As filed with the Securities and Exchange Commission on July 30, 1997
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
ORION NETWORK SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-2008654
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
------------------
2440 RESEARCH BOULEVARD, SUITE 400
ROCKVILLE, MARYLAND 20850
(Address of principal executive offices)
------------------
ORION NETWORK SYSTEMS, INC. 1997 STOCK OPTION PLAN
(Full title of the plan)
------------------
RICHARD H. SHAY, ESQ.
2440 RESEARCH BOULEVARD, SUITE 400
ROCKVILLE, MARYLAND 20850
(301) 258-8101
(Name, address and telephone number, including area code, of agent for service)
------------------
Copy to:
STEVEN M. KAUFMAN, ESQ.
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004-1109
(202) 637-5600
------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered price per share (1) offering price (1) registration fee (1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 1,300,000 $12.875 $16,737,500 $5,072
=================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) and (h) solely for purposes of
calculating the amount of the registration fee. The proposed maximum
offering price per share was determined based upon the average of the high
and low prices per share of the Orion Network Systems, Inc. Common Stock on
July 25, 1997, as reported on the Nasdaq National Market.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I will be
sent or given to eligible directors as specified by Rule 428(b)(1) of the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
the instructions to Part I of Form S-8, such documents will not be filed with
the Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Orion Network Systems, Inc. (the "Registrant") is a recently formed
Delaware corporation that is the corporate successor to Orion Oldco Services,
Inc., which has been filing reports with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since August 1995. The
Registrant hereby incorporates by reference into this Registration Statement the
following documents filed with the Commission by the Registrant:
(a) Registrant's annual report on Form 10-K dated March 31,
1997 and amendment thereto on Form 10-K/A dated June 25, 1997 filed pursuant to
Sections 13(a) and 15(d) of the Exchange Act, which contain audited financial
statements for Registrant's fiscal year ended December 31, 1996;
(b) All other reports of the Registrant filed pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1996, including
the Registrant's quarterly report on Form 10-Q dated May 15, 1997;
(c) The description of the Registrant's Common Stock, par
value $.01 per share (the "Common Stock"), contained in the Registrant's
Registration Statement on Form 8-B filed with the Commission on January 31,
1997; and
(d) The Registrant's reports on Form 8-K filed with the
Commission on February 14, 1997 and March 26, 1997, respectively.
In addition, all documents and reports filed by the Registrant
subsequent to the date hereof pursuant to Sections 13(a), 13(c), 14, or 15(d) of
the Exchange Act, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities remaining unsold, shall be deemed to be incorporated by reference in
this Registration Statement and to be part hereof from the date of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
2
<PAGE>
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable. (The Common Stock is registered under Section 12 of the
Exchange Act.)
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation, as amended (the
"Restated Certificate of Incorporation"), provides that the Company's directors
will not be liable for monetary damages for breach of the directors' fiduciary
duty of care to the Company and its stockholders. This provision in the Restated
Certificate of Incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under Delaware law. In
accordance with the requirements of Delaware law, as amended, the Restated
Certificate of Incorporation provides that the Company's directors would remain
subject to liability for monetary damages (i) for any breach of their duty of
loyalty to the Company or its shareholders, (ii) for acts or omissions not in
good faith or involving intentional misconduct or knowing violation of law,
(iii) under Section 174 of the Delaware Code for approval of an unlawful
dividend or an unlawful stock purchase or redemption and (iv) for any
transaction from which the director derived an improper personal benefit. This
provision also does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
The Company's Restated Certificate of Incorporation also provides that,
except as expressly prohibited by law, the Company shall indemnify any person
who was or is a party (or threatened to be made a party) to any threatened,
pending or completed action, suit or proceeding by reason of the fact that such
person is or was director or office of the Company (or is or was serving at the
request of the Company as a director or officer of another enterprise), against
expenses, liabilities and losses (including attorneys' fees), judgments, fines
and amounts paid or to be paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding if such person
acted in good faith and a manner such person reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. Such indemnification shall not be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Company unless (and only to the extent that) the Delaware Court of Chancery or
the court in which such action or suit was brought determines that, in view of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity.
Section 145 of the General Corporation Law of the State of Delaware
empowers a corporation incorporated under that statute to indemnify its
directors, officers, employees and agents and its former directors, officers,
employees and agents and those who serve in such capacities with another
enterprise at its request against expenses, as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred by them
in connection with the defense of any action, suite or proceeding in which they
or any of them were or are made parties or are threatened to be made parties by
3
<PAGE>
reason of their serving or having served in such capacity. The power to
indemnify shall only exist where such officer, director, employee or agent has
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and, in the case of a
criminal action, where such person had no reasonable cause to believe his
conduct was unlawful. However, in an action or suit by or in the right of the
corporation, unless a court shall determine to the contrary, where such a person
has been adjudged liable to the corporation, the corporation shall have no power
of indemnification. Indemnity is mandatory to the extent a claim, issue or
matter has been successfully defended. Indemnification is not deemed exclusive
of any other rights to which those indemnified may be entitled, under any
by-law, agreement, vote of stockholders or otherwise. A Delaware corporation
also has the power to purchase and maintain insurance on behalf of the persons
it has the power to indemnify, whether or not indemnity against such liability
would be allowed under the statute.
The Company has an insurance policy which will insure Directors and
officers against damages from actions and claims incurred in the course of their
duties and will insure the Company against expenses incurred in defending
lawsuits arising from certain alleged acts of the Directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Description
------ -----------
3.1 Certificate of Amendment of Certificate of Incorporation of
Orion Network Systems, Inc.
4.1 Restated Certificate of Incorporation, as amended, of
Registrant (filed as Exhibit 3.1 to the Registrant's
Registration Statement on Form 8-B filed with the Commission
on January 31, 1997, and incorporated herein by reference).
4
<PAGE>
4.2 Bylaws, as amended, of the Registrant (filed as Exhibit 3.2
to the Registrant's Registration Statement on Form 8-B filed
with the Commission on January 31, 1997, and incorporated
herein by reference).
4.3 Form of Common Stock Certificate (filed as Exhibit 4.5 to
the Registrant's Registration Statement on Form S-4 (File
No. 333- 19795), and incorporated herein by reference).
4.4 Orion Network Systems, Inc. 1997 Stock Option Plan.
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of
the securities being registered.
21.1 List of subsidiaries of Orion Network Systems, Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion
filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (included on signature pages).
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
5
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undertaking concerning indemnification is as set forth under
the response to Item 6.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockville, State of Maryland on the 30th day of July,
1997.
ORION NETWORK SYSTEMS, INC.
BY: /s/ W. NEIL BAUER
---------------------------------------
W. Neil Bauer
President and Chief Executive Officer
POWER OF ATTORNEY
Know all Men by These Presents, that each individual whose signature
appears below constitutes and appoints John G. Puente, W. Neil Bauer and David
J. Frear, and each of them, his true and lawful attorney-in-fact and agent, with
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in- fact and
agents, or any of them, or their, his or her substitutes or substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ W. NEIL BAUER Chief Executive July 30, 1997
- ------------------------------ Officer and Director
W. Neil Bauer, President (Principal Executive Officer)
/s/ DAVID J. FREAR Chief Financial July 30, 1997
- ------------------------------ Officer and Treasurer
David J. Frear, Vice President (Principal Financial Officer
and Principal Accounting Officer)
/s/ GUSTAVE M. HAUSER Director July 30, 1997
- ------------------------------
Gustave M. Hauser, Chairman
7
<PAGE>
/s/ JOHN V. SAEMAN Director July 30, 1997
- -----------------------------
John V. Saeman
/s/ JOHN G. PUENTE Director July 30, 1997
- -----------------------------
John G. Puente
/s/ RICHARD J. BREKKA Director July 30, 1997
- -----------------------------
Richard J. Brekka
/s/ WARREN B. FRENCH JR. Director July 30, 1997
- -----------------------------
Warren B. French, Jr.
/s/ SIDNEY S. KAHN Director July 30, 1997
- -----------------------------
Sidney S. Kahn
/s/ W. ANTHONY RICE Director July 30, 1997
- -----------------------------
W. Anthony Rice
/s/ ROBERT M. VAN DEGNA Director July 30, 1997
- -----------------------------
Robert M. Van Degna
/s/ BARRY HOROWITZ Director July 30, 1997
- -----------------------------
Barry Horowitz
8
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
3.1 Certificate of Amendment of Certificate of Incorporation of Orion
Network Systems, Inc.
4.1 Restated Certificate of Incorporation, as amended, of *
Registrant (filed as Exhibit 3.1 to the Registrant's
Registration Statement on Form 8-B filed with the Commission
on January 31, 1997, and incorporated herein by reference).
4.2 Bylaws, as amended, of the Registrant (filed as Exhibit 3.2 to *
the Registrant's Registration Statement on Form 8-B filed with
the Commission on January 31, 1997, and incorporated herein by
reference).
4.3 Form of Common Stock Certificate (filed as Exhibit 4.5 to the *
Registrant's Registration Statement on Form S-4 (File No.
333-19795), and incorporated herein by reference).
4.4 Orion Network Systems, Inc. 1997 Stock Option Plan. *
5.1 Opinion of Hogan & Hartson L.L.P. regarding the legality of
the securities being registered.
21.1 List of subsidiaries of Orion Network Systems, Inc.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion *
filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (included on signature pages). *
Exhibit 3.1
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
ORION NEWCO SERVICES, INC.
Orion Newco Services, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:
The amendment to the Certificate of Incorporation of the
Corporation set forth below has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware (the "DGCL"):
1. The Certificate of Incorporation of the Corporation is
hereby amended by striking Article FIRST thereof in its entirety
and inserting in lieu thereof the following:
"FIRST: The name of the Corporation is Orion Network
Systems, Inc. (hereinafter called the `Corporation')."
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be duly executed and acknowledged in accordance with
Section 103 of the DGCL.
ORION NEWCO SERVICES, INC.
By: /s/ W. Neil Bauer
------------------------------------------
Name: W. Neil Bauer
Title: President and Chief Executive Officer
EXHIBIT 4.4
-----------
ORION NETWORK SYSTEMS, INC.
1997 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
1. PURPOSE.............................................................1
2. DEFINITIONS.........................................................1
3. ADMINISTRATION......................................................3
3.1. Committee....................................................3
3.2. No Liability.................................................3
4. STOCK...............................................................3
5. ELIGIBILITY.........................................................4
6. EFFECTIVE DATE AND TERM.............................................4
6.1. Effective Date...............................................4
6.2. Term.........................................................4
7. GRANT OF OPTIONS....................................................4
8. LIMITATION ON INCENTIVE STOCK OPTIONS...............................5
9. OPTION AGREEMENTS...................................................5
10. OPTION PRICE........................................................5
11. TERM AND EXERCISE OF OPTIONS........................................6
11.1. Term........................................................6
11.2. Exercise by Optionee........................................6
11.3. Option Period and Limitations on Exercise...................6
11.4. Method of Exercise..........................................6
11.5. Parachute Limitations.......................................7
12. TRANSFERABILITY OF OPTIONS..........................................8
12.1. Transferability of Options..................................8
12.2. Family Transfers............................................8
13. TERMINATION OF EMPLOYMENT AND OTHER SERVICE
RELATIONSHIPS.....................................................9
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY.........................10
14.1. Death......................................................10
14.2. Disability.................................................10
15. USE OF PROCEEDS....................................................11
16. SECURITIES LAWS....................................................11
17. EXCHANGE ACT: RULE 16b-3...........................................12
17.1. General....................................................12
17.2. Compensation Committee.....................................12
17.3. Restriction on Transfer of Stock...........................12
18. AMENDMENT AND TERMINATION..........................................12
19. EFFECT OF CHANGES IN CAPITALIZATION................................13
19.1. Changes in Stock...........................................13
19.2. Reorganization With Corporation Surviving..................13
19.3. Other Reorganizations; Sale of Assets or Stock.............14
19.4. Adjustments................................................14
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19.5. No Limitations on Corporation..............................14
20. WITHHOLDING........................................................15
21. DISCLAIMER OF RIGHTS...............................................15
22. NONEXCLUSIVITY.....................................................15
23. GOVERNING LAW......................................................15
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ORION NETWORK SYSTEMS, INC.
1997 STOCK OPTION PLAN
ORION NETWORK SYSTEMS, INC., a Delaware corporation (the
"Corporation"), sets forth herein the terms of the 1997 Stock Option Plan (the
"Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 5 hereof) an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to continue to service the Corporation. Stock options
granted under the Plan will be Incentive Stock Options within the meaning of
Section 422 of the Code or non-incentive stock options as specifically
designated at the time of grant.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Option Agreements), the following definitions shall apply:
2.1 "Affiliate" means any company or other trade or business that
is controlled by or under common control with the Corporation, (determined in
accordance with the principles of Section 414(b) and 414(c) of the Code and the
regulations thereunder) or is an affiliate of the Corporation within the meaning
of Rule 405 of Regulation C under the 1933 Act.
2.2 "Board" means the Board of Directors of the Corporation.
2.3 "Cause" means, unless otherwise defined in an Option
Agreement, (i) gross negligence or willful misconduct in connection with the
performance of duties; (ii) conviction of a criminal offense (other than minor
traffic offenses); or (iii) material breach of any term of any employment,
consulting or other services, confidentiality, intellectual property or
non-competition agreements, if any, between Optionee and the Corporation or any
of its Subsidiaries or Affiliates.
2.4 "Code" means the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.
2.5 "Committee" means the Compensation Committee of the Board
which must consist of no fewer than two members of the Board and shall be
appointed by the Board.
<PAGE>
2.6 "Corporation" means Orion Network Systems, Inc..
2.7 "Effective Date" means the date of adoption of the Plan by
the Board.
2.8 "Employer" means Orion Network Systems, Inc. or other
Affiliate which employs the designated recipient of an Option.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as
now in effect or as hereafter amended.
2.10 "Fair Market Value" means the value of each share of Stock
subject to the Plan as determined by the Board or the Committee in good faith.
2.11 "Grant Date" means the later of (i) the date as of which the
Committee approves the grant and (ii) the date as of which the Optionee and the
Corporation, Subsidiary or Affiliate enter the relationship resulting in the
Optionee being eligible for grants.
2.12 "Immediate Family Members" means the spouse, children and
grandchildren of the Optionee.
2.13 "Incentive Stock Option" means an "incentive stock option"
within the meaning of section 422 of the Code.
2.14 "Option" means an option to purchase one or more shares of
Stock pursuant to the Plan.
2.15 "Option Agreement" means the written agreement evidencing the
grant of an Option hereunder.
2.16 "Optionee" means a person who holds an Option under the Plan.
2.17 "Option Period" means the period during which Options may be
exercised as defined in Section 11.
2.18 "Option Price" means the purchase price for each share of
Stock subject to an Option.
2.19 "Plan" means the Orion Network Systems, Inc. 1997 Stock
Option Plan.
2.20 "1933 Act" means the Securities Act of 1933, as now in effect
or as hereafter amended.
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<PAGE>
2.21 "Service Relationship" means the provision of bona fide
services to the Corporation, a Subsidiary or an Affiliate as an employee,
director, advisor or consultant.
2.22 "Stock" mean the shares of common stock, par value $.01 per
share, of the Corporation.
2.23 "Subsidiary" means any "subsidiary corporation" of the
Corporation within the meaning of Section 425(f) of the Code.
3. ADMINISTRATION
3.1. COMMITTEE
The Plan shall be administered by the Committee appointed by the Board,
which shall have the full power and authority to take all actions and to make
all determinations required or provided for under the Plan or any Option granted
or Option Agreement entered into hereunder and all such other actions and
determinations not inconsistent with the specific terms and provisions of the
Plan deemed by the Committee to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted or Option Agreement entered into
hereunder shall be final and conclusive.
3.2. NO LIABILITY
No member of the Board or of the Committee shall be liable for any
action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.
4. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be Stock, which shares may be treasury shares or authorized but unissued
shares. The number of shares of Stock that may be issued pursuant to Options
granted under the Plan shall not exceed in the aggregate 1,300,000 shares of
Stock, which number of shares is subject to adjustment as provided in Section 19
hereof. If any Option expires, terminates or is terminated for any reason prior
to exercise in full, the shares of Stock that were subject to the unexercised
portion of such Option shall be available for future Options granted under the
Plan.
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<PAGE>
5. ELIGIBILITY
Options may be granted under the Plan to (i) any officer or key
employee of the Corporation, any Subsidiary or any Affiliate (including any such
officer or key employee who is also a director of the Corporation, any
Subsidiary or any Affiliate) or (ii) any other individual who has, or has had, a
Service Relationship with the Corporation, any Subsidiary or any Affiliate and
whose participation in the Plan is determined to be in the best interests of the
Corporation by the Committee. An individual may hold more than one Option,
subject to such restrictions as are provided herein.
6. EFFECTIVE DATE AND TERM
6.1. EFFECTIVE DATE
The Plan shall become effective as of the date of adoption by the
Board, subject to stockholders' approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding stock is present, either in person or by proxy, and voting on the
matter, or by written consent in accordance with applicable state law and the
Certificate of Incorporation and By-Laws of the Corporation; provided, however,
that upon approval of the Plan by the stockholders of the Corporation, all
Options granted under the Plan on or after the effective date shall be fully
effective as if the stockholders of the Corporation had approved the Plan on the
effective date. If the stockholders fail to approve the Plan within one year of
such effective date, any Options granted hereunder shall be null, void and of no
effect.
6.2. TERM
The Plan shall terminate on the date 10 years after the effective date.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, at
any time and from time to time prior to the date of termination of the Plan,
grant to such eligible individuals as the Committee may determine Options to
purchase such number of shares of Stock on such terms and conditions as the
Committee may determine, including any terms or conditions which may be
necessary to qualify such Options as Incentive Stock Options. Without limiting
the foregoing, the Committee may at any time, with the consent of the Optionee,
amend the terms of outstanding Options or issue new Options in exchange for the
surrender and cancellation of outstanding Options. The date on which the
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<PAGE>
Committee approves the grant of an Option (or such later date as is specified by
the Committee) shall be considered the date on which such Option is granted. The
maximum number of shares of Stock subject to Options that can be awarded under
the Plan to any person is 433,333 shares.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option shall constitute an Incentive Stock Option only to the extent
that (i) it is designated an Incentive Stock Option and (ii) the aggregate fair
market value (determined at the time the Option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionee during any calendar year (under the Plan and all other plans of the
Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements to be executed by the Corporation and the Optionee, in such form or
forms as the Committee shall from time to time determine. Option Agreements
covering Options granted from time to time or at the same time need not contain
similar provisions; provided, however, that all such Option Agreements shall
comply with all terms of the Plan.
10. OPTION PRICE
The purchase price of each share of Stock subject to an Option shall be
fixed by the Committee and stated in each Option Agreement. In the case of an
Option that is intended to constitute an Incentive Stock Option, the Option
Price shall be not less than the greater of par value or 100 percent of the fair
market value of a share of the Stock covered by the Option on the date the
Option is granted (as determined in good faith by the Committee); provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the fair
market value of a share of the Stock covered by the Option at the time such
Option is granted. In the case of an Option not intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the par value of
a share of the Stock covered by the Option on the date the Option is granted.
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11. TERM AND EXERCISE OF OPTIONS
11.1 TERM
Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of 10 years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Committee and stated in the Option Agreement relating to such Option;
provided, however, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted.
11.2. EXERCISE BY OPTIONEE
Only the Optionee receiving an Option or a transferee of an Option
pursuant to Section 12 (or, in the event of the Optionee's legal incapacity or
incompetency, the Optionee's guardian or legal representative, and in the case
of the Optionee's death, the Optionee's estate) may exercise the Option.
11.3. OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable in whole or in
part at any time and from time to time over a period commencing on or after the
date of grant of the Option and ending upon the expiration or termination of the
Option, as the Committee shall determine and set forth in the Option Agreement
relating to such Option. Without limitation of the foregoing, the Committee,
subject to the terms and conditions of the Plan, may in its sole discretion
provide that an Option may not be exercised in whole or in part for any period
or periods of time during which such Option is outstanding as the Committee
shall determine and set forth in the Option Agreement relating to such Option.
Any such limitation on the exercise of an Option contained in any Option
Agreement may be rescinded, modified or waived by the Committee, in its sole
discretion, at any time and from time to time after the date of grant of such
Option. Notwithstanding any other provisions of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the
stockholders of the Corporation as provided in Section 6.1 hereof.
11.4. METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by delivery
to the Corporation on any business day, at its principal office addressed to the
attention of the Committee, of written notice of exercise, which notice shall
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specify the number of shares for which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised. Payment of the Option Price for the shares of
Stock purchased pursuant to the exercise of an Option shall be made, as
determined by the Committee and set forth in the Option Agreement pertaining to
an Option, (a) in cash or by certified check payable to the order of the
Corporation; (b) through the tender to the Corporation of shares of Stock, which
shares shall be valued, for purposes of determining the extent to which the
Option Price has been paid thereby, at their Fair Market Value on the date of
exercise; or (c) by a combination of the methods described in Sections 11.4(a)
and 11.4(b) hereof; provided, however, that the Committee may in its discretion
impose and set forth in the Option Agreement pertaining to an Option such
limitations or prohibitions on the use of shares of Stock to exercise Options as
it deems appropriate. Payment in full of the Option Price need not accompany the
written notice of exercise provided the notice directs that the Stock
certificate or certificates for the shares for which the Option is exercised be
delivered to a licensed broker acceptable to the Corporation as the agent for
the individual exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Corporation cash (or cash
equivalents acceptable to the Corporation) equal to the Option Price plus the
amount (if any) of federal and/or other taxes which the Corporation may, in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted hereunder other than as set forth above
shall be invalid and of no force and effect. Promptly after the exercise of an
Option and the payment in full of the Option Price of the shares of Stock
covered thereby, the individual exercising the Option shall be entitled to the
issuance of a Stock certificate or certificates evidencing such individual's
ownership of such shares. A separate Stock certificate or certificates shall be
issued for any shares purchased pursuant to the exercise of an Option which is
an Incentive Stock Option, which certificate or certificates shall not include
any shares which were purchased pursuant to the exercise of an Option which is
not an Incentive Stock Option. An individual holding or exercising an Option
shall have none of the rights of a stockholder until the shares of Stock covered
thereby are fully paid and issued to such individual and, except as provided in
Section 19 hereof, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date of such issuance.
11.5. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Optionee with the Corporation or any Subsidiary, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this paragraph (an "Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
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hereafter adopted by the Corporation (or any such Subsidiary) for the direct or
indirect provision of compensation to the Optionee (including groups or classes
of participants or beneficiaries of which the Optionee is a member), whether or
not such compensation is deferred, is in cash, or is in the form of a benefit to
or for the Optionee (a "Benefit Arrangement"), if the Optionee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Optionee and any right to receive any payment or other benefit
under this Plan shall not become exercisable or vested (i) to the extent that
such right to exercise, vesting, payment, or benefit, taking into account all
other rights, payments, or benefits to or for the Optionee under this Plan, all
Other Agreements, and all Benefit Arrangements, would cause any payment or
benefit to the Optionee under this Plan to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code as then in effect (a
"Parachute Payment") and (ii) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amounts received by the Optionee from the Corporation
under this Plan, all Other Agreements, and all Benefit Arrangements would be
less than the maximum after-tax amount that could be received by Optionee
without causing any such payment or benefit to be considered a Parachute
Payment. In the event that the receipt of any such right to exercise, vesting,
payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Optionee under any Other Agreement or any
Benefit Arrangement would cause the Optionee to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing the
after-tax amount received by the Optionee as described in clause (ii) of the
preceding sentence, then the Optionee shall have the right, in the Optionee's
sole discretion, to designate those rights, payments, or benefits under this
Plan, any Other Agreements, and any Benefit Arrangements that should be reduced
or eliminated so as to avoid having the payment or benefit to the Optionee under
this Plan be deemed to be a Parachute Payment.
12. TRANSFERABILITY OF OPTIONS
12.1. TRANSFERABILITY OF OPTIONS
Except as provided in Section 12.2, during the lifetime of an
Optionee, only the Optionee (or, in the event of legal incapacity or
incompetency, the Optionee's guardian or legal representative) may exercise an
Option. Except as provided in Section 12.2, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
12.2. FAMILY TRANSFERS.
Subject to the terms of the applicable Option Agreement, an Optionee
may transfer all or part of an Option which is not an Incentive Stock Option to
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(i) any Immediate Family Member, (ii) a trust or trusts for the exclusive
benefit of any Immediate Family Member, or (iii) a partnership in which
Immediate Family Members are the only partners, provided that (x) there may be
no consideration for any such transfer, and (y) subsequent transfers of
transferred Options are prohibited except those in accordance with this Section
12.2 or by will or the laws of descent and distribution. Following transfer, any
such Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that for purposes of
Section 12.2 hereof the term "Optionee" shall be deemed to refer the transferee.
The events of termination of the Service Relationship of Sections 13 and 14
hereof shall continue to be applied with respect to the original Optionee,
following which the Option shall be exercisable by the transferee only to the
extent, and for the periods specified in Section 11.3.
13. TERMINATION OF EMPLOYMENT AND OTHER SERVICE RELATIONSHIPS
Upon the termination of employment or other long-term Service
Relationship of an Optionee with the Corporation, a Subsidiary or an Affiliate,
other than by reason of the death or "permanent and total disability" (within
the meaning of Section 22(e)(3) of the Code) of such Optionee or for Cause, any
Option granted to an Optionee pursuant to the Plan shall continue to be
exercisable only to the extent that it was exercisable immediately before such
termination; provided, however, such Option shall terminate thirty (30) days
after the date of such termination of emploment or other such Service
Relationship, unless earlier terminated pursuant to Section 11.1 hereof, and
such Optionee shall have no further right to purchase shares of Stock pursuant
to such Option; and provided further, that the Committee may provide, by
inclusion of appropriate language in any Option Agreement, that an Optionee may
(subject to the general limitations on exercise set forth in Section 11.3
hereof), in the event of termination of employment or other Service Relationship
(whether long-term or short-term) of the Optionee with the Corporation, a
Subsidiary or an Affiliate, exercise an Option, in whole or in part, at any time
subsequent to such termination of Service Relationship and prior to termination
of the Option pursuant to Section 11.1 hereof, either subject to or without
regard to any installment limitation on exercise imposed pursuant to Section
11.3 hereof, as the Committee, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement. Upon the termination of
employment or other Service Relationship of an Optionee with the Corporation, a
Subsidiary or an Affiliate for Cause, any Option granted to an Optionee pursuant
to the Plan shall terminate and such Optionee shall have no further right to
purchase shares of Stock pursuant to such Option; and provided however, that the
Committee may provide, by inclusion of appropriate language in any Option
Agreement, that an Optionee may (subject to the general limitations on exercise
set forth in Section 11.3 hereof), in the event of termination of employment or
other Service Relationship of the Optionee with the Corporation, a Subsidiary or
an Affiliate for Cause, exercise an Option, in whole or in part, at any time
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subsequent to such termination of Service Relationship and prior to termination
of the Option pursuant to Section 11.1 hereof, either subject to or without
regard to any installment limitation on exercise imposed pursuant to Section
11.3 hereof, as the Committee, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement. Whether a leave of absence or
leave on military or government service shall constitute a termination of
employment or other Service Relationship for purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive.
For purposes of the Plan, including without limitation this Section 13 and
Section 14, unless otherwise provided in an Option Agreement, a termination of
employment or other Service Relationship with the Corporation, a Subsidiary or
an Affiliate shall not be deemed to occur if the Optionee immediately thereafter
has an employment or other Service Relationship with the Corporation, any other
Subsidiary or any other Affiliate.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. DEATH
If an Optionee dies while in a Service Relationship with the
Corporation, a Subsidiary or an Affiliate or within the period following the
termination of such Service Relationship during which the Option is exercisable
under Section 13 or 14.2 hereof, the executors, administrators, legatees or
distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 11.3 hereof), at any time
within one year after the date of such Optionee's death and prior to termination
of the Option pursuant to Section 11.1 hereof, to exercise, in whole or in part,
any Option held by such Optionee at the date of such Optionee's death, whether
or not such Option was exercisable immediately prior to such Optionee's death;
provided, however, that the Committee may provide by inclusion of appropriate
language in any Option Agreement that, in the event of the death of an Optionee,
the executors, administrators, legatees or distributees of such Optionee's
estate may exercise an Option (subject to the general limitations on exercise
set forth in Section 11.3 hereof), in whole or in part, at any time subsequent
to such Optionee's death and prior to termination of the Option pursuant to
Section 11.1 hereof, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 11.3 hereof, as the
Committee, in its sole and absolute discretion, shall determine and set forth in
the Option Agreement.
14.2. DISABILITY
If an Optionee terminates a Service Relationship with the Corporation,
a Subsidiary or an Affiliate by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right (subject to the general limitations on exercise
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set forth in Section 11.3 hereof), at any time within one year after such
termination of Service Relationship and prior to termination of the Option
pursuant to Section 11.1 hereof, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of Service Relationship,
whether or not such Option was exercisable immediately prior to such termination
of Service Relationship; provided, however, that the Committee may provide, by
inclusion of appropriate language in any Option Agreement, that an Optionee may
(subject to the general limitations on exercise set forth in Section 11.3
hereof), in the event of the termination of the Service Relationship of the
Optionee with the Corporation or a Subsidiary by reason of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option, in whole or in part, at any time subsequent to
such termination of Service Relationship and prior to termination of the Option
pursuant to Section 11.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 11.3 hereof, as
the Committee, in its sole and absolute discretion, shall determine and set
forth in the Option Agreement. Whether a termination of a Service Relationship
is to be considered by reason of "permanent and total disability" for purposes
of the Plan shall be determined by the Committee, which determination shall be
final and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Corporation.
16. SECURITIES LAWS
The Corporation shall not be required to sell or issue any shares of
Stock under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or by the Corporation of any
provisions of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations. If at
any time the Corporation shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to the Option upon any
securities exchange or under any state or federal law, or the consent of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares, the Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Corporation, and any delay caused thereby shall in no way
affect the date of termination of the Option. Specifically in connection with
the Securities Act, upon exercise of any Option, unless a registration statement
under the Securities Act is in effect with respect to the shares of Stock
covered by such Option, the Corporation shall not be required to sell or issue
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such shares unless the Corporation has received evidence satisfactory to the
Corporation that the Optionee may acquire such shares pursuant to an exemption
from registration under the Securities Act. Any determination in this connection
by the Corporation shall be final and conclusive. The Corporation may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act. The Corporation shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
17. EXCHANGE ACT: RULE 16B-3
17.1. GENERAL
The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3") (and any
successor thereto) under the Exchange Act. Any provision inconsistent with Rule
16b-3 shall, to the extent permitted by law and determined to be advisable by
the Committee (constituted in accordance with Section 17.2 hereof), be
inoperative and void.
17.2. COMPENSATION COMMITTEE
The Committee appointed in accordance with Section 3.1 hereof shall
consist of not fewer than two members of the Board each of whom shall qualify
(at the time of appointment to the Committee and during all periods of service
on the Committee) in all respects as a "non-employee director" as defined in
Rule 16b-3.
17.3. RESTRICTION ON TRANSFER OF STOCK
No director, officer or other "insider" of the Corporation subject to
Section 16 of the Exchange Act shall be permitted to sell Stock (which such
"insider" had received upon exercise of an Option) during the six months
immediately following the grant of such Option.
18. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
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granted. The Corporation also may retain the right in an Option Agreement to
cause a forfeiture of the shares or gain realized by an Optionee on account of
the Optionee taking actions in "competition with the Corporation," as defined in
the applicable Option Agreement. Furthermore, the Corporation may, in the Option
Agreement, retain the right to annul the grant of an Option if the holder of
such grant had a Service Relationship with the Corporation, a Subsidiary, or an
Affiliate and is terminated "for cause," as defined in the applicable Option
Agreement. Except as permitted under Section 19 hereof, no amendment, suspension
or termination of the Plan shall, without the consent of the Optionee, alter or
impair rights or obligations under any Option theretofore granted under the
Plan.
19. EFFECT OF CHANGES IN CAPITALIZATION
19.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares for which Options are outstanding, so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
19.2. REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 19.3 hereof, if the Corporation shall be the
surviving entity in any reorganization, merger or consolidation of the
Corporation with one or more other entities, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.
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19.3. OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK
Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other entities in which the Corporation is not the surviving entity, or upon a
sale of substantially all of the assets of the Corporation to another person or
entity, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving entity) approved by the
Board that results in any person or entity owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, the Plan and
all Options outstanding hereunder shall terminate, except to the extent
provision is made in connection with such transaction for the continuation of
the Plan and/or the assumption of the Options theretofore granted, or for the
substitution for such Options of new options covering the stock of a successor
entity, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kinds of shares and exercise prices, in which event the Plan and
Options theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each Optionee shall
have the right (subject to the general limitations on exercise set forth in
Section 11.3 hereof and except as otherwise specifically provided in the Option
Agreement relating to such Option), immediately prior to the occurrence of such
termination and during such period occurring prior to such termination as the
Committee in its sole discretion shall designate, to exercise such Option in
whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs, but subject to any additional provisions that the
Committee may, in its sole discretion, include in any Option Agreement. The
Committee shall send written notice of an event that will result in such a
termination to all Optionees not later than the time at which the Corporation
gives notice thereof to its stockholders.
19.4. ADJUSTMENTS
Adjustments under this Section 19 relating to stock or securities of
the Corporation shall be made by the Committee, whose determination in that
respect shall be final and conclusive. No fractional shares of Stock or units of
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share or unit.
19.5. NO LIMITATIONS ON CORPORATION
The grant of an Option pursuant to the Plan shall not affect or limit
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
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20. WITHHOLDING
The Corporation or a Subsidiary may be obligated to withhold federal
and local income taxes and Social Security taxes to the extent that an Optionee
realizes ordinary income in connection with the exercise of an Option. The
Corporation or a Subsidiary may withhold amounts needed to cover such taxes from
payments otherwise due and owing to an Optionee, and upon demand the Optionee
will promptly pay to the Corporation or a Subsidiary having such obligation any
additional amounts as may be necessary to satisfy such withholding tax
obligation. Such payment shall be made in cash or cash equivalents.
21. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Corporation, any Subsidiary
or any Affiliate, or to interfere in any way with the right and authority of the
Corporation, any Subsidiary or any Affiliate either to increase or decrease the
compensation of any individual at any time, or to terminate any employment or
other relationship between any individual and the Corporation, any Subsidiary or
any Affiliate. The obligation of the Corporation to pay any benefits pursuant to
the Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the Corporation to
transfer any amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any participant or beneficiary under the terms of
the Plan.
22. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
23. GOVERNING LAW.
This Plan and all Options to be granted hereunder shall be governed by
the laws of the State of Delaware (but not including the choice of law rules
thereof).
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* * *
Adopted by the Board of Directors on March 12, 1997.
Adopted by the Company's Stockholders on May 22, 1997
Section 19.3 amended in its entirety by resolutions adopted
by the Board of Directors on July 16, 1997
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Exhibit 5.1
July 30, 1997
Board of Directors
Orion Network Systems, Inc.
2440 Research Boulevard, Suite 400
Rockville, Maryland 20850
Gentlemen:
This firm has acted as counsel to Orion Network Systems, Inc. (the
"Company"), a Delaware corporation, in connection with its registration,
pursuant to a registration statement on Form S-8 filed on or about the date
hereof (the "Registration Statement"), of 1,300,000 shares (the "Shares") of
common stock, par value $.01 per share, of the Company, issuable under the Orion
Network Systems, Inc. 1997 Stock Option Plan (the "Plan"). This letter is
furnished to you pursuant to the requirements of Item 601(b)(5) of Regulation
S-K, 17 C.F.R. ss. 229.601(b)(5), in connection with such registration.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. A copy of the Plan, as certified by the Secretary of the Company on the
date hereof as then being complete, accurate and in effect.
3. The Restated Certificate of Incorporation of the Company, as amended
(the "Charter"), as certified by the Secretary of State of the State of
Delaware on January 29, 1997 and by the Secretary of the Company on the
date hereof as then being complete, accurate and in effect.
4. The By-laws of the Company, as amended, as certified by the Secretary of
the Company on the date hereof as then being complete, accurate and in
effect.
<PAGE>
Board of Directors
Orion Network Systems, Inc.
July 30, 1997
Page 2
5. Resolutions and consents of the Board of Directors of the Company
adopted on March 12, 1997 and July 16, 1997 as certified by the
Secretary of the Company on the date hereof as then being complete,
accurate and in effect relating to, among other things, approval of the
Plan.
We have not, except as specifically identified above, made any independent
review or investigation of factual or other matters, including the organization,
existence, good standing, assets, business or affairs of the Company or its
subsidiaries. In our examination of the aforesaid certificates, records, and
documents, we have assumed the genuineness of all signatures, the legal capacity
of natural persons, the authenticity, accuracy and completeness of all documents
submitted to us as originals, and the authenticity, accuracy and completeness
and conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. We have assumed the
authenticity and accuracy of the foregoing certifications of corporate officers,
on which we are relying, and have made no independent investigations thereof.
This opinion is given in the context of the foregoing.
This opinion letter is based as to matters of law solely on the General
Corporation Law of the State of Delaware. We express no opinion herein as to any
other laws, statutes, regulations, or ordinances.
Based upon, subject to, and limited by the foregoing, we are of the opinion
that the Shares, when issued and delivered in the manner and on the terms
contemplated in the Registration Statement and the Plan (with the Company having
received the consideration therefor, the form of which is in accordance with
applicable law), will be validly issued, fully paid and non-assessable by the
Company.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this letter, and should not be quoted in whole or in
part or otherwise be referred to, nor be filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
<PAGE>
Board of Directors
Orion Network Systems, Inc.
July 30, 1997
Page 3
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement. In giving this consent, we do not thereby admit that
we are an "expert" within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
HOGAN & HARTSON L.L.P.
Exhibit 21.1
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LIST OF SUBSIDIARIES OF ORION NETWORK SYSTEMS, INC.
STATE OF
NAME INCORPORATION
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Orion Oldco Services Inc. Delaware
Orion Network Services, Inc. Delaware
International Private Satellite
Partners, L.P. Delaware
OrionNet, Inc. Delaware
Orion Network Systems-Asia Pacific, Inc. Delaware
Asia Pacific Space and Communications, Ltd. Delaware
Orion Network Systems-Europe, Inc. Delaware
Teleport Europe GmbH Germany
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333- ) pertaining to the Orion Network Systems, Inc. 1997 Stock Option
Plan of our report dated March 7, 1997, with respect to the consolidated
financial statements of Orion Network Systems, Inc., (a Delaware corporation
that is now known as Orion Oldco Services, Inc.) included in its Annual Report
(Form 10-K and amendment thereto on Form 10-K/A) for the year ended December 31,
1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Washington, D.C.
July 24, 1997