwise incident to the performance of or compliance by the Company with this
Section 2. Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Eligible Registrable Securities pursuant to the Shelf Registration Statement.
2(g) Consultation Regarding Top-up Registration. Within thirty
(30) days after the filing of the second Top-up Registration Statement, the
Company and the other parties hereto shall consult regarding (i) whether the
process of filing Top-up Registration Statements rather than registering all
Registrable Securities is resulting in any delays or other impediments in
Holders being able to sell Eligible Registrable Securities, and (ii) if any
delays are occurring, whether this Agreement should be modified to eliminate
such delays in view of the detriments associated with such modifications.
-7-
3. Demand Registration of Underwritten Offerings.
---------------------------------------------
3(a) Requests for Underwritten Registration. At any time
following expiration of the 180 day period referred to under paragraph 1 of the
Transfer Restriction Agreement, one or more Holders may request that the Company
effect a registration under the Securities Act of all or any of their Eligible
Registrable Securities in an Underwritten Offering; provided, however, that the
requesting Holders must request registration of Eligible Registrable Securities
with a Market Value, on the date of such request, of at least $17.5 million.
Each request for an Underwritten Offering shall specify the approximate number
of shares of Eligible Registrable Securities requested to be registered and the
anticipated per share price range for such offering. Within ten days after
receipt of any such request, the Company will give written notice of such
requested demand registration to all other Holders and, subject to Section 3(b),
will include in any such registration which constitutes an Underwritten Offering
satisfying the requirements of this Section 3(a) all Eligible Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the date the Company's notice is given.
3(b) Priority on Underwritten Offering. If the managing
Underwriters for an Underwritten Offering advise the Company in writing that in
their reasonable opinion the aggregate number of Eligible Registrable Securities
to be included in an Underwritten Offering (together with any other shares of
Common Stock ("Other Registrable Stock") which the Company is required to
include in such registration on a pro rata basis with Eligible Registrable
Securities under a Prior Registration Rights Agreement) exceeds the number of
shares which can be sold in an orderly manner in such offering within a price
range acceptable to the Holders of a majority of the Eligible Registrable
Securities and Other Registrable Stock requested to be included in such
registration, the Company will include in such registration (i) first, the
maximum amount of Eligible Registrable Securities requested to be included
therein, pro rata among the respective Holders thereof on the basis of the
amount of Eligible Registrable Securities requested to be included in such
registration by each such Holder, and (ii) second, the maximum amount of Other
Registrable Stock and any other securities requested to be included therein
(including by the Company, subject to Section 3(e)), pro rata among the holders
of such Other Registrable Stock and other securities on the basis of the number
of shares requested to be included in such registration by each such holder, in
each case up to the greatest number of shares of Common Stock which in the
reasonable opinion of such underwriters can be sold in an orderly manner in the
price range of such offering,
3(c) Restrictions on Underwritten Offerings. The Company will
not be obligated to effect more than one Underwritten Offering for Holders of
Eligible Registrable Securities within any twelve month period and will not be
obligated to effect an Underwritten Offering for Holders of Eligible Registrable
-8-
Securities at any time before 90 days after the earlier of (i) the date the
previous registration statement prepared in connection with an Underwritten
Offering for holders of Eligible Registrable Securities ceases to be effective
or (ii) the date that all shares registered thereunder have been sold.
3(d) Selection of Underwriters. The Holders of a majority of
the Eligible Registrable Securities requested to be included in such
Underwritten Offering will have the right to select the managing Underwriter(s)
to administer the offering; provided, first, that if the Company is successful
in obtaining the services of one or more Underwriters who have been the managing
Underwriters for an Underwritten Offering of the Company's securities
previously, such Underwriters shall be the managing Underwriter(s) to administer
the offering; and provided, second, that if the Company participates in the
Underwritten Offering under Section 3(e), such Holders shall obtain the
Company's consent to managing Underwriter(s) to administer the offering, which
consent shall not be unreasonably withheld.
3(e) Inclusion by the Company of its Common Stock in an
Underwritten Offering. If the managing underwriters for an Underwritten Offering
advise the Company in writing that in their opinion the aggregate number of
Eligible Registrable Securities to be included in an Underwritten Offering
(together with any Other Registrable Stock) is less than the number of shares
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Eligible Registrable Securities
and Other Registrable Stock requested to be included in such registration, the
Company may include in such registration, on its own behalf, up to the greatest
number of shares of Common Stock which in the opinion of such underwriters can
be sold (together with the Eligible Registrable Securities and Other Registrable
Stock requested to be included in such registration) in an orderly manner in the
price range of such offering.
3(f) Participation in Underwritten Registrations.
Notwithstanding any other provision of this Section 3 to the contrary, no Person
may participate in any Underwritten Offering hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in the applicable
underwriting arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided, however,
that no Holder of Eligible Registrable Securities included in any Underwritten
Offering shall be required to make any representations or warranties to the
Company or the underwriters other than representations and warranties regarding
such Holder and such Holder's intended method of distribution.
3(g) Expenses of Underwriting Offering. If the Underwritten
Offering includes Eligible Registrable Securities with a Market Value, on the
date
-9-
of the request under Section 3(a) that the Company effect the Underwritten
Offering, of at least $35 million, the Company shall pay any and all
Registration Expenses incident to the filing of each registration statement or
otherwise incident to the performance of or compliance by the Company with this
Section 3; if such Market Value is less than $35 million, any and all
Registration Expenses incident to the filing of each registration statement and
other out of pocket expenses incident to the performance of or compliance by the
Company with this Section 3 shall be borne by the Holders whose Eligible
Registrable Securities are included in the Underwritten Offering and holders of
any other securities included therein (including the Company, if it is including
its securities in the Underwritten Offering), pro rata based upon the number of
shares included by each such holder. Each Holder shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Eligible Registrable Securities included in the
Underwritten Offering.
3(h) Relationship to Shelf Registration. The rights and
obligations of the parties hereto under Section 3 shall be in addition to, and
not in lieu of, their respective rights and obligations under Section 2.
4. Piggyback Registration Rights.
-----------------------------
4(a) Requests for Piggyback Registration. If at any time
following the expiration of the 180 day period referred to in paragraph 1 of the
Transfer Restriction Agreement, the Company proposes to effect a Piggyback
Registration, the Company will give written notice to all Holders of its
intention to effect such a registration and, subject to Section 4(b) and Section
4(c), will include in such registration all Eligible Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 15 days after the date the Company's notice is given.
4(b) Priority on Primary Registrations. If the proposed
Piggyback Registration is an underwritten primary registration on behalf of the
Company, and the managing Underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering in an orderly
manner within a price range acceptable to the Company, the Company will include
in such registration (i) first, the securities the Company proposes to sell and
the High Priority Registrable Securities (as defined in the Recent PRRAA), pro
rata among the Company and the holders of such High Priority Registrable
Securities on the basis of the number of shares requested to be included by the
Company and each such holder, and (ii) second, the greatest number of Eligible
Registrable Securities and the remaining Other Registrable Stock requested to be
included which in the opinion of such Underwriters can be sold in an orderly
manner in the price range of such offering, pro rata among the respective
holders thereof on the basis of the
-10-
amount of Eligible Registrable Securities or Other Registrable Stock requested
to be included in such registration by each such holder.
4(c) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing Underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company will
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration and any other securities to
be included in such registration (including Other Registrable Stock) and (ii)
second, the Eligible Registrable Securities requested to be included in such
registration, pro rata among the holders of such Eligible Registrable Securities
and other securities on the basis of the number of shares requested to be
included by each such holder.
4(d) Participation in Piggyback Registrations. Notwithstanding
any other provision of this Section 4 to the contrary, no Person may participate
in any Piggyback Registrations hereunder unless such Person (a) agrees to sell
such Person's securities on the basis provided in the applicable underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided, however, that no
Holder of Eligible Registrable Securities included in any Piggyback
Registrations shall be required to make any representations or warranties to the
Company or the underwriters other than representations and warranties regarding
such Holder and such Holder's intended method of distribution.
4(e) Expenses of Piggyback Registration. The Company shall pay
any and all Registration Expenses incident to the filing of each registration
statement or otherwise incident to the performance of or compliance by the
Company with this Section 4. Each Holder shall pay all underwriting discounts
and commissions and transfer taxes, if any, relating to the sale or disposition
of such Holder's Eligible Registrable Securities included in the Piggyback
Registration.
5. Registration Procedures.
-----------------------
In connection with the obligations of the Company with respect to a
registration statement pursuant to Section 2, Section 3 or Section 4 hereof, the
Company shall use its reasonable best efforts to effect or cause to be effected
(subject to the provisions of Section 6(c) hereof) the registration of the
Eligible Registrable Securities under the Securities Act to permit the sale of
such Eligible Registrable Securities by the Holders in accordance with their
intended method or methods of distribution, and the Company shall:
-11-
5(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Eligible Registrable
Securities and use its reasonable best efforts to cause such registration
statement to become effective within the time period required hereunder
(provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to one counsel
selected by the holders of 70% of the Eligible Registrable Securities (together
with any Other Registrable Stock) covered by such registration statement copies
of all such documents proposed to be filed, which documents will be subject to
the review of such counsel, and the Company will incorporate in such
registration statement the reasonable comments of such counsel not inconsistent
with the Company's disclosure obligations under applicable securities laws);
5(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period required hereunder (or if no period is so required, a period of not
less than 180 days or such shorter period which is sufficient to complete the
distribution of the securities registered under the registration statement) and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
5(c) furnish to each seller of Eligible Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Eligible
Registrable Securities owned by such seller;
5(d) use its reasonable best efforts to register or qualify
such Eligible Registrable Securities under such other securities or blue sky
laws of such jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the Eligible
Registrable Securities owned by such seller (provided that the Company will not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction);
5(e) notify each seller of such Eligible Registrable
Securities (i) at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus
-12-
included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Eligible Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading; (ii) when a
registration statement and any amendment thereto has been filed with the SEC and
when the registration statement or any post-effective amendment thereto has
become effective; (iii) of any request by the SEC for amendment or supplements
to the registration statement or the prospectus included therein or for
additional information; (iv) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose; and (v) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
securities included therein for sale in any jurisdiction or the initiation of
any proceeding for such purpose;
5(f) cause all such Eligible Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use its reasonable best efforts to secure designation of all such
Eligible Registrable Securities covered by such registration statement as a
Nasdaq "national market system security" within the meaning of Rule 11Aa2-1 of
the SEC or, failing that, to secure Nasdaq authorization for such Eligible
Registrable Securities and without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such with respect to such
Eligible Registrable Securities with the NASD;
5(g) provide a transfer agent and registrar for all such
Eligible Registrable Securities not later than the effective date of such
registration statement;
5(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Eligible Registrable Securities (together with
any Other Registrable Stock) being sold or the Underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Eligible
Registrable Securities;
5(i) make available all financial and other records, pertinent
corporate documents and properties of the Company for inspection by, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by, any seller of Eligible
Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or Underwriter in connection with such
registration statement who executes any
-13-
reasonable confidentiality agreement that may be reasonably requested by the
Company or who is bound by fiduciary duty or professional responsibility to
preserve the confidentiality thereof;
5(j) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC; and
5(k) use its reasonable best efforts to cause such Eligible
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the sellers thereof to consummate the disposition of such
Eligible Registrable Securities.
5(l) take such reasonable action as may be necessary so that
(i) any registration statement and any amendment thereto and any prospectus
forming part thereof and any amendment or supplement thereto (and each report or
other document incorporated therein by reference in each case) complies in all
material respects with the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, (ii) any registration statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein not misleading and
(iii) any prospectus forming part of any registration statement, and any
amendment or supplement to such prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
5(m) use its reasonable best efforts to prevent the issuance,
and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any registration statement at the earliest possible time.
5(n) unless any Eligible Registrable Securities shall be in
book-entry form, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Eligible Registrable Securities to be
sold pursuant to any registration statement free of any restrictive legend and
in such permitted denominations and registered in such names as Holders may
request in connection with the sale of Eligible Registrable Securities pursuant
to such registration statement.
5(o) use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders or otherwise provide in accordance with Section 11(a) of the
Securities Act within the period required after the effective date of the
applicable registration statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereof.
-14-
The Company may require each Holder of Eligible Registrable Securities
(i) to furnish to the Company such information regarding the proposed
distribution by such Holder of such Eligible Registrable Securities as the
Company may from time to time reasonably request in writing, and (ii) to enter
into an underwriting agreement and securities sales agreement in the form
contemplated by Section 5(h).
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5(e) hereof, such
Holder will immediately discontinue disposition of Eligible Registrable
Securities pursuant to a registration statement until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
5(b) hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at the expense of the Company) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Eligible Registrable Securities current at the time of receipt of
such notice. If the Company shall give any such notice to suspend the
disposition of Eligible Registrable Securities pursuant to a registration
statement, the Company shall extend the period during which the registration
statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the Holders shall have received copies of
the supplemented or amended prospectus necessary to resume such dispositions.
6. Hold-Back Agreements.
--------------------
6(a) Restrictions on Public Sale by Holders. By electing to
include Eligible Registrable Securities in a registration statement filed
pursuant to Section 3 or Section 4 hereof, each such Holder of Eligible
Registrable Securities shall be deemed to have agreed not to effect any public
sale or distribution of securities of the Company of the same or similar class
or classes of the securities included in the registration statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act,
during the 15-day period prior to, and during such period of time as may be
required by the Underwriters, but not to exceed a 180-day period beginning on,
the effective date of the registration statement (except pursuant to the
registration statement), except to the extent otherwise agreed in writing by the
managing Underwriter.
6(b) Restrictions on Public Sale by the Company. The Company
shall not effect any public sale or distribution of any securities which are the
same as or substantially similar to the Eligible Registrable Securities being
registered pursuant to a registration statement filed pursuant to Section 3 or
Section 4 hereof, or any securities convertible into or exchangeable or
exercisable for such securities during the 15-day period prior to, and during
the 180-day period
-15-
beginning on, the effective date of a registration statement (except pursuant to
the registration statement).
6(c) Coordination with Prior Registration Rights Agreements.
The Company may, as necessary for the Company to perform its obligations under
the SS/L RR Agreement, delay (only to the extent necessary to avoid a violation
by the Company thereunder) in proceeding with any registration, under Section 2,
3 or 4 or otherwise.
7. Black-Out Periods for Shelf Registration Statements.
---------------------------------------------------
Notwithstanding anything to the contrary in this Agreement,
commencing thirty (30) days after the effectiveness of a Shelf Registration
Statement, the Company may, not more than once in any 12-month period, and one
additional time during the term of this Agreement (but not during any other
Suspension Event or within thirty (30) days after termination of any other
Suspension Event), direct the Holders to suspend sales of Eligible Registrable
Securities registered thereunder, as provided herein, if one or more of the
following events (a "Suspension Event") occurs: (i) an underwritten primary
offering by the Company where the Company is advised by the managing
Underwriter(s) for such offering that sale of Eligible Registrable Securities
under the Shelf Registration Statement would have an adverse effect on the
primary offering, (ii) a private placement offering by the Company where the
Company is advised by the placement agent(s) for such offering, or, if there is
no such placement agent, the Company reasonably determines, based upon advice
from the Company's then financial advisors, if any, that sale of Eligible
Registrable Securities under the Shelf Registration Statement would have an
adverse effect on the private placement offering, (iii) pending negotiations
relating to, or consummation of, a material corporate transaction (x) that would
require additional disclosure of material information by the Company in the
Shelf Registration Statement (or such filings), (y) as to which the Company has
a bona fide business purpose for preserving confidentiality and (z) which
renders the Company unable to comply with SEC requirements, in each case under
circumstances that would make it impractical or inadvisable to cause the Shelf
Registration Statement (or such filings) to become effective or to promptly
amend or supplement the Shelf Registration Statement on a post-effective basis,
as applicable, or (iv) to the extent necessary under the Recent PRRAA.
In the case of a Suspension Event, the Company may give notice
(a "Suspension Notice") to the Holders to suspend sales of the Eligible
Registrable Securities so that the Company may correct or update the Shelf
Registration Statement (or such filings). Each suspension shall continue only
for so long as the Suspension Event or its effect is continuing, and in no event
will any suspension exceed 90 days. The Holders agree that they will not effect
any sales of the Eligible Registrable Securities pursuant to such Shelf
Registration Statement (or such filings) at any time after they have received a
Suspension Notice from the
-16-
Company. If so directed by the Company, Holders will deliver to the Company all
copies of the prospectus covering the Eligible Registrable Securities held by
them at the time of receipt of the Suspension Notice. The Holders may recommence
effecting sales of the Eligible Registrable Securities pursuant to the Shelf
Registration Statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall be given by the Company not later than five days after the conclusion of
any Suspension Event and shall be accompanied by copies of the supplemented or
amended prospectus necessary to resume such sales.
Notwithstanding Section 2, if the Company shall give a
Suspension Notice pursuant to this Section 7, the Company shall extend the
period during which the Shelf Registration Statement shall be maintained
effective pursuant to this Agreement by the number of days during the period
from the date of the giving of the Suspension Notice to and including the date
when the Holders shall have received the End of Suspension Notice and copies of
the supplemented or amended prospectus necessary to resume sales.
8. Indemnification.
---------------
8(a) Indemnification by the Company The Company shall
indemnify, to the extent permitted by law, each Holder of Eligible Registrable
Securities, each Person who controls such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act) and their
respective officers, directors, partners, employees, agents and representatives,
against all Losses caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which made,
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the same
and except insofar as the same are caused by or contained in any prospectus if
such Holder failed to send or deliver a copy of any subsequent prospectus or
prospectus supplement which would have corrected such untrue or alleged untrue
statement of material fact or such omission or alleged omission of a material
fact with or prior to the delivery of written confirmation of the sale by such
Holder after the Company has furnished such Holder with a sufficient number of
copies of the same. In connection with an Underwritten Offering, the Company
will indemnify such Underwriters, each Person who controls such Underwriters
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act) and their respective officers, directors, partners,
employees, agents and representatives
-17-
to the same extent as provided above with respect to the indemnification of the
Holders of Eligible Registrable Securities.
8(b) Indemnification by Holders. In connection with any
registration statement in which Holders of Eligible Registrable Securities are
participating, each such Holder will furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the extent permitted by law,
will indemnify the Company, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act) and their respective officers, directors, partners, employees,
agents and representatives against any Losses arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus, or form of prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which made, not misleading, to the extent, but only to the
extent, that such untrue or alleged untrue statement is contained in, or such
omission or alleged omission is required to be contained in, any information so
furnished in writing by such Holder to the Company expressly for use in such
registration statement or prospectus and that such statement or omission was
relied upon by the Company in preparation of such registration statement,
prospectus or form of prospectus; provided, however, that such Holder of
Eligible Registrable Securities shall not be liable in any such case to the
extent that the Holder has furnished in writing to the Company prior to the
filing of any such registration statement or prospectus or amendment or
supplement thereto information expressly for use in such registration statement
or prospectus or any amendment or supplement thereto which corrected or made not
misleading, information previously furnished to the Company, and the Company
failed to include such information therein. In no event shall the liability of
any selling Holder of Eligible Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds (net of payment of all expenses)
received by such Holder upon the sale of the Eligible Registrable Securities
giving rise to such indemnification obligation. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such indemnified party.
8(c) Conduct of Indemnification Proceedings. If any Person shall be
entitled to indemnity hereunder such indemnified party shall give prompt notice
to the party or parties from which such indemnity is sought of the commencement
of any Proceeding with respect to which such indemnified party seeks
indemnification or contribution pursuant hereto; provided, however, that the
failure to so notify the indemnifying parties shall not relieve the indemnifying
parties from any obligation or liability except to the extent that the
indemnifying parties have been prejudiced by such failure. The indemnifying
parties shall have the right, exercisable by giving written notice to an
indemnified party promptly after the receipt of written notice from such
indemnified party of such Proceeding, to assume, at the indemnifying
-18-
parties' expense, the defense of any such Proceeding, with counsel reasonably
satisfactory to such indemnified party; provided, however, that an indemnified
party or parties (if more than one such indemnified party is named in any
Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless the parties to such Proceeding include both the indemnified party or
parties and the indemnifying party or parties, and there exists, in the opinion
of the parties' counsel, a conflict between one or more indemnifying parties and
one or more indemnified parties, in which case the indemnifying parties shall,
in connection with any one such Proceeding or separate but substantially similar
or related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of not more
than one separate firm of attorneys (together with appropriate local counsel) at
any time for such indemnified party or parties. If an indemnifying party assumes
the defense of such Proceeding, the indemnifying parties will not be subject to
any liability for any settlement made by the indemnified party without its or
their consent (such consent not to be unreasonably withheld).
8(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have an obligation to
contribute to the amount paid or payable by such indemnified party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the indemnifying party, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been taken by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent such
party would have been indemnified for such expenses under Section 8(c) if the
indemnification provided for in Section 8(a) or Section 8(b) was available to
such party. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 8(d), an indemnifying party that
is a
-19-
selling Holder of Eligible Registrable Securities shall not be required to
contribute any amount in excess of the amount by which the net proceeds received
by such indemnifying party exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reasons of such untrue
or alleged untrue statement or omission or alleged omission. No person adjudged
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
9. Miscellaneous.
-------------
9(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Majority Holders; provided, however, that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 2, Section 3, Section 4, Section 7 or Section 8 hereof shall be
effective as against any Holder of Eligible Registrable Securities unless
consented to in writing by such Holder of Eligible Registrable Securities.
9(b) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 9(b), (ii) if to the Company, at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000, Attention: General Counsel, and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 9(b).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
9(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any successor, assignee or transferee
of any Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities
-20-
such Person shall be entitled to receive the benefits hereof and shall be
conclusively deemed to have agreed to be bound by all of the terms and
provisions hereof.
9(d) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
9(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
9(f) Governing Law; Consent to Jurisdiction. THIS AGREEMENT
AND THE DUTIES AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATES OF MARYLAND AND DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
9(g) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
9(h) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
9(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes all
prior oral or written agreements, commitments or understandings between the
parties with respect to the matters provided for herein.
9(j) Execution by Newco. At or prior to the Closing under the
Exchange Agreement, ONS shall cause Newco to execute and deliver this Agreement
or a counterpart hereof, at which time Newco shall become a party to this
Agreement and be bound (and have all rights and obligations of the Company)
-21-
hereunder. Each of the parties hereto hereby agrees to take or cause to be taken
such further actions, and to execute and deliver such amendments hereto, as may
be necessary or as may be reasonably requested in order to make Newco a party to
this Agreement and be bound (and have all rights and obligations of the Company)
hereunder.
-22-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ORION NETWORK SYSTEMS, INC.
By:
-----------------------------------
Name:
Title:
BRITISH AEROSPACE COMMUNICATIONS,
INC.
By:
-----------------------------------
Name:
Title:
COM DEV SATELLITE COMMUNICATIONS
LIMITED
By:
-----------------------------------
Name:
Title:
KINGSTON COMMUNICATIONS
INTERNATIONAL LIMITED
By:
-----------------------------------
Name:
Title:
-23-
LOCKHEED XXXXXX COMMERCIAL LAUNCH
SERVICES, INC.
By:
------------------------------------
Name:
Title:
MCN SAT US, INC.
By:
------------------------------------
Name:
Title:
TRANS-ATLANTIC SATELLITE, INC.
By:
------------------------------------
Name:
Title:
-24-
FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
------------------------------------------------
THIS FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this
"Amendment") is entered into as of __________, 1996, by and among Orion Network
Systems, Inc., a Delaware corporation (the "Company"), and the undersigned
holders of more than 70% of the Registrable Securities (as defined in and) under
the Registration Rights Agreement dated June 17, 1994 among the Company and the
Persons (Series A/B investors) set forth on the Schedule of Investors attached
thereto (the "Series A/Series B Registration Rights Agreement").
WHEREAS, the Series A/Series B Registration Rights Agreement
sets forth certain rights of the holders of Registrable Securities to have their
common stock issuable upon conversion of the Series A and Series B preferred
stock of the Company registered by the Company; and
WHEREAS, the Company is proposing to enter into a registration
rights agreement substantially in the form attached hereto, with such changes as
the holders of more than 70% of the Registrable Securities may agree upon in
writing (the "Series C Registration Rights Agreement"), among the Company;
British Aerospace Communications, Inc., COM DEV Satellite Communications
Limited, Kingston Communications International Limited, Lockheed Xxxxxx
Commercial Launch Services, Inc., MCN Sat US, Inc., and Trans-Atlantic
Satellite, Inc.; and
WHEREAS, the Company is proposing to issue approximately $100
million of convertible subordinated debentures or other securities to finance
its Orion 2 satellite (the "Convert"), and in connection therewith may enter
into a registration rights agreement with the purchasers thereof (the "Convert
Registration Rights Agreement");
WHEREAS, the parties hereto desire to amend the Series
A/Series B Registration Rights Agreement to eliminate the conflicts between the
Series A/Series B Registration Rights Agreement and the Series C Registration
Rights Agreement and to provide for a further amendment to the Series A/Series B
Registration Rights Agreement with respect to the Convert Registration Rights
Agreement, and effect certain other changes.
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. PROVISIONS REGARDING OTHER REGISTRATIONS
Sections 2(d) and 3(b) of the Series A/Series B Registration
Rights Agreement are hereby amended so that the provisions thereof (which
provisions restrict the Company from filing or causing to be filed a
registration or effecting any public sale or distribution of its securities) do
not apply to any registration or public sale or distribution under the Series C
Registration Rights Agreement. Instead, the Company agrees that, to the extent a
registration or public sale or distribution of its securities under the Series C
Registration Rights Agreement would otherwise have been a violation of the
Series A/Series B Registration Rights Agreement, the Company agrees to use any
then available rights under the Series C Registration Rights Agreement to
suspend any shelf registration statements filed by the Company thereunder.
In addition, the provisions of Section 3(b)(ii) of the Series
A/Series B Registration Rights Agreement are hereby amended so that they do not
apply to any of the Series C 6% Cumulative Redeemable Convertible Preferred
Stock ("Series C Preferred Stock") or any of the Common Stock issuable or issued
as dividends on or with respect to, or upon conversion of, Series C Preferred
Stock or other shares of capital stock issued in respect of Series C Preferred
Stock (whether or not held by the Exchanging Partners).
2. PROVISIONS REGARDING PRIORITY IN PIGGYBACK REGISTRATIONS
Section 2(b) of the Series A/Series B Registration Rights
Agreement is hereby amended to read in its entirety as follows:
(b) Priority on Primary Registrations. If
the proposed Piggyback Registration is an underwritten primary
registration on behalf of the Company (not including any
registration initiated by the Company at the request of
holders of Series C Preferred Stock pursuant to Section 3 of
the Series C Registation Rights Agreement, whether or not the
Company ultimately includes its shares in such registration),
and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be
sold in such offering without adversely affecting the
marketability of the offering, the Company will include in
such registration (i) first, the securities the Company
proposes to sell and (ii) second, the Registrable Securities
requested to be included in such registration and any other
securities requested to be included in
such registration, pro rata among the holders of such
Registrable Securities and other securities on the basis of
the number of shares requested to be included by each such
holder. Notwithstanding the prior sentence, if securities are
proposed to be included in such Piggyback Registration under
the Series C Registration Rights Agreement, and the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the
offering, the Company will include in such registration (i)
first, the securities the Company proposes to sell and up to
one half of the Registrable Securities initially issued by the
Company to the holders thereof and requested to be included in
such registration (the "High Priority Registrable
Securities"), pro rata among the Company and the holders of
such High Priority Registrable Securities on the basis of the
number of shares requested to be included by the Company and
each such holder, and (ii) second, the remaining Registrable
Securities requested to be included in such registration, the
securities requested to be included in such registration under
the Series C Registration Rights Agreement and any other
securities requested to be included in such registration, pro
rata among the holders of such Registrable Securities and
other securities on the basis of the number of shares
requested to be included by each such holder.
3. WAIVER OF MOST FAVORABLE RIGHTS PROVISION
The provisions of Section 1(g) of the Series A/Series B
Registration Rights Agreement (which provide for the Company agreeing not to
grant materially more favorable registration rights than were granted under the
Series A/Series B Registration Rights Agreement unless the Company agrees to
amend the Series A/Series B Registration Rights Agreement to grant such more
favorable rights to the holders of Registrable Securities under the Series
A/Series B Registration Rights Agreement) are hereby waived with respect to the
Series C Registration Rights Agreement.
4. CONFIRMATION REGARDING PARTICIPATION IN SHELF REGISTRATION
The parties hereto confirm that the rights of the holders of
Registrable Securities under the Series A/Series B Registration Rights Agreement
entitle such holders to have their Registrable Securities included in any Shelf
Registration Statement, including any Top-Up Shelf
Registration Statement (as defined in and) under the Series C Registration
Rights Agreement
5. AGREEMENT TO FURTHER AMENDMENT FOR CONVERT REGISTRATION
RIGHTS AGREEMENT
The undersigned holders of Registrable Securities hereby agree
to enter into a further amendment to the Series A/Series B Registration Rights
Agreement with regard to the Convert Registration Rights Agreement substantially
similar to this Amendment, provided that the terms of the Convert Registration
Rights Agreement are not materially more restrictive with respect to the rights
of (or less favorable to) the holders of Registrable Securities (as such rights
may be implemented by or through the Company) than the terms of the Series C
Registration Rights Agreement.
6. MISCELLANEOUS
6(a) Defined Terms
Capitalized terms used in this Amendment and not otherwise
defined in this Amendment shall have the meanings provided for in the Series
A/Series B Registration Rights Agreement.
6(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 Series A/Series B
Registration Rights Agreement.
6(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.
6(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.
6(e) Ratification
The Series A/Series B Registration Rights Agreement, except as
amended and modified as hereinabove set forth, is in all respects ratified and
confirmed, and the terms, covenants and agreements thereof shall be and remain
in full force and effect.
6(f) Effectiveness of the Amendment
This First Amendment to Series A/Series B Registration Rights
Agreement is being made pursuant to Section 9(c) of the Series A/Series B
Registration Rights Agreement which allows for amendment and waiver upon the
prior written consent of the Company and holders of at least 70% of the
Registrable Securities, and this First Amendment to Registration Rights
Agreement shall become effective upon receipt of the signatures (in counterpart)
from the Company and the holders of at least 70% of the Registrable Securities
without any requirement that any other party to the Series A/Series B
Registration Rights Agreement be a signatory hereto.
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.
ORION NETWORK SYSTEMS, INC.
By
--------------------------
Its
--------------------------
CIBC WOOD GUNDY VENTURES, INC.
By
--------------------------
Xxxxxxx X. Xxxxxx
President
FLEET VENTURE RESOURCES, INC.
By
--------------------------
Its
FLEET EQUITY PARTNERS, VI L.P.
By: Fleet Growth Resources II, Inc., a
General Partner
By
--------------------------
Its
--------------------------
XXXXXXX PARTNERS, II, L.P.
By: Silverado II, L.P., Its General
Partner
By: Silverado II Corp., Its General
Partner
By
--------------------------
Its
--------------------------
EXHIBIT E
---------
__________ ___, 1996
Orion Network Systems, Inc.
Suite 400
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Re: Resale Restrictions
--- -------------------
Pursuant to and subject to the terms and conditions contained
in the Section 351 Exchange Agreement and Plan of Conversion, dated as of June
___, 1996, among International Private Satellite Partners, L.P. ("Orion
Atlantic"), Orion Network Systems, Inc. ("ONS"), Orion Satellite Corporation,
British Aerospace Communications, Inc., Com Dev Satellite Communications
Limited, Kingston Communications International Limited, Lockheed Xxxxxx
Commercial Launch Services, Inc., MCN Sat U.S., Inc. and Trans-Atlantic
Satellite, Inc. (the "Exchange Agreement"), ONS and the Exchanging Partners (as
defined therein) are agreeing to (i) formation of a new Delaware corporation to
be named Orion Newco Services, Inc. ("Newco" or the "Company") substantially
identical in all material respects to ONS; (ii) have a newly created subsidiary
of Newco merge into ONS in a transaction in which all capital stock of ONS is
exchanged for equivalent capital stock (common or preferred, as applicable, with
the same relative rights and preferences) of Newco, and in which ONS becomes a
wholly owned subsidiary of Newco; and (iii) have the Exchanging Partners
(including the undersigned) transfer their limited partnership interests in
Orion Atlantic to Newco in exchange for shares of a newly created series of
preferred stock of Newco having the designation Series C 6% Cumulative
Redeemable Convertible Preferred Stock (the "Series C Preferred Stock"), which
shares will be convertible into common stock, par value $.01 per share, of Newco
(the "Common Stock").
In consideration of the foregoing, as required by the Exchange
Agreement and in order to induce the parties thereto to consummate the Exchange
Agreement and the transactions contemplated thereby, the undersigned hereby
irrevocably agrees as follows:
1. 180 Day Lockup. The undersigned will not, directly or
indirectly, sell, offer, contract to sell, make any short sale, pledge or
otherwise dispose of ("transfer") any shares of Common Stock issued upon
conversion of shares of Series C Preferred Stock or as dividends on such Series
C Preferred Stock ("Affected Shares") without the prior written consent of the
Company for a period of
180 days (the "Lockup Period") from the date of issuance of the Series C
Preferred Stock as contemplated by the Exchange Agreement.
Notwithstanding the foregoing provision of this paragraph 1,
the undersigned shall not be precluded from transferring any Affected Shares to
an "affiliate" (as such term is defined in Rule 144 under the Securities Act of
1933, as amended (the "Securities Act")) of the undersigned during the Lockup
Period in any transfer not involving a public distribution or public offering;
provided, however, that prior to such transfer the transferee shall execute and
deliver to the Company an agreement substantially identical to this agreement
and otherwise reasonably satisfactory in form and substance to the Company, in
which such affiliate agrees to abide by all of the restrictions set forth in
this agreement.
Notwithstanding the foregoing provision of this paragraph 1,
the undersigned shall not be precluded from transferring any Affected Shares, in
any transfer (i) pursuant to a tender or exchange offer made by or on behalf of
the Company or a third-party, (ii) in connection with a merger, consolidation,
sale of all or substantially all of the assets, recapitalization or similar
transaction involving the Company or (iii) not involving a public distribution
or offering registered under the Securities Act and which is not made through a
broker, dealer or market-maker pursuant to Rule 144 under the Securities Act
(including a pledge that meets such requirements); provided, however, that prior
to any transfer of Affected Shares under clause (iii) and prior to any transfer
of Series C Preferred Stock (other than under the circumstances set forth in
clauses (i) or (ii)), the transferee shall execute and deliver to the Company an
agreement substantially identical to this agreement and otherwise reasonably
satisfactory in form and substance to the Company, in which such transferee
agrees to abide by all of the restrictions set forth in this agreement.
The undersigned further agrees that prior to the transfer
during the Lockup Period of any Series C Preferred Stock or Common Stock issued
as dividends paid on Series C Preferred Stock, the transferee shall execute and
deliver to the Company an agreement substantially identical to this agreement
and otherwise reasonably satisfactory in form and substance to the Company, in
which such transferee agrees to abide by all of the restrictions set forth in
this agreement.
2. 25% Limit. The undersigned further agrees that the
undersigned will not transfer during any 90 day period Affected Shares that
collectively represent more than 25% of the aggregate number of shares of Common
Stock issuable upon the conversion of the Series C Preferred Stock received by
the undersigned pursuant to the Exchange Agreement or as dividends on such
Series C Preferred Stock (the "25% Limit"), except as provided below.
Notwithstanding the foregoing provision of this paragraph 2,
the undersigned shall not be precluded from transferring any Affected Shares
after the
Lockup Period, in any transfer (i) pursuant to an underwritten, public offering
pursuant to a registration statement under the Securities Act, (ii) pursuant to
a tender or exchange offer made by or on behalf of the Company or a third-party,
(iii) in connection with a merger, consolidation, sale of all or substantially
all of the assets, recapitalization or similar transaction involving the Company
or (iv) not involving a public distribution or offering registered under the
Securities Act and which is not made through a broker, dealer or market-maker
pursuant to Rule 144 under the Securities Act; provided, however, that prior to
any transfer of Affected Shares under clause (iv) and prior to any transfer of
Series C Preferred Stock (other than under the circumstances set forth in
clauses (i), (ii) or (iii)), the transferee shall execute and deliver to the
Company an agreement substantially similar to this agreement (but omitting the
provisions of paragraph 1 hereof), reasonably satisfactory in form and substance
to the Company, in which such transferee agrees that it will comply with the 25%
Limit, pro rated as to the Affected Shares transferred to it, and that it will
furnish to the Company notice of each sale of Common Stock certifying that each
such sale, collectively with all prior sales by such entity, did not result in a
violation of the 25% Limit and, provided, further, that the number of Affected
Shares that any such transferee may sell during the applicable 90 day period
that includes the original date of transfer to such transferee shall be reduced
by a number of shares equal to the proportionate number of shares sold by the
transferor during such 90 day period prior to such original date of transfer.
3. Termination of 25% Limit. The restrictions contained in
paragraph 2 hereof, and in all agreements entered into by transferees pursuant
to paragraph 2, shall terminate on the date that is five years after the date of
issuance of the Series C Preferred Stock under the Exchange Agreement.
4. Execution by Newco. At or prior to the Closing under the
Exchange Agreement, ONS shall cause Newco to execute and deliver this agreement
or a counterpart hereof, at which time Newco shall become a party to this
agreement and be bound (and have all rights and obligations of the Company)
hereunder. Each of the parties hereto hereby agrees to take or cause to be taken
such further actions, and to execute and deliver such amendments hereto, as may
be necessary or as may be reasonably requested in order to make Newco a party to
this Agreement and be bound (and have all rights and obligations of the Company)
hereunder.
5. Similar Agreements. ONS represents that ONS is entering or
has entered into agreements (the "Similar Agreements") with each of the
Exchanging Partners identical (other than with respect to the name of the
Exchanging Partner and the date of signature) to this agreement. ONS agrees that
it will not amend or waive one or more provisions of any of the Similar
Agreements without offering to amend or waive one or more provisions of this
agreement in an identical manner.
6. General. The undersigned understands that the agreements of
the undersigned herein are irrevocable and shall be binding upon the
undersigned's legal representatives, successors and assigns. The undersigned
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of Common Stock or other
securities of the Company held by the undersigned except in compliance with this
agreement.
[Name]
By:
---------------------------------
Its:
------------------------------
Agreed and Acknowledged:
ORION NETWORK SYSTEMS, INC.
By:
----------------------------
Its:
----------------------------
Schedule 7.3
------------
List of ONS Approvals
---------------------
1. Consents of the stockholders of ONS (including consents of the
holders of ONS' preferred stock).
2. Filings may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
3. Any consent of the U.S. Federal Communications Commission that
may be required for the Exchange, notwithstanding the
memorandum from ONS's communications counsel attached hereto
as Exhibit K, and the consent of the U.S. Federal
Communications Commission that will be required for the
Merger.
4. Any consents necessary to effect the transfer of certain
contracts under Section 4.3 hereto.
Schedule 7.9
------------
List of Subsidiaries of ONS
---------------------------
Name of Subsidiary Number of Shares Owned of Record By
Orion Satellite Corporation 100 Orion Network
Systems, Inc.
OrionNet, Inc. 100 Orion Network
Systems, Inc.
OrionNet Finance Corporation 100 OrionNet, Inc.
Orion Asia Pacific Corporation 1,000 Orion Network
Systems, Inc.
Asia Pacific Space and 2,089,392 Orion Network
Communications, Ltd. (of 2,511,739 shares Systems, Inc.
outstanding)
Schedule 7.11
-------------
SKYDATA MATTER
--------------
In October 1995, Skydata Corporation ("Skydata"), a former Orion Atlantic
contractor, filed suit against Orion Atlantic, Orion Satellite Corporation and
ONS (the "Orion parties"), in the United States District Court for the Middle
District of Florida, claiming that certain Orion Atlantic operations using frame
relay switches infringe a Skydata patent. Skydata's suit sought damages in
excess of $10 million and asked that any damages assessed be trebled although
Skydata's prior demands were for amounts far lower than the amount now sought in
the lawsuit. On December 11, 1995, the Orion parties filed a motion to dismiss
the lawsuit on the grounds of lack of jurisdiction and violation of a mandatory
arbitration agreement. In addition, on December 19, 1995, the Orion parties
filed a Demand for Arbitration against Skydata with the American Arbitration
Association in Atlanta, Georgia, requesting damages in excess of $100,000 for
breach of contract and declarations, among other things, that ONS and Orion
Atlantic owns a royalty-free license to the patent, that the patent is invalid
and unenforceable and that ONS and Orion Atlantic have not infringed the patent.
On March 5, 1996, the court granted ONS's motion to dismiss the lawsuit on the
basis that Skydata's claims are subject to arbitration. Skydata has appealed the
dismissal to the United States Court of Appeals for the Federal Circuit. Skydata
has also filed a counterclaim in the arbitration proceeding asserting a claim
for $2 million in damages as a result of the conduct of Orion and its
affiliates. The Orion parties believe that they may be entitled to co-ownership
of the patent at issue and, in any event, that there are substantial issues
concerning inventorship, validity and enforceability of the patent as well as
certain non-infringement and contractual defenses. On May 15, 1996, the
arbitrator granted the Orion parties' request for an initial hearing on claims
relating to the Orion parties' rights to the patent, including co-ownership
claim and other contractual claims. This initial hearing, which may obviate the
need for a subsequent hearing on patent infringement and validity, is scheduled
to begin in late September 1996. The Orion parties believe that they have
meritorious defenses and intend to assert their position vigorously in the
arbitration proceeding. Although ONS believes that its potential exposure for
royalties to Skydata will not be material to its financial conditions or results
of operations, there can be no assurance as to the outcome of this matter.
