SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-B
FOR REGISTRATION OF SECURITIES OF
CERTAIN SUCCESSOR ISSUERS
FILED PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Orion Newco Services, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 52-2008654
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(State of incorporation (I.R.S. Employer
or organization) Identification No.)
2440 Research Boulevard, Rockville, Maryland 20850
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(Address of principal executive offices) (ZIP Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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none none
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Securities to be registered pursuant to Section 12(g) of the Act:
All of the Issued and Outstanding Shares of
(i) Common Stock of Orion Newco Services, Inc. and
(ii) Preferred Stock of Orion Newco Services, Inc.
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(Title of Class)
<PAGE>
Item 1. General Information.
(a) The Registrant was organized as a Delaware Corporation on
June 26, 1996.
(b) The Registrant's fiscal year ends on December 31 of each
year.
Item 2. Transaction of Succession.
(a) The Registrant is the successor to Orion Network Systems,
Inc., a Delaware corporation organized in 1982 ("Old Orion") and a registrant
under Section 12(g) of the Securities Exchange Act of 1934 (File No. -026450).
(b) Prior to the succession, the Registrant was a wholly owned
subsidiary of Old Orion. The Registrant was organized by Old Orion for the
purpose of effecting (i) a merger in which a wholly owned subsidiary of the
Registrant was merged with and into Old Orion in a tax-free reorganization, and
Old Orion became a wholly owned subsidiary of the Registrant (the "Merger"), and
(ii) an exchange of shares of the Registrant's Series C 6% Cumulative Redeemable
Convertible Preferred Stock (the "Registrant's Series C Preferred Stock") for
limited partnership interests in International Private Satellite Partners, L.P.,
a Delaware limited partnership ("Orion Atlantic"), held by each of the existing
limited partners of Orion Atlantic other than Old Orion (the "Exchange").
In the Merger, each share of Old Orion's common stock, par
value $.01 per share, Old Orion's Series A 8% Cumulative Redeemable Convertible
Preferred Stock and Series B 8% Cumulative Redeemable Convertible Preferred
Stock was converted, without any action on the part of the holder thereof, into
the right to receive one share of the Registrant's common stock, par value $.01
per share (the "Registrant's Common Stock"), the Registrant's Series A 8%
Cumulative Redeemable Convertible Preferred Stock (the "Registrant's Series A
Preferred Stock") and Series B 8% Cumulative Redeemable Convertible Preferred
Stock (the "Registrant's Series B Preferred Stock," and together with the
Registrant's Series A Preferred Stock, the "Registrant's Preferred Stock"),
respectively.
Following the Merger, the Registrant has a certificate of
incorporation, bylaws, management and capital structure (other than the
Registrant's Series C Preferred Stock issued in the Exchange described above)
substantially identical in all material respects to those of Old Orion. As a
result of the Merger, (i) the Registrant became a public holding company that
owns all of the capital stock of Old Orion, which continues its business and
operations, and (ii) the stockholders of Old Orion have substantially the same
securities and rights in the Registrant that they had in Old Orion, except that
their percentage ownership in the Registrant is diluted as a result of the
Exchange.
<PAGE>
Item 3. Securities to be Registered.
(a) Registrant's Common Stock. (i) 40,000,000 shares of the
Registrant's Common Stock are presently authorized under the Registrant's
Restated Certificate of Incorporation, (ii) at the effective time of the Merger,
approximately 10,974,121 shares of the Registrant's Common Stock will be issued
and outstanding, none of which will be held by or for the account of the
Registrant either directly or by its subsidiaries.
(b) Registrant's Preferred Stock. (i) 1,000,000 shares of the
Registrant's Preferred Stock are presently authorized under the Registrant's
Restated Certificate of Incorporation, (ii) at the effective time of the Merger,
approximately 13,871 shares of the Registrant's Series A Preferred Stock and
4,298 shares of the Registrant's Series B Preferred Stock will be issued, none
of which are held by or for the account of the Registrant.
Item 4. Description of Registrant's Securities to be Registered.
The information set forth under the caption "Description of
Capital Stock" in the Registrant's Registration Statement on Form S-4
(Registration No. 333-19795) is incorporated herein by reference.
Item 5. Financial Statements and Exhibits.
(a) No financial statements need to be filed since the capital
structure and balance sheet of the Registrant immediately after the succession
were substantially the same as those of Old Orion.
(b) Exhibits.
(i) The Agreement and Plan of Merger, dated January 8, 1997,
by and among Orion Network Systems, Inc., Orion Newco Services, Inc. and Orion
Merger Company, Inc. (Incorporated by reference to exhibit number 2.1 in
Registration Statement No. 333-19795 on Form S-4 of Orion Newco Services, Inc.).
(ii) The Registrant's Registration Statement on Form S-4
(Registration No. 333-19795), of which Orion Network Systems, Inc. Proxy
Statement/Orion Newco Services, Inc. Prospectus is a part, is incorporated
herein by reference.
<PAGE>
(iii) Other exhibits:
Exhibit
Number Description
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3.1 Restated Certificate of Incorporation of Orion Newco Services,
Inc.
3.2 Amended and Restated Bylaws of Orion Newco Services, Inc.
3.3 Certificate of Incorporation of Orion Network Systems, Inc.
(Incorporated by reference to exhibit number 3.1 in Registration
Statement No. 33-80518 on Form S-1 of Orion Network Systems,
Inc.)
3.4 Bylaws of Orion Network Systems, Inc. (Incorporated by reference
to exhibit number 3.2 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
4.1 Forms of Warrant issued by Orion. (Incorporated by reference to
exhibit number 4.1 in Registration Statement No. 33-80518 on Form
S-1 of Orion Network Systems, Inc.)
4.2 Forms of Warrant issued by Orion to holders of Preferred Stock.
(Incorporated by reference to exhibit number 4.2 in Registration
Statement No. 33-80518 on Form S-1 of Orion Network Systems,
Inc.)
4.3 Certificates of Designation of Series A 8% Cumulative Redeemable
Convertible Preferred Stock, Series B 8% Cumulative Redeemable
Convertible Preferred Stock and Form of Series C 6% Cumulative
Redeemable Convertible Preferred Stock of Orion Newco Services,
Inc.
4.4 Forms of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock Certificates of Orion (Incorporated by
reference to exhibit number 4.4 in Registration Statement No.
333-19795 on Form S-4 of Orion Newco Services, Inc.)
4.5 Form of Common Stock Certificate of Orion (Incorporated by
reference to exhibit number 4.5 in Registration Statement No.
333-19795 on Form S-4 of Orion Newco Services, Inc.)
4.6 Form of Warrant issued to DACOM Corp (Incorporated by reference
to exhibit number 4.6 in Registration Statement No. 333-19795 on
Form S-4 of Orion Newco Services, Inc.).
4.7 Debenture Purchase Agreement, dated January 13, 1997, with
British Aerospace and Matra Marconi Space (Incorporated by
reference to exhibit number 4.7 in Registration Statement No.
333-19795 on Form S-4 of Orion Newco Services, Inc.)
10.1 Second Amended and Restated Purchase Agreement, dated September
26, 1991, ("Satellite Contract") by and between OrionSat and
British Aerospace PLC and the First Amendment, dated as of
September 15, 1992, Second Amendment, dated as of November 9,
1992, Third Amendment, dated as of March 12, 1993, Fourth
Amendment, dated as of April 15, 1993, Fifth Amendment, dated as
of September 22, 1993, Sixth Amendment, dated as of April 6,
1994, Seventh Amendment, dated as of August 9, 1994, Eighth
Amendment, dated as of December 8, 1994, and Amendment No. 9
dated October 24, 1995, thereto. [CONFIDENTIAL TREATMENT HAS BEEN
GRANTED FOR PORTIONS OF THESE
<PAGE>
Exhibit
Number Description
- ------ -----------
DOCUMENTS.] (Incorporated by reference to exhibits number 10.13
and 10.14 in Registration Statement No. 33-80518 on Form S-1 of
Orion Network Systems, Inc.)
10.2 Restated Amendment No. 10 dated December 10, 1996, between Orion
Atlantic and Matra Marconi Space to the Second Amended and
Restated Purchase Agreement, dated September 26, 1991 by and
between OrionSat and British Aerospace PLC (which contract and
prior exhibits thereto were incorporated by reference as exhibit
number 10.1). [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
PORTIONS OF THIS DOCUMENT.] (Incorporated by reference to exhibit
number 10.2 in Registration Statement No. 333-19795 on Form S-4
of Orion Newco Services, Inc.)
10.3 Ground Support System Agreement, dated as of August 2, 1991, by
and between Orion Atlantic and Telespazio S.p.A. [CONFIDENTIAL
TREATMENT HAS BEEN GRANTED FOR PORTIONS OF THIS DOCUMENT.]
(Incorporated by reference to exhibit number 10.25 in
Registration Statement No. 33-80518 on Form S-1 of Orion Network
Systems, Inc.)
10.4 Italian Facility and Services Agreement, dated as of August 2,
1991, by and between OrionSat and Telespazio S.p.A. as amended by
the amendment thereto, dated March 19, 1994. [CONFIDENTIAL
TREATMENT HAS BEEN GRANTED FOR PORTIONS OF THESE DOCUMENTS.]
(Incorporated by reference to exhibit number 10.26 in
Registration Statement No. 33-80518 on Form S-1 of Orion Network
Systems, Inc.)
10.5 Contract for a Satellite Control System, dated December 7, 1992,
by and between Orion Atlantic, Telespazio S.p.A. and Martin
Marietta Corporation. [CONFIDENTIAL TREATMENT HAS BEEN GRANTED
FOR PORTIONS OF THIS DOCUMENT.] (Incorporated by reference to
exhibit number 10.31 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.6 Credit Agreement, dated as of November 23, 1993, by and between
Orion Atlantic, OrionSat and General Electric Capital Corporation
("GECC"). [CONFIDENTIAL TREATMENT HAS BEEN GRANTED FOR PORTIONS
OF THIS DOCUMENT.] (Incorporated by reference to exhibit number
10.32 in Registration Statement No. 33-80518 on Form S-1 of Orion
Network Systems, Inc.)
10.7 Security Agreement, dated as of November 23, 1993, by and between
Orion Atlantic, OrionSat and GECC. (Incorporated by reference to
exhibit number 10.33 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.8 Assignment and Security Agreement, dated as of November 23, 1993,
by and between Orion Atlantic, OrionSat and GECC. (Incorporated
by reference to exhibit number 10.34 in Registration Statement
No. 33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.9 Consent and Agreement, dated as of November 23, 1993, by and
between Orion Atlantic, Martin Marietta Corporation and GECC.
(Incorporated
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Exhibit
Number Description
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by reference to exhibit number 10.35 in Registration Statement
No. 33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.10 Deed of Trust, dated as of November 23, 1993, by and between
Orion Atlantic, W. Allen Ames, Jr. and Michael J. Schwel, as
Trustees, and GECC. (Incorporated by reference to exhibit number
10.37 in Registration Statement No. 33-80518 on Form S-1 of Orion
Network Systems, Inc.)
10.11 Lease Agreement, dated as of November 23, 1993, by and between
OrionNet, Inc. and Orion Atlantic, as amended by an Amendment,
dated January 3, 1995. [CONFIDENTIAL TREATMENT HAS BEEN GRANTED
FOR PORTIONS OF THESE DOCUMENTS.] (Incorporated by reference to
exhibit number 10.38 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.12 Note for Interim Loans, dated as of November 23, 1993, by and
between Orion Atlantic and GECC. (Incorporated by reference to
exhibit number 10.42 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.13 Sales Representation Agreement and Ground Operations Service
Agreement, each dated as of May 1, 1994 and June 30, 1994, by and
between each of OrionNet, Inc. and Kingston Communications,
respectively, and Orion Atlantic, as amended by side agreements,
dated May 1, 1994, July 12, 1994 and February 1, 1995.
[CONFIDENTIAL TREATMENT HAS BEEN GRANTED FOR PORTIONS OF THESE
DOCUMENTS.] (Incorporated by reference to exhibit number 10.43 in
Registration Statement No. 33-80518 on Form S-1 of Orion Network
Systems, Inc.)
10.14 Lease Agreement, dated as of October 2, 1992, by and between
OrionNet and Research Grove Associates, as amended by Amendment
No. 1, dated March 26, 1993, Amendment No. 2, dated August 23,
1993, and Amendment No. 3, dated December 20, 1993. (Incorporated
by reference to exhibit number 10.38 in Registration Statement
No. 33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.15 Sales Representation Agreement and Ground Operations Service
Agreement, dated as of June 30, 1995, by and between MCN Sat
Service, S.A. and Orion Atlantic. [CONFIDENTIAL TREATMENT HAS
BEEN GRANTED FOR PORTIONS OF THIS DOCUMENT.] (Incorporated by
reference to exhibit number 10.69 in Orion's Registration
Statement No. 33-80518 on Form S-1.)
10.16 Volume Purchase Agreement, dated January 18, 1995, by and between
the Company and Dornier GmbH. [CONFIDENTIAL TREATMENT HAS BEEN
GRANTED FOR PORTIONS OF THIS DOCUMENT.] (Incorporated by
reference to exhibit number 10.66 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.17 Product Development, License and Marketing Agreement, dated
January 18, 1995, by and between the Company and Dornier GmbH.
[CONFIDENTIAL TREATMENT HAS BEEN GRANTED FOR PORTIONS OF THIS
DOCUMENT.] (Incorporated by reference to
<PAGE>
Exhibit
Number Description
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exhibit number 10.65 in Orion's Registration Statement No.
33-80518 on Form S-1.)
10.18 Sales Representation Agreement, dated as of June 8, 1995, by and
between Nortel Dasa Network Systems GmbH & Co. KG and Orion
Atlantic. [CONFIDENTIAL TREATMENT HAS BEEN GRANTED FOR PORTIONS
OF THIS DOCUMENT.] (Incorporated by reference to exhibit number
10.70 in Registration Statement No. 33-80518 on Form S-1 of Orion
Network Systems, Inc.)
10.19 Orion 2 Spacecraft Purchase Contract, dated July 31, 1996,
between Orion Atlantic and Matra Marconi Space. [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
(Incorporated by reference to exhibit number 10.19 in
Registration Statement No. 333-19795 on Form S-4 of Orion Newco
Services, Inc.)
10.20 Orion's Amended and Restated 1987 Stock Option Plan as amended.
(Incorporated by reference to exhibit number 10.23 in
Registration Statement No. 33-80518 on Form S-1 of Orion Network
Systems, Inc.)
10.21 Purchase Contract, dated December 4, 1991, by and between
OrionNet, Inc., Shenandoah Valley Leasing Company and MCI
Telecommunications Corporation. [CONFIDENTIAL TREATMENT HAS BEEN
GRANTED FOR PORTION OF THIS DOCUMENT.] (Incorporated by reference
to exhibit number 10.30 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.22 Amended and Restated Partnership Agreement of Orion Financial
Partnership, dated as of April 15, 1994, by and between OrionNet
and Computer Leasing Inc. ("CLI"). (Incorporated by reference to
exhibit number 10.44 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.23 Continuing Guaranty, dated as of April 15, 1994, of the Company
of the obligations of OrionNet Finance Corporation. (Incorporated
by reference to exhibit number 10.45 in Registration Statement
No. 33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.24 Release of Continuing Guaranty, dated as of December 29, 1994, by
the Orion Financial Partnership. (Incorporated by reference to
exhibit number 10.46 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.25 Confirmation of Continuing Guaranty, dated as of December 29,
1994, of the Company of the obligation of OFC. (Incorporated by
reference to exhibit number 10.47 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.26 Continuing Guarantee, dated as of December 29, 1994, by Lessor
Capital Funding Limited Partnership in favor of Orion Financial
Partnership. (Incorporated by reference to exhibit number 10.48
in Registration Statement No. 33-80518 on Form S-1 of Orion
Network Systems, Inc.)
10.27 Master Lease Agreement, dated as of April 15, 1994, by and
between OrionNet and Orion Financial Partnership. (Incorporated
by reference to
<PAGE>
Exhibit
Number Description
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exhibit number 10.49 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.28 Collateral Assignment and Pledge and Security Agreement, dated
April 22, 1994, by and between CLI and Orion Financial
Partnership. (Incorporated by reference to exhibit number 10.50
in Registration Statement No. 33-80518 on Form S-1 of Orion
Network Systems, Inc.)
10.29 Purchase Agreement, dated as of April 22, 1994, by and between
OrionNet and Orion Financial Partnership. (Incorporated by
reference to exhibit number 10.51 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.30 Stock Purchase Agreement, dated as of April 29, 1994, by and
between the Company and SS/L. (Incorporated by reference to
exhibit number 10.53 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.31 Registration Rights Agreement, dated as of April 29, 1994, by and
between the Company and SS/L. (Incorporated by reference to
exhibit number 10.54 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.32 Purchase Agreement, dated as of June 17, 1994, by and between the
Company, CIBC, Fleet and Chisholm. (Incorporated by reference to
exhibit number 10.55 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.33 Stockholders Agreement, dated as of June 17, 1994, by and between
the Company, CIBC, Fleet, Chisholm and certain principal
stockholders of the Company. (Incorporated by reference to
exhibit number 10.56 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.)
10.34 Registration Rights Agreement, dated as of June 17, 1994, by and
between the Company, CIBC, Fleet and Chisholm. (Incorporated by
reference to exhibit number 10.57 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.35 Purchase Agreement, dated as of June 19, 1995, by and among the
Company, CIBC, Fleet and an affiliate of Fleet. (Incorporated by
reference to exhibit number 10.58 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.36 Definitive Agreement, dated April 26, 1990, by and between Orion
Asia Pacific and the Republic of the Marshall Islands and a Stock
Option Agreement related thereto. [CONFIDENTIAL TREATMENT HAS
BEEN GRANTED FOR PORTIONS OF THESE DOCUMENTS.] (Incorporated by
reference to exhibit number 10.60 in Registration Statement No.
33-80518 on Form S-1 of Orion Network Systems, Inc.)
10.37 Option Agreement, dated December 10, 1996, by and between Orion
Atlantic and Matra Marconi Space. [CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.] (Incorporated by
reference to exhibit number 10.37 in Registration Statement No.
333-19795 on Form S-4 of Orion Newco Services, Inc.)
<PAGE>
Exhibit
Number Description
- ------ -----------
10.38 Memorandum of Agreement for the Procurement of Orion 2
Spacecraft, dated December 10, 1996, by and between Orion
Atlantic and Matra Marconi Space. [CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.] (Incorporated by
reference to exhibit number 10.38 in Registration Statement No.
333-19795 on Form S-4 of Orion Newco Services, Inc.)
10.39 TT&C Earth Station Agreement, dated as of November 11, 1996, by
and between Orion Asia Pacific and DACOM Corp. [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
(Incorporated by reference to exhibit number 10.39 in
Registration Statement No. 333-19795 on Form S-4 of Orion Newco
Services, Inc.)
10.40 Joint Investment Agreement, dated as of November 11, 1996, by and
between Orion Asia Pacific and DACOM Corp. [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
(Incorporated by reference to exhibit number 10.40 in
Registration Statement No. 333-19795 on Form S-4 of Orion Newco
Services, Inc.)
10.41 Orion Network Systems, Inc. Employee Stock Purchase Plan
(Incorporated by reference to exhibit number 4.4 in Registration
Statement No. 333-19021 on Form S-8 of Orion Network Systems,
Inc.)
10.42 Orion Network Systems, Inc. 401(k) Profit Sharing Plan
(Incorporated by reference to exhibit number 4.5 in Registration
Statement No. 333-19021 on Form S-8 of Orion Network Systems,
Inc.)
10.43 Orion Network Systems, Inc. Non-Employee Director Stock Option
Plan (Incorporated by reference to exhibit number 10.43 in
Registration Statement No. 333-19795 on Form S-4 of Orion Newco
Services, Inc.)
10.44 Exchange Agreement dated June , 1996 among Orion Network Systems,
Orion Atlantic, OrionSat and the Limited Partners (Incorporated
by reference to exhibit 10 in Current Report on Form 8-K dated
December 20, 1995 of Orion Network Systems, Inc.)
10.45 First Amendment to Exchange Agreement dated December ___, 1996
among Orion Network Systems, Orion Atlantic, OrionSat, and the
Limited Partners. (Incorporated by reference to exhibit number
10.45 in Registration Statement No. 333-19795 on Form S-4 of
Orion Newco Services, Inc.)
10.46 Redemption Agreement dated November 21, 1995, by and between STET
and Orion Atlantic, the promissory notes delivered thereunder and
Instrument of Redemption relating thereto (Incorporated by
reference to exhibit number 10.1 in Current Report on Form 8-K
dated November 21, 1995 of Orion Network
<PAGE>
Exhibit
Number Description
- ------ -----------
Systems, Inc.)
10.47 IPSP-Telecom Italia Agreement dated November 21, 1995, by and
between Telecom Italia and Orion Atlantic. [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.]
(Incorporated by reference to exhibit number 10.2 in Current
Report on Form 8-K dated November 21, 1995 of Orion Network
Systems, Inc.)
10.48 Indemnity Agreement dated November 21, 1995, by and among Telecom
Italia, Orion Atlantic, Orion and STET (Incorporated by reference
to exhibit number 10.3 in Current Report on Form 8-K dated
November 21, 1995 of Orion Network Systems, Inc.)
10.49 Subscription Agreement dated November 21, 1995, by and between
Orion and Orion Atlantic, and the promissory note delivered
thereunder (Incorporated by reference to exhibit number 10.5 in
Current Report on Form 8-K dated November 21, 1995 of Orion
Network Systems, Inc.)
10.50 First Amendment to the Italian Facility and Services Agreement
dated November 21, 1995, by and between Orion Atlantic and Nuova
Telespazio (Incorporated by reference to exhibit number 10.7 in
Current Report on Form 8-K dated November 21, 1995 of Orion
Network Systems, Inc.)
10.51 Cancellation of Consulting Agreement dated November 16, 1995, by
and between Orion Atlantic and Nuova Telespazio (Incorporated by
reference to exhibit number 10.8 in Current Report on Form 8-K
dated November 21, 1995 of Orion Network Systems, Inc.)
10.52 Orion 3 Spacecraft Purchase Contract, dated January 15, 1997, by
and among Hughes Space and Communications International, Inc.,
Orion Asia Pacific Corporation and Orion Network Systems.
[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS
DOCUMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND FILED
SEPARATELY WITH THE COMMISSION.] (Incorporated by reference to
exhibit number 10.52 in Registration Statement No. 333-19795 on
Form S-4 of Orion Newco Services, Inc.)
21.1 List of subsidiaries of Orion Newco Services, Inc.
99.1 Orders of FCC regarding OrionSat. (Incorporated by reference to
exhibit number 99.1 in Registration Statement No. 33-80518 on
Form S-1 of Orion Network Systems, Inc.).
99.2 Opinion of Salomon Brothers Inc. (Incorporated by reference to
exhibit number 99.2 in Registration Statement No. 333-19795 on
Form S-4 of Orion Newco Services, Inc.)
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration Statement
on Form 8-B to be signed on its behalf by the undersigned, thereunto duly
authorized.
ORION NEWCO SERVICES, INC.
(Registrant)
By: /s/ W. Neil Bauer
-----------------------
Name: W. Neil Bauer
Title: President
Dated: January 31, 1997
EXHIBIT 3.1
RESTATED 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:
1. The present name of the Corporation is Orion Newco Services, Inc.
The Corporation was originally incorporated under the same name, and its
original certificate of incorporation was filed with the Secretary of State of
the State of Delaware on June 26, 1996.
2. This Restated Certificate of Incorporation restates and integrates
and further amends the certificate of incorporation of the Corporation (the
"Certificate of Incorporation"), and has been duly adopted in accordance with
Sections 242 and 245 of the General Corporation Law of the State of Delaware
(the "DGCL").
3. The text of the Certificate of Incorporation is hereby restated and
integrated and further amended to read in its entirety as set forth on Exhibit A
attached hereto and incorporated herein by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed and acknowledged in accordance with Section 103 of the DGCL.
ORION NEWCO SERVICES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
ORION NEWCO SERVICES, INC.
FIRST: The name of the Corporation is Orion Newco Services, Inc.
(hereinafter called the "Corporation").
SECOND: The registered office of the Corporation in the State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle. The name of the Corporation's registered agent at said address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful
acts or activities for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock that
the Corporation shall have authority to issue is Forty-One Million (41,000,000)
shares, consisting of Forty Million (40,000,000) shares of common stock, par
value $.01 per share, and One Million (1,000,000) shares of preferred stock, par
value $.01 per share.
A. Common Stock. Each holder of shares of common stock shall be
entitled to one vote for each share of common stock held of record on all
matters on which the holders of common stock are entitled to vote. There shall
be no cumulative voting rights for the election of directors.
B. Preferred Stock. The Board of Directors is authorized,
subject to limitations prescribed by the Delaware General Corporation Law and
the provisions of this Article FOURTH to provide, by resolution or resolutions
from time to time adopted without further stockholder approval, and filing a
Certificate pursuant to the applicable provision of the Delaware General
Corporation Law, for the issuance of the shares of Preferred Stock in series, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and such rights of the
shares of each such series and the qualifications, limitations and restrictions
thereof. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
1. The number of shares constituting that series and the
distinctive designation of that series.
<PAGE>
2. The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
3. Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such voting rights;
4. Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
5. Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption, including the dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption dates;
6. Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
7. The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
8. Any other relative rights, preferences and limitations of
that series.
FIFTH: The name and mailing address of the incorporator (the
"Incorporator") are Daniel M. Pattarini, 555 Thirteenth Street, NW, Washington,
D.C. 20004. The powers of the Incorporator shall terminate upon the filing of
this Certificate of Incorporation, and the names and mailing addresses of the
persons who are to serve as the directors of the Corporation until the first
annual meeting of the stockholders of the Corporation or until their successors
are elected and qualified are as follows:
<PAGE>
NAME MAILING ADDRESS
W. Neil Bauer 2440 Research Boulevard
Rockville, MD 20850
David J. Frear 2440 Research Boulevard
Rockville, MD 20850
Richard H. Shay 2440 Research Boulevard
Rockville, MD 20850
SIXTH: The authorized number of directors of this corporation
shall be not less than 3 and not more than 15. The number of directors within
this range shall be stated in the Corporation's Bylaws, as may be amended from
time to time. When the number of directors is changed the Board of Directors
shall determine the class or classes to which the increased or decreased number
of directors shall be apportioned; provided that the directors in each class
shall be as nearly equal in number as possible. No decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
The Board of Directors shall be divided into three classes,
designated as Class I, Class II, and Class III, as nearly equal in number as
possible, and the term of office of directors of one class shall expire at each
annual meeting of stockholders, and in all cases until their successors shall be
elected and shall qualify, or until their earlier resignation, removal from
office, death or incapacity. The initial term of office of Class I shall expire
at the annual meeting of stockholders in 1997, that of Class II shall expire at
the annual meeting in 1998, and that of Class III shall expire at the annual
meeting in 1999, and in all cases as to each director until his successor shall
be elected and shall qualify, or until his earlier resignation, removal from
office, death or incapacity.
Subject to the foregoing, at each annual meeting of stockholders
the successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting and until their successors shall be elected and qualified.
The directors remaining in office acting by a majority vote, or
a sole remaining director, although less than a quorum, are hereby expressly
delegated the power to fill any vacancies in the Board of Directors, however
occurring, whether by an increase in the number of directors, death,
resignation, retirement,
<PAGE>
disqualification, removal from office or otherwise, and any director so chosen
shall hold office until the next election of the class for which such director
shall have been chosen and until his successor shall have been elected and
qualified, or until his earlier resignation, removal from office death or
incapacity.
SEVENTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors of the
Corporation is expressly authorized and empowered to adopt, amend and repeal
bylaws of the Corporation.
EIGHTH: No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach or fiduciary
duty as a director, provided that nothing contained in this Article EIGHTH shall
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
NINTH: The Corporation reserves the right at any time and from
time to time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law, except that Articles FOURTH, SIXTH, TENTH,
ELEVENTH, TWELFTH, THIRTEENTH, FOURTEENTH and this Article NINTH may not be
altered, amended, or repealed except by the affirmative vote of at least
two-thirds (2/3) of the shares entitled to vote thereon and the affirmative vote
of the Board of Directors; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
Article NINTH.
TENTH: Notwithstanding any other provision of this Amended and
Restated Certificate of Incorporation to the contrary, outstanding shares of
stock of the Corporation shall always be subject to redemption by the
Corporation, by action of the Board of Directors, if in the judgment of the
Board of Directors such action should be taken, pursuant to Section 151(b) of
the Delaware General Corporation Law or any other applicable provision of law,
to the extent necessary to prevent the loss or secure the reinstatement of any
license or franchise from any governmental agency held by the Corporation or any
of its subsidiaries to conduct any portion of the business of the Corporation or
any of its subsidiaries, which license or franchise is conditioned upon some or
all of the holders of the Corporation's stock possessing prescribed
qualifications. The terms and conditions of such redemption shall be as follows:
<PAGE>
(a) the redemption price of the shares to be redeemed pursuant
to this Article TENTH shall be determined by the Board of
Directors and shall be at least equal to the lesser of (i) the
Redemption Value or (ii) if such stock was purchased by such
Disqualified Holders within one year of the Redemption Date,
such Disqualified Holder's purchase price for such shares;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders
are to be redeemed, the shares to be redeemed shall be selected
in such manner as shall be determined by the Board of Directors,
which may include selection first of the most recently purchased
shares thereof, selection by lot or selection in any other
manner determined by the Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to
be redeemed (unless waived in writing by any such holder),
provided that the Redemption Date may be the date on which
written notice shall be given to record holders if the cash or
Redemption Securities necessary to effect the redemption shall
have been deposited in trust for the benefit of such record
holders and subject to immediate withdrawal by them upon
surrender of the stock certificates of their shares to be
redeemed;
(e) from and after the Redemption Date, any and all rights of
whatever nature which may be held by the owners of shares
selected for redemption (including without limitation any rights
to vote or participate in dividends declared on stock of the
same class or series as such shares) shall cease and terminate
and such owners shall thenceforth be entitled only to receive
the cash or Redemption Securities payable upon redemption; and
(f) such other terms and conditions as the Board of Directors
shall determine.
For purposes of this Article TENTH:
(i) "Disqualified Holder" shall mean any
holder of shares of stock of the Corporation whose
holding of such stock, either individually or when
taken together with the holding of shares of stock of
the Corporation by any other holders, may result, in
the judgment of the Board of Directors, in the loss of,
or the failure to secure the reinstatement of, any
license or franchise from any
<PAGE>
governmental agency held by the Corporation on any of
its subsidiaries to conduct any portion of the business
of the Corporation or any of its subsidiaries.
(ii) "Redemption Value" of a share of the
Corporation's stock of any class or series shall mean
the average Closing Price for such a share for each of
the 45 most recent days on which shares of stock of
such class or series shall have been traded preceding
the day on which notice of redemption shall be given
pursuant to paragraph (d) of this Article TENTH;
provided, however, that if shares of stock of such
class or series are not traded on any securities
exchange or in the over-the-counter market, "Redemption
Value" shall be determined by the Board of Directors in
good faith. "Closing Price" on any day means the
reported closing sales price or, in case no such sale
takes place, the average of the reported closing bid
and asked prices on the principal United States
securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or,
if such stock is not listed on any such exchange, the
highest closing sales price or bid quotation for such
stock on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system
then in use, or if no such prices or quotations are
available, the fair market value on the day in question
as determined by the Board of Directors in good faith.
(iii) "Redemption Date" shall mean the date
fixed by the Board of Directors for the redemption of
any shares of stock of the Corporation pursuant to this
Article TENTH.
(iv) "Redemption Securities" shall mean any
debt or equity securities of the Corporation, any of
its subsidiaries or any other corporation, or any
combination thereof, having such terms and conditions
(including, without limitation, in the case of debt
securities, repayment over a period of up to thirty
years, or a longer period) as shall be approved by the
Board of Directors and which, together with any cash to
be paid as part of the redemption price, in the opinion
of any nationally recognized investment banking firm
selected by the Board of Directors (which may be a firm
which provides other investment banking, brokerage or
other services to the Corporation), has a value, at the
time notice of redemption is given pursuant to
paragraph (d) of this Article, at least equal to the
price required to be paid pursuant to paragraph (a) of
this Article TENTH (assuming, in the case of Redemption
Securities to be publicly traded, such
<PAGE>
Redemption Securities were fully distributed and
subject only to normal trading activity).
ELEVENTH: Control Share Acquisitions
A. Control Shares. As used in this Article ELEVENTH, "control
share" means shares of the Corporation that would have voting power that when
added to all the other shares of the Corporation owned by a person or in respect
to which that person may exercise or direct the exercise of voting power, would
entitle that person, immediately after acquisition of the shares (directly or
indirectly, alone or as part of a group), to exercise or direct the exercise of
the voting power of the Corporation in the election of directors within any of
the following ranges of voting power:
(1) One-fifth or more but less that a third of all voting
power.
(2) One-third or more but less than a majority of all voting
power.
(3) A majority or more of all voting power.
B. Control Share Acquisition.
1. As used in this Article ELEVENTH, "control share
acquisition" means the acquisition (directly or indirectly) by any person of
ownership of, or the power to direct the exercise of voting power with respect
to, issued and outstanding control shares.
2. For purposes of this Article ELEVENTH, shares acquired
within ninety (90) days or shares acquired pursuant to a plan to make a control
share acquisition are considered to have been acquired in the same acquisition.
3. For purposes of this Article ELEVENTH, a person who
acquires shares in the ordinary course of business for the benefit of others in
good faith and not for the purpose of circumventing this Article ELEVENTH has
voting power only of shares in respect of which that person would be able to
exercise or direct the vote without further instruction from others.
4. The acquisition of any shares of the Corporation does not
constitute a control share acquisition if the acquisition is consummated in any
of the following circumstances:
(1) Before April 1, 1992.
<PAGE>
(2) Pursuant to a binding contract existing before April 1,
1992.
(3) Pursuant to the laws of descent and distribution.
(4) Pursuant to the satisfaction of a pledge or other security
interest created in good faith and not for the purpose of
circumventing this Article ELEVENTH.
(5) Pursuant to a merger or plan of share exchange if the
Corporation is a party to the agreement of merger or plan of share
exchange.
(6) Pursuant to a tender or exchange offer that is made pursuant
to an agreement to which the Corporation is a party.
(7) Directly from the Corporation, or from any of its wholly
owned subsidiaries.
5. The acquisition of any shares of the Corporation in good
faith and not for the purpose of circumventing this Article ELEVENTH by or from
(1) any person whose voting rights had previously been authorized by
stockholders in compliance with this Article ELEVENTH, or (2) any person whose
previous acquisition of shares of the Corporation would have constituted a
control share acquisition but for the circumstances specified in the paragraph
above, does not constitute a control share acquisition, unless the acquisition
entitles the person (directly or indirectly, alone or as a part of a group) to
exercise or direct the exercise of voting power of the Corporation in the
election of directors in excess of the voting power otherwise authorized.
C. Interested Shares. As used in this Article ELEVENTH,
"interested shares" mean the shares of the Corporation in respect of which any
of the following persons may exercise or direct the exercise of the voting power
of the Corporation in the election of directors:
(1) An acquiring person or member of a group with respect to a
control share acquisition.
(2) Any officer of the Corporation.
(3) Any employee of the Corporation who is also a director of
the Corporation.
<PAGE>
D. Acquiring Person Statement. Any person who proposes to make
or has made a control share acquisition may at the person's election deliver an
acquiring person statement to the Corporation at the Corporation's principal
office. The acquiring person statement must set forth all of the following:
(1) The identity of the acquiring person and each other member
of any group of which the person is a part for purposes of
determining control shares.
(2) A statement that the acquiring person statement is given
pursuant to this Article ELEVENTH.
(3) The number of shares of the Corporation owned (directly or
indirectly) by the acquiring person and each other member of the
group.
(4) The range of voting power under which the control share
acquisition falls or would, if consummated, fall.
(5) If the control share acquisition has not taken place:
(a) a description in reasonable detail of the terms of
the proposed control share acquisition; and
(b) representations of the acquiring person, together
with a statement in reasonable detail of the facts upon
which they are based, that the proposed control share
acquisition, if consummated, will not be contrary to law and
that the acquiring person has the financial capacity to make
to proposed control share acquisition.
E. Special Meeting of Stockholders.
1. If the acquiring person so requests at the time of delivery
of an acquiring person statement and gives an undertaking to pay the
Corporation's expenses of a special meeting, within ten (10) days thereafter,
the directors of the Corporation shall call a special meeting of the
stockholders of the Corporation for the purpose of considering the voting rights
to be accorded to the shares acquired or to be acquired in the control share
acquisition.
2. Unless the acquiring person agrees in writing to another
date, the special meeting of the stockholders shall be held within fifty (50)
days after the receipt by the Corporation of the request.
<PAGE>
3. If no request is made, the voting rights to be accorded the
shares acquired in the control share acquisition shall be presented at the next
special or annual meeting of stockholders.
4. If the acquiring person so requests in writing at the time
of the delivery of the acquiring person statement, the special meeting must not
be held sooner than thirty (30) days after the receipt by the Corporation of the
acquiring person's statement.
F. Notice.
1. If a special meeting is requested, notice of the special
meeting of stockholders shall be given as promptly as reasonably practicable by
the Corporation to all stockholders of record as of the record date set for the
meeting, whether or not entitled to vote at the meeting.
2. Notice of the special or annual stockholder meeting at
which the voting rights are to be considered must include or be accompanied by
both of the following:
(1) a copy of the acquiring person statement delivered
to the Corporation pursuant to this Article ELEVENTH.
(2) A statement by the Board of the Directors of the
Corporation, authorized by its directors, of its position or
recommendation, or that it is taking no position or making
no recommendation, with respect to the proposed control
share acquisition.
G. Voting Rights.
1. Control shares acquired in a control share acquisition have
the same voting rights as were accorded the shares before the control share
acquisition only to the extent granted by resolutions approved by the
stockholders of the Corporation.
2. To be adopted under this section, the resolutions shall be
approved by a majority of all the votes which could be cast in a vote on the
election of directors by all the outstanding shares other than interested
shares. Interested shares shall not be entitled to vote on the matter, and in
determining whether a quorum exists, all interested shares shall be disregarded.
For the purpose of this subsection, the interested share shall be determined as
of the record date for determining the stockholders entitled to vote at the
meeting.
<PAGE>
H. Redemption.
1. Control shares acquired in a control share acquisition with
respect to which no acquiring person statement has been filed with the
Corporation may, at any time during the period ending sixty (60) days after the
last acquisition of control shares by the acquiring person, be subject to
redemption by the Corporation at the redemption price specified in paragraph 3
of this subsection.
2. Control shares acquired in a control share acquisition are
not subject to redemption after an acquiring person statement has been filed
unless the shares are not accorded full voting rights by the stockholders as
provided above.
3. The redemption price for shares to be redeemed under this
section shall be the number of such shares multiplied by the dollar amount
(rounded to the nearest cent) equal to the average per share price, including
any brokerage commissions, transfer taxes and soliciting dealer's fees, paid by
the acquiring person for such shares. The Corporation may rely conclusively on
public announcements by, or filings with the Securities and Exchange Commission
by, the acquiring person as to the prices so paid.
I. Dissenters Rights.
1. In the event control shares acquired in a control share
acquisition are accorded full voting rights and the acquiring person has
acquired control shares with a majority or more of all voting power, all
shareholders of the Corporation, other than the acquiring person, have the right
to dissent from the granting of voting rights and to demand payment of the fair
value of their shares under Section 262 of the Delaware General Corporation Law
as though such granting of voting rights were a corporate action described in
paragraph (b) of Section 262, except that the provisions of subsection (1) of
paragraph (b) of Section 262 shall not be applicable.
2. For purposes of this section "fair value" of shares under
Section 262 of the Delaware General Corporation Law shall in no event be less
than the highest price per share paid in the control share acquisition, as
adjusted for any subsequent stock dividends or reverse stock splits or similar
changes.
TWELFTH: Certain Business Combinations
A. Vote Required for Certain Business Combinations.
1. Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or
this Certificate of Incorporation, and except as
otherwise
<PAGE>
expressly provided in subsection B of this Article
TWELFTH:
(a) any merger or consolidation of the
Corporation or any Subsidiary (as
hereinafter defined) with (i) any
Interested Stockholder (as
hereinafter defined) or (ii) any
other corporation (whether or not
itself an Interested Stockholder)
which is, or after such merger or
consolidation would be, an Affiliate
(as hereinafter defined) of an
Interested Stockholder; or
(b) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition
(in one transaction or a series of
transactions) to or with any
Interested Stockholder or any
Affiliate of any Interested
Stockholder of any assets of the
Corporation or any Subsidiary having
an aggregate Fair Market Value (as
hereinafter defined) of $1,000,000 or
more, or
(c) the issuance or transfer by the
Corporation or any Subsidiary (in one
transaction or a series of
transactions) of any securities of
the Corporation or any Subsidiary to
any Interested Stockholder or any
Affiliate of any Interested
Stockholder in exchange for cash,
securities or other property (or a
combination thereof) having an
aggregate Fair Market Value of
$1,000,000 or more; or
(d) the adoption of any plan or proposal
for the liquidation or dissolution of
the Corporation proposed by or on
behalf of an Interested Stockholder
or any Affiliate of any Interested
Stockholder; or
(e) any reclassification of securities
(including any reverse stock split),
or recapitalization of the
Corporation, or any merger or
consolidation of the Corporation with
any of its Subsidiaries or any other
transaction (whether or not with or
into or otherwise involving an
Interested Stockholder) which has the
effect, directly or indirectly, of
increasing the proportionate share of
the outstanding shares of any class
of equity or convertible securities
of the Corporation or any Subsidiary
which is directly or
<PAGE>
indirectly owned by any Interested
Stockholder or any Affiliate of any
Interested Stockholder;
shall require the affirmative vote of (A) the holders
of at least a majority of the voting power of the then
outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors
(the "Voting Stock"), voting together as a single class
and (B) the holders of at least a majority of the
Voting Stock, voting together as a single class,
excluding for purposes of calculating both the
affirmative vote and the number of outstanding shares
of Voting Stock all shares of Voting Stock of which the
beneficial owner is an Interested Stockholder or any
Affiliate of an Interested Stockholder referred to in
clauses (a) through (e) in this paragraph 1. Such
affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser
percentage may be specified, by law.
2. "Definition of "Business Combination." The term
"Business Combination" as used in this Article TWELFTH
shall mean any transaction which is referred to in any
one or more of clauses (a) through (e) of paragraph 1
of this subsection A.
B. When Higher Vote is Not Required. The provisions of
subsection A of this Article TWELFTH shall not be
applicable to any particular Business Combination, and
such Business Combination shall require only such
affirmative vote as is required by law and any other
provision of this Certificate of Incorporation, if all
of the conditions specified in either of the following
paragraphs 1 and 2 are met:
1. Approval by Continuing Directors. The Business
Combination shall have been approved by a majority of
the Continuing Directors (as hereinafter defined).
2. Price and Procedure Requirements. All of the following
conditions shall have been met:
(a) The aggregate amount of the cash and
the Fair Market Value (as hereinafter
defined) as of the date of the
consummation of the Business
Combination of consideration other
than cash to be received per share by
holders of common stock in such
Business
<PAGE>
Combination shall be at least equal
to the highest of the following:
(i) (if applicable) the highest per
share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Stockholder for any shares
of common stock acquired by it (A)
within the two-year period
immediately prior to the first public
announcement of the proposal of the
Business Combination (the
"Announcement Date") or (B) in the
transaction in which it became an
Interested Stockholder, whichever is
higher; or
(ii) the Fair Market Value per share
of common stock on the Announcement
Date or on the date on which the
Interested Stockholder became an
Interested Stockholder (such latter
date is referred to in this Article
TWELFTH as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and
the Fair Market Value as of the date
of the consummation of the Business
Combination of consideration other
than cash to be received per share by
holders of shares of any other class
of outstanding Voting Stock shall be
at least equal to the highest of the
following (it being intended that the
requirements of this paragraph 2(b)
shall be required to be met with
respect to every class of outstanding
Voting Stock, whether or not the
Interested Stockholder has previously
acquired any shares of a particular
class of Voting Stock):
(i) (if applicable) the highest per
share price (including any brokerage
commissions, transfer taxes and
soliciting dealers' fees) paid by the
Interested Stockholder for any shares
of such class of Voting Stock
acquired by it (A) within the
two-year period immediately prior to
the Announcement Date or (B) in the
transaction in which it became an
Interested Stockholder, whichever is
higher;
(ii) (if applicable) the highest
preferential amount per share to
which the holders of shares of such
class
<PAGE>
of Voting Stock are entitled in the
event of any voluntary or involuntary
liquidation, dissolution or winding
up of the Corporation; and
(iii) The Fair Market Value per share
of such class of Voting Stock on the
Announcement Date or on the
Determination Date, whichever is
higher.
(c) The consideration to be received by
holders of a particular class of
Voting Stock (including common stock)
in the Business Combination shall be
in cash or in the same form as the
Interested Stockholder has previously
paid for shares of such Voting Stock.
If the Interested Stockholder has
paid for shares of any class of
Voting Stock with varying forms of
consideration, the form of
consideration for such Voting Stock
shall be either cash or the form used
to acquire the largest number of
shares of such Voting Stock
previously acquired by it.
(d) After such Interested Stockholder has
become an Interested Stockholder and
prior to the consummation of such
Business Combination: (i) there shall
have been (A) no reduction in the
annual rate of dividends paid on the
capital stock (except as necessary to
reflect any subdivision of the
capital stock), except as approved by
a majority of the Continuing
Directors, and (B) an increase in
such annual rate of dividends as
necessary to reflect any
reclassification (including any
reverse stock split),
recapitalization, reorganization or
any similar transaction which has the
effect of reducing the number of
outstanding shares of common stock,
unless the failure so to increase
such annual rate is approved by a
majority of the Continuing Directors;
and (ii) such Interested Stockholder
shall have not become the beneficial
owner of any additional shares of
Voting Stock except as part of the
transaction which results in such
Interested Stockholder becoming an
Interested Stockholder.
(e) After such Interested Stockholder has
become an Interested Stockholder,
such Interested Stockholder shall not
have received the benefit, directly
or indirectly (except proportionately
as a stockholder),
<PAGE>
of any loans, advances, guarantees,
pledges or other financial assistance
or any tax credits or other tax
advantages provided by the
Corporation, whether in anticipation
of or in connection with such
Business Combination or otherwise.
(f) A proxy or information statement
describing the proposed Business
Combination and complying with the
requirements of the Securities
Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations
thereunder (or any subsequent
provisions replacing such Act, rules
or regulations) shall be mailed to
public stockholders of the
Corporation at least 20 days prior to
the consummation of such Business
Combination (whether or not such
proxy or information statement is
required to be mailed pursuant to
such Act or subsequent provisions).
C. Certain Definitions. For the purposes of this Article
TWELFTH:
1. A "person" shall mean any individual, firm,
corporation or other entity.
2. "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary)
who or which:
(a) is the beneficial owner, directly or
indirectly, of more than 20% of the
voting power of the outstanding
Voting Stock; or
(b) is an Affiliate of the Corporation
and at any time within the two-year
period immediately prior to the date
in question was the beneficial owner,
directly or indirectly, of 20% or
more of the voting power of the then
outstanding Voting Stock; or
(c) is an assignee of or has otherwise
succeeded to any shares of Voting
Stock which were at any time within
the two-year period immediately prior
to the date in question beneficially
owned by any Interested Stockholder,
if such assignment or succession
shall have occurred in the course of
a transaction or series of
transactions not involving a
<PAGE>
public offering within the meaning of
the Securities Act of 1933.
3. A person shall be a "beneficial owner" of any
Voting Stock:
(a) which such person or any of its
Affiliates or Associates (as
hereinafter defined) beneficially
owns, directly or indirectly; or
(b) which such person or any of its
Affiliates or Associates has (i) the
right to acquire (whether such right
is exercisable immediately or only
after the passage of time), pursuant
to any agreement, arrangement or
understanding or upon the exercise of
conversion rights, exchange rights,
warrants or options, or otherwise, or
(ii) the right to vote pursuant to
any agreement, arrangement or
understanding; or
(c) which are beneficially owned,
directly or indirectly, by any other
person with which such person or any
of its Affiliates or Associates has
any agreement, arrangement or
understanding for the purpose of
acquiring, holding, voting or
disposing of any shares of Voting
Stock.
4. For the purposes of determining whether a
person is an Interested Stockholder pursuant
to paragraph 2 of this subsection C, the
number of shares of Voting Stock deemed to be
outstanding shall include shares deemed owned
through application of paragraph 3 of this
subsection C but shall not include any other
shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
5. "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in
Rule l2b-2 of the General Rules and
Regulations under the Exchange Act.
6. "Subsidiary" means any corporation of which a
majority of any class of equity security is
owned, directly or indirectly, by the
Corporation; provided, however, that for the
purposes of the definition of Interested
Stockholder set forth in paragraph 2 of this
subsection C, the term
<PAGE>
"Subsidiary" shall mean only a corporation of
which a majority of each class of equity
security is owned, directly or indirectly, by
the Corporation.
7. "Continuing Director" means any member of the
Board of Directors of the Corporation who is
unaffiliated with the Interested Stockholder
and was a member of the Board of Directors of
the Corporation prior to the time that the
Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing
Director who is unaffiliated with the
Interested Stockholder and is recommended to
succeed a Continuing Director by a majority of
Continuing Directors then on the Board of
Directors of the Corporation.
8. "Fair Market Value" means:
(a) in the case of stock, the highest
closing sale price during the 30-day
period immediately preceding the date
in question of a share of such stock
on the principal United States
securities exchange registered under
the Exchange Act on which such stock
is listed, or, if such stock is not
listed on any such exchange, the
highest closing bid quotation with
respect to a share of such stock
during the 30-day period preceding
the date in question on the National
Association of Securities Dealers,
Inc. Automated Quotations System or
any system then in use, or if no such
quotations are available, the fair
market value on the date in question
of a share of such stock as
determined by the Board of Directors
of the Corporation in good faith; and
(b) In the case of property other than
cash or stock, the fair market value
of such property on the date in
question as determined by the Board
of Directors of the Corporation in
good faith.
D. Powers of the Board of Directors. A majority of the
directors of the Corporation shall have the power and
duty to determine for the purposes of this Article
TWELFTH, on the basis of information known to them
after reasonable inquiry, (1) whether a person is an
Interested Stockholder, (2) the number of shares of
Voting Stock beneficially owned by any person, (3)
whether a
<PAGE>
person is an Affiliate or Associate of another, and (4)
whether the assets which are the subject of any
Business Combination have, or the consideration to be
received for the issuance or transfer of securities by
the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value of
$1,000,000 or more.
E. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article TWELFTH
shall be construed to relieve any Interested
Stockholder from any fiduciary obligation imposed by
law.
THIRTEENTH: Indemnification.
A. Authorization of Indemnification. Each person who was or is a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative and whether by or in the right of the
corporation or otherwise (a "proceeding"), by reason of the fact that he or she,
or a person of whom he or she is the legal representative, is or was a director
or officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan, shall be (and shall be deemed to have
a contractual right to be) indemnified and held harmless by the corporation (and
any successor to the corporation by merger or otherwise) to the fullest extent
authorized by, and subject to the conditions and (except as provided herein)
procedures set forth in the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but any such amendment shall not be deemed to limit
or prohibit the rights of indemnification hereunder for past acts or omissions
of any such person insofar as such amendment limits or prohibits the
indemnification rights that said law permitted the corporation to provide prior
to such amendment), against all expenses, liabilities and losses (including
attorney's fees, judgments, fines, ERISA taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith; provided, however, that the corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person (except for a suit or action pursuant to
subsection B only if such proceeding (or part thereof) was authorized by the
board of directors of the corporation. Persons who are not directors or officers
of the corporation may be similarly indemnified in respect of such service to
the extent authorized at any time by the board of directors of the corporation.
The indemnification conferred in this subsection A also shall include the right
to be paid by the corporation (and such successor) the expenses (including
attorney's fees) incurred in the defense of or other involvement in any such
proceeding in advance of its final disposition (including in the case of a
director or former director expenses of separate legal
<PAGE>
counsel, up to a maximum of $50,000, but only in the event that the director or
former director as the indemnified party reasonably determines, assuming an
outcome unfavorable to such indemnified party, that there is a reasonable
probability that such proceeding may materially and adversely affect such
indemnified party, or that there may be legal defenses available to such
indemnified party that are different from or in addition to those available to
the corporation); provided, however, that, if and to the extent the Delaware
General Corporation Law requires, the payment of such expenses (including
attorney's fees) incurred by a director or officer in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking by or on behalf of such director or officer to repay all
amounts so paid in advance if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this subsection A or
otherwise; and provided further, that, such expenses incurred by other employees
and agents may be so paid in advance upon such terms and conditions, if any, as
the board of directors deems appropriate.
B. Right of Claimant to Bring Action against the Corporation. If
a claim under subsection A of this section is not paid in full by the
corporation within sixty days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring an action against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such action. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in connection with any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed or is otherwise not entitled to indemnification under subsection
A of this section but the burden of proving such defense shall be on the
corporation. The failure of the corporation (in the manner provided under the
Delaware General Corporation Law) to have made a determination prior to or after
the commencement of such action that indemnification of the claimant is proper
in the circumstances because he or she has met the applicable standard of
conduct set forth in the Delaware General Corporation Law shall not be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct. An actual determination by the corporation (in
the manner provided under the Delaware General Corporation Law) after the
commencement of such action that the claimant has not met such applicable
standard of conduct shall not be a defense to the action, but shall create a
presumption that the claimant has not met the applicable standard of conduct.
C. Non-exclusivity. The rights to indemnification and advance
payment of expenses provided by subsection A of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification and advance
<PAGE>
payment of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
D. Survival of Indemnification. The indemnification and advance
payment of expenses and rights thereto provided by, or granted pursuant to,
subsection A of this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the personal
representatives, heirs, executors and administrators of such person.
E. Insurance. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, against any
liability asserted against such person or incurred by such person in any such
capacity, or arising out of such person's status as such, and related expenses,
whether or not the corporation would have the power to indemnify such person
against such liability under the provisions of the Delaware General Corporation
Law.
<PAGE>
FOURTEENTH: Any actions required or permitted to be taken by the
stockholders must be effected at a duly called annual or special meeting of such
stockholders and may not be effected by any consent in writing by such
stockholders.
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
ORION NEWCO SERVICES, INC.
1. Offices.
1.1 Registered Office. The registered office of the corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware, and
the registered agent in charge thereof shall be The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
1.2 Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
2. Meetings of Stockholders.
2.1 Place of Meetings. All meetings of the stockholders for the
election of directors shall be held in the City of Washington, District of
Columbia, at such place as may be fixed from time to time by the board of
directors, or at such other place, within or without the State of Delaware, as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
2.2 Annual Meetings. Annual meetings of stockholders, commencing
with the year 1997, shall be held on the first Thursday of May, if not a legal
<PAGE>
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting or in a
duly executed waiver of notice thereof, at which stockholders shall elect a
board of directors and transact such other business as may properly be brought
before the meeting.
2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the board of directors or by the
president, and shall be called by the president or secretary at the request in
writing of two or more stockholders owning at least 35% in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote if
no special meeting of stockholders has been called and held at the request of
stockholders within the six months preceding such written request. Such request
shall include a statement of the purpose or purposes of the proposed meeting.
2.4 Notice of Meetings. Written notice of the annual meeting,
stating the place, date and hour of the meeting, shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting. Written notice of a special meeting
of stockholders, stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called, shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
2.5 Business at Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
2.6 List of Stockholders. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of
each
<PAGE>
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote in person or by proxy at any
meeting of stockholders.
2.7 Quorum at Meetings. Except as otherwise provided by statute
or by the certificate of incorporation, the holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any such meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time to another time
and place, without notice other than announcement at the meeting of such other
time and place. At the adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the original meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
<PAGE>
2.8 Voting and Proxies. Unless otherwise provided in the
certificate of incorporation, and subject to the provisions of Section 6.4 of
these Bylaws, each stockholder shall be entitled to one vote on each matter, in
person or by proxy, for each share of the corporation's capital stock having
voting power which is held by such stockholder. No proxy shall be voted or acted
upon after three years from its date, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
2.9 Required Vote. When a quorum is present at any meeting of
stockholders, all matters shall be determined, adopted and approved by the vote
(which need not be by ballot) of the holders of a majority of the stock having
voting power, present in person or represented by proxy, unless the proposed
action is one upon which, by express provision of statutes or of the certificate
of incorporation, a different vote is specified and required, in which case such
express provision shall govern and control the decision of such question.
Notwithstanding the foregoing, candidates for election as members of the board
of directors who receive the highest number of votes, up to the number of
directors to be chosen, shall stand elected, and an absolute majority of the
votes cast shall not be a prerequisite to the election of any candidate to the
board of directors.
2.10. Stockholder Actions. Any action required or permitted to
be taken by the stockholders must be effected at a duly called annual or special
meeting of such stockholders and may not be effected by any consent in writing
by such stockholders.
2.11. Nominating Committee. Only persons who are nominated in
accordance with the procedures set forth in this Section 2.11 shall be eligible
for
<PAGE>
election as directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 2.11. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the corporation not less than 50 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 60 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the corporation's books, of such stockholder and (ii) the class and number of
shares of the corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors,
<PAGE>
any person nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
later than the tenth day following the date of receipt of a stockholder
nomination submitted pursuant to this Section 2.11, the president of the
corporation shall, if the facts warrant, determine and notify in writing the
stockholder making such nomination that such nomination was not made in
accordance with the time limits and/or other procedures prescribed by the
Bylaws. If no such notification is mailed to such stockholder within such
ten-day period, such nomination shall be deemed to have been made in accordance
with the provisions of this Section 2.11. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth in this Section 2.11.
2.12. Business at Annual Meeting. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than 50 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following
<PAGE>
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. No later than the tenth
day following the date of receipt of a shareholder notice pursuant to this
Section 2.12, the president of the corporation shall, if the facts warrant,
determine and notify in writing the stockholder submitting such notice that such
notice was not made in accordance with the time limits and/or other procedures
prescribed by the Bylaws. If no such notification is mailed to such shareholder
within such ten-day period, such stockholder notice containing a matter of
business shall be deemed to have been made in accordance with the provisions of
this Section 2.12. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 2.12.
3. Directors.
3.1 Powers. The business and affairs of the corporation shall be
managed by or under the direction of the board of directors, which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the certificate of incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
<PAGE>
3.2. Number and Election. The number of directors which shall
constitute the whole board shall be eleven members and shall be divided into
three classes as specified or determined pursuant to the Certificate of
Incorporation of the corporation as in effect from time to time.
3.3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors shall be
filled in the manner specified in the Certificate of Incorporation of the
corporation as in effect from time to time.
3.4 Place of Meetings. The board of directors of the corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
3.5 First Meeting of Each Board. The first meeting of each newly
elected board of directors shall be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver of notice
signed by all of the directors.
3.6 Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board of directors.
3.7 Special Meetings. Special meetings of the board may be
called by the president on one day's notice to each director, either personally
or by telephone, by mail or by telegram; special meetings shall be called by the
chairman or secretary in like manner and on like notice on the written request
of one-third of the total number of directors.
3.8 Quorum and Vote at Meetings. At all meetings of the board,
one director if a board of one director is authorized, or such greater number of
directors as is not less than a majority of the total number of directors, shall
constitute a
<PAGE>
quorum for the transaction of business. The vote of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the board
of directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the board of directors, the directors present thereat may adjourn the
meeting to another time and place, without notice other than announcement at the
meeting of such other time and place.
3.9 Telephone Meetings. Members of the board of directors or any
committee designated by the board may participate in a meeting of such board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
3.10 Action Without Meeting. Unless otherwise restricted by the
certificate of incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board of directors or committee.
3.11 Committees of Directors. The board of directors may by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. If a member of a committee shall be absent from any
meeting, or disqualified from voting thereat, the remaining member or members
present and not disqualified from voting, whether or not such member or members
<PAGE>
constitute a quorum, may, by unanimous vote, appoint another member of the board
of directors to act at the meeting in the place of such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
pursuant to Section 151(a) of the General Corporation Law of the State of
Delaware (hereinafter the "GCL"), fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), adopting an agreement of
merger or consolidation pursuant to Sections 251 or 252 of the GCL, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
Bylaws of the corporation; and, unless otherwise expressly provided in the
resolution, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the GCL. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors. Unless otherwise specified in
the resolution of the board of directors designating the committee, at all
meetings of each such committee of directors, a majority of the
<PAGE>
total number of members of the committee shall constitute a quorum for the
transaction of business, and the vote of a majority of the members of the
committee present at any meeting at which there is a quorum shall be the act of
the committee. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors, when required.
3.12 Compensation of Directors. Unless otherwise restricted by
the certificate of incorporation, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
or a stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be paid like
compensation for attending committee meetings.
4. Notices of Meetings.
4.1 Notice Procedure. Whenever, whether under the provisions of
any statute or of the certificate of incorporation or of these Bylaws, notice is
required to be given to any director or stockholder, such requirement shall not
be construed to require the giving of personal notice. Such notice may be given
in writing, by mail, addressed to such director or stockholder, at his address
as it appears on the records of the corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same is
deposited in the United States mail. Notice to directors may also be given by
telex, telegram or telephone.
4.2 Waivers of Notice. Whenever the giving of any notice is
required by statute, the certificate of incorporation or these Bylaws, a waiver
thereof, in
<PAGE>
writing, signed by the person or persons entitled to said notice, whether before
or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice, unless
so required by the certificate of incorporation, by statute or by these Bylaws.
5. Officers.
5.1 Positions. The officers of the corporation shall be a
president and a secretary, and such other officers as the board of directors may
appoint, including one or more vice presidents, a treasurer, assistant
secretaries and assistant treasurers, who shall exercise such powers and perform
such duties as shall be determined from time to time by the board. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these Bylaws otherwise provide; provided, however, that in no event shall the
president and the secretary be the same person.
5.2 Appointment. The officers of the corporation shall be chosen
by the board of directors at its first meeting after each annual meeting of
stockholders.
5.3 Compensation. The compensation of all officers of the
corporation shall be fixed by the board of directors.
5.4 Term of Office. The officers of the corporation shall hold
office until their successors are chosen and qualify or until their earlier
resignation or
<PAGE>
removal. Any officer may resign at any time upon written notice to the
corporation. Any officer elected or appointed by the board of directors may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors. All officers of the
corporation shall be required to retire at the end of the month during which
they attain 65 years of age.
5.5 Fidelity Bonds. The corporation may secure the fidelity of
any or all of its officers or agents by bond or otherwise.
5.6 Chairman. The chairman shall preside at all meetings of the
stockholders and board of directors and shall be ex officio a member of all
standing committees of the board of directors.
5.7 President. The president shall be the chief executive
officer of the corporation, shall be ex officio a member of all standing
committees, shall assume all responsibility for the management and operation of
the business of the corporation, and shall ensure that all orders and
resolutions of the board of directors are carried into effect. The president
shall have the authority to execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some officer or agent of the corporation.
5.8 Vice Chairman or Vice Presidents. If the directors shall
appoint one or more vice presidents, such vice chairman or vice presidents shall
perform such duties and have such powers as may be vested in such vice
presidents by the board of directors or by the president. One of such vice
presidents may be designated the chief operating officer of the corporation and
have general
<PAGE>
management of the day-to-day operations of the corporation, subject to the
authority of the president.
5.9 Secretary. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders, and shall record all
the proceedings of the meetings of the stockholders and of the board of
directors in a book to be kept for that purpose, and shall perform like duties
for the standing committees, when required. The secretary shall give, or cause
to be given, notice of all meetings of the stockholders and special meetings of
the board of directors, and shall perform such other duties as may be prescribed
by the board of directors or by the president, under whose supervision the
secretary shall be. The secretary shall have custody of the corporate seal of
the corporation, and the secretary, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it, and when so affixed
it may be attested by the signature of the secretary or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
such officer's signature. The secretary or an assistant secretary may also
attest all instruments signed by the president or any vice president.
5.10 Assistant Secretary. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors (or if there shall have been no such determination, then in the
order of their election), shall, in the absence of the secretary or in the event
of the secretary's inability or refusal to act, perform the duties and exercise
the powers of the secretary, and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
5.11 Treasurer.
<PAGE>
5.11.1 Duties. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors. The treasurer shall disburse the funds of the corporation as ordered
by the board of directors, taking proper vouchers for such disbursements, and
shall render to the president, and to the board of directors at its regular
meetings, or when the board of directors so requires, an account of all
transactions as treasurer and of the financial condition of the corporation.
5.11.2 Bond. If required by the board of directors, the
treasurer shall give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the treasurer's office and for the restoration to
the corporation, in case of the treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind, in the treasurer's possession or under the treasurer's control
and belonging to the corporation.
5.12 Assistant Treasurer. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors (or if there shall have been no such determination, then in
the order of their election), shall, in the absence of the treasurer or in the
event of the treasurer's inability or refusal to act, perform the duties and
exercise the powers of the treasurer, and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
6. Capital Stock.
<PAGE>
6.1 Certificates of Stock; Uncertificated Shares. The shares of
the corporation shall be represented by certificates, provided that the board of
directors may provide by resolution or resolutions that some or all of any or
all classes or series of the corporation's stock shall be uncertificated shares.
Any such resolution shall not apply to shares represented by a certificate until
such certificate is surrendered to the corporation. Notwithstanding the adoption
of such a resolution by the board of directors, every holder of stock
represented by certificates and upon request every holder of uncertificated
shares shall be entitled to have a certificate signed by, or in the name of the
corporation by the president or vice president, and by the treasurer and/or
assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all the signatures on the certificate may be facsimile. In case any
officer, transfer agent or registrar whose signature or facsimile signature
appears on a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if such person were such officer, transfer agent or
registrar at the date of issue.
6.2 Lost Certificates. The board of directors may direct a new
certificate or certificates of stock or uncertificated shares to be issued in
place of any certificate or certificates theretofore issued by the corporation
and alleged to have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming that the certificate of stock has
been lost, stolen or destroyed. When authorizing such issuance of a new
certificate or certificates, the board of directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or such owner's legal
representative, to advertise the same in such manner as the board shall require
and/or to give the corporation a bond, in such
<PAGE>
sum as the board may direct, as indemnity against any claim that may be made
against the corporation on account of the certificate alleged to have been lost,
stolen or destroyed or on account of the issuance of such new certificate or
uncertificated shares.
6.3 Transfers. The transfer of stock and certificates that
represent the stock and the transfer of uncertificated shares shall be effected
in accordance with the laws of the State of Delaware. Any restriction on the
transfer of a security imposed by the corporation shall be noted conspicuously
on the security.
6.4 Fixing Record Date. In order that the corporation may
determine the stockholders entitled to notice of, or to vote at, any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of,
or to vote at, a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
6.5 Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, to receive notifications, to vote as such
owner, and to exercise all the rights and powers of an owner; and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or
<PAGE>
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
7. Indemnification.
Indemnification of certain persons by the corporation shall be
as specified in or determined pursuant to the Certificate of Incorporation of
the Corporation as is in effect from time to time.
8. General Provisions.
8.1 Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation and
the laws of the State of Delaware, may be declared by the board of directors at
any regular or special meeting. Subject to the provisions of the General
Corporation Law of the State of Delaware, such dividends may be paid either out
of surplus, as defined in the General Corporation Law of the State of Delaware,
or in the event that there shall be no such surplus, out of the net profits for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock, subject to the provisions, if any, of the
certificate of incorporation.
8.2 Reserves. The directors of the corporation may set apart,
out of the funds of the corporation available for dividends, a reserve or
reserves for any proper purpose and may abolish any such reserve.
8.3 Execution of Instruments. All checks or demands for money
and notes of the corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time to time
designate.
8.4 Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
<PAGE>
8.5 Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
Section 9. Amendments. These Bylaws may be altered, amended or
repealed and new bylaws may be adopted by a majority of the Board of Directors,
except that Sections 2.3, 2.10, 2.11, 2.12, 3.2, 3.3 and this Section 9 may not
be altered, amended, or repealed except by at the affirmative vote of at least
two-thirds the shares entitled to vote thereon or the affirmative vote of the
Board of Directors.
* * * *
<PAGE>
The foregoing Bylaws were adopted by the Board of Directors on
January __, 1997.
---------------------------------
Secretary
Exhibit 4.3
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES
OF
SERIES A 8% 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 Restated 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 Series A 8% Cumulative Redeemable Convertible
Preferred Stock having the designations, rights and preferences 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 $.01 per share, of the Corporation be, and it hereby
is, created; that the shares of such series shall be, and they hereby
are,
<PAGE>
designated as "Series A 8% Cumulative Redeemable Convertible Preferred
Stock"; that the number of shares constituting such series shall be,
and it hereby is, 15,000; and that the designations, rights and
preferences 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 __________, 199__.
ORION NEWCO SERVICES, INC.
By:
------------------------------
[SEAL] Name: W. Neil Bauer
Title: President/Chief Executive
Officer
ATTEST:
- ----------------------------------------
Name: Richard H. Shay, Esq.
Title: Vice President, Corporate and
Legal Affairs/Secretary
<PAGE>
EXHIBIT A
SERIES A 8% CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
The following sections set forth the designations, rights and
preferences of the Corporation's Series A Preferred. Capitalized terms used
herein are defined in Section 12 below.
Section 1. Dividends.
1A. General Obligation. When and as declared by the
Corporation's board of directors and to the extent permitted under the General
Corporation Law of Delaware, the Corporation shall pay preferential dividends to
the holders of the Preferred Stock as provided in this Section 1. Except as
otherwise provided herein, dividends on each Preferred Share shall accrue on a
daily basis at the rate of 8% per annum of the sum of the Liquidation Value
thereof plus all accumulated and unpaid dividends thereon, from and including
the Date of Issuance of such Preferred Share to and including the date on which
the Liquidation Value of such Preferred Share (plus all accrued and unpaid
dividends thereon) is paid or the date on which such Preferred Share is
converted into shares of Common Stock hereunder. Such dividends shall accrue
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Corporation legally available for the payment of
dividends.
1B. Dividend Reference Dates. To the extent not paid on a
Dividend Reference Date, with the initial Dividend Reference Date being February
28, 1997, all dividends which have accrued on each Preferred Share outstanding
since the latest preceding Dividend Reference Date (or the Date of Issuance of
such Preferred Share, if later) ending upon each such Dividend Reference Date,
and, in the case of each Preferred Share outstanding that was issued upon the
Old ONS Preferred Share Conversion, all dividends that were accrued,
accumulated, and unpaid at the time of the Old ONS Preferred Share Conversion on
the Old ONS Preferred Share that was converted into such Preferred Share, shall
be accumulated and shall remain accumulated dividends with respect to such
Preferred Share until paid.
1C. Distribution of Partial Dividend Payments. Except in
connection with redemptions or repurchases (i) pursuant to paragraph 4A or 4B
below, (ii) in compliance with paragraph 4H below, or (iii) as provided in the
Purchase Agreement, 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
<PAGE>
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 accumulated dividends
with respect to such Preferred Shares.
Section 2. Liquidation.
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 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. If upon any such Liquidation the Corporation's
assets to be distributed among the holders of the Preferred Stock are
insufficient to permit 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 declare for
payment all accrued and unpaid dividends with respect to the Preferred Stock.
(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. [Reserved.]
Section 4. Redemptions.
4A. Redemption at Option of Corporation.
(i) The Corporation may at any time redeem all or, subject to
paragraph 4E below, any of the Preferred Shares then outstanding at the
Redemption Price, provided that no redemption pursuant to this paragraph 4A
shall be for Preferred Shares with an aggregate Liquidation Value of less than
$1,000,000 (or such lesser number of Preferred Shares then outstanding).
<PAGE>
(ii) The Corporation may in connection with a Reorganization redeem all or any
of the Preferred Shares then outstanding at the Redemption Price, payable at the
time of the consummation of the Reorganization as follows:
(a) first, in Freely Tradeable Securities in an amount
not to exceed the lesser of (1) the Redemption Price
of such Preferred Shares and (2) the amount of Freely
Tradeable Securities that, if such holder had
converted such Preferred Shares into Common Stock
immediately prior to such Reorganization, would have
been issued to such holder in connection with such
Reorganization in respect of such shares of Common
Stock; and
(b) second, the balance of the Redemption Price (if any)
in cash.
Notwithstanding paragraph 4H hereof, if the Corporation seeks the consent of the
holders of Preferred Stock to any Reorganization under subparagraph 3D(iv) of
the Purchase Agreement, and the affirmative consent of the holders required
thereunder is not obtained, the Corporation may redeem at or prior to the time
of the consummation of such Reorganization and pursuant to this paragraph
4A(ii), all (but not less than all) of the Preferred Shares held by those
holders that did not affirmatively consent to such transaction.
4B. Redemptions at the Option of the Holder.
(i) At any time after the fifth anniversary of the Closing,
subject to subparagraph 4B(ii) below, each holder of Preferred Stock may request
redemption of all or a portion of the Preferred Shares owned by such holder for
a price equal to the Redemption Price. Within five Business Days after receipt
of such request, the Corporation shall give written notice to all other holders
of Preferred Stock, and such other holders may request redemption of their
Preferred Shares by delivering written notice to the Corporation within 10
Business Days after receipt of the Corporation's notice. The Corporation shall
pay the Redemption Price of all Preferred Shares whose redemption has been duly
requested pursuant to this paragraph 4B within 30 days after its receipt of the
initial request for such redemption.
Notwithstanding the above, the Corporation shall not be
obligated pursuant to this paragraph 4B to redeem any Preferred Share initially
issued to a Small Business Investment Company licensed by the U.S. Small
Business Administration before the fifth anniversary of the Date of Issuance of
such Preferred Share, provided that all such outstanding Preferred Shares shall
be counted as held by their holders for purposes of all pro rata and other
calculations.
<PAGE>
(ii) Notwithstanding the provisions of subparagraph 4B(i) above, the Corporation
shall not be obligated to repurchase, pursuant to this paragraph 4B:
(a) on a cumulative basis, (x) before the sixth
anniversary of the Closing, a number of shares of Preferred Stock in
excess of one-third of all shares of Preferred Stock issued by the
Corporation at any time (for purposes of such calculation, taking into
account both repurchases under this paragraph 4B and repurchases under
paragraph 6A of the Purchase Agreement), and (y) before the seventh
anniversary of the Closing, a number of shares of Preferred Stock in
excess of two-thirds of all shares of Preferred Stock issued by the
Corporation at any time (for purposes of such calculation, taking into
account both repurchases under this paragraph 4B and repurchases under
paragraph 6A of the Purchase Agreement) (and at no time shall any
initial holder and its transferees be entitled to sell shares of
Preferred Stock to the Corporation pursuant to this paragraph 4B to the
extent that the aggregate number of such shares of Preferred Stock sold
by such Persons at or before that time pursuant to this paragraph 4B or
pursuant to paragraph 6A of the Purchase Agreement (limited in the case
of a transferee to shares of Preferred Stock acquired directly or
indirectly from, or acquired in respect of Preferred Stock acquired
directly or indirectly from, such initial holder) would, on a
cumulative basis, exceed an amount equal to (I) the maximum cumulative
number of shares which the Corporation may be required to redeem under
this subparagraph 4B(ii)(a) at such time, multiplied by (II) a fraction
(x) the numerator of which is the aggregate number, without
duplication, of shares of Preferred Stock issued by the Corporation at
any time that was held by such holders (limited in the case of a
transferee to shares of Preferred Stock acquired directly or indirectly
from, or acquired in respect of Preferred Stock acquired directly or
indirectly from, such initial holder), and (y) the denominator of which
is the aggregate number, without duplication, of shares of Preferred
Stock issued by the Corporation at any time); and
(b) for a period of 180 days after the date the
Corporation redeems shares of Preferred Stock pursuant to paragraph
4B(i), any shares of Preferred Stock pursuant to a request for
redemption under paragraph 4B(i) that is requested subsequent to, and
not as part of, such prior redemption.
4C. Redemption Payment. For each Preferred Share which is to
be redeemed (and except as otherwise provided in paragraph 4A(ii) above), the
Corporation shall be obligated on the Redemption Date to pay to the holder
thereof (upon surrender by such holder at the Corporation's principal office of
the certificate representing such Preferred Share) an amount in immediately
available funds equal to the Redemption Price of such Preferred Share. If the
funds of the Corporation legally available for redemption of Preferred Shares on
any Redemption Date are insufficient to redeem the total number of Preferred
Shares to
<PAGE>
be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of 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 will remain outstanding. 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. In
connection with any redemption of Preferred Stock pursuant to this Section 4,
the Corporation shall declare for payment all dividends that are accrued and
unpaid as of the Redemption Date with respect to the Preferred Shares which are
to be redeemed on such Redemption Date. (Payment of the Redemption Price in
respect of such Preferred Shares shall constitute payment of such declared
dividends.)
4D. Notice of Redemption. The Corporation shall mail written
notice of each redemption of any Preferred Stock to each record holder thereof
not more than 60 nor less than 30 days prior to the date on which such
redemption is to be made in the case of a redemption pursuant to paragraph 4A,
and not less than 5 Business Days prior to the date on which such redemption is
to be made in the case of a redemption pursuant to paragraph 4B. 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. 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.
4E. Determination of the Number of Each Holder's Preferred
Shares to be Redeemed. The number of Preferred Shares to be redeemed from each
holder thereof in redemptions pursuant to paragraph 4A(i) 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.
4F. Dividends After Redemption Date. No Preferred Share 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 not be deemed to be outstanding.
4G. Redeemed or Otherwise Acquired Preferred Shares. Any
Preferred Shares which are redeemed or otherwise acquired by the Corporation
thereupon shall be retired. All such shares shall upon their retirement become
<PAGE>
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 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.
4H. Other Redemptions or Acquisitions. Neither the Corporation
nor any Subsidiary shall redeem or otherwise acquire any Preferred Stock, except
as expressly authorized herein or pursuant to the Purchase Agreement or pursuant
to a purchase offer made pro rata to all holders of Preferred Stock on the basis
of the aggregate Redemption Price of the Preferred Shares owned by each such
holder.
Section 5. 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
share of Common Stock that would be issuable upon conversion of such Preferred
Share at the time the vote is taken.
Section 6. Conversion.
6A. 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 computed by multiplying the number of Preferred
Shares to be converted by the Liquidation Value and dividing the result by the
Conversion Price then in effect.
(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. At such time
as such conversion has been effected, the rights of the holder of such Preferred
Shares as such holder shall cease, all accrued and unpaid dividends on such
Preferred Shares shall be deemed to have been forfeited immediately prior to
such conversion, 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.
<PAGE>
(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, such conversion may, at the election of the holder of such Preferred
Shares, be conditioned upon the consummation of the Public Offering, in which
case such conversion shall not be deemed to be effective until the consummation
of the Public Offering.
(v) As soon as possible after a conversion has been effected
(but in any event within five 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 (including, without limitation, making any filings
required to be made by the Corporation).
<PAGE>
(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 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 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 or exercise
of the Warrants, such number of shares of Common Stock issuable upon the
conversion of all outstanding Preferred Stock and exercise of all outstanding
Warrants 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 (excluding Investment Regulations) 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).
6B. Conversion Price.
(i) In order to prevent dilution of the conversion rights
granted under this subdivision, the Conversion Price shall be subject to
adjustment from time to time pursuant to this Section 6.
(ii) If and whenever on or after the Date of Issuance of any
Preferred Share the Corporation issues or sells, or in accordance with paragraph
6C 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 Conversion
Price in effect immediately prior to such time with respect to any such
Preferred Share, then forthwith upon such issue or sale the Conversion Price of
such Preferred Share shall be reduced to the lowest net price per share at which
any such share of Common Stock has been issued or sold or is deemed to have been
issued or sold.
6C. Effect on Conversion Price of Certain Events. Solely for
purposes of determining the adjusted Conversion Price under paragraph 6B, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any Options and the lowest price per share for which any one share
of Common Stock is issuable upon the exercise of any such Option or upon
conversion or exchange of any Convertible Security is less than any Conversion
Price in effect immediately prior to the time of the granting of such Option,
then such share of Common Stock shall be deemed to have been issued and sold by
the Corporation at
<PAGE>
the time of the granting of such Options for such price per share and such
Conversion Price shall be adjusted in accordance with paragraph 6B(ii) above.
For purposes of this paragraph, the "lowest price per share for which any one
share of Common Stock is issuable" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Corporation with
respect to any one share of Common Stock upon the granting of the Option, upon
exercise of the Option and upon conversion or exchange of the Convertible
Security. No further adjustment of such Conversion Price shall be made upon the
actual issue of such Common Stock or of such Convertible Security upon the
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Security.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than any Conversion Price in effect immediately prior
to the time of such issue or sale, then such share 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 for such price per share and
such Conversion Price shall be adjusted in accordance with paragraph 6B(ii)
above. For the purposes of this paragraph, the "lowest price per share for which
any one share of Common Stock is issuable" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance of
the Convertible Security and upon the conversion or exchange of such Convertible
Security. No further adjustment of such 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 such Conversion Price had
been or are to be made pursuant to other provisions of this Section 6, no
further adjustment of such Conversion Price shall be made by reason of such
issue or sale.
(iii) 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 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.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
<PAGE>
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.
(v) 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 determined jointly by the Corporation
and the holders of 70% of the outstanding Preferred Shares. If such parties are
unable to reach agreement within a reasonable period of time, the fair value of
such consideration shall be determined by an independent appraiser experienced
in valuing such type of consideration jointly selected by the Corporation and
the holders of 70% 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.
(vi) 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.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation fixes a record date for
determining the holders of Common Stock entitled (a) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of
<PAGE>
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or upon the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
6D. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Conversion 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) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, any Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
6E. Reorganization, Reclassification, Consolidation, Merger or
Sale. In connection with any Organic Change, the Corporation shall make
appropriate provisions (in form and substance reasonably satisfactory to the
holders of 70% of the Preferred Shares then outstanding) to insure that each of
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 or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Preferred Stock immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance reasonably satisfactory to the holders of 70%
of the Preferred Shares then outstanding) to insure that the provisions of this
Section 6 and Sections 7 and 8 hereof shall thereafter be applicable to the
Preferred Stock (including, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is other than the
Corporation, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and a corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of Preferred Stock, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale).
6F. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Corporation's board of directors shall make an appropriate adjustment
in each Conversion Price so as to protect the rights of the holders of Preferred
Stock; provided that no such adjustment shall increase any Conversion Price as
otherwise determined pursuant to this Section 6 or decrease the number of shares
of Conversion Stock issuable upon conversion of each share of Preferred Stock.
<PAGE>
6G. Notices.
(i) Immediately upon any adjustment of any 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 Organic Change or Liquidation.
(iii) The Corporation shall also give written notice to the
holders of Preferred Stock at least 20 days prior to the date on which any
Organic Change shall take place.
6H. Mandatory Conversion. The Corporation may require by
written notice to all holders of Preferred Stock, the conversion of all of the
outstanding Preferred Stock, at the then applicable Conversion Price or Prices,
at any time after the second anniversary of the Closing, provided that (a) 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 30 of the 45 latest trading days preceding the
date of the Corporation's notice has been greater than (i) $12.50 per share, if
such notice is delivered prior to the last day of the 30th month after Closing,
(ii) $15.62 per share, if such notice is delivered after the last day of the
30th month after Closing but prior to the third anniversary of the Closing, or
(iii) $18.75 per share, if such notice is delivered on or after the third
anniversary of the Closing, (b) the number of Public Float Securities
outstanding exceeds 20% of the number of shares of Common Stock outstanding on a
"fully diluted" basis (i.e., after giving effect to the exercise, exchange and
conversion of all rights, options, warrants and convertible securities that are,
directly or indirectly, exercisable or exchangeable for, or convertible into,
Common Stock, determined without regard to any vesting limitations or
restrictions on exercise, exchange or conversion), and (c) the holders of the
Preferred Stock are not then subject to (and will not, as a result of such
exercise, become subject to) any agreement restricting the sale of the Common
Stock issued upon the conversion of the Preferred Stock.
Section 7. 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 Dividends which
would have been paid on the shares of Common Stock had such Preferred Stock been
converted
<PAGE>
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 8. 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 could 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 9. Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance of the type described in
subparagraph (ii) of the definition of Event of Noncompliance has occurred and
has continued for a period of 30 days and is continuing or any other Event of
Noncompliance has occurred and is continuing, the annual dividend rate on the
Preferred Stock shall increase immediately by an increment of two percentage
points. Thereafter, until such time as no Event of Noncompliance exists, the
annual dividend rate shall increase automatically at the end of each succeeding
90-day period by an additional increment of two percentage points (but in no
event shall the annual dividend rate exceed 14%). Any increase of the dividend
rate resulting from the operation of this paragraph shall terminate as of the
close of business on the date on which no Event of Noncompliance exists, subject
to subsequent increases pursuant to this paragraph.
(ii) If both (a) either (1) an Event of Noncompliance of the
type described in subparagraph (i) or (iii) of the definition of Event of
Noncompliance has occurred and is continuing, or (2) an Event of Noncompliance
of the type described in subparagraph (ii) or (iv) of the definition of Event of
Noncompliance has occurred and has continued for a period of 60 days and is
continuing and (b) the holder or holders of 70% of the Preferred Stock then
outstanding have given written notice to the Corporation of their intent to
exercise their rights under this paragraph (ii) in connection with such Event of
Noncompliance (which notice may be given at any time after the occurrence of
such Event of Noncompliance) and 30 days have lapsed since the date such notice
was given, then the holder or holders of 70% of the Preferred Stock then
outstanding shall have the option to demand (by written notice delivered to the
Corporation at any time thereafter until such time as there is no Event of
Noncompliance in existence) redemption of all or any portion of the
<PAGE>
Preferred Stock owned by such holder or holders at a price per Preferred Share
equal to the Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). The Corporation shall give prompt written notice of such election to
the other holders of Preferred Stock (but in any event within five days after
receipt of the initial demand for redemption), and each such other holder shall
have the option to demand redemption of all or any portion of such holder's
Preferred Stock by giving written notice thereof to the Corporation within seven
days after receipt of the Corporation's notice. The Corporation shall redeem all
Preferred Stock as to which rights under this paragraph have been exercised
within 15 days after receipt of the initial demand for redemption.
(iii) If any Event of Noncompliance exists, each holder of
Preferred Stock shall also have any other rights which such holder is entitled
to under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
Section 10. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration 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 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 11. 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 of any series of Preferred Stock, 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 of such series represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate,
<PAGE>
and dividends shall accrue on the Preferred Stock represented by such new
certificate from the date to which dividends have been fully paid on such lost,
stolen, destroyed or mutilated certificate.
Section 12. Definitions.
"Business Day" means a day on which banks are generally open
for business in New York City.
"Closing" has the meaning given such term in the Purchase
Agreement.
"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 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 A
Share, $8.50 (subject to adjustment as provided in Section 6 for events
occurring after the Closing).
"Convertible Security" means any stock or other securities of
the Corporation convertible into or exchangeable for Common Stock.
<PAGE>
"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 Dates" mean August 31, November 30,
February 28 and May 31 of each year.
"Excluded Issuance" means the issue or sale of (i) shares of
Common Stock in respect of any transaction described in paragraph 6D or pursuant
to the Old ONS Merger Agreement, (ii) up to an aggregate of 2,203,960 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 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, or (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, the per share exercise price of which is greater than or equal to the
fair market value of a share of Common Stock at the time such Option is issued,
as determined by the Board of Directors of the Corporation (or the compensation
committee thereof).
"Event of Noncompliance" means and shall be deemed to have
occurred if:
(i) the Corporation fails to make any redemption
payment with respect to the Preferred Stock which it is obligated to
make hereunder, whether or not such payment is legally permissible or
is prohibited by any agreement to which the Corporation is subject;
(ii) the Corporation breaches or otherwise fails to
perform or observe any other covenant or agreement set forth herein or
in the Purchase Agreement; provided, first, that no Event of
Noncompliance shall be deemed to have occurred under this subparagraph
(ii) if the Corporation reasonably establishes that the Event of
Noncompliance is not material to the financial condition, operating
results, operations or assets of the Corporation and its Subsidiaries,
taken as a whole, or to any holder's investment in the Preferred
<PAGE>
Stock; and provided, second, that, so long as the Corporation
commences promptly and continues to exercise reasonable and diligent
efforts to cure the Event of Noncompliance (if cure is possible)
within a reasonable time after its occurrence, the applicable grace
periods set forth in paragraph (i) and in clause (a) of paragraph (ii)
of Section 9 shall be extended with respect to such Event of
Noncompliance for a period of time equal to the period during which
such efforts are continuing;
(iii) any representation, warranty or certification
by or on behalf of the Corporation contained in the Purchase Agreement
or required to be furnished to any holder of Preferred Stock pursuant
to the Purchase Agreement is false or misleading in any material
respect on the date made; provided, however, that any Event of
Noncompliance under this clause (iii) resulting from the delivery of a
certification that is made in good faith but is false or misleading
shall be deemed to be cured from and after the date a certification
correcting the earlier false or misleading certification is delivered
to the holders of the Preferred Stock, which delivery shall occur
promptly after the facts or events that caused such earlier
certification to be false or misleading become known to the
Corporation; or
(iv) the Corporation or any Subsidiary makes an
assignment for the benefit of creditors or admits in writing its
inability to pay its debts generally as they become due; or an order,
judgment or decree is entered adjudicating the Corporation or any
Subsidiary bankrupt or insolvent; or any order for relief with respect
to the Corporation or any Subsidiary is entered under the Federal
Bankruptcy Code; or the Corporation or any Subsidiary petitions or
applies to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Corporation or any Subsidiary or of any
substantial part of the assets of the Corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary
liquidation and dissolution of a Subsidiary) relating to the
Corporation or any Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the
Corporation or any Subsidiary and either (a) the Corporation or any
such Subsidiary by any act indicates its approval thereof, consent
thereto or acquiescence therein or (b) such petition, application or
proceeding is not dismissed within 60 days.
"Freely Tradeable Securities" has the meaning given such term
in the Purchase Agreement.
"Fundamental Change" has the meaning given such term in the
Purchase Agreement.
<PAGE>
"Investment Regulations" means, as applicable, Title III of
the Small Business Investment Act of 1958, as amended, and the regulations
promulgated thereunder, Regulation Y (Title 12, Code of Federal Regulations,
Part 225) under Section 5(b) of the Bank Holding Company Act of 1956, as
amended, or other similar laws or regulations governing a regulated Person's
investment authority.
"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.
"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 earnings or earned surplus (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 the Closing Price of such share or other security, averaged over a period
of 21 days consisting of the day as of which the Market Price is being
determined and the 20 consecutive Business Days prior to such day. 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, the Market
Price will be the fair value of such security determined by agreement between
the Company and the holders of 70% 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 70% 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.
"Old ONS" Orion Network Systems, Inc., a Delaware Corporation
incorporated in 1982.
"Old ONS Merger Agreement" means the Agreement and Plan of
Merger dated as of January 8, 1997, by and among the Corporation, Old ONS and
Orion Merger Company, Inc.
<PAGE>
"Old ONS Preferred Share" means one (1) share of the series of
the preferred stock of Old ONS having the designation "Series A 8% Cumulative
Redeemable Convertible Preferred Stock," as set forth in that certain
"Certificate of Designations, Rights and Preferences of Series A 8% Cumulative
Redeemable Convertible Preferred Stock of Orion Network Systems, Inc." filed
with the Secretary of State of the State of Delaware on June 17, 1994.
"Old ONS Preferred Share Conversion" means the conversion of
Old ONS Preferred Shares into the right to receive Preferred Shares, pursuant to
the Old ONS Merger Agreement.
"Options" means any right or option to subscribe for or to
purchase Common Stock or any Convertible Securities.
"Organic Change" 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.
"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 Preferred Stock.
"Preferred Stock" means the Series A Preferred.
"Public Float Securities" means, as of any date of
determination, those shares of the Corporation's Common Stock that (i)
previously have been sold to the public in an offering registered under the
Securities Act or through a broker, dealer or market maker under Rule 144 of the
Securities Act, (ii) are listed for trading on a "national securities exchange"
(within the meaning of the Securities Exchange Act of 1934, as amended) or
quoted on the "National Market System" or "National List" published by the
National Association of Securities Dealers Automated Quotations System or any
successor list, and (iii) are held by Persons other than the Corporation or any
of its "affiliates" (within the meaning of Rule 144 under the Securities Act).
"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
<PAGE>
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 Agreement" means the Purchase Agreement, dated as of
June 17, 1994, by and among Old ONS and certain investors, as such agreement may
from time to time be amended in accordance with its terms, the performance of
Old ONS's obligations under which the Corporation has assumed pursuant to a
written agreement by and among Old ONS, the Corporation, and such investors.
"Purchase Rights" mean 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, with respect to any Preferred Share
being redeemed, the Liquidation Value of such Preferred Share plus all accrued
and unpaid dividends thereon.
"Reorganization" means any merger or consolidation of the
Corporation with any Person where both (i) either (a) the Corporation is not the
surviving corporation, (b) the terms of the Preferred Stock are altered in any
respect, or (c) the Preferred Stock is exchanged for cash, securities or other
property, and (ii) such merger or consolidation does not constitute a
Fundamental Change.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred" means the Corporation's Series A 8%
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share.
"Series A Share" means a share of Series A Preferred.
"Subsidiary" means, with respect to any Person, 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
<PAGE>
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.
"Warrants" means the Common Stock purchase warrants issued
pursuant to the Purchase Agreement (whether at the Closing or thereafter
pursuant to paragraph 1D or Section 7 thereof) and any warrant issued in
exchange, substitution or replacement thereof.
Section 13. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 13 hereof without the
prior written consent of the holders of 70% of the Preferred Shares outstanding
at the time such action is taken; provided, that no such action shall change (i)
the rate at which or the manner in which dividends on the Preferred Stock accrue
or the times at which such dividends become payable or the amount payable on
redemption of the Preferred Stock or the times at which redemption of Preferred
Stock is to occur, without the prior written consent of the holders of at least
90% of the Preferred Shares then outstanding, (ii) any Conversion Price of the
Preferred Stock or the number of shares or class of stock into which the
Preferred Stock is convertible, without the prior written consent of the holders
of at least 90% of the Preferred Stock then outstanding or (iii) the percentage
required to approve any change in clauses (i) and (ii) above, without the prior
written consent of the holders of at least 90% of the Preferred Stock then
outstanding.
Section 14. 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).
<PAGE>
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES
OF
SERIES B 8% 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 Restated 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 Series B 8% Cumulative Redeemable Convertible
Preferred Stock having the designations, rights and preferences 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 $.01 per share, of the Corporation be, and it hereby
is, created; that the shares of such series shall be, and they hereby
are,
<PAGE>
designated as "Series B 8% Cumulative Redeemable Convertible Preferred
Stock"; that the number of shares constituting such series shall be,
and it hereby is, 5,000; and that the designations, rights and
preferences 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 __________, 199__.
ORION NEWCO SERVICES, INC.
By:
------------------------------------
[SEAL] Name: W. Neil Bauer
Title: President/Chief Executive
Officer
ATTEST:
- ----------------------------------------
Name: Richard H. Shay, Esq.
Title: Vice President, Corporate and
Legal Affairs/Secretary
<PAGE>
EXHIBIT A
SERIES B 8% CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
The following sections set forth the designations, rights and
preferences of the Corporation's Series B Preferred. Capitalized terms used
herein are defined in Section 12 below.
Section 1. Dividends.
1A. General Obligation. When and as declared by the
Corporation's board of directors and to the extent permitted under the General
Corporation Law of Delaware, the Corporation shall pay preferential dividends to
the holders of the Preferred Stock as provided in this Section 1. Except as
otherwise provided herein, dividends on each Preferred Share shall accrue on a
daily basis at the rate of 8% per annum of the sum of the Liquidation Value
thereof plus all accumulated and unpaid dividends thereon, from and including
the Date of Issuance of such Preferred Share to and including the date on which
the Liquidation Value of such Preferred Share (plus all accrued and unpaid
dividends thereon) is paid or the date on which such Preferred Share is
converted into shares of Common Stock hereunder. Such dividends shall accrue
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Corporation legally available for the payment of
dividends.
1B. Dividend Reference Dates. To the extent not paid on a
Dividend Reference Date, with the initial Dividend Reference Date being February
28, 1997, all dividends which have accrued on each Preferred Share outstanding
since the latest preceding Dividend Reference Date (or the Date of Issuance of
such Preferred Share, if later) ending upon each such Dividend Reference Date,
and, in the case of each Preferred Share outstanding that was issued upon the
Old ONS Preferred Share Conversion, all dividends that were accrued,
accumulated, and unpaid at the time of the Old ONS Preferred Share Conversion on
the Old ONS Preferred Share that was converted into such Preferred Share, shall
be accumulated and shall remain accumulated dividends with respect to such
Preferred Share until paid.
1C. Distribution of Partial Dividend Payments. Except in
connection with redemptions or repurchases (i) pursuant to paragraph 4A or 4B
below, (ii) in compliance with paragraph 4H below, or (iii) as provided in the
Purchase Agreement, if at any time the Corporation pays less than the
<PAGE>
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 accumulated dividends with respect to
such Preferred Shares.
Section 2. Liquidation.
Subject to the provisions of Section 2 of the Series A
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 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 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 declare for
payment all accrued and unpaid dividends with respect to the Preferred Stock.
(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. [Reserved.]
Section 4. Redemptions.
4A. Redemption at Option of Corporation.
(i) The Corporation may at any time redeem all or, subject to
paragraph 4E below, any of the Preferred Shares then outstanding at the
Redemption Price, provided that no redemption pursuant to this paragraph 4A
shall be for Preferred Shares with an aggregate Liquidation Value of less
<PAGE>
than $1,000,000 (less the aggregate liquidation value of any Series A Shares
being redeemed) or such lesser number of Preferred Shares then outstanding.
(ii) The Corporation may in connection with a Reorganization
redeem all or any of the Preferred Shares then outstanding at the Redemption
Price, payable at the time of the consummation of the Reorganization as follows:
(a) first, in Freely Tradeable Securities in an
amount not to exceed the lesser of (1) the Redemption Price of such
Preferred Shares and (2) the amount of Freely Tradeable Securities
that, if such holder had converted such Preferred Shares into Common
Stock immediately prior to such Reorganization, would have been issued
to such holder in connection with such Reorganization in respect of
such shares of Common Stock; and
(b) second, the balance of the Redemption Price (if
any) in cash.
Notwithstanding paragraph 4H hereof, if the Corporation seeks the consent of the
holders of Preferred Stock to any Reorganization under subparagraph 3D(iv) of
the Purchase Agreement, and the affirmative consent of the holders required
thereunder is not obtained, the Corporation may redeem at or prior to the time
of the consummation of such Reorganization and pursuant to this paragraph
4A(ii), all (but not less than all) of the Preferred Shares held by those
holders that did not affirmatively consent to such transaction.
4B. Redemptions at the Option of the Holder.
(i) At any time after the fifth anniversary of the Closing,
subject to subparagraph 4B(ii) below, each holder of Preferred Stock may request
redemption of all or a portion of the Preferred Shares owned by such holder for
a price equal to the Redemption Price. Within five Business Days after receipt
of such request (or of any similar request under paragraph 4B(i) of the Series A
Certificate), the Corporation shall give written notice to all other holders of
Preferred Stock, and such other holders may request redemption of their
Preferred Shares by delivering written notice to the Corporation within 10
Business Days after receipt of the Corporation's notice. The Corporation shall
pay the Redemption Price of all Preferred Shares whose redemption has been duly
requested pursuant to this paragraph 4B within 30 days after its receipt of the
initial request for such redemption.
Notwithstanding the above, the Corporation shall not be
obligated pursuant to this paragraph 4B to redeem any Preferred Share initially
issued to a Small Business Investment Company licensed by the U.S. Small
Business Administration before the fifth anniversary of the Date
<PAGE>
of Issuance of such Preferred Share, provided that all such outstanding
Preferred Shares shall be counted as held by their holders for purposes of all
pro rata and other calculations.
(ii) Notwithstanding the provisions of subparagraph 4B(i)
above, the Corporation shall not be obligated to repurchase, pursuant to this
paragraph 4B:
(a) on a cumulative basis, (x) before the sixth
anniversary of the Closing, a number of shares of Preferred Stock,
which when taken together with the number of Series A Shares similarly
repurchased, exceeds one-third of all shares of Series A Preferred and
Series B Preferred issued by the Corporation at any time (for purposes
of such calculation, taking into account both repurchases under this
paragraph 4B, repurchases under paragraph 4B of the Series A
Certificate and repurchases under paragraph 6A of the Purchase
Agreement), and (y) before the seventh anniversary of the Closing, a
number of shares of Preferred Stock, which when taken together with the
number of Series A Shares similarly repurchased, exceeds two-thirds of
all shares of Series A Preferred and Series B Preferred issued by the
Corporation at any time (for purposes of such calculation, taking into
account both repurchases under this paragraph 4B, repurchases under
paragraph 4B of the Series A Certificate and repurchases under
paragraph 6A of the Purchase Agreement) (and at no time shall any
initial holder and its transferees be entitled to sell shares of
Preferred Stock to the Corporation pursuant to this paragraph 4B to the
extent that the aggregate number of shares of Series A Preferred and
Series B Preferred sold by such Persons at or before that time pursuant
to this paragraph 4B, pursuant to paragraph 4B of the Series A
Certificate or pursuant to paragraph 6A of the Purchase Agreement
(limited in the case of a transferee to shares of Series A Preferred
and Series B Preferred acquired directly or indirectly from, or
acquired in respect of Series A Preferred or Series B Preferred
acquired directly or indirectly from, such initial holder) would, on a
cumulative basis, exceed an amount equal to (I) the maximum cumulative
number of shares which the Corporation may be required to redeem under
this subparagraph 4B(ii) (a) at such time, multiplied by (II) a
fraction (x) the numerator of which is the aggregate number, without
duplication, of shares of Series A Preferred and Series B Preferred
issued by the Corporation at any time that was held by such holders
(limited in the case of a transferee to shares of Series A Preferred
and Series B Preferred acquired directly or indirectly from, or
acquired in respect of Series A Preferred and Series B Preferred
acquired directly or indirectly from, such initial holder), and (y) the
denominator of which is the aggregate number, without duplication, of
<PAGE>
shares of Series A Preferred and Series B Preferred issued by the
Corporation at any time); and
(b) for a period of 180 days after the date the
Corporation redeems shares of Series B Preferred pursuant to paragraph
4B(i) (or Series A Preferred pursuant to paragraph 4B(i) of the Series
A Certificate), any shares of Preferred Stock pursuant to a request for
redemption under paragraph 4B(i) that is requested subsequent to, and
not as part of, such prior redemption.
4C. Redemption Payment. For each Preferred Share which is to
be redeemed (and except as otherwise provided in paragraph 4A(ii) above), the
Corporation shall be obligated on the Redemption Date to pay to the holder
thereof (upon surrender by such holder at the Corporations principal office of
the certificate representing such Preferred Share) an amount in immediately
available funds equal to the Redemption Price of such Preferred Share. Subject
to the provisions of paragraph 4C of the Series A Certificate: if the funds of
the Corporation legally available for redemption of Preferred Shares on any
Redemption Date are insufficient to redeem the total number of Preferred Shares
to be redeemed on such date, those funds which are legally available shall be
used to redeem the maximum possible number of 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 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. In connection
with any redemption of Preferred Stock pursuant to this Section 4, the
Corporation shall declare for payment all dividends that are accrued and unpaid
as of the Redemption Date with respect to the Preferred Shares which are to be
redeemed on such Redemption Date. (Payment of the Redemption Price in respect of
such Preferred Shares shall constitute payment of such declared dividends.)
4D. Notice of Redemption. The Corporation shall mail written
notice of each redemption of any Series A Preferred or Series B Preferred 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 in the case of a
redemption pursuant to paragraph 4A (or paragraph 4A of the Series A
Certificate), and not less than 5 Business Days prior to the date on which such
redemption is to be made in the case of a redemption pursuant to paragraph 4B
(or paragraph 4B of the Series A Certificate). Upon mailing any such notice of
redemption, the Corporation shall become obligated to
<PAGE>
redeem the total number of Preferred Shares specified in such notice at the time
of redemption specified therein. 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.
4E. Determination of the Number of Each Holder's Preferred
Shares to be Redeemed. The number of Preferred Shares to be redeemed from each
holder thereof in redemptions pursuant to paragraph 4A(i) 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.
4F. Dividends after Redemption Date. No Preferred Share 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 not be deemed to be outstanding.
4G. Redeemed or Otherwise Acquired Preferred Shares. Any
Preferred Shares which are redeemed 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 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.
4H. Other Redemptions or Acquisitions. Neither the Corporation
nor any Subsidiary shall redeem or otherwise acquire any Preferred Stock, except
as expressly authorized herein or pursuant to the Purchase Agreement or pursuant
to a purchase offer made pro rata to all holders of Preferred Stock on the basis
of the aggregate Redemption Price of the Preferred Shares owned by each such
holder.
Section 5 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
<PAGE>
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
share of Common Stock that would be issuable upon conversion of such Preferred
Share at the time the vote is taken.
Section 6. Conversion.
6A. 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 computed by multiplying the number of Preferred
Shares to be converted by the Liquidation Value and dividing the result by the
applicable Conversion Price then in effect.
(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. At such time
as such conversion has been effected, the rights of the holder of such Preferred
Shares as such holder shall cease, all accrued and unpaid dividends on such
Preferred Shares shall be deemed to have been forfeited immediately prior to
such conversion, 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.
(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, such conversion may, at the election of the holder of such Preferred
Shares, be conditioned upon the consummation of the Public Offering, in which
case such conversion shall not be deemed to be effective until the consummation
of the Public Offering
(v) As soon as possible after a conversion has been effected
(but in any event within five 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
<PAGE>
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 (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 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 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 or exercise
of the Warrants, such number of shares of Common Stock issuable upon the
conversion of all outstanding Preferred Stock and exercise of all outstanding
Warrants 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 (excluding Investment Regulations) or any requirements
of any domestic securities exchange upon
<PAGE>
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).
6B. Conversion Price.
(i) In order to prevent dilution of the conversion rights
granted under this subdivision, the Conversion Price shall be subject to
adjustment from time to time pursuant to this Section 6.
(ii) If and whenever on or after the Date of Issuance of any
Preferred Share the Corporation issues or sells, or in accordance with paragraph
6C 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 Conversion
Price in effect immediately prior to such time with respect to any such
Preferred Share, then forthwith upon such issue or sale the Conversion Price of
such Preferred Share shall be reduced to the lowest net price per share at which
any such share of Common Stock has been issued or sold or is deemed to have been
issued or sold.
6C. Effect on Conversion Price of Certain Events. Solely for
purposes of determining the adjusted Conversion Price under paragraph 6B, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants any Options and the lowest price per share for which any one share
of Common Stock is issuable upon the exercise of any such Option or upon
conversion or exchange of any Convertible Security is less than any Conversion
Price in effect immediately prior to the time of the granting of such Option,
then such share 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 such Conversion Price shall be adjusted in accordance with paragraph
6B(ii) above. For purposes of this paragraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the granting of
the Option, upon exercise of the Option and upon conversion or exchange of the
Convertible Security. No further adjustment of such Conversion Price shall be
made upon the actual issue of such Common Stock or of such Convertible Security
upon the exercise of such Options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Security.
(ii) Issuance of Convertible Securities. If the Corporation in
any manner issues or sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion
<PAGE>
or exchange thereof is less than any Conversion Price in effect immediately
prior to the time of such issue or sale, then such share 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 for such price per share and
such Conversion Price shall be adjusted in accordance with paragraph 6B(ii)
above. For the purposes of this paragraph, the "lowest price per share for which
any one share of Common Stock is issuable" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the
Corporation with respect to any one share of Common Stock upon the issuance of
the Convertible Security and upon the conversion or exchange of such Convertible
Security. No further adjustment of such 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 such Conversion Price had
been or are to be made pursuant to other provisions of this Section 6, no
further adjustment of such Conversion Price shall be made by reason of such
issue or sale.
(iii) 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 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.
(iv) 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.
(v) 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
<PAGE>
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 determined
jointly by the Corporation and the holders of 70% of the outstanding Preferred
Shares. If such parties are unable to reach agreement within a reasonable period
of time, the fair value of such consideration shall be determined by an
independent appraiser experienced in valuing such type of consideration jointly
selected by the Corporation and the holders of 70% 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.
(vi) 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.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation fixes a record date for
determining the holders of Common Stock entitled (a) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
6D. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
<PAGE>
Common Stock into a greater number of shares, any Conversion 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) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, any Conversion Price in effect immediately prior to such combination
shall be proportionately increased.
6E. Reorganization, Reclassification, Consolidation, Merger or
Sale. In connection with any Organic Change, the Corporation shall make
appropriate provisions (in form and substance reasonably satisfactory to the
holders of 70% of the Preferred Shares then outstanding) to insure that each of
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 or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Preferred Stock immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance reasonably satisfactory to the holders of 70%
of the Preferred Shares then outstanding) to insure that the provisions of this
Section 6 and Sections 7 and 8 hereof shall thereafter be applicable to the
Preferred Stock (including, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is other than the
Corporation, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and a corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of Preferred Stock, if the value so
reflected is less than the Conversion Price in effect immediately prior to such
consolidation, merger or sale).
6F. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Corporation's board of directors shall make an appropriate adjustment
in each Conversion Price so as to protect the rights of the holders of Preferred
Stock; provided that no such adjustment shall increase any Conversion Price as
otherwise determined pursuant to this Section 6 or decrease the number of shares
of Conversion Stock issuable upon conversion of each share of Preferred Stock.
<PAGE>
6G. 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 Organic Change or Liquidation.
(iii) The Corporation shall also give written notice to the
holders of Preferred Stock at least 20 days prior to the date on which any
Organic Change shall take place.
6H. Mandatory Conversion. The Corporation may require by
written notice to all holders of Preferred Stock, the conversion of all of the
outstanding Preferred Stock at the then applicable Conversion Price, at any time
after the second anniversary of the Closing, provided that (a) 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 30 of the 45 latest trading days preceding the date of the
Corporation's notice has been greater than (i) $12.50 per share, if such notice
is delivered prior to the last day of the 30th month after Closing, (ii) $15.62
per share, if such notice is delivered after the last day of the 30th month
after Closing but prior to the third anniversary of the Closing, or (iii) $18.75
per share, if such notice is delivered on or after the third anniversary of the
Closing, (b) the number of Public Float Securities outstanding exceeds 20% of
the number of shares of Common Stock outstanding on a "fully-diluted" basis
(i.e., after giving effect to the exercise, exchange and conversion of all
rights, options, warrants and convertible securities that are, directly or
indirectly, exercisable or exchangeable for, or convertible into, Common Stock,
determined without regard to any vesting limitations or restrictions on
exercise, exchange or conversion), and (c) the holders of the Preferred Stock
are not then subject to (and will not, as a result of such exercise, become
subject to) any agreement restricting the sale of the Common Stock issued upon
the conversion of the Preferred Stock.
Section 7. Liquidation 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 Dividends which
would
<PAGE>
have been paid on the shares of Common Stock 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 8. 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 could 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 9. Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance of the type described in
subparagraph (ii) of the definition of Event of Noncompliance has occurred and
has continued for a period of 30 days and is continuing or any other Event of
Noncompliance has occurred and is continuing, the annual dividend rate on the
Preferred Stock shall increase immediately by an increment of two percentage
points. Thereafter, until such time as no Event of Noncompliance exists, the
annual dividend rate shall increase automatically at the end of each succeeding
90-day period by an additional increment of two percentage points (but in no
event shall the annual dividend rate exceed 14%). Any increase of the dividend
rate resulting from the operation of this paragraph shall terminate as of the
close of business on the date on which no Event of Noncompliance exists, subject
to subsequent increases pursuant to this paragraph.
(ii) If both (a) either (1) an Event of Noncompliance of the
type described in subparagraph (i) or (iii) of the definition of Event of
Noncompliance has occurred and is continuing, or (2) an Event of Noncompliance
of the type described in subparagraph (ii) or (iv) of the definition of Event of
Noncompliance has occurred and has continued for a period of 60 days and is
continuing and (b) the holder or holders of 70% of the Preferred Stock then
outstanding have given written notice to the Corporation of their intent to
exercise their rights under this paragraph (ii) in connection with such Event of
Noncompliance (which notice may be given at any time after the occurrence of
such Event of Noncompliance) and 30 days
<PAGE>
have lapsed since the date such notice was given, then the holder or holders of
70% of the Preferred Stock then outstanding shall have the option to demand (by
written notice delivered to the Corporation at any time thereafter until such
time as there is no Event of Noncompliance in existence) redemption of all or
any portion of the Preferred Stock owned by such holder or holders at a price
per Preferred Share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Corporation shall give prompt written notice of
such election (or of any similar election under paragraph 9(ii) of the Series A
Certificate) to the other holders of Preferred Stock (but in any event within
five days after receipt of the initial demand for redemption), and each such
other holder shall have the option to demand redemption of all or any portion of
such holder's Preferred Stock by giving written notice thereof to the
Corporation within seven days after receipt of the Corporation's notice. The
Corporation shall redeem all Preferred Stock as to which rights under this
paragraph have been exercised within 15 days after receipt of the initial demand
for redemption.
(iii) If any Event of Noncompliance exists, each holder of
Preferred Stock shall also have any other rights which such holder is entitled
to under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
Section 10. Registration of Transfer.
The Corporation shall keep at its principal office a register
for the registration 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 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 11. 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 of any series of Preferred Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
<PAGE>
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 of such series 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 such lost, stolen, destroyed or mutilated certificate.
Section 12. Definitions.
"Business Day" means a day on which banks are generally open
for business in New York City.
"Closing" means June 17, 1994.
"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 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.
<PAGE>
"Conversion Price" shall mean, with respect to any Series B
Share, $10.20 (subject to adjustment as provided in Section 6 for events
occurring after its Date of Issuance).
"Convertible Security" means any stock or other securities of
the Corporation convertible into or exchangeable for 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 Dates" mean August 31, November 30,
February 28 and May 31 of each year.
"Excluded Issuance" means the issue or sale of (i) shares of
Common Stock in respect of any transaction described in paragraph 6D or pursuant
to the Old ONS Merger Agreement, (ii) up to an aggregate of 2,203,960 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 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, or (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, the per share exercise price of which is greater than or equal to the
fair market value of a share of Common Stock at the time such Option is issued,
as determined by the Board of Directors of the Corporation (or the compensation
committee thereof).
"Event of Noncompliance" means and shall be deemed to have
occurred if:
(i) the Corporation fails to make any redemption
payment with respect to the Preferred Stock which it is obligated to
make hereunder, whether or not such payment is legally permissible or
is prohibited by any agreement to which the Corporation is subject;
<PAGE>
(ii) the Corporation breaches or otherwise fails to
perform or observe any other covenant or agreement set forth herein or
in the Purchase Agreement; provided, first, that no Event of
Noncompliance shall be deemed to have occurred under this subparagraph
(ii) if the Corporation reasonably establishes that the Event of
Noncompliance is not material to the financial condition, operating
results, operations or assets of the Corporation and its Subsidiaries,
taken as a whole, or to any holder's investment in the Preferred Stock;
and provided, second, that, so long as the Corporation commences
promptly and continues to exercise reasonable and diligent efforts to
cure the Event of Noncompliance (if cure is possible) within a
reasonable time after its occurrence, the applicable grace periods set
forth in paragraph (i) and in clause (a) of paragraph (ii) of Section 9
shall be extended with respect to such Event of Noncompliance for a
period of time equal to the period during which such efforts are
continuing;
(iii) any representation, warranty or certification
by or on behalf of the Corporation contained in the Purchase Agreement
or required to be furnished to any holder of Preferred Stock pursuant
to the Purchase Agreement is false or misleading in any material
respect on the date made; provided, however, that any Event of
Noncompliance under this clause (iii) resulting from the delivery of a
certification that is made in good faith but is false or misleading
shall be deemed to be cured from and after the date a certification
correcting the earlier false or misleading certification is delivered
to the holders of the Preferred Stock, which delivery shall occur
promptly after the facts or events that caused such earlier
certification to be false or misleading become known to the
Corporation; or
(iv) the Corporation or any Subsidiary makes an
assignment for the benefit of creditors or admits in writing its
inability to pay its debts generally as they become due; or an order,
judgment or decree is entered adjudicating the Corporation or any
Subsidiary bankrupt or insolvent; or any order for relief with respect
to the Corporation or any Subsidiary is entered under the Federal
Bankruptcy Code; or the Corporation or any Subsidiary petitions or
applies to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Corporation or any Subsidiary or of any
substantial part of the assets of the Corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary
liquidation and dissolution of a Subsidiary) relating to the
Corporation or any Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or
application
<PAGE>
is filed, or any such proceeding is commenced,
against the Corporation or any Subsidiary and either (a) the
Corporation or any such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within 60 days.
"Freely Tradeable Securities" has the meaning given such term
in the Purchase Agreement.
"Fundamental Change" has the meaning given such term in the
Purchase Agreement.
"Investment Regulations" means, as applicable, Title III of
the Small Business Investment Act of 1958, as amended, and the regulations
promulgated thereunder, regulation Y (Title 12, Code of Federal Regulations,
Part 225) under Section 5(b) of the Bank Holding Company Act of 1956, as
amended, or other similar laws or regulations governing a regulated Person's
investment authority.
"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).
"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
or 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 earnings or earned surplus (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 the Closing Price of such share or other security, averaged over a period
of 21 days consisting of the day as of which the Market Price is being
determined and the 20 consecutive Business Days prior to such day. 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, the Market
Price will be the fair value of such security determined
<PAGE>
by agreement between the Company and the holders of 70% 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 70% 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.
"Old ONS" means Orion Network Systems, Inc., a Delaware
Corporation incorporated in.
"Old ONS Merger Agreement" means the Agreement and Plan of
Merger dated as of January 8, 1997, by and among the Corporation, Old ONS and
Orion Merger Company, Inc.
"Old ONS Preferred Share" means one (1) share of the series of
the preferred stock of Old ONS having the designation "Series B 8% Cumulative
Redeemable Convertible Preferred Stock," as set forth in that certain
"Certificate of Designations, Rights and Preferences of Series B 8% Cumulative
Redeemable Convertible Preferred Stock of Orion Network Systems, Inc." filed
with the Secretary of State of the State of Delaware on June 16, 1995.
"Old ONS Preferred Share Conversion" means the conversion of
Old ONS Preferred Shares into the right to receive Preferred Shares, pursuant to
the Old ONS Merger Agreement.
"Options" means any right or option to subscribe for or to
purchase Common Stock or any Convertible Securities.
"Organic Change" 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.
"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 B Preferred.
<PAGE>
"Preferred Stock" means the Series B Preferred.
"Public Float Securities" means, as of any date of
determination, those shares of the Corporation's Common Stock that (i)
previously have been sold to the public in an offering registered under the
Securities Act or through a broker, dealer or market maker under Rule 144 of the
Securities Act, (ii) are listed for trading on a "national securities exchange"
(within the meaning of the Securities Exchange Act of 1934, as amended) or
quoted on the "National Market System" or "National List" published by the
National Association of Securities Dealers Automated Quotations System or any
successor list, and (iii) are held by Persons other than the Corporation or any
of its "affiliates" (within the meaning of Rule 144 under the Securities Act).
"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 Agreement" means the Purchase Agreement, dated as of
June 17, 1994, by and among Old ONS and certain investors, as such agreement may
from time to time be amended in accordance with its terms, the performance of
Old ONS's obligations under which the Corporation has assumed pursuant to a
written agreement by and among Old ONS, the Corporation, and such investors.
"Purchase Rights" mean 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, with respect to any Preferred Share
being redeemed, the Liquidation Value of such Preferred Share plus all accrued
and unpaid dividends thereon.
"Reorganization" means any merger or consolidation of the
Corporation with any Person where both (i) either (a) the Corporation is not the
surviving corporation, (b) the terms of the Preferred Stock are altered in any
respect, or (c) the Preferred Stock is exchanged for cash, securities or other
property, and (ii) such merger or consolidation does not constitute a
Fundamental Change.
"Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
"Series A Certificate" means the Certificate of Designations,
Rights and Preferences for the Series A 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 A Share" means a share of Series A Preferred.
"Series B Share" means a share of Series B Preferred.
"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.
"Warrants" means the Common Stock purchase warrants issued
pursuant to the Purchase Agreement (whether at the Closing or thereafter
pursuant to paragraph 1D or Section 7 thereof) and any warrant issued in
exchange, substitution or replacement thereof.
Section 13. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of Sections 1 to 13 hereof without the
prior written consent of the holders of 70% of the Preferred Shares outstanding
at the time such action is taken; provided, that no such action
<PAGE>
shall change (i) the rate at which or the manner in which dividends on the
Preferred Stock accrue or the times at which such dividends become payable or
the amount payable on redemption of the Preferred Stock or the times at which
redemption of Preferred Stock is to occur, without the prior written consent of
the holders of at least 90% of the Preferred Shares then outstanding, (ii) any
Conversion Price of the Preferred Stock or the number of shares or class of
stock into which the Preferred Stock is convertible, without the prior written
consent of the holders of at least 90% of the Preferred Stock then outstanding
or (iii) the percentage required to approve any change in clauses (i) and (ii)
above, without the prior written consent of the holders of at least 90% of the
Preferred Stock then outstanding.
Section 14. 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).
<PAGE>
FORM OF
CERTIFICATE OF DESIGNATIONS,
RIGHTS AND PREFERENCES
OF
SERIES C 6% CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK
OF
ORION NETWORK SYSTEMS, 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 Network
Systems, 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
<PAGE>
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 150,000; 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 January, 1997.
ORION NETWORK SYSTEMS, INC.
By:
--------------------------------------
[SEAL] Name: W. Neil Bauer
Title: President/Chief Executive
Officer
ATTEST:
- -----------------------------------------
Name: Richard H. Shay, Esq.
Title: Vice President, Corporate and
Legal Affairs/Secretary
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 January 31, 1997.
"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
<PAGE>
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 a public
or private offering of convertible subordinated debentures of the Corporation,
which debentures would be convertible into Common Stock.
"Corporation" means Orion Network Systems, Inc., a Delaware
corporation formerly known as Orion Newco Services, Inc.
"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 January 31 of each year,
commencing January 31, 1998, 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 greater than or equal to the respective exercise prices
in effect as of Closing (as
<PAGE>
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 or stock purchase
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, or
as interest thereon) as part of or in connection with a Bond Offering or a
Convertible Subordinated Debenture Offering or (vi) shares of Common Stock as
dividends on or upon conversion of the Series C Preferred.
"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 January 31, 1999 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,
<PAGE>
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 January 31,
2022.
"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.
<PAGE>
"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
<PAGE>
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).
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF ORION NEWCO SERVICES, INC.
STATE OF
NAME INCORPORATION
- ---- -------------
Orion Oldco Services Inc. Delaware
Orion Satellite Corporation Delaware
International Private Satellite
Partners, L.P. Delaware
OrionNet, Inc. Delaware
Orion Asia Pacific Corporation Delaware
Asia Pacific Space and Communications Delaware
Orion Atlantic Europe, Inc. Delaware
