<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ORBITAL SCIENCES CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ORBITAL SCIENCES CORPORATION
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
Orbital
Sciences [LOGO]
Corporation
March 27, 1995
Dear Stockholder:
It is my pleasure to invite you to the Annual Meeting of Stockholders of
Orbital Sciences Corporation to be held on Thursday, April 27, 1995 at 9:00 A.M.
at the Company's headquarters located at 21700 Atlantic Boulevard, Dulles,
Virginia 20166.
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the meeting. You are
accordingly urged to sign, date and return your proxy promptly in the enclosed
envelope, which requires no postage if mailed in the United States. Your return
of a proxy in advance will not affect your right to vote in person at the
meeting.
I hope that you will be able to attend the meeting. The officers and
directors of the Company look forward to seeing you at that time.
Sincerely,
/s/ DAVID W. THOMPSON
---------------------
DAVID W. THOMPSON
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 1995
------------------------
The Annual Meeting of Stockholders of Orbital Sciences Corporation (the
"Company") will be held at the Company's headquarters located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166, on Thursday, April 27, 1995 at 9:00 A.M. for
the following purposes:
1. To elect five directors for a three-year term ending in 1998.
2. To approve the increase in the number of shares of Common Stock
authorized for issuance under the 1990 Stock Option Plan from
2,000,000 to 2,975,000 shares.
3. To approve amendments to the 1990 Stock Option Plan for Non-Employee
Directors to increase the option exercise price from 85 percent of
the fair market value on the date of grant to 100 percent of the fair
market value on the date of grant; to increase the number of shares
of Common Stock automatically granted to non-employee directors on an
annual basis from 2,000 to 3,000 shares; and to increase the number
of shares of Common Stock authorized for issuance under such plan
from 120,000 to 170,000 shares.
4. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 6, 1995 as
the record date for determination of stockholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/ LESLIE C. SEEMAN
-------------------
LESLIE C. SEEMAN
Senior Vice President, General Counsel
and Secretary
March 27, 1995
<PAGE> 4
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Orbital Sciences Corporation (the "Company" or "Orbital") for use
at the Annual Meeting of Stockholders to be held at the Company's headquarters
located at 21700 Atlantic Boulevard, Dulles, Virginia 20166, on Thursday, April
27, 1995 at 9:00 A.M. and any adjournments thereof.
Stockholders of record at the close of business on March 6, 1995 will be
entitled to vote at the Annual Meeting of Stockholders. On that date, there were
20,211,540 shares of common stock, par value $.01 per share ("Common Stock"), of
the Company outstanding, the holders of which are entitled to one vote per share
on each matter to come before the meeting. Proxies properly executed and
returned will be voted at the meeting in accordance with any directions noted
thereon or, if no direction is indicated, proxies will be voted FOR the election
of the nominees for director set forth below and FOR the other proposals
described in this Proxy Statement. Proxies will be voted in the discretion of
the holders of the proxy with respect to any other business that may properly
come before the meeting and all matters incidental to the conduct of the
meeting. Any stockholder signing and delivering a proxy may revoke it at any
time before it is voted by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a date later than the date of the
proxy being revoked. Any stockholder attending the meeting in person may revoke
his or her proxy and vote his or her shares.
This Proxy Statement was first mailed to stockholders on or about March 27,
1995.
<PAGE> 5
ELECTION OF DIRECTORS (PROPOSAL 1)
Five directors are to be elected at the 1995 Annual Meeting for three-year
terms that expire in 1998. Nine other directors have been elected or appointed
to terms that end in either 1996 or 1997, as indicated below. Unless
instructions are given to the contrary, it is the intention of the persons named
as proxies to vote the shares to which the proxy is related FOR the election of
each of the nominees listed below for a term of three years expiring at the 1998
Annual Meeting of Stockholders and until his successor is elected and qualified
or until his earlier death, removal or resignation. If any nominee should become
unavailable, such proxy will be voted for a substitute nominee designated by the
Human Resources and Nominating Committee. Management does not anticipate that
any of the nominees will become unavailable. The five nominees for election as
directors at the Annual Meeting who receive the greatest number of votes
properly cast for the election of directors shall be elected directors.
Set forth below is certain information concerning each of the nominees and
the other incumbent directors:
DIRECTORS TO BE ELECTED AT THE 1995 ANNUAL MEETING
FRED C. ALCORN, 64
Member of Human Resources and Nominating Committee
Fred C. Alcorn has been a Director of the Company since 1983. Since 1975, Mr.
Alcorn has been President of Alcorn Oil & Gas Company and Alcorn Development
Company.
LENNARD A. FISK, 51
Member of Strategy and Technology Committee
Lennard A. Fisk has been a Director of the Company since October 1993. Since
July 1993, Dr. Fisk has been Professor and Chairman of the Department of
Atmospheric, Oceanic, and Space Sciences at the University of Michigan. From
1987 until 1993, he was Associate Administrator for Space Science and
Applications at the National Aeronautics and Space Administration ("NASA"). From
1977 until 1987, he held various positions at the University of New Hampshire,
including Vice President for Research and Financial Affairs.
JACK L. KERREBROCK, 67
Member of Strategy and Technology Committee
Jack L. Kerrebrock has been a Director of the Company since January 1993. From
1984 until 1993, he was a director of the Company's then wholly owned
subsidiary, Orbital Research Corporation ("ORC"). Since 1965, Dr. Kerrebrock has
been a Professor of Aeronautics and Astronautics at the Massachusetts Institute
of Technology ("MIT"). From 1990 to 1991, he was Acting Dean of Engineering at
MIT, and from 1985 to 1989, he was Associate Dean of Engineering. He was NASA
Associate Administrator for Aeronautics and Space Technology from 1981 to 1983.
From 1985 to 1986, Dr. Kerrebrock served as a member of the National Commission
on Space.
DAVID W. THOMPSON, 40
Chairman of the Board
David W. Thompson is a founder of Orbital and has been Chairman of the Board,
President and Chief Executive Officer of the Company since 1982. From 1981 to
1982, Mr. Thompson was Special Assistant to the President at Hughes Aircraft
Company's Missile Systems Group. From 1977 to 1979, Mr. Thompson was employed by
NASA at the Marshall Space Flight Center as a project manager and engineer. From
1975 to 1976, he worked on the Space Shuttle's autopilot design at the Charles
Stark Draper Laboratory. Mr. Thompson received an M.B.A. degree from Harvard
Business School and holds an M.S. degree in
2
<PAGE> 6
Aeronautics from the California Institute of Technology and a B.S. degree in
Aeronautics and Astronautics from MIT.
JAMES R. THOMPSON, 58
James R. Thompson (who is not related to David W. Thompson) has been Executive
Vice President and General Manager/Launch Systems Group since October 1993 and a
Director of the Company since 1992. Mr. Thompson was Executive Vice President
and Chief Technical Officer of Orbital from 1991 to October 1993. He was Deputy
Administrator of NASA from 1989 to 1991. From 1986 until 1989, Mr. Thompson was
Director of the Marshall Space Flight Center. Mr. Thompson was Deputy Director
for Technical Operations at Princeton University's Plasma Physics Laboratory
from 1983 through 1986. Before that, he had a 20-year career with NASA at the
Marshall Space Flight Center. Mr. Thompson holds an M.S. degree in Mechanical
Engineering from the University of Florida and a B.S. degree in Aeronautical
Engineering from the Georgia Institute of Technology. He is a director of
Nichols Research Corp., an engineering analysis and services company.
DIRECTORS WHOSE TERMS EXPIRE IN 1996
KELLY H. BURKE, 65
Chairman of Human Resources and Nominating Committee
Kelly H. Burke has been a Director of the Company since 1984. In 1982, General
Burke retired from the U.S. Air Force. Since that time, General Burke has been
Chairman of Stafford, Burke and Hecker, Inc., an aerospace consulting firm.
During 30 years of U.S. Air Force service, General Burke held a wide variety of
command and staff positions, culminating with that of Deputy Chief of Staff for
Research, Development and Acquisition at the Pentagon. Additionally, he has
served as an advisor to the White House Science Office, the National Academy of
Sciences, the Defense Science Board and the Air Force Scientific Advisory Board.
BRUCE W. FERGUSON, 40
Bruce W. Ferguson is a founder of Orbital and has been Executive Vice President
and General Manager/Communications and Information Systems Group since October
1993 and a Director of the Company since 1982. Mr. Ferguson was Executive Vice
President and Chief Operating Officer of Orbital from 1989 to October 1993 and
Senior Vice President/Finance and Administration and General Counsel from 1985
to 1989. Mr. Ferguson holds an M.B.A. degree from Harvard Business School, a
J.D. degree from Harvard Law School and an A.B. degree in Government from
Harvard College.
DANIEL J. FINK, 68
Chairman of Strategy and Technology Committee and Member of Audit and Finance
Committee
Daniel J. Fink has been a Director of the Company since 1983. Since 1982, Mr.
Fink has been President of D.J. Fink Associates, Inc., a management consulting
firm. From 1967 until 1982, Mr. Fink held a variety of positions at General
Electric Company, including the position of Senior Vice President from 1979 to
1982. He is a director of Titan Corporation and M/A-COM, Inc., a former member
of the Defense Science Board and a former Chairman of the NASA Advisory Council.
JACK A. FROHBIETER, 59
Jack A. Frohbieter has been a Director of the Company since August 1994, and
Executive Vice President and General Manager/Space and Electronics Systems Group
since September 1994. From 1990 until August 1994, Mr. Frohbieter was President
and Chief Operating Officer of Fairchild Space and Defense Corporation
("Fairchild"). From 1988 to 1990, he was Vice President and General Manager of
General Electric Company's Government Electronics Systems Division, and from
1966 to 1987, he held a variety of positions at RCA's Astro Space Division,
including Vice President and Division Manager from 1986 to 1987.
3
<PAGE> 7
J. PAUL KINLOCH, 50
Member of Audit and Finance Committee
J. Paul Kinloch has been a Director of the Company since 1984. Since 1984, Mr.
Kinloch has been a Managing Director in the Investment Banking Division of
Lehman Brothers, Inc. Since 1968, Mr. Kinloch has held a variety of positions at
Lehman Brothers, Inc. and its predecessor companies.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
DOUGLAS S. LUKE, 53
Chairman of Audit and Finance Committee and Member of Human Resources and
Nominating Committee
Douglas S. Luke has been a Director of the Company since 1983. Since 1991, Mr.
Luke has been President and Chief Executive Officer of WLD Enterprises, Inc., a
private investment firm. From 1979 until 1990, he held various positions with
Rothschild, Inc., including the position of Managing Director from 1987 until
1990. Mr. Luke is currently a director of DNA Plant Technology Corporation and
Regency Realty Corporation.
JOHN L. MCLUCAS, 74
Member of Human Resources and Nominating and Strategy and Technology Committees
John L. McLucas has been a Director of the Company since 1993. From 1987 until
1993, he was a director of ORC. Currently, Dr. McLucas is Chairman of the Board
of External Tanks Corp. He was formerly Chairman of the International Space
University and currently serves on its Board of Advisors. From 1988 to 1991, he
was Chairman of the NASA Advisory Council and Chairman of the Air Force Studies
Board. From 1985 to 1988, he was Chairman of QuesTech, Inc. From 1977 to 1985,
Dr. McLucas was the Executive Vice President of The Communications Satellite
Corporation. Prior to 1977, Dr. McLucas held a variety of positions, including
Administrator of the Federal Aviation Administration, Secretary of the U.S. Air
Force and President of MITRE Corporation.
HARRISON H. SCHMITT, 59
Member of Audit and Finance and Strategy and Technology Committees
Harrison H. Schmitt has been a Director of the Company since 1983. From 1982
until the present, Dr. Schmitt has served in various capacities as a consultant.
From 1976 to 1982, Dr. Schmitt was a United States Senator from New Mexico,
during which time he chaired the Senate Science, Technology and Space
Subcommittee, which approves and oversees all non-military space-related
research and development projects of the U.S. Government. From 1974 to 1975, he
was NASA Assistant Administrator for Energy Programs. From 1965 to 1973, he was
a NASA astronaut. As Lunar Module Pilot on Apollo 17 in 1972, he explored the
Moon's surface.
SCOTT L. WEBSTER, 42
Scott L. Webster is a founder of Orbital and has been a Director of the Company
since 1982. Mr. Webster was Senior Vice President of Orbital from October 1993
until January 1995, was President/Space Data Division of Orbital from 1991 until
October 1993, was Executive Vice President/Space Data Division from 1989 to
1990, was Senior Vice President/Marketing and Business Development from 1985 to
1989 and was Vice President/ Marketing from 1982 to 1985. From 1974 to 1978, he
was a Senior Engineer at Litton Industries, Inc. Mr. Webster received an M.B.A.
degree from Harvard Business School and holds a B.S. degree in Mechanical
Engineering from the University of Minnesota.
4
<PAGE> 8
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board has three standing committees: the Audit and Finance Committee;
the Human Resources and Nominating Committee; and the Strategy and Technology
Committee. The biographical information in the immediately preceding section
identifies the Committee memberships held by each director.
The Audit and Finance Committee, which held four meetings during 1994,
reviews corporate financial planning; recommends annually the persons or firm to
be employed by the Company as its independent auditors; consults with the
independent auditors with regard to the plan of audit; reviews, in consultation
with the independent auditors, the audit report and the accompanying management
letter, if any, of such independent auditors; and consults with the independent
auditors with regard to the adequacy of internal controls of the Company.
The Human Resources and Nominating Committee, which held four meetings and
took action by unanimous written consent once during 1994, administers the
Company's 1990 Stock Option Plan (the "Orbital Option Plan") and the Company's
1990 Stock Option Plan for Non-Employee Directors (the "Non-Employee Director
Plan"); advises in connection with the administration of the Orbital
Communications Corporation ("ORBCOMM") 1992 Stock Option Plan (the "ORBCOMM
Option Plan"); approves compensation arrangements for directors, executive
officers and other members of management; evaluates compensation plans and
policies and makes appropriate recommendations to the Board with respect
thereto; considers issues of management development and evaluation; nominates
candidates for positions on the Board; and will consider nominees recommended by
stockholders if such recommendations are in writing, are filed with the
Secretary of the Company, and set forth the information, and are filed by the
time, specified in the Company's By-Laws.
The Strategy and Technology Committee, which held four meetings during
1994, is responsible for giving initial Board-level consideration to certain
technology and business strategy issues, which may include significant
proposals, competitive assessments, new product development, internal
capabilities and potential acquisition evaluations.
In 1994, directors who were not employees of the Company were paid an
annual retainer of $7,500 for service on the Board and fees of $1,000 for each
Board or Committee meeting they attended. In addition, pursuant to the terms of
the Non-Employee Director Plan, each year non-employee directors are
automatically granted options for 2,000 shares of Common Stock at an exercise
price equal to 85 percent of the fair market value on the date of grant. If
Proposal 3 below is approved by the stockholders, beginning on January 2, 1996,
the number of options automatically granted to non-employee directors will be
for 3,000 shares of Common Stock, but the exercise price will be increased to
100 percent of the fair market value on the date of grant.
During 1994, the Board held six meetings and took action by unanimous
written consent three times. Each incumbent director attended at least 75
percent of all meetings of the Board and Committees of which he was a member.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual salary and
bonus earned for services in all capacities to the Company during, and long-term
compensation and other compensation awarded or paid in, the fiscal years ended
December 31, 1994, 1993 and 1992, to those persons who were, at December 31,
1994, (a) the Chief Executive Officer and (b) the other four most highly
compensated executive officers of the Company (with the Chief Executive Officer,
the "Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------
ANNUAL COMPENSATION SECURITIES ALL
------------------- UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
--------------------------- ---- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
David W. Thompson.......... 1994 $250,000 $27,500 10,000 $12,949
Chairman of the Board,
President and Chief 1993 240,000 43,600 4,000 12,154
Executive Officer
1992 220,000 60,720 11,500 14,130
18,000(2)
Bruce W. Ferguson.......... 1994 195,000 24,500 10,000 10,850
Executive Vice President 2,500(2)
and
General Manager/ 1993 185,000 25,900 4,000 10,101
Communications and
Information Systems Group 1992 170,000 46,920 9,000 11,050
30,000(2)
James R. Thompson.......... 1994 220,000 27,000 10,000 9,871
Executive Vice President
and
General Manager/ 1993 220,000 30,800 4,000 8,452
Launch Systems Group 5,000(2)
1992 200,000 55,200 8,000 12,595
4,500(2)
Carlton B. Crenshaw........ 1994 190,000 50,000 10,000 11,659
Senior Vice President/ 3,000(2)
Finance and 1993 170,000 59,500 10,000 8,802
Administration
and Treasurer
1992 155,000 42,780 10,000 9,934
15,000(2)
John H. Mehoves............ 1994 180,000 23,000 10,000 10,809
Senior Vice President
1993 170,000 23,800 4,000 10,117
5,000(2)
1992 160,000 44,000 9,000 10,307
3,750(2)
</TABLE>
---------------
(1) Company matching and profit-sharing contributions earned under the Company's
401(k) Plan.
(2) Shares of ORBCOMM common stock subject to options granted under the ORBCOMM
Option Plan.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants of stock options to the Named
Officers pursuant to the Orbital Option Plan and the ORBCOMM Option Plan during
the fiscal year ended December 31, 1994, which options are reflected in the
Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
% OF
TOTAL POTENTIAL REALIZED
NUMBER GRANTED VALUE AT ASSUMED
OF TO PRICE RATES OF STOCK
SECURITIES EMPLOYEES ON PRICE APPRECIATION
UNDERLYING IN EXERCISE DATE FOR OPTION TERM
OPTIONS FISCAL PRICE OF EXPIRATION -------------------
NAME GRANTED(#)(1) YEAR ($/SHARE) GRANT DATE 5%($) 10%($)
---------------------- ------ ------- ------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
David W. Thompson..... 10,000 1.388% $22.00 $22.00 4/27/2004 $138,357 $350,623
Bruce W. Ferguson..... 10,000 1.388% 22.00 22.00 4/27/2004 138,357 350,623
2,500(2) 2.107% 13.00 13.00 1/26/2004 20,439 51,797
James R. Thompson..... 10,000 1.388% 22.00 22.00 4/27/2004 138,357 350,623
Carlton B. Crenshaw... 10,000 1.388% 22.00 22.00 4/27/2004 138,357 350,623
3,000(2) 2.528% 13.00 13.00 1/26/2004 24,527 62,156
John H. Mehoves....... 10,000 1.388% 22.00 22.00 4/27/2004 138,357 350,623
</TABLE>
---------------
(1) Except as noted, reflects options granted under the Orbital Option Plan that
vest in one-third increments over a three-year period.
(2) Options to acquire ORBCOMM common stock granted pursuant to the ORBCOMM
Option Plan that vest in one-fourth increments over a four-year period.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Shown below is information with respect to the exercise of stock options
granted under the Orbital Option Plan during fiscal year 1994 and the 1994
year-end value of unexercised stock options granted under the Orbital Option
Plan and the ORBCOMM Option Plan. In 1994, none of the Named Officers exercised
any options granted under the ORBCOMM Option Plan.
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTION SHARES IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, AT DECEMBER 31,
ACQUIRED 1994(#) 1994($)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David W. Thompson...... 10,000 $135,000 14,498 16,502 $ 80,066 $ 42,289
13,500(1) 4,500(1) 171,000 57,000
Bruce W. Ferguson...... -- -- 20,331 15,669 173,123 37,407
22,500(1) 10,000(1) 285,000 100,000
James R. Thompson...... 5,000 37,050 51,665 15,335 418,320 35,450
4,625(1) 4,875(1) 45,875 23,625
Carlton B. Crenshaw.... 10,400 70,901 5,265 20,002 28,735 70,359
11,250(1) 6,750(1) 142,500 53,500
John H. Mehoves........ 5,000 54,875 16,331 15,669 104,923 37,407
4,062(1) 4,688(1) 38,775 21,256
</TABLE>
---------------
(1) Options to acquire ORBCOMM common stock granted pursuant to the ORBCOMM
Option Plan.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Human Resources and Nominating Committee of the Board of Directors (the
"Committee") is composed entirely of independent outside directors. The
Committee is responsible for determining executive compensation, including
salaries, bonus awards and stock option awards.
Under the supervision of the Committee, Orbital has developed and
implemented compensation policies and plans that seek to enhance the sales
growth, profitability and financial strength of the Company and, accordingly,
stockholder value by linking the financial interests of Orbital's senior
management to those of the Company's stockholders. To implement these goals,
Orbital's compensation structure has three components: base salary, annual (and
occasional "special") cash bonuses and stock options. Base salaries for 1994
were generally intended to be somewhat below competitive levels, while bonus
opportunities and stock option grants were generally intended to produce an
overall compensation structure that was at competitive levels.
Generally, in the early part of each fiscal year, the Committee reviews
with the Chief Executive Officer and approves, with any modifications it deems
appropriate, salary levels for the Company's executive officers, including the
Named Officers, and certain other senior managers. The salary amounts are
determined subjectively, based on perceptions of industry and peer group salary
levels and judgments as to the past and expected future contributions of the
individual senior executives, as well as the Company's overall growth and
profitability. In 1994, the Committee initially acceded to the Chief Executive
Officer's suggestion that he forego an increase in his 1994 base salary. In
Summer 1994, however, the Committee determined to increase prospectively the
Chief Executive Officer's 1994 base salary to $275,000. The Committee considered
a number of factors in approving this increase, including the Chief Executive
Officer's increased experience, his value to the Company, the Company's
increased size, a successful acquisition in 1994, and the Committee's
perceptions as to what salary he could command in other positions.
Under the Company's incentive bonus plan for 1994, executive officers of
the Company were eligible to receive semi-annual bonuses of up to 20% of annual
base salary, and certain senior managers of the Company and its subsidiaries
were eligible to receive semi-annual bonuses of up to 10% of annual base salary.
At the beginning of each semi-annual period, the Committee reviews semi-annual
Company and group performance goals recommended by management for purposes of
bonus opportunities. These goals include both financial goals, such as revenues,
backlog, earnings and cash flow, and non-financial operational goals, such as
mission reliability, mission timeliness and new product initiatives. At the end
of each semi-annual period, management evaluates the Company's and the groups'
performance against the established goals, and presents this evaluation,
together with its reasoning and recommended bonus percentages, to the Committee.
The Committee then determines, based on the recommendations of management and
any other factors the Committee considers relevant, the percentage of base
salary to be awarded as a bonus to each executive officer and senior manager and
establishes a bonus pool for all other eligible employees. The nature of the
goals means that management's recommendations and the Committee's determinations
as to bonus percentages are necessarily subjective. The awarded bonus
percentages are generally uniform for executive officers, including the Chief
Executive Officer and the other Named Officers. The Committee determined that no
semi-annual bonuses would be awarded for the first half of 1994 because the
Company fell short of the overall performance goals that had been set.
Semi-annual bonuses were awarded, however, for the second half of 1994. For
1994, the bonus percentages awarded to each of the Named Officers totalled 10
percent of annual base salary, as compared to opportunities totalling 40
percent. The 1994 bonuses reflected a number of factors, including the Company's
mixed success in meeting self-imposed program timelines and certain financial
and operating goals, coupled with the implementation of successful cost cutting
measures and a corporate reorganization and two successful acquisitions.
The Company also has a policy of retroactively awarding "special" one-time
occasional bonuses on an individual or group basis in recognition of significant
achievement or effort. This policy is intended to complement the incentive bonus
plan. Generally, special bonuses are awarded when the performance of an
individual, program or department is perceived to merit extraordinary
recognition or compensation in excess of that which is awarded under the
incentive bonus plan. The amounts of special bonuses are determined
subjectively, based on such factors as the perceived value to the Company of the
achievement, the amount of
8
<PAGE> 12
effort involved and the salary level of the individual. In 1994, the Company
awarded special bonuses to two Named Officers in recognition of their efforts
and success in connection with the Company's acquisitions during the year and to
two Named Officers in recognition of their efforts in connection with the
successful first launch of the Company's Taurus(R) launch vehicle.
The Company believes that stock options provide meaningful long-term
incentives because they reward the enhancement of stockholder value. The number
of stock options granted to each individual is determined subjectively based on
a number of factors, including the individual's degree of responsibility,
general level of performance, salary level, stock and option holdings and recent
noteworthy achievements, and generally is not based on historical corporate
performance. The Committee's grant of 10,000 options to the Chief Executive
Officer in 1994 was based on the foregoing factors.
In addition to the options granted by Orbital in 1994, certain senior
managers and two Named Officers were granted options to acquire common stock of
the Company's ORBCOMM subsidiary under the ORBCOMM Option Plan, which is
administered by the Board of Directors of ORBCOMM with assistance from the
Committee. ORBCOMM stock options are granted to motivate individual senior
managers to continue their substantial efforts in designing, developing and
implementing the ORBCOMM low-Earth orbit satellite-based communications system
(the "ORBCOMM System") in light of the Company's significant interest in the
ORBCOMM System. The number of ORBCOMM stock options granted to each individual
is subjective, based on the individual's degree of involvement in the ORBCOMM
System and factors similar to those used in awarding Orbital stock options.
The levels of salary and bonuses at the Company are such that the recently
enacted $1 million limit on the Federal tax deductibility of individual
executive compensation is not generally relevant to compensation determinations.
However, because significant stock price appreciation over a number of years
could result in the limit being applicable to option exercises, in 1994 the
Board of Directors amended, with stockholder approval, the Orbital Option Plan
so that options granted thereunder are expected to be exempt from the $1 million
limitation under Internal Revenue Service guidelines.
A review conducted at the end of 1994 and in early 1995 by the Company's
independent auditors of management's compensation vis-a-vis a group of companies
with comparable revenues in the same or similar industry as the Company,
indicated that for 1994, base salaries of certain executive officers (but not
the Chief Executive Officer) were slightly above market levels, while bonuses
paid were below the market median. The review also found that long-term
incentive compensation, in the form of stock options, was below the market
median in terms of the value of actual grants and the percentage of shares
reserved for issuance to employees under the Orbital Option Plan.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries.
The foregoing report has been furnished by the Committee members:
<TABLE>
<S> <C>
Gen. Kelly H. Burke (Chairman) Mr. Douglas S. Luke
Dr. John L. McLucas Mr. Fred C. Alcorn
</TABLE>
9
<PAGE> 13
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock against the cumulative total return on the
Nasdaq Stock Market Index of U.S. Companies and the Dow Jones Aerospace/Defense
Index for the period commencing on April 30, 1990 and ending on December 31,
1994.
COMPARISON OF CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
DOW JONES
NASDAQ US AERO- ORBITAL
MEASUREMENT PERIOD COMPANY SPACE/DEFENSE SCIENCES
(FISCAL YEAR COVERED) INDEX INDEX CORPORATION
<S> <C> <C> <C>
APRIL 1990 100.000 100.000 100.000
DECEMBER 1990 91.131 98.633 95.536
DECEMBER 1991 147.047 119.329 100.000
DECEMBER 1992 171.588 120.739 85.714
DECEMBER 1993 193.492 152.011 146.429
DECEMBER 1994 189.197 167.134 137.500
</TABLE>
* Assumes that the value of the investment in Orbital Common Stock, the Nasdaq
Stock Market Index of U.S. Companies and the Dow Jones Aerospace/Defense Index
was $100 on April 30, 1990 and that all dividends were reinvested.
INDEMNIFICATION AGREEMENTS
The Company has entered into substantially identical indemnification
agreements with each of its directors, the Named Officers and with certain other
officers and senior managers. The agreements provide that the Company shall, to
the full extent permitted by the Delaware General Corporation Law, as amended
from time to time, indemnify each indemnitee against all loss and expense
incurred by the indemnitee because he or she was, is or is threatened to be made
a party to any completed, pending or threatened action, suit or proceeding by
reason of the fact that he or she was a director, officer, employee or agent of
the Company or any of its affiliates, or because the Company has a right to
judgment in its favor because of his or her position with the Company or any of
its affiliates. The indemnitee will be indemnified so long as he or she acted in
good faith and in a manner reasonably believed by him or her to be in or not
opposed to the Company's best interest. The agreements further provide that the
indemnification thereunder is not exclusive of any other rights the indemnitee
may have under the Company's Restated Certificate of Incorporation, By-Laws or
any agreement or vote of stockholders and that the Restated Certificate of
Incorporation or By-Laws may not be amended to affect adversely the rights of
the indemnitee.
10
<PAGE> 14
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into executive employment agreements with certain
officers including each of the Named Officers. These agreements become effective
in the event of a "change of control" (as defined in the agreements) of the
Company, and no Named Officer currently receives compensation under these
agreements. Upon a "change of control," each Named Officer whose employment is
terminated by the Company other than for disability or "cause" (as defined in
the agreements), or whose employment is terminated by the executive for "good
reason" (as defined in the agreements), within 24 months following such "change
of control," would receive his full base salary through the termination date,
plus the lesser of (i) $500,000, or (ii) two times the sum of 12 times his
then-current monthly salary plus an amount equal to any bonus paid in the
previous year. In addition, all retirement benefits would vest, all insurance
benefits would continue for 30 months and all Company stock options would be
repurchased by the Company at the difference between the highest price paid in
the "change of control" transaction for shares of stock of the same class or
series and the exercise price.
SUMMARY OF ORBITAL OPTION PLAN AND NON-EMPLOYEE DIRECTOR PLAN
Orbital Option Plan
The Orbital Option Plan, which is an amendment and restatement of the
Company's 1987 Stock Option Plan, is administered by the Board of Directors. The
Board has authority, among other things, to (i) determine which eligible persons
will receive options, (ii) determine the time when options will be granted,
(iii) determine the terms and conditions, not inconsistent with the provisions
of the Orbital Option Plan, of any option, (iv) determine the number of shares
that may be issued upon exercise of the options, and (v) interpret the
provisions of the Orbital Option Plan and of any option granted thereunder. The
Board has the authority to appoint a committee to administer the plan and to
exercise all of the powers, authority and discretion of the Board, with the
exception of the Board's power and authority to amend and terminate the Orbital
Option Plan. The committee must include not less than three members of the
Board, and must be made up of disinterested persons as defined under Rule 16b-3
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Board has appointed the Human Resources and Nominating Committee to perform the
foregoing functions.
All employees of the Company, its subsidiaries and certain affiliated
partnerships are eligible to participate in the Orbital Option Plan. The Orbital
Option Plan permits the granting of both incentive stock options ("incentive
stock options") intended to qualify as such under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonstatutory stock options
("nonstatutory options" or "nonqualified options") not intended to so qualify.
The type of option granted is subject to the discretion of the Board. The option
exercise price for shares is determined by the Board in its sole discretion,
provided that incentive stock options must be granted at an option exercise
price of not less than the fair market value of the shares on the date of the
grant, and nonstatutory options must be granted at an option exercise price of
not less than 85 percent of the fair market value on the date of grant. The
Orbital Option Plan provides that options to acquire no more than 70,000 shares
may be granted to any individual in any two-year period, except that options to
acquire up to an additional 50,000 shares may be granted in connection with an
individual's initial hiring as an employee of the Company.
The period within which any stock option granted under the Orbital Option
Plan may be exercised is a matter of Board discretion, provided that the period
cannot exceed ten years from the date of grant. Each option will vest at a rate
set forth by the Board in each individual option agreement. The Board may
accelerate the time at which an option or installment may be exercised.
Generally, outstanding options issued under the Orbital Option Plan vest
one-third each year following the grant date for a three-year period and
terminate ten years following the grant date. Options cease vesting upon
termination of employment, and in any event expire no later than three months
(one year in the case of death or disability) following such a termination. On
the exercise of an option, the Company receives proceeds in the amount equal to
the exercise price of the option times the number of shares received in the
exercise, which proceeds are used for general corporate purposes.
11
<PAGE> 15
The Board may terminate or amend the Orbital Option Plan without
stockholder approval, except that approval would be required to the extent an
amendment would cause the Plan to fail to satisfy the incentive stock option
requirements of the Code, or the requirements of Rule 16b-3 of the Exchange Act.
The Board may also, under certain circumstances, amend the terms of any option
previously granted, prospectively or retroactively, although no amendment may
materially adversely affect a previously granted option without the consent of
the optionee.
Unless sooner terminated by the Board, the Orbital Option Plan will
terminate on November 9, 1997. Options may not be granted after termination of
the Orbital Option Plan; however, the provisions of the Orbital Option Plan will
continue thereafter to govern all options granted under the Plan until the
exercise, expiration or cancellation of such options. In the event of a
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split, the Board has the authority to authorize a proportionate
adjustment in the number or kind of shares and the option price, of outstanding
options.
A total of 2,000,000 shares of Common Stock are authorized for issuance
under the Orbital Option Plan. If Proposal 2 (below) is adopted, the number of
shares of Common Stock authorized for issuance thereunder will be increased to
2,975,000 shares. As of March 6, 1995, approximately 1,845 persons were eligible
to receive options under the Orbital Option Plan and approximately 860 of the
Company's current employees had received options thereunder. In addition, in
connection with Orbital's December 1994 acquisition of Magellan Corporation
("Magellan"), the Company granted 409,556 options (the "Replacement Options") to
acquire Orbital Common Stock to 150 Magellan employees who held Magellan
options. The Replacement Options were not granted under the Orbital Option Plan.
Non-Employee Director Plan
The Non-Employee Director Plan provides for the automatic annual grant of
nonstatutory stock options to purchase shares of Common Stock to eligible
non-employee directors of the Company and its subsidiaries. An eligible
non-employee director is any director who is not an employee of the Company or
its subsidiaries, is not a holder of more than two percent of the outstanding
shares of Common Stock of the Company, and is not an affiliate of any such
holder.
Under the Non-Employee Director Plan, nonstatutory options to purchase
2,000 shares of Common Stock are automatically granted to each eligible
non-employee director annually on January 2. To date, options have been granted
with an exercise price equal to 85 percent of the fair market value on the date
of the grant. Each option vests on the first anniversary of the date of the
grant. If Proposal 3 (below) is approved by the stockholders, beginning on
January 2, 1996, a nonstatutory option to purchase 3,000 shares of Common Stock,
with an exercise price of 100 percent of the fair market value on the date of
grant, will automatically be granted to each eligible non-employee director.
The Non-Employee Director Plan is administered by the Board, which has the
authority, among other things, to (i) prescribe the form or forms of instruments
evidencing options and any other instruments required under such Plan and change
such forms from time to time, (ii) adopt, amend and rescind rules and
regulations for the administration of the Non-Employee Director Plan, and (iii)
interpret such Plan and decide any questions and settle all controversies and
disputes that may arise in connection with the Non-Employee Director Plan. The
Board has the authority to appoint a committee to administer the Non-Employee
Director Plan and exercise all of the powers, authority and discretion of the
Board, with the exception of the Board's power and authority to amend and
terminate the Plan. The committee must include not less than three members of
the Board. The Board has appointed the Human Resources and Nominating Committee
to perform the foregoing functions.
The Board may terminate or amend the Non-Employee Director Plan at any
time, provided that (i) without the approval of the Company's stockholders, no
such amendment may cause the Plan to fail to comply with Rule 16b-3 of the
Exchange Act, (ii) unless required by applicable law, rule or regulation, no
such amendment may materially adversely affect a previously granted option
without the consent of the optionee, and (iii) the provisions of the Plan
relating to the automatic granting of options, the option exercise
12
<PAGE> 16
price and the option vesting and exercise schedules shall not be amended more
than once every six months, other than to comply with applicable law.
Unless sooner terminated by the Board, the Non-Employee Director Plan will
terminate on August 2, 2000. Options may not be granted after termination of the
Non-Employee Director Plan; however, the provisions of the Non-Employee Director
Plan will continue thereafter to govern all options granted under that Plan
until the exercise, expiration or cancellation of such options. In the event of
a reorganization, recapitalization, reclassification, stock dividend, stock
split or reverse stock split, the Board has the authority to authorize a
proportionate adjustment in the number or kind of shares, and the option price,
of outstanding options.
All options granted under the Non-Employee Director Plan expire and
terminate ten years following the date of grant. Options cease vesting upon
termination of service as a director, and in any event expire no later than
three months (one year in the case of death or disability) following such a
termination.
A total of 120,000 shares of Common Stock are authorized for issuance under
the Non-Employee Director Plan. If Proposal 3 (below) is adopted, the number of
shares authorized for issuance thereunder will be increased to 170,000 shares.
As of March 6, 1995, nine persons were eligible to receive options under the
Non-Employee Director Plan, no options had been exercised, and options for
82,000 shares were outstanding and unexercised under such Plan.
FEDERAL TAX ASPECTS OF THE ORBITAL OPTION PLAN AND THE NON-EMPLOYEE DIRECTOR
PLAN
In general, neither the grant nor the exercise of an incentive stock option
will result in taxable income to the option holder or a deduction to the
Company. However, option holders exercising incentive stock options may become
subject to the alternative minimum tax by reason of that exercise.
If the stock received upon the exercise of an incentive stock option is
held for at least two years from the date of grant and at least one year after
the date of exercise, any gain or loss recognized upon a later disposition of
the stock will be considered long-term capital gain or loss and will be taxable
accordingly. If stock received upon exercise of an incentive stock option is
disposed of before the holding period requirements described above have been
satisfied (a "disqualifying disposition"), the option holder will realize
ordinary income, and the Company will be entitled to a deduction, equal in
general to the difference between the option price and the value of the stock on
the date of exercise. The amount of ordinary income realized on a disqualifying
disposition may be limited when the stock is sold for less than its value on the
exercise date. Incentive stock options will be treated for tax purposes as
nonstatutory options (see below) to the extent the aggregate value (determined
at the time of grant) of the stock for which the options first became
exercisable in any calendar year exceeds $100,000.
In the case of nonstatutory options, no income results upon the grant of
the option. When an option holder exercises a nonqualified option, he or she
will realize ordinary income, subject to withholding, equal in general to the
excess of the then-fair market value of the stock over the option price. The
Company will in general be entitled to a deduction equal to the amount of
ordinary income realized by the optionee, provided the Company satisfies certain
withholding and reporting requirements.
Special rules will apply in the case of officers and directors subject to
the short-swing profit limitations of Section 16(b) of the Exchange Act who
exercise options within six months of the date of grant.
Section 162(m) of the Code limits to $1 million the deduction a public
corporation may claim with respect to the remuneration paid in any year to any
of the corporation's chief executive officer and the other four most highly
compensated executive officers. The deduction limitation is subject to a number
of exemptions, including for "performance-based" compensation. It is anticipated
that options granted under the Orbital Option Plan will be eligible for an
exemption from the $1 million deduction limitation. However, final regulations
under Section 162(m) have not yet been issued.
13
<PAGE> 17
The foregoing summary is limited to Federal income tax consequences and
does not purport to be a complete description of the Federal tax consequences
with respect to the Orbital Option Plan and the Non-Employee Director Plan.
OPTION GRANTS UNDER THE ORBITAL OPTION PLAN
The future benefits or amounts that would be received under the Orbital
Option Plan by the executive officers and the groups named in the table below
are not determinable at this time. The following table shows the number of
shares subject to options granted in 1994 to the individuals and groups
indicated below, which options, in the case of the Named Officers, are also
included in the relevant tables set forth above.
<TABLE>
<CAPTION>
SHARES
SUBJECT
TO
OPTIONS
GRANTED
NAME AND POSITION IN 1994
-------------------------------------------------------------- -------
<S> <C>
David W. Thompson............................................. 10,000
Chairman of the Board,
President and Chief Executive Officer
Bruce W. Ferguson............................................. 10,000
Executive Vice President and
General Manager/Communications and
Information Systems Group
James R. Thompson............................................. 10,000
Executive Vice President and
General Manager/Launch Systems Group
Carlton B. Crenshaw........................................... 10,000
Senior Vice President/Finance and
Administration and Treasurer
John H. Mehoves............................................... 10,000
Senior Vice President
All Executive Officers as a Group............................. 103,500
All Other Employees as a Group................................ 617,200
</TABLE>
OPTIONS GRANTED UNDER THE NON-EMPLOYEE DIRECTOR PLAN
Nonstatutory options for 2,000 shares each were granted under the
Non-Employee Director Plan on January 2, 1995 with an exercise price of $16.68
per share to the following non-employee directors of the Company: Fred C.
Alcorn, Kelly H. Burke, Daniel J. Fink, Lennard A. Fisk, Jack L. Kerrebrock, J.
Paul Kinloch, Douglas S. Luke, John L. McLucas and Harrison H. Schmitt. If
Proposal 3 (below) is approved by the stockholders, beginning on January 2,
1996, the number of options automatically granted to non-employee directors will
be for 3,000 shares of Common Stock with an exercise price of 100 percent of the
fair market value on the date of grant. The future benefits or amounts that
would be received under the Non-Employee Director Plan by the non-employee
directors named above are not determinable at this time.
APPROVAL OF AN INCREASE IN SHARES AUTHORIZED FOR
ISSUANCE UNDER THE ORBITAL OPTION PLAN (PROPOSAL 2)
There are currently 2,000,000 shares of Common Stock authorized for
issuance under the Orbital Option Plan. As of March 6, 1995, options to purchase
a total of 1,960,291 shares of Common Stock had been granted under the Plan and
not terminated or canceled, of which 353,464 have been exercised and 1,606,827
remain outstanding. The closing sales price of the Company's Common Stock on
March 6, 1995 was $17.00. The Orbital Option Plan is described in detail on
pages 11-12.
Effective January 26, 1995, the Board of Directors adopted an amendment to
the Orbital Option Plan to increase the number of shares of Common Stock
authorized for issuance under the Plan from 2,000,000 shares
14
<PAGE> 18
to 2,975,000 shares, subject to stockholder approval. The Board of Directors
found that the remaining number of shares available for grant under the Orbital
Option Plan was insufficient to adequately attract and provide an incentive to
the highly qualified employees necessary for the continued development and
success of the Company. One factor influencing this decision was a comprehensive
review of Orbital's management compensation that was performed by the Company's
independent auditors. Based on this review, the independent auditors concluded
that the percentage of shares of Common Stock presently reserved under the
Orbital Option Plan (approximately 8 percent of outstanding shares, assuming
conversion of the Company's 6 3/4% convertible subordinated debentures due 2003
(the "Convertible Debentures")) was at the lower end of the range (below the
25th percentile (approximately 12 percent of outstanding shares)) of the group
of companies included in the review for comparison purposes. This comparative
group included companies with comparable revenues in either the same or a
similar industry as Orbital. An increase in the number of shares authorized
under the Orbital Option Plan also is particularly necessary in view of the
substantial growth of the Company's work force during 1994, primarily as a
result of the Company's acquisitions of Fairchild and Magellan, and the need to
be able to provide long-term incentives in the form of options to new employees
(the work force grew from 1,123 full-time employees at December 31, 1993 to
1,845 at December 31, 1994). The Board believes that increasing the amount of
Common Stock to be issued under the Orbital Option Plan from the present
2,000,000 shares to 2,975,000 shares (approximately 12 percent of outstanding
shares assuming conversion of the Convertible Debentures) would be adequate for
the Company's near-term needs, and therefore recommends that the stockholders
approve the amendment to the Orbital Option Plan to effect this increase.
Unless instructions are given to the contrary, it is the intention of the
persons named as proxies to vote the shares to which the proxy is related FOR an
amendment to the Orbital Option Plan to increase the number of shares of Common
Stock authorized for issuance under such Plan from 2,000,000 shares to 2,975,000
shares. The affirmative vote of the holders of a majority of shares properly
cast on the proposal, in person or by proxy, will be required to approve the
proposed increase in the number of shares authorized for issuance under the
Orbital Option Plan.
APPROVAL OF CERTAIN AMENDMENTS TO THE NON-EMPLOYEE DIRECTOR PLAN
TO INCREASE THE EXERCISE PRICE; TO INCREASE THE
AMOUNT OF AUTOMATIC GRANT; AND TO INCREASE THE SHARES
AUTHORIZED FOR ISSUANCE UNDER SUCH PLAN (PROPOSAL 3)
The Non-Employee Director Plan currently provides for the automatic
granting of nonstatutory options to purchase Common Stock to eligible
non-employee directors of 2,000 options per year, with an exercise price of 85
percent of the fair market value of the Common Stock on the date of grant. There
are currently 120,000 shares of Common Stock authorized for issuance under the
Non-Employee Director Plan. As of March 6, 1995, options to purchase a total of
82,000 shares of Common Stock were outstanding and unexercised and no options
had been exercised under the Non-Employee Director Plan. The Non-Employee
Director Plan is described in detail on pages 12-13.
Effective January 26, 1995, the Board of Directors adopted amendments to
the Non-Employee Director Plan, subject to stockholder approval, to increase the
exercise price from 85 percent of the fair market value to 100 percent of the
fair market value of the Common Stock on the date of grant; to increase the
number of shares automatically granted each year from 2,000 to 3,000 shares; and
to increase the number of shares of Common Stock authorized for issuance under
the Non-Employee Director Plan from 120,000 shares to 170,000 shares. The Board
believes that increasing the exercise price of the options from 85 percent to
100 percent of the fair market value on the date of grant is in the interest of
all stockholders of the Company, and when taken in conjunction with the proposed
increase in the number of shares to be automatically granted to directors,
ensures that director compensation is directly tied to an increase in the stock
price, rather than based in part on an initial 15 percent discount in the
exercise price. The Board believes that an increase in the number of shares
authorized for issuance under the Non-Employee Director Plan is necessary to
enable the
15
<PAGE> 19
Company to attract and retain highly qualified directors and to have sufficient
shares available under the Plan to meet its obligation to issue options to
eligible non-employee directors, at least for the next three years, particularly
if, as proposed, the amount of the annual grant is increased to 3,000 shares. In
the event this Proposal 3 is not approved and assuming the composition of the
Board remains approximately the same, beginning in 1998, Orbital will have
insufficient shares authorized for issuance under the Non-Employee Director Plan
to effectuate future automatic option grants.
Unless instructions are given to the contrary, it is the intention of the
persons named as proxies to vote the shares to which the proxy is related FOR an
amendment to the Non-Employee Director Plan to increase the exercise price from
85 percent of the fair market value to 100 percent of the fair market value of
the Common Stock on the date of grant; to increase the number of shares
automatically granted each year from 2,000 to 3,000 shares; and to increase the
number of shares of Common Stock authorized for issuance under the Non-Employee
Director Plan from 120,000 shares to 170,000 shares. The affirmative vote of the
holders of a majority of shares properly cast on the proposal, in person or by
proxy, will be required to approve the proposed amendments to the Non-Employee
Director Plan.
RATIFICATION OF THE SELECTION
OF INDEPENDENT AUDITORS (PROPOSAL 4)
The Board of Directors recommends the ratification by the stockholders of
the appointment by the Board of Directors of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending December 31, 1995.
KPMG Peat Marwick LLP has served as the Company's independent auditors since
1989. Unless instructions are given to the contrary, it is the intention of the
persons named as proxies to vote the shares to which the proxy is related FOR
the ratification of the appointment of KPMG Peat Marwick LLP. The affirmative
vote of the holders of a majority of shares properly cast on the proposal, in
person or by proxy, will be required to approve Proposal 4. In the event that
the stockholders do not ratify the selection of KPMG Peat Marwick LLP, the Board
of Directors will consider the selection of another firm of independent
auditors. A representative of KPMG Peat Marwick LLP is expected to be present at
the Annual Meeting and will be available to respond to appropriate questions and
make such statements as he may desire.
16
<PAGE> 20
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 6, 1995 by (i) each person
known by the Company to own beneficially more than five percent of the Common
Stock, (ii) each director of the Company and each Named Officer and (iii) all
officers and directors as a group. Unless otherwise indicated, each of the
persons or entities listed below exercises sole voting and investment power over
the shares that each of them beneficially owns.
<TABLE>
<CAPTION>
NUMBER
NAME AND ADDRESS OF SHARES PERCENT
------------------------------------------------------------------------ --------- -----
<S> <C> <C>
G.T. Capital Management, Inc.(1)........................................ 1,816,000 8.9%
50 California Street, 27th Floor
San Francisco, CA 94111
Fred C. Alcorn(2)....................................................... 62,590 *
Kelly H. Burke(2)....................................................... 26,040 *
Carlton B. Crenshaw(2).................................................. 15,266 *
Bruce W. Ferguson(2)(3)................................................. 201,785 *
Daniel J. Fink(2)....................................................... 19,500 *
Lennard A. Fisk(2)...................................................... 2,000 *
Jack A. Frohbieter...................................................... 0 --
Jack L. Kerrebrock(2)................................................... 22,500 *
J. Paul Kinloch(2)...................................................... 22,032 *
Douglas S. Luke(2)...................................................... 16,000 *
John L. McLucas(2)...................................................... 22,000 *
John H. Mehoves(2)...................................................... 38,899 *
Harrison H. Schmitt(2)(4)............................................... 13,850 *
David W. Thompson(2)(3)................................................. 81,258 *
James R. Thompson(2)(3)................................................. 58,999 *
Scott L. Webster(2)..................................................... 168,232 *
Officers and Directors as a Group
(21 persons)(2)....................................................... 910,770 4.4%
</TABLE>
---------------
* Represents less than one percent of the outstanding shares of stock.
(1) G.T. Capital Management, Inc.'s beneficial ownership is as of December 31,
1994, not March 6, 1995, and is based on a Schedule 13G filed with the
Securities and Exchange Commission ("SEC").
(2) Includes shares issuable upon exercise of currently vested stock options or
options that will vest within sixty days of March 6, 1995, in the following
amounts: Fred C. Alcorn, 16,000 shares; Kelly H. Burke, 16,000 shares;
Carlton B. Crenshaw, 15,266 shares; Bruce W. Ferguson, 25,331 shares; Daniel
J. Fink, 16,000 shares; Lennard A. Fisk, 2,000 shares; Jack L. Kerrebrock,
16,000 shares; J. Paul Kinloch, 16,000 shares; Douglas S. Luke, 16,000
shares; John L. McLucas, 16,000 shares; John H. Mehoves, 23,999 shares;
Harrison H. Schmitt, 12,000 shares; David W. Thompson, 22,999 shares; James
R. Thompson, 58,999 shares; Scott L. Webster, 25,332 shares; and all
officers and directors as a group, 445,023 shares.
(3) Excludes 17,700 shares of Common Stock owned by Mr. Ferguson's wife, 24,500
shares of Common Stock owned by Mr. David Thompson's wife, 1,385 shares of
Common Stock owned by Mr. James Thompson's wife and 450 shares of Common
Stock owned by Mr. James Thompson's dependent children. Messrs. Ferguson,
David Thompson and James Thompson disclaim beneficial ownership of such
shares.
(4) Includes 1,850 shares of Common Stock with respect to which Dr. Schmitt
shares voting and investment power with his wife.
17
<PAGE> 21
QUORUM REQUIREMENT AND METHOD OF TABULATION
Consistent with Delaware state corporate law and under the Company's
By-Laws, a majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such
matter. Votes cast by proxy or in person at the Annual Meeting will be counted
by persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will count shares represented by proxies that
withhold authority to vote for a nominee for election as a director or that
reflect abstentions and "broker non-votes" (i.e., shares represented at the
meeting held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither abstentions nor
broker non-votes have any effect on the outcome of voting on the matter.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Orbital's executive officers and
directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish to the
Company copies of all Forms 3, 4 and 5 they file. Based solely on the Company's
review of the copies of such forms it has received and written representations
from certain reporting persons, the Company believes that, except as specified
below, all of its executive officers, directors and greater than ten percent
beneficial owners, complied with all such filing requirements applicable to them
with respect to transactions during fiscal 1994.
Mr. Webster's Form 5, reflecting a gift of 7,116 shares of Common Stock on
December 28, 1994 was filed with the SEC one day late. Mr. Mehoves' Form 5,
reflecting a gift of 100 shares of Common Stock in June 1994 was filed
approximately one month late. The Form 3 that reported Mr. Frohbieter's
appointment as a director of the Company as of August 11, 1994, and reflected
that he beneficially owned no Common Stock of the Company was filed with the SEC
one day late. Mr. David Thompson's Form 4 that reported a sale of 2,500 shares
of Common Stock in January 1994 was filed with the SEC several months late. The
Forms 3 of Matra Aerospace, Inc., Sofimades S.A., Matra Hachette S.A. and
Lagardere Groupe S.C.A. reporting their direct or indirect beneficial ownership
of more than ten percent of the Company's Common Stock were filed with the SEC
several weeks late.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the SEC, stockholder proposals
intended to be included in the Company's proxy materials for the Company's 1996
annual meeting of stockholders must be received by the Company on or before
November 29, 1995 at its principal office, 21700 Atlantic Boulevard, Dulles,
Virginia 20166, Attention: Corporate Secretary.
OTHER MATTERS
The management has no knowledge of any other matter that may come before
the Annual Meeting and does not, itself, currently intend to present any such
other matter. However, if any such other matters properly come before the
meeting or any adjournment thereof, the persons named as proxies will have
discretionary authority to vote the shares represented by the accompanying proxy
in accordance with their own judgment.
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PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of the Company by mail, telegram or personally. In addition, the
Company has retained D.F. King & Co. ("D.F. King") to solicit proxies by
personal interview, mail, telephone and telegram and to request brokerage houses
and other custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of Common Stock. The Company will pay D.F. King a fee not to
exceed $3,500 covering its services and, in addition, will reimburse D.F. King
for expenses and payments made for the Company's account to brokers and other
nominees for their expenses in forwarding soliciting material.
Stockholders are urged to send their proxies without delay. Your
cooperation is appreciated.
19
<PAGE> 23
ORBITAL SCIENCES CORPORATION
PROXY STATEMENT
APPENDIX
A. 1990 Stock Plan for Non-Employee Directors
B. Orbital Sciences Corporation 1990 Stock Option Plan
<PAGE> 24
APPENDIX A
ORBITAL SCIENCES CORPORATION
1990 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
PURPOSE OF PLAN
The purpose of this 1990 Stock Option Plan for Non-Employee Directors is to
promote the growth and profitability of Orbital Sciences Corporation by
providing, through the ownership of Shares, incentives to attract and retain
non-employee directors who are in a position to make significant contributions
to the success of the Company and other Participating Companies and to reward
such directors for such contributions.
ARTICLE II
DEFINITIONS
For the purposes of the Plan, the following terms shall have the meanings
set forth in this Article II:
2.01 Board. The term "Board" shall mean the Board of Directors of the
Company.
2.02 Committee. The term "Committee" shall mean a committee appointed by
the Board pursuant to Section 3.04 and constituting not less than three (3)
members of the Board.
2.03 Company. The term "Company" shall mean Orbital Sciences Corporation,
a Delaware corporation, or any successor thereof.
2.04 Director. The term "Director" shall mean a member of the Board, or a
member of the board of directors of any Participating Company.
2.05 Effective Date. The term "Effective Date" shall mean August 2, 1990.
2.06 Eligible Director. The term "Eligible Director" shall mean any
Director who is not an employee of the Company or any Participating Company and
is not a holder of more than two percent (2%) of the outstanding Shares, nor a
person who is an affiliate of any such holder.
2.07 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
2.08 Fair Market Value. The term "Fair Market Value," when used with
respect to the determination of the option price of Options, shall mean the
closing sale price of outstanding Shares on the national securities exchange on
which outstanding Shares are then principally traded or, if that measure of
price is not available, on a composite index of such exchanges or, if that
measure of price is not available, in a national market system on which
outstanding Shares are quoted on the date of the grant of the Option. In the
event that there are no sales of outstanding Shares on any such exchange or
market on such date of the grant of the Option, the fair market value of Shares
on the date of the grant shall be deemed to be the closing sales price on the
next preceding day on which outstanding Shares were sold on any such exchange or
market. In the event that Shares are not listed or quoted on any such exchange
or market on such date of the grant of the Option, a reasonable valuation of the
fair market value of the Shares on the date of the grant shall be made by the
Board.
2.09 I.R.C. The term "I.R.C." shall mean the Internal Revenue Code of
1986, as it has been or may be amended from time to time.
2.10 Incentive Stock Option. The term "Incentive Stock Option" shall mean
any Option intended to satisfy the requirements under I.R.C. Section 422(b) as
an incentive stock option.
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2.11 Nonstatutory Stock Option. The term "Nonstatutory Stock Option" shall
mean any Option granted under the Plan that does not qualify as an Incentive
Stock Option.
2.12 Option. The term "Option" shall mean an option to acquire Shares
granted under the Plan.
2.13 Optionee. The term "Optionee" shall mean an Eligible Director who has
been granted Options.
2.14 Parent Corporation. The term "Parent Corporation" shall mean a
corporation as defined in I.R.C. Section 425(e).
2.15 Participating Company. The term "Participating Company" shall mean
the Company and any Parent Corporation or Subsidiary Corporation.
2.16 Plan. The term "Plan" shall refer to the 1990 Stock Option Plan for
Non-Employee Directors of the Company set forth herein that provides for the
granting of Nonstatutory Stock Options.
2.17 Securities Act. The term "Securities Act" shall mean the Securities
Act of 1933, as amended.
2.18 Shares. The term "Shares" shall mean shares of the Company's
authorized Common Stock, $0.01 par value, and may be unissued shares or treasury
shares or shares purchased for purposes of the Plan.
2.19 Subsidiary Corporation. The term "Subsidiary Corporation" shall mean
a corporation as defined in I.R.C. Section 425(f).
2.20 Terminating Transaction. The term "Terminating Transaction" shall
mean any of the following events: (a) the dissolution or liquidation of the
Company; (b) a reorganization, merger or consolidation of the Company with one
or more other corporations as a result of which the Company goes out of
existence or becomes a subsidiary of another corporation (which shall be deemed
to have occurred if another corporation shall own, directly or indirectly,
eighty percent (80%) or more of the aggregate voting power of all outstanding
equity securities of the Company); (c) a sale of substantially all of the
Company's assets; or (d) a sale to one person (or two or more persons acting in
concert) of equity securities of the Company representing eighty percent (80%)
or more of the aggregate voting power of all outstanding equity securities of
the Company. As used herein or elsewhere in this Plan, the word "person" shall
mean an individual, corporation, partnership, association or other person or
entity, or any group of two or more of the foregoing that have agreed to act
together.
2.21 Termination Date. The term "Termination Date" shall mean August 2,
2000.
2.22 Total Disability. The term "Total Disability" shall mean a total and
permanent disability as that term is defined in I.R.C. Section 22(e)(3).
ARTICLE III
ADMINISTRATION OF PLAN
3.01 Administration by Board. The Plan shall be administered by the Board.
The Board shall have full and absolute power and authority in its sole
discretion (a) to grant Options in accordance with the Plan to Eligible
Directors; (b) to prescribe the form or forms of instruments evidencing Options
and any other instruments required under the Plan and to change such forms from
time to time; (c) to adopt, amend and rescind rules and regulations for the
administration of the Plan; and (d) to interpret the Plan and to decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan.
3.02 Rules and Regulations. The Board may adopt such rules and regulations
as the Board may deem necessary or appropriate to carry out the purposes of the
Plan and shall have authority to do everything necessary or appropriate to
administer the Plan.
3.03 Binding Authority. All decisions, determinations, interpretations or
other actions by the Board shall be final, conclusive and binding on all parties
and on their successors-in-interest.
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3.04 Administration by Committee. The Board, in its sole discretion, may,
from time to time, appoint a Committee to administer the Plan and exercise all
of the powers, authority and discretion of the Board under the Plan, other than
the power and authority to amend and terminate the Plan under Section 7.01.
ARTICLE IV
NUMBER OF SHARES AVAILABLE FOR GRANT
Subject to the provisions of this Article IV and Section 6.08(a), the
maximum aggregate number of Shares which may be optioned and sold under the Plan
is 120,000. In the event that outstanding Options shall, for any reason,
terminate, lapse, be forfeited or expire without being exercised, the Shares
subject to such unexercised Options shall again be available for the granting of
Options. In the event that Shares that were previously issued by the Company
upon exercise of an Option are reacquired by the Company as part of the
consideration received (in accordance with Section 6.05(b) hereof) upon the
subsequent exercise of an Option, such reacquired Shares shall again be
available for the granting of Options.
ARTICLE V
TERM OF PLAN
The Plan shall be effective as of the Effective Date and shall terminate on
the Termination Date. No Option may be granted after the Termination Date.
ARTICLE VI
OPTION TERMS
6.01 Number of Options Shares and Form of Option Agreement. Each Eligible
Director shall be granted a Nonstatutory Stock Option for two thousand (2,000)
Shares on August 2, 1990. In addition, each Eligible Director shall be granted a
Nonstatutory Stock Option for two thousand (2,000) Shares on January 2, 1991,
and on each anniversary thereof, provided that such individual is then an
Eligible Director. Any Option granted shall be evidenced by an agreement
("Option Agreement") in such form as the Board, in its discretion, may, from
time to time, approve. Any Option Agreement shall contain such terms and
conditions as the Board may deem necessary or appropriate and which are not
inconsistent with the provisions of the Plan.
6.02 Option Exercise Price. The option exercise price for Shares covered
by Options shall be eighty-five percent (85%) of the Fair Market Value of the
Shares.
6.03 Vesting and Exercisability of Options. Subject to the limitations set
forth herein and/or in any applicable Option Agreement entered into hereunder,
Options granted shall vest and be exercisable in accordance with the rules set
forth in this Section 6.03:
(a) General. Subject to the other provisions of this Section 6.03,
Options shall vest and become exercisable in accordance with the following
formula:
(i) Options granted on August 2, 1990 shall become exercisable to
the extent of one hundred percent (100%) of the Shares covered thereby
on January 2, 1991; and
(ii) Options granted after August 2, 1990 shall become exercisable
as to one hundred percent (100%) of the Shares covered thereby on the
first anniversary of the date of grant.
(b) Termination of Options. All installments of an Option shall
expire and terminate ten (10) years from the day before the date such
Option was granted (the "Option Termination Date").
(c) Termination of Directorship other than by Death or Total
Disability. In the event that an Optionee ceases to be a Director for any
reason (other than death or Total Disability), any Options held by such
Optionee that have not vested and become exercisable as of the directorship
termination date
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shall expire and become unexercisable as of the directorship termination
date. All vested and exercisable Options as of the directorship termination
date shall expire and become unexercisable as of the earlier of (i) three
(3) months following the directorship termination date or (ii) the original
Option Termination Date. For purposes of the Plan, an Optionee who is a
Director of any Participating Company shall not be deemed to have incurred
a termination of his directorship so long as such Optionee is a Director of
any Participating Company.
(d) Death or Total Disability of Optionee while a Director. In the
event that the directorship of an Optionee with a Participating Company is
terminated by reason of death or Total Disability, any vested and
exercisable Options held by such Optionee shall expire and become
unexercisable as of the earlier of (i) the applicable Option Termination
Date or (ii) the first anniversary of the date of termination of
directorship of such Optionee by reason of the Optionee's death or Total
Disability.
Any such vested and exercisable Options may be exercised prior to
their expiration only by the person or persons to whom the Optionee's
Option rights pass by will or the laws of descent and distribution. Any
Options held by such a deceased or disabled Optionee that are not vested
and exercisable as of the date of the Director's termination of
directorship due to death or Total Disability shall expire and become
unexercisable as of the directorship termination date.
(e) Termination of Affiliation of Participating
Company. Notwithstanding the foregoing provisions of this Section 6.03, in
the case of an Optionee who is a Director of a Participating Company other
than the Company, upon an Affiliation Termination (as defined herein) of
such Participating Company, such Optionee shall be deemed (for all purposes
of the Plan) to have incurred a termination of his directorship for reasons
other than death or Total Disability, with such termination to be deemed
effective as of the effective date of said Affiliation Termination. As used
herein, the term "Affiliation Termination" shall mean, with respect to a
Participating Company, the termination of such Participating Company's
status as a Participating Company.
6.04 Exercise of Options. Options may be exercised, in whole or in part,
by giving written notice of exercise to the Company, which notice shall specify
the number of Shares to be purchased and shall be accompanied by payment in full
of the purchase price in accordance with Section 6.05. An Option shall be deemed
exercised when such written notice of exercise has been received by the Company.
No Shares shall be issued until full payment has been made and the Optionee has
satisfied such other conditions as may be required by the Plan, as may be
required by applicable laws, rules or regulations, or as may be adopted or
imposed by the Board. Until the issuance of stock certificates, no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 6.08(a).
6.05 Payment of Option Exercise Price.
(a) Except as otherwise provided in Section 6.05(b), the entire option
exercise price shall be paid at the time the Option is exercised by
cashier's check or such other means as deemed acceptable by the Company.
(b) An Optionee may elect to pay for all or some of the Optionee's
Shares with Shares to which the Optionee has a right at the time of the
exercise by the Optionee, including Shares to which the Optionee has
obtained a right by previous exercise, subject to all restrictions and
limitations of applicable laws, rules and regulations and subject to the
satisfaction of any conditions the Board may impose, including, but not
limited to, the making of such representations and warranties and the
providing of such other assurances that the Board may require with respect
to the Optionee's title to the Shares used for payment of the exercise
price. Such payment shall be made by delivery of certificates representing
Shares, duly endorsed or with duly signed stock power attached, such Shares
to be valued at the last reported sale price of the Shares on a national
securities exchange or national market system on the date immediately
preceding the day notice of exercise is received by the Company or, if such
Shares are not then listed or quoted on such an exchange or market, on such
basis as the Board shall determine.
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6.06 Options Not Transferable. Options granted under the Plan may not be
sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily by
operation of law, other than by will or the laws of descent and distribution,
and may be exercised during the lifetime of an Optionee only by such Optionee.
6.07 Restrictions on Issuance of Shares.
(a) No Shares shall be issued or delivered upon exercise of an Option
unless and until there shall have been compliance with all applicable
requirements of the Securities Act, all applicable listing or similar
requirements of any national securities exchange or national market system
on which Shares are then listed or quoted, and any other requirement of law
or of any regulatory body having jurisdiction over such issuance and
delivery. The inability of the Company to obtain any required permits,
authorizations or approvals necessary for the lawful issuance and sale of
any Shares hereunder on terms deemed reasonable by the Board shall relieve
the Company, the Board and any Committee of any liability in respect of the
non-issuance or sale of such Shares as to which such requisite permits,
authorizations or approvals shall not have been obtained.
(b) As a condition to the granting or exercise of any Option, the
Board may require the person receiving or exercising such Option to make
any representation and/or warranty to the Company as may be required under
any applicable law or regulation, including, but not limited to, a
representation that the Option and/or Shares are being acquired only for
investment and without any present intention to sell or distribute such
Option and/or Shares, if such a representation is required under the
Securities Act or any other applicable law, rule or regulation.
(c) The grant of Options prior to approval of the Plan by the
affirmative vote or written consent of a majority of the holders of
outstanding Shares represented and voting at a meeting or by written
consent is conditioned on such approval being obtained within twelve (12)
months of the adoption of the Plan. In the event such stockholder approval
is not obtained within such time period, any outstanding Options shall be
void.
6.08 Option Adjustments.
(a) If the outstanding Shares are increased, decreased, changed into
or exchanged for a different number or kind of shares of the Company
through reorganization, recapitalization, reclassification, stock dividend,
stock split or reverse stock split, upon authorization of the Board, a
proportionate adjustment shall be made in the number or kind of shares and
the per-share option price thereof, which may be issued in the aggregate
and to individual Optionees upon exercise of Options; provided, however,
that no such adjustment need be made if, upon the advice of counsel, the
Board determines that such adjustment may result in the receipt of
federally taxable income to holders of outstanding Options or the holders
of Common Stock or other classes of the Company's securities.
(b) In the event of any Terminating Transaction, all outstanding
Options shall become exercisable prior to the consummation of such
Terminating Transaction and the Board shall take all necessary actions to
ensure that such Options remain exercisable for a period of at least twenty
(20) days prior to the consummation. Upon consummation of the Terminating
Transaction, all outstanding Options shall terminate and cease to be
exercisable. There shall be excluded from the operation of the provisions
of this Section 6.08(b) any Terminating Transaction in which: (i) the
holders of outstanding Shares prior to the Terminating Transaction retain
or acquire securities constituting a majority of the outstanding voting
common stock of the acquiring or surviving corporation or other entity; and
(ii) no single person owns more than half of the outstanding voting common
stock of the acquiring or surviving corporation or other entity. For
purposes of this Section 6.08(b), voting common stock of the acquiring or
surviving corporation or other entity, upon exercise of warrants or
options, shall be considered outstanding, and all securities that vote in
the election of directors (other than solely as the result of a default in
the making of any dividend or other payment) shall be deemed to constitute
that number of shares of voting common stock that is equivalent to the
number of such votes that may be cast by the holders of such securities.
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<PAGE> 29
Notwithstanding the foregoing, in the event that any person or group
of persons commences a tender offer for outstanding Shares within the scope
of Regulation 14D under the Exchange Act, all outstanding Options shall
become immediately exercisable. Any Shares received upon this accelerated
exercise that are not purchased pursuant to the offer (whether by failure
of the offer or otherwise) shall be subject to repurchase at the exercise
price by the Company upon termination of the Optionee's service as a
Director, in accordance with the vesting schedule that corresponds to the
schedule of exercisability for the Option under which the Shares were
acquired.
(c) To the maximum extent possible, any adjustments authorized under
this Section 6.08 with respect to any outstanding Options shall be made by
means of appropriate adjustments to the number of Shares (or other
securities) and the option exercise price therefor under the unexercised
portions of such outstanding Options, but without changing the aggregate
exercise price applicable to said unexercised portions. In all cases, the
nature and extent of adjustments under this Section 6.08 shall be
determined by the Board in its sole discretion, and any such determination
as to what adjustments shall be made, and the extent thereof, shall be
final and binding. No fractional shares of stock shall be issued under the
Plan pursuant to any such adjustment.
6.09 Taxes. The Board shall make such provisions and take such steps as it
deems necessary or appropriate for the withholding of any federal, state, local
and other tax required by law to be withheld with respect to the grant or
exercise of an Option, or with respect to the disposition of Shares acquired
pursuant to the exercise of an Option pursuant to the Plan, including, but not
limited to, the deduction of the amount of any such withholding tax from any
compensation or other amounts payable to an Optionee by any member of the
Participating Companies, or requiring an Optionee (or the Optionee's beneficiary
or legal representative), as a condition of granting or exercising an Option, to
pay to any member of the Participating Companies any amount required to be
withheld, or to execute such other documents as the Board deems necessary or
desirable in connection with the satisfaction of any applicable withholding
obligation. An Optionee may, in lieu of remitting to the Company amounts
sufficient to satisfy federal, state, local or other withholding tax
requirements, direct the Company to withhold Shares or deliver Shares in each
case with a value equal to such withholding tax requirements.
6.10 Legends on Options and Stock Certificates. Each Option Agreement and
each certificate representing Shares acquired upon exercise of an Option shall
be endorsed with all legends, if any, required by applicable federal and state
securities laws to be placed on the Option Agreement and/or the certificate. The
determination of which legends, if any, shall be placed upon Option Agreements
and/or said Shares shall be made by the Board in its sole discretion, and such
decision shall be final and binding.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board may amend, alter and/or terminate the Plan at any time; provided,
however, that no change shall be effective unless approved by the stockholders
of the Company if such change would cause the Plan to fail to comply with Rule
16b-3 of the Exchange Act or any successor rule under such Act as in effect on
the date of such amendment; provided, further, that unless required by
applicable law, rule or regulation, no amendment of the Plan shall affect in a
material and adverse manner Options granted prior to the date of any such
amendment without the consent of any Optionee holding any such affected Options;
and provided, further, that the provisions of Sections 6.01, 6.02 and 6.03 shall
not be amended more than once every six (6) months, other than to comport with
changes in the I.R.C., the Employee Retirement Income Security Act or the rules
thereunder.
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ARTICLE VIII
GENERAL PROVISIONS
8.01 Availability of the Plan. A copy of the Plan shall be delivered to
the Secretary of the Company and shall be shown by the Secretary to any Eligible
Director making reasonable inquiry concerning the Plan.
8.02 Notice. Any notice or other communication required or permitted to be
given pursuant to the Plan or under any Option Agreement must be in writing and
may be given by registered or certified mail and, if given by registered or
certified mail, shall be determined to have been given and received when a
registered or certified letter containing such notice, properly addressed with
postage prepaid, is deposited in the United States mails and, if given otherwise
than by registered or certified mail, shall be deemed to have been given when
delivered to and received by the party to whom addressed. Notice shall be given
to Eligible Directors at their most recent addresses shown in the Company's
records. Notice to the Company shall be addressed to the Company at the address
of the Company's principal executive offices, to the attention of the Secretary
of the Company.
8.03 Titles and Headings. Titles and headings of sections of the Plan are
for convenience of reference only and shall not affect the construction of any
provision of the Plan.
8.04 Governing Law. The Plan shall be governed by, interpreted under and
construed and enforced in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of Delaware, applicable
to agreements made and to be performed wholly within the State of Delaware.
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<PAGE> 31
APPENDIX B
ORBITAL SCIENCES CORPORATION
1990 STOCK OPTION PLAN
(AMENDMENT AND RESTATEMENT OF 1987 STOCK OPTION PLAN)
ARTICLE I
PURPOSE OF PLAN
The purpose of this 1990 Stock Option Plan is to promote the growth and
profitability of Orbital Sciences Corporation by providing, through the
ownership of Shares, incentives to attract and retain highly talented persons to
provide managerial and administrative services to the Company and other
Participating Companies and to motivate such persons to use their best effort on
behalf of the Company and other Participating Companies.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall have the meanings
set forth in this Article II:
2.01 Accrued Installment. The term "Accrued Installment" shall mean any
vested installment of an Option.
2.02 Board. The term "Board" shall mean the Board of Directors of the
Company.
2.03 Committee. The term "Committee" shall mean a committee appointed by
the Board pursuant to Section 3.04 and constituting not less than three (3)
members of the Board.
2.04 Company. The term "Company" shall mean Orbital Sciences Corporation,
a Delaware corporation, or any successor thereof.
2.05 Director. The term "Director" shall mean a member of the Board, or a
member of the board of directors of any Participating Company.
2.06 Disinterested Person. The term "Disinterested Person" shall mean any
person defined as a disinterested person under Rule 16b-3 of the Securities and
Exchange Commission as promulgated under the Exchange Act.
2.07 Effective Date. The term "Effective Date" shall mean November 9,
1987.
2.08 Eligible Person. The term "Eligible Person" shall mean any employee
of any Participating Company, but shall not include any Director of any
Participating Company who is not also an employee or officer of a Participating
Company.
2.09 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
2.10 Fair Market Value. The term "Fair Market Value," when used with
respect to the determination of the option price of Options, shall mean the
closing sale price of Shares on the national securities exchange on which Shares
are then principally traded or, if that measure of price is not available, on a
composite index of such exchanges or, if that measure of price is not available,
in a national market system for securities on the date of the grant of the
Option. In the event that there are no sales of Shares on any such exchange or
market on such date of the grant of the Option, the fair market value of Shares
on the date of the grant shall be deemed to be the closing sales price on the
next preceding day on which Shares were sold on any such exchange or market. In
the event that such Shares are not listed on any such market or exchange on such
date
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of the grant of the Option, a reasonable valuation of the fair market value of
the Shares on the date of the grant shall be made by the Board.
2.11 I.R.C. The term "I.R.C." shall mean the Internal Revenue Code of
1986, as it may be amended from time to time.
2.12 Incentive Stock Option. The term "Incentive Stock Option" shall mean
any Option intended to satisfy the requirements under I.R.C. Section 422(b) as
an incentive stock option.
2.13 Nonstatutory Stock Option. The term "Nonstatutory Stock Option" shall
mean any Option granted under the Plan that does not qualify as an Incentive
Stock Option.
2.14 Option. The term "Option" shall mean an option to acquire Shares
granted under the Plan.
2.15 Optionee. The term "Optionee" shall mean an Eligible Person who has
been granted Options.
2.16 Parent Corporation. The term "Parent Corporation" shall mean a
corporation as defined in I.R.C. Section 425(e).
2.17 Participating Company. The term "Participating Company" shall mean
the Company and any Parent Corporation or Subsidiary Corporation.
2.18 Plan. The term "Plan" shall refer to the Stock Option Plan of the
Company set forth herein that provides for the granting of Incentive Stock
Options and Nonstatutory Stock Options.
2.19 Restricted Shareholder. The term "Restricted Shareholder" shall mean
an Optionee granted an Incentive Stock Option who, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, with
stock ownership determined in accordance with the attribution rules of I.R.C.
Section 425(d).
2.20 Shares. The term "Shares" shall mean shares of the Company's
authorized Common Stock, $.01 par value, and may be unissued shares or treasury
shares or shares purchased for purposes of the Plan.
2.21 Subsidiary Corporation. The term "Subsidiary Corporation" shall mean
a corporation as defined in I.R.C. Section 425(f).
2.22 Terminating Transaction. The term "Terminating Transaction" shall
mean any of the following events: (a) the dissolution or liquidation of the
Company; (b) a reorganization, merger or consolidation of the Company with one
or more other corporations as a result of which the Company goes out of
existence or becomes a subsidiary of another corporation (which shall be deemed
to have occurred if another corporation shall own, directly or indirectly,
eighty percent (80%) or more of the aggregate voting power of all outstanding
equity securities of the Company); (c) a sale of substantially all of the
Company's assets; or (d) a sale to one person (or two or more persons acting in
concert) of equity securities of the Company representing eighty percent (80%)
or more of the aggregate voting power of all outstanding equity securities of
the Company. As used herein or elsewhere in this Plan, the word "person" shall
mean an individual, corporation, partnership, association or other person or
entity, or any group of two or more of the foregoing that have agreed to act
together.
2.23 Termination Date. The term "Termination Date" shall mean November 9,
1997.
2.24 Total Disability. The term "Total Disability" shall mean a total and
permanent disability as that term is defined in I.R.C. Section 22(e)(3).
ARTICLE III
ADMINISTRATION OF PLAN
3.01 Administration by Board. The Plan shall be administered by the Board.
The Board shall have full and absolute power and authority in its sole
discretion to (a) determine which Eligible Persons shall receive Options; (b)
determine the time when Options shall be granted; (c) determine the terms and
conditions, not
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inconsistent with the provisions of the Plan, of any Option granted hereunder;
(d) determine the number of Shares which may be issued upon exercise of the
Options; and (e) interpret the provisions of this Plan and of any Option granted
under this Plan.
3.02 Rules and Regulations. The Board may adopt such rules and regulations
as the Board may deem necessary or appropriate to carry out the purposes of the
Plan and shall have authority to do everything necessary or appropriate to
administer the Plan.
3.03 Binding Authority. All decisions, determinations, interpretations or
other actions by the Board shall be final, conclusive and binding on all
Eligible Persons, Optionees, Participating Companies and any
successors-in-interest to such parties.
3.04 Administration by Committee.
(a) The Board, in its sole discretion, may, from time to time, appoint
a Committee to administer the Plan and exercise all of the powers,
authority and discretion of the Board under the Plan, other than the power
and authority to amend and terminate the Plan under Section 7.01.
(b) In establishing the Committee, each member of the Committee must
be a Disinterested Person, and the Board may, but is not required to, take
such other actions as are deemed necessary or advisable to conform the Plan
to the requirements of Rule 16b-3 as promulgated under the Exchange Act.
(c) The Committee, in its sole discretion, may, from time to time,
delegate to the Chairman, the President and the Chief Executive Officer, or
any of them, while any such officer is a member of the Board, authority to
grant Options under the Plan to Eligible Persons who are not officers of
the Company within the meaning of Rule 16a1-(f) promulgated under the
Exchange Act. Such authority shall be on such terms and conditions, and
subject to such limitations, as the Committee shall specify in its
delegation of authority. Except to the extent otherwise specified by the
Committee in such delegation, the delegated authority to grant Options
shall include the full and absolute power in his or their sole discretion
to (a) determine which of such Eligible Persons shall receive Options, (b)
determine the time when such Options shall be granted, (c) determine the
terms and conditions (including the amount and manner of payment of the
exercise price), not inconsistent with the provisions of the Plan, of any
such Option granted pursuant to such delegated authority, and (d) determine
the number of Shares that may be issued upon exercise of such Options.
Except to the extent otherwise specified by the Committee in such
delegation, the authority so delegated shall be in addition to, and not in
lieu of, the authority of the Committee to grant options to Eligible
Persons, including Eligible Persons who are not officers within the meaning
of such Rule 16a-1(f).
(d) The Committee, the Chairman, the President and the Chief Executive
Officer shall report to the Board the names of Eligible Persons granted
Options by the Committee or such officer, as the case may be, the number of
Shares covered by each Option, and the terms and conditions of each such
Option.
ARTICLE IV
NUMBER OF SHARES AVAILABLE FOR GRANT
Subject to the following provisions of this Article IV, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
2,000,000. In the event that Options granted under the Plan shall, for any
reason, terminate, lapse, be forfeited or expire without being exercised, the
Shares subject to such unexercised Options shall again be available for the
granting of Options under the Plan. In the event that Shares that were
previously issued by the Company, upon exercise of an Option, are reacquired by
the Company as part of the consideration received (in accordance with Section
6.05(b) hereof) upon the subsequent exercise of an Option, such reacquired
Shares shall again be available for the granting of Options hereunder.
Notwithstanding any other provision of the Plan, no Eligible Person may be
granted in any two-year period Options to acquire more than 70,000 Shares except
that Options to acquire up to an additional 50,000 Shares may be granted in
connection with an Eligible Person's initial hiring as an employee of a
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Participating Company or in connection with such Eligible Person's employer
becoming a Participating Company.
ARTICLE V
TERM OF PLAN
The Plan shall be effective as of the Effective Date and shall terminate on
the Termination Date. No Option may be granted hereunder after the Termination
Date.
ARTICLE VI
OPTION TERMS
6.01 Form of Option Agreement. Any Option granted under the Plan shall be
evidenced by an agreement ("Option Agreement") in such form as the Board, in its
discretion, may, from time to time, approve. Any Option Agreement shall contain
such terms and conditions as the Board may deem necessary or appropriate and
which are not inconsistent with the provisions of the Plan.
6.02 Option Exercise Price. The option exercise price for Shares to be
issued under the Plan shall be determined by the Board in its sole discretion,
but in no event shall the option exercise price be less than the Fair Market
Value of the Shares in the case of an Incentive Stock Option, or less than
eighty-five percent (85%) of the Fair Market Value in the case of a Nonstatutory
Stock Option.
6.03 Vesting and Exercisability of Options. Subject to the limitations set
forth herein and/or in any applicable Option Agreement entered into hereunder,
Options granted under the Plan shall vest and be exercisable in accordance with
the rules set forth in this Section 6.03:
(a) General. Subject to the other provisions of this Section 6.03,
Options shall vest and become exercisable at such time and in such
installments as the Board shall provide in each individual Option
Agreement. Notwithstanding the foregoing, the Board may, in its sole
discretion, accelerate the time at which an Option or installment thereof
may be exercised. Unless otherwise provided in this Section 6.03 or in the
Option Agreement pursuant to which an Option is granted, an Option may be
exercised when Accrued Installments accrue as provided in such Option
Agreement and at any time thereafter until, and including, the day before
the Option Termination Date.
(b) Termination of Options. All installments of an Option shall
expire and terminate on such date as the Board shall determine ("Option
Termination Date"), which in no event shall be later than ten (10) years
from the date such Option was granted and, in the case of an Incentive
Stock Option granted to a Restricted Shareholder, the Option shall, by its
terms, not be exercisable after the expiration of five (5) years from the
date such Option was granted.
(c) Termination of Employment or Directorship other than by Death or
Total Disability. In the event that the employment of an Optionee with a
Participating Company is terminated for any reason (other than death or
Total Disability), any installments under an Option held by such Optionee
that have not accrued as of the employment termination date shall expire
and become unexercisable as of the employment termination date. In the
event that an Optionee who is a Director ceases to be a Director for any
reason (other than death or Total Disability), any installments under an
Option held by such Optionee that have not accrued as of the directorship
termination date shall expire and become unexercisable as of the
directorship termination date. All Accrued Installments as of the
employment termination date or the directorship termination date (whichever
may be applicable) shall expire and become unexercisable as of the earlier
of (i) three (3) months following the employment or directorship
termination date; or (ii) the original Option Termination Date. For
purposes of the Plan, an Optionee who is an employee or a Director of any
Participating Company shall not be deemed to have incurred a termination of
his or her employment or a termination of his or her directorship
(whichever may be
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<PAGE> 35
applicable) so long as such Optionee is an employee or Director (whichever
may be applicable) of any Participating Company.
(d) Leave of Absence. An approved leave of absence shall not
constitute a termination of employment under the Plan. An approved leave of
absence shall mean an absence approved pursuant to the policy of a
Participating Company for military leave, sick leave, or other bona fide
leave, not to exceed ninety (90) days or, if longer, as long as the
employee's right to re-employment is guaranteed by contract, statute or the
policy of a Participating Company. Notwithstanding the foregoing, in no
event shall an approved leave of absence operate to make an Option
exercisable after the original Option Termination Date.
(e) Death or Total Disability of Optionee while Employed. In the
event that the employment and/or directorship of an Optionee with a
Participating Company is terminated by reason of death or Total Disability,
any unexercised Accrued Installments of Options granted hereunder to such
Optionee shall expire and become unexercisable as of the earlier of:
(i) The applicable Option Termination Date; or
(ii) The first anniversary of the date of termination of employment
and/or directorship of such Optionee by reason of the Optionee's death
or Total Disability.
Any such Accrued Installments of a deceased Optionee may be exercised
prior to their expiration only by the person or persons to whom the
Optionee's Option rights pass by will or the laws of descent and
distribution. Any Option installments under such a deceased or disabled
Optionee's Option that have not accrued as of the date of the employee's
termination of employment and/or Director's termination of directorship due
to death or Total Disability shall expire and become unexercisable as of
the employment and/or directorship termination date.
(f) Termination of Affiliation of Participating
Company. Notwithstanding the foregoing provisions of this Section 6.03, in
the case of an Optionee who is an employee or Director of a Participating
Company other than the Company, upon an Affiliation Termination (as defined
herein) of such Participating Company, such Optionee shall be deemed (for
all purposes of the Plan) to have incurred a termination of his or her
employment or directorship (whichever may be applicable) for reasons other
than death or Total Disability, with such termination to be deemed
effective as of the effective date of said Affiliation Termination. As used
herein, the term "Affiliation Termination" shall mean, with respect to a
Participating Company, the termination of such Participating Company's
status as a Participating Company.
6.04 Exercise of Options. An Option may be exercised in accordance with
this Section 6.04 as to all or any portion of the Shares covered by an Accrued
Installment of the Option, from time to time during the applicable option
period, except that an Option shall not be exercisable with respect to fractions
of a Share. Options may be exercised, in whole or in part, by giving written
notice of exercise to the Company, which notice shall specify the number of
Shares to be purchased and shall be accompanied by payment in full of the
purchase price in accordance with Section 6.05. An Option shall be deemed
exercised when such written notice of exercise has been received by the Company.
No Shares shall be issued until full payment has been made and the Optionee has
satisfied such other conditions as may be required by the Plan; as may be
required by applicable laws, rules or regulations; or as may be adopted or
imposed by the Board. Until the issuance of stock certificates, no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other rights for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 6.08(a).
6.05 Payment of Option Exercise Price.
(a) Except as otherwise provided in Section 6.05(b), the entire option
exercise price shall be paid at the time the Option is exercised by
cashier's check or such other means as deemed acceptable by the Company.
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<PAGE> 36
(b) In the discretion of the Board, an Optionee may elect to pay for
all or some of the Optionee's Shares with Shares to which the Optionee has
a right at the time of the exercise by the Optionee, including Shares to
which the Optionee has obtained a right by previous exercise, subject to
all restrictions and limitations of applicable laws, rules and regulations
and subject to the satisfaction of any conditions the Board may impose,
including, but not limited to, the making of such representations and
warranties and the providing of such other assurances that the Board may
require with respect to the Optionee's title to the Shares used for payment
of the exercise price. Such payment shall be made by delivery of
certificates representing Shares, duly endorsed or with duly signed stock
power attached, such Shares to be valued at the last reported sale price of
the Shares on a public exchange on the day immediately preceding the day
notice of exercise is received by the Company or, if such Shares are not
then listed on such stock exchange, on such basis as the Board shall
determine.
6.06 Options Not Transferable. Options granted under this Plan may not be
sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily by
operation of law, other than by will or the laws of descent and distribution,
and may be exercised during the lifetime of an Optionee only by such Optionee.
6.07 Restrictions on Issuance of Shares.
(a) No Shares shall be issued or delivered upon exercise of an Option
unless and until there shall have been compliance with all applicable
requirements of the Securities Act of 1933, as amended, all applicable
listing requirements of any national securities exchange on which Shares
are then listed, and any other requirement of law or of any regulatory body
having jurisdiction over such issuance and delivery. The inability of the
Company to obtain any required permits, authorizations or approvals
necessary for the lawful issuance and sale of any Shares hereunder on terms
deemed reasonable by the Board shall relieve the Company, the Board and any
Committee of any liability in respect of the non-issuance or sale of such
Shares as to which such requisite permits, authorizations or approvals
shall not have been obtained.
(b) As a condition to the granting or exercise of any Option, the
Board may require the person receiving or exercising such Option to make
any representation and/or warranty to the Company as may be required under
any applicable law or regulation, including, but not limited to, a
representation that the Option and/or Shares are being acquired only for
investment and without any present intention to sell or distribute such
Option and/or Shares, if such a representation is required under the
Securities Act of 1933, as amended, or any other applicable law, rule or
regulation.
(c) The exercise of Options under the Plan is conditioned on approval
of the Plan by the vote or written consent of a majority of the holders of
outstanding Shares of the Company's Common Stock represented and voting at
a meeting within twelve (12) months of the adoption of the Plan. In the
event such stockholder approval is not obtained within such time period,
any Options granted hereunder shall be void.
6.08 Option Adjustments.
(a) If the outstanding Shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or
kind of shares of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, upon
authorization of the Board, a proportionate adjustment shall be made in the
number or kind of shares and the per share option price thereof, which may
be issued in the aggregate and to individual Optionees upon exercise of
Options granted under the Plan; provided, however, that no such adjustment
need be made if, upon the advice of counsel, the Board determines that such
adjustment may result in the receipt of federally taxable income to holders
of Options granted hereunder or the holders of Common Stock or other
classes of the Company's securities.
(b) Upon the occurrence of a Terminating Transaction, as of the
effective date of such Terminating Transaction, the Plan and any then
outstanding Options (whether or not vested) shall terminate unless (i)
provision is made in writing in connection with such transaction for the
continuance of the Plan and
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for the assumption of such Options, or for the substitution for such
Options of new options covering the securities of any successor or survivor
corporation in the Terminating Transaction or an affiliate thereof, with
such adjustments as the Board deems appropriate with respect to the number
and kind of securities and the per share exercise price under such
substituted options, in which event the Plan and such outstanding Options
shall continue or be replaced, as the case may be, in the manner and under
the terms so provided; or (ii) the Board otherwise shall provide in writing
for such adjustments as it deems appropriate in the terms and conditions of
the then outstanding Options (whether or not vested), including, without
limitation, (A) accelerating the vesting of outstanding Options; and/or (B)
providing for the cancellation of Options and their automatic conversion
into the right to receive the securities or other properties that a holder
of Shares underlying such Options would have been entitled to receive upon
the consummation of such Terminating Transaction had such Shares been
issued and outstanding (net of the appropriate option exercise prices). If,
pursuant to the foregoing provisions of this paragraph (b), the Plan and
the Options shall terminate by reason of the occurrence of a Terminating
Transaction without provision for any of the action(s) described in clause
(i) and/or (ii) hereof, then any Optionee holding outstanding Options shall
have the right, at such time immediately prior to the consummation of the
Terminating Transaction as the Board shall designate, to exercise their
Options to the full extent not theretofore exercised, including any
installments that have not yet become Accrued Installments.
(c) Except to the extent required in order to retain the qualification
of an Option as an Incentive Stock Option under I.R.C. Section 422, to the
maximum extent possible, any adjustments authorized under this Section 6.08
with respect to any outstanding Options shall be made by means of
appropriate adjustments to the number of Shares (or other securities) and
the option exercise price therefor under the unexercised portions of such
outstanding Options, but without changing the aggregate exercise price
applicable to said unexercised portions. In all cases, the nature and
extent of adjustments under this Section 6.08 shall be determined by the
Board in its sole discretion, and any such determination as to what
adjustments shall be made, and the extent thereof, shall be final and
binding. No fractional shares of stock shall be issued under the Plan
pursuant to any such adjustment.
6.09 Taxes. The Board shall make such provisions and take such steps as it
deems necessary or appropriate for the withholding of any federal, state, local
and other tax required by law to be withheld with respect to the grant or
exercise of an Option under the Plan, or with respect to the disposition of
Shares acquired pursuant to the exercise of an Option pursuant to the Plan,
including, but without limitation, the deduction of the amount of any such
withholding tax from any compensation or other amounts payable to an Optionee by
any member of the Participating Companies, or requiring an Optionee (or the
Optionee's beneficiary or legal representative), as a condition of granting or
exercising an Option, to pay to any member of the Participating Companies any
amount required to be withheld, or to execute such other documents as the Board
deems necessary or desirable in connection with the satisfaction of any
applicable withholding obligation.
6.10 Legends on Options and Stock Certificates. Each Option Agreement and
each certificate representing Shares acquired upon exercise of an Option shall
be endorsed with all legends, if any, required by applicable federal and state
securities laws to be placed on the Option Agreement and/or the certificate. The
determination of which legends, if any, shall be placed upon Stock Option
Agreements and/or said Shares shall be made by the Board in its sole discretion,
and such decision shall be final and binding.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
7.01 Board Authority. The Board may amend, alter and/or terminate the Plan
at any time; provided, however, that no change shall be effective unless
approved by the stockholders of the Company if such change would cause the
Option Plan to fail to meet the qualification requirements for Incentive Stock
Option Plans as set forth in the I.R.C. or to comply with Rule 16b-3 of the
Exchange Act or any successor rule under such Act as in effect on the date of
such amendment.
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<PAGE> 38
7.02 Limitation on Board Authority. The Board may amend the terms of any
Option previously granted, prospectively or retroactively, and may amend the
Plan in accordance with the provisions of Section 7.01; provided, however, that
unless required by applicable law, rule or regulation, no amendment of the Plan
or of any Option Agreement shall affect, in a material and adverse manner,
Options granted prior to the date of any such amendment without the consent of
any Optionee holding any such affected Options.
7.03 Substitution of Options. In the Board's discretion, the Board may,
with an Optionee's consent, substitute Nonstatutory Stock Options for
outstanding Incentive Stock Options, and any such substitution shall not
constitute a new Option grant for the purposes of the Plan, and shall not
require a revaluation of the Option exercise price for the substituted Option.
Any such substitution may be implemented by an amendment to the applicable
Option Agreement or in such other manner as the Board in its discretion may
determine.
ARTICLE VIII
GENERAL PROVISIONS
8.01 Availability of the Plan. A copy of the Plan shall be delivered to
the Secretary of the Company and shall be shown by the Secretary to any Eligible
Person making reasonable inquiry concerning the Plan.
8.02 Notice. Any notice or other communication required or permitted to be
given pursuant to the Plan or under any Option Agreement must be in writing and
may be given by registered or certified mail and, if given by registered or
certified mail, shall be determined to have been given and received when a
registered or certified letter containing such notice, properly addressed with
postage prepaid, is deposited in the United States mails and, if given otherwise
than by registered or certified mail, shall be deemed to have been given when
delivered to and received by the party to whom addressed. Notice shall be given
to Eligible Persons at their most recent addresses shown in the Company's
records. Notice to the Company shall be addressed to the Company at the address
of the Company's principal executive offices, to the attention of the Secretary
of the Company.
8.03 Titles and Headings. Titles and headings of sections of the Plan are
for convenience of reference only and shall not affect the construction of any
provision of the Plan.
8.04 Governing Law. The Plan shall be governed by, interpreted under and
construed and enforced in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of Delaware, applicable
to agreements made and to be performed wholly within the State of Delaware.
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ORBITAL SCIENCES CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- APRIL 27, 1995
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned appoints David W. Thompson and Leslie C. Seeman and
X each of them as proxies, with power of substitution and re-substitution to
Y each, to vote at the annual meeting of stockholders of Orbital Sciences
Corporation (the "Company") to be held at the Company's headquarters, 21700
Atlantic Boulevard, Dulles, Virginia 20166 on April 27, 1995 at 9:00 A.M.
and at any adjournments thereof, all shares of stock of the Company that
the undersigned would be entitled to vote if personally present. A majority
of said proxies or their substitutes or re-substitutes or any one if only
one is present and acting, shall have all powers of all said proxies. The
undersigned instructs said proxies, or their substitutes or re-substitutes,
to vote in such manner as they may determine on any matters that may
properly come before the meeting as indicated in the Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged, and
to vote as specified by the undersigned on the reverse side.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE).
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 40
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL ITEMS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS MADE, FOR THE ELECTION OF THE NAMED NOMINEES AND FOR
PROPOSALS 2, 3 AND 4.
1. Election of Directors
NOMINEES: Fred C. Alcorn, Lennard A. Fisk, Jack L. Kerrebrock, David W.
Thompson and James R. Thompson
/ / FOR / / WITHHELD MARK HERE
ALL FROM ALL IF YOU PLAN
NOMINEES NOMINEES TO ATTEND
THE MEETING / /
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE BELOW / /
/ /
-------------------------------------------------
FOR, EXCEPT VOTE WITHHELD FROM THE ABOVE NOMINEE(S).
<TABLE>
<S> <C> <C>
2. Approving the increase in the number of shares issuable FOR AGAINST ABSTAIN
under the 1990 Stock Option Plan from 2,000,000 to / / / / / /
2,975,000 shares.
3. Approving amendments to the 1990 Stock Option Plan for Non- FOR AGAINST ABSTAIN
Employee Directors to increase the option exercise price to / / / / / /
100% of the fair market value; to increase the number of
shares of common stock automatically granted annually to
3,000 shares; and to increase the number of shares of common
stock authorized for issuance to 170,000 shares.
4. Ratifying the selection of KPMG Peat Marwick LLP as FOR AGAINST ABSTAIN
auditors. / / / / / /
</TABLE>
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS CARD AND RETURN THIS CARD IN
THE ENCLOSED ENVELOPE. WHEN SIGNING AS EXECUTOR, ATTORNEY, TRUSTEE, GUARDIAN,
OR CUSTODIAN, OR FOR A CORPORATION, PLEASE GIVE FULL TITLE AS SUCH.
SIGNATURE:__________________________________ DATE: ____________
SIGNATURE:__________________________________ DATE: ____________
