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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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ORBITAL SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 06-1209561
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)
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21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID W. THOMPSON
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(703) 406-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
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DANIEL S. EVANS, ESQ. CRAIG B. BROD, ESQ.
ROPES & GRAY CLEARY, GOTTLIEB, STEEN & HAMILTON
ONE INTERNATIONAL PLACE ONE LIBERTY PLAZA
BOSTON, MA 02110 NEW YORK, N.Y. 10006
(617) 951-7000 (212) 225-2000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. /X/
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.. 3,887,304 $18 3/8 $71,429,211 $24,643
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(1) Maximum number of shares issuable upon conversion of $55,880,000 principal
amount of Registrant's 6 3/4% Convertible Subordinated Debentures due 2003
outstanding on the close of business on June 30, 1996.
(2) Estimated solely for calculating the amount of the registration fee,
pursuant to Rule 457(c) under the Securities Act of 1933, on the basis of
the average of the high and low sales prices of the Common Stock of Orbital
Sciences Corporation in trading on the National Association of Securities
Dealers, Inc. Automated Quotations National Market System on July 19, 1996.
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[ORBITAL SCIENCES CORPORATION LOGO]
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3,887,304 SHARES
COMMON STOCK
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This Prospectus relates to the sale from time to time by Deutsche Morgan
Grenfell/C.J. Lawrence (the "Purchaser") of a maximum of 3,887,304 shares of
common stock, par value $.01 per share (the "Common Stock"), of Orbital Sciences
Corporation, a Delaware corporation (the "Company"), that may be acquired by the
Purchaser either (i) on conversion of the Company's outstanding 6 3/4%
Convertible Subordinated Debentures due 2003 (the "Debentures") or (ii) under
the standby arrangements described herein.
The Company has called all the Debentures for redemption on August 14, 1996 (the
"Redemption Date"), at a redemption price of $1,047.25 plus accrued interest of
$30.56 from March 1, 1996 to the Redemption Date for a total of $1,077.81 for
each $1,000 principal amount of Debentures (the "Redemption Price"). Prior to
5:00 p.m. New York City time on the Redemption Date, the Debentures may be
converted into shares of Common Stock at a price of $14.375 per share, or
approximately 69.565 shares for each $1,000 principal amount of Debentures. Cash
will be paid in lieu of any fractional share on conversion of the Debentures.
Holders who elect to convert their Debentures into Common Stock will not be
entitled to receive interest accrued since March 1, 1996. Any Debentures not
surrendered for conversion on or prior to 5:00 p.m. New York City time on the
Redemption Date will be redeemed.
In the event that less than all the Debentures are surrendered for conversion
prior to or on the Redemption Date, the Company has made arrangements with the
Purchaser to purchase from the Company, at a purchase price of $15.06 per share,
such number of shares of Common Stock as would have been issuable upon
conversion of the Debentures that have not been surrendered for conversion prior
to or on the Redemption Date. The Purchaser may also purchase Debentures in the
open market or otherwise prior to the expiration of the right of conversion on
the Redemption Date, and any Debentures so purchased will be converted into
Common Stock. See "Standby Arrangements" for a description of the Purchaser's
compensation and indemnification arrangements with the Company.
The convertibility of the Debentures will expire at 5:00 p.m. New York City time
on the Redemption Date.
SEE RISK FACTORS ON PAGES 4 TO 7 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
FACTORS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
The Company's Common Stock is quoted on the NASDAQ National Market System under
the symbol "ORBI." On July 23, 1996, the last reported sale price of the Common
Stock on the NASDAQ National Market System was $18.375 per share. Based on the
last reported sale price of the Common Stock, a holder of Debentures who
converted such Debenture on July 23, 1996 would have received Common Stock with
a market value of $1,278.26 for each $1,000 principal amount of Debentures
converted (including cash, if any, received in lieu of any fractional share). If
such principal amount of Debentures were surrendered for redemption on the
Redemption Date, such Holder would receive $1,077.81 in cash. WHILE NO ASSURANCE
CAN BE GIVEN AS TO ANY FUTURE PRICE FOR THE COMMON STOCK, AS LONG AS THE MARKET
PRICE OF THE COMMON STOCK (AFTER GIVING EFFECT TO COMMISSIONS AND ANY OTHER
COSTS OF SALE) REMAINS AT OR ABOVE $15.49 PER SHARE, UPON CONVERSION OF THEIR
DEBENTURES, HOLDERS WILL RECEIVE COMMON STOCK AND CASH FOR FRACTIONAL SHARES
HAVING A CURRENT MARKET VALUE EQUAL TO OR GREATER THAN THE REDEMPTION PRICE. It
should be noted, however, that the price of the Common Stock received upon
conversion will fluctuate in the market, and that Holders may incur various
expenses of sale if such Common Stock is sold.
On or before 5:00 p.m. New York City time on the Redemption Date, the Purchaser
may offer to the public Common Stock, including shares acquired through the
purchase and conversion of Debentures, at prices set from time to time by the
Purchaser. It is intended that each such price when set will not exceed the
highest price offered by any dealer not participating in this distribution, as
reported in the NASDAQ National Market System, plus the amount of any
concessions to dealers, and it is intended that an offering price set on any
calendar day will not be increased more than once during such day. The Purchaser
may also make sales to dealers at prices which represent concessions from the
prices at which the Common Stock is being offered to the public. After the
Redemption Date, the Purchaser may offer Common Stock at a price or prices to be
determined, but it is presently intended that any such price will be determined
in conformity with this paragraph. The Purchaser may thus realize profits or
losses independent of the compensation referred to under "Standby Arrangements."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Any Common Stock will be offered by the Purchaser when, as and if accepted by
the Purchaser and subject to its right to reject orders in whole or in part.
DEUTSCHE MORGAN GRENFELL
The date of this Prospectus is July 25, 1996.
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IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OR
THE DEBENTURES OF THE COMPANY, OR BOTH, AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
Seven World Trade Center, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Commission at prescribed rates through its
Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding the Company; the address of such site
is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement. For further information with respect to the Company and
the shares of Common Stock offered hereby, reference is made to the Registration
Statement. Statements contained in this Prospectus concerning the provisions of
certain documents are not necessarily complete and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission, each statement being qualified
in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been previously filed by the Company
with the Commission pursuant to the Exchange Act (File No. 0-18287), are
incorporated by reference in this Prospectus and shall be deemed to be a part
hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the Quarter Ended
March 31, 1996;
(3) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed under Section 12 of the
Exchange Act, including any reports filed under the Exchange Act for the
purpose of updating such description; and
(4) The Company's Report on Form 8-K filed on July 18, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents (such documents, and the documents enumerated above, being
hereinafter referred to as the "Incorporated Documents"). Any statement
contained in an Incorporated Document shall be deemed to be modified or
superseded for purposes of this Prospectus to
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the extent that a statement contained herein or in any subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to Orbital Sciences Corporation, 21700 Atlantic Boulevard,
Dulles, Virginia 20166, telephone number: (703) 406-5000, Attention: General
Counsel. Such reports, proxy statements and other information can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, DC 20549. Copies of such materials can also
be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal offices at 450 Fifth Street, N.W., Washington, DC
20549. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding the Company; the address
of such site is http://www.sec.gov.
OSC(R), TOS(R), Pegasus(R) and Taurus(R) are registered trademarks of the
Company; Orbital(TM), Transfer Orbit Stage(TM), PegaStar(TM), SeaStar(TM),
MicroStar(TM), MicroLab(TM), microCOM-M(TM) and PicoStar(TM) are trademarks of
the Company; Pegasus(R) is a registered service mark of the Company; and
Orbital(sm), ORBCOMM(sm) and ORBIMAGE(sm) are service marks of the Company.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements included or incorporated by reference in this Prospectus
constitute "forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, general economic and business conditions, launch
success, product performance, market acceptance of new products and technologies
and the other factors set forth herein under the heading "Risk Factors."
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THE COMPANY
Orbital Sciences Corporation (together with its subsidiaries, "Orbital" or
the "Company") is a space technology and satellite services company that
designs, manufactures, operates and markets a broad range of space-related
products and services. Orbital's products and services are grouped into three
business sectors: Space Infrastructure, Satellite-Access Products, and
Satellite-Provided Services. Orbital's Space Infrastructure sector includes
Launch Systems, Space and Electronics Systems and Ground Systems and Software.
Launch Systems include space and suborbital launch vehicles and other advanced
vehicles; Space and Electronics Systems include satellites, space sensors and
instruments, space payloads and experiments, as well as advanced electronics and
data management systems; and Ground Systems and Software products include
commercial satellite remote sensing ground station and related information
processing software, automated aeronautical information and air traffic
management systems and defense system software and network systems consulting
services. Orbital's Satellite-Access Products sector consists of satellite-based
navigation and communications products. Orbital's Satellite-Provided Services
sector includes satellite-based two-way mobile data communications services and
remote sensing services. See "Business."
The Company's principal executive offices are located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166, and the Company's telephone number is (703)
406-5000.
RISK FACTORS
In addition to the other information included in this Prospectus or
incorporated by reference herein, prospective investors should carefully
consider the following risk factors before purchasing any shares of the
Company's Common Stock.
TECHNOLOGICALLY ADVANCED PRODUCTS AND SERVICES
Most of the products developed and manufactured by Orbital are
technologically advanced and novel systems that must function under demanding
operating conditions. Even though Orbital believes that it employs sophisticated
design, manufacturing and testing practices, there can be no assurance that
Orbital's products will be successfully launched or operated or that they will
be developed or will perform as intended. Certain of Orbital's contracts require
the Company to forfeit part of its expected profit, to receive reduced payments,
to provide a replacement launch or other product or service, or to reduce the
price of follow-on missions if its products fail to perform adequately.
Performance penalties also may be imposed should Orbital fail to meet delivery
schedules or other measures of contract performance. Orbital, like most
companies and governments that have launch and satellite programs, has
experienced occasional product failures and other problems, including with
respect to certain of its launch vehicles and satellites. The Company will
likely experience some product failures and other problems in connection with
its launch vehicles and other products in the future. In addition to any costs
resulting from product warranties, contract performance or required remedial
action, product failures may result in increased costs or loss of revenues due
to postponement of subsequently scheduled launches or spacecraft operations or
other product deliveries. While the Company usually insures certain potential
costs related to product warranties and contract performance, the Company
generally does not insure potential costs resulting from any required remedial
actions or costs or loss of revenues due to postponement of subsequently
scheduled operations or product deliveries.
Orbital's products and services are and will continue to be subject to
significant technological change and innovation. Orbital's success will
generally depend on its ability to penetrate and retain markets for its existing
products and to continue to conceive, design, develop, manufacture and market
new products and services on a cost-effective and timely basis. Orbital
anticipates that it will incur significant expenses in the design, development
and initial manufacture and marketing of new products and services. There can be
no assurance that Orbital will be able to achieve the
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technological advances necessary to remain competitive and be profitable, that
new products and services will be developed and manufactured on schedule and on
a cost-effective basis, that licenses and regulatory approvals required for new
products and services will be secured, that anticipated markets will exist or
develop for new products or services, or that Orbital will have the sufficient
financial or other resources necessary to effect any such technological advances
or to develop or manufacture such products or services, or that its existing
products will not become technologically obsolete.
DEPENDENCE ON UNITED STATES GOVERNMENT
As of December 31, 1995, approximately 60% of Orbital's backlog is with the
U.S. Government or under subcontracts with prime contractors to the U.S.
Government. Most of Orbital's government contracts are funded incrementally on a
year-to-year basis. Changes in government policies, priorities or funding levels
through agency or program budget reductions by the U.S. Congress or the
imposition of budgetary constraints could materially adversely affect Orbital's
financial condition or results of operations. All Orbital's U.S. Government
contracts and, in general, its subcontracts with the U.S. Government's prime
contractors, provide that such contracts may be terminated at will by the U.S.
Government or the prime contractor, respectively. There can be no assurance that
these contracts will not be terminated or suspended in the future, or that
contract suspensions or terminations will not result in unreimbursable expenses
or charges or other adverse effects on the Company.
CAPITAL REQUIREMENTS
Orbital's future business requirements and growth plans will require
significant additional capital. Orbital believes that working capital, cash from
operations, operating leases, customer financing and available bank borrowings
will be adequate to meet these capital needs through the balance of 1996.
Orbital expects that it will need to incur indebtedness or raise additional
equity capital to fund its anticipated growth in 1997 and beyond. See "Recent
Developments." While Orbital believes that, if necessary, it has flexibility to
reduce or delay its anticipated capital requirements and its anticipated
investments in future projects, such reductions or delays could impede Orbital's
growth and adversely affect Orbital's financial condition or results of
operations. In addition, Orbital routinely evaluates potential strategic
acquisitions and has historically financed its acquisitions through the issuance
of shares of its Common Stock. The Company currently has no agreements relating
to any potential acquisitions.
Orbital has invested and will continue to invest substantial resources in
capital equipment and other assets supporting its various products and programs.
Certain of Orbital's products and services are being developed for markets that
are small or that do not currently exist. In the event of significantly reduced
or eliminated product sales with respect to a particular program, or the failure
of a market to develop for such products and services, Orbital could be required
to expense some or all of its investments in assets dedicated to that program.
LONG-TERM CONTRACTS
Certain of the Company's revenues have been generated under fixed-price
incentive fee, firm fixed-price and cost-plus-fee long-term contracts.
Fixed-price incentive fee contracts are long-term contracts with specified cost,
profit and price targets. To the extent a contractor incurs less costs than
targeted, the contractor's profit will be increased based on contractual
incentives. In this manner, the contractor is encouraged to keep costs at a
minimum and, as a reward, realizes additional profit. The customer, by virtue of
the contractor's reduced costs, offset in part by increased profit, realizes a
reduced price for the product or service. Firm-fixed-price contracts are
long-term contracts with fixed stated prices. The contractor bears the burden of
cost increases and realizes the reward of cost savings. Cost-plus-fee contracts,
which include cost-reimbursable contracts, are long-term contracts that
reimburse a contractor for all costs incurred in the
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performance of the contract with various contractual fee arrangements, including
fixed fees, award fees based on specific contractor performance, and incentive
fees based on contractor cost performance. Orbital recognizes revenues on
long-term contracts using the percentage of completion method of accounting,
whereby revenue, and therefore profit or loss, is recognized based on actual
costs incurred in relation to total estimated costs to complete the contract or
based on specific delivery terms and conditions. In the case of incentive fee
and award fee contracts, such fees are included in revenue at the time the
amount of such fee can reasonably be determined or based on the Company's
ongoing estimates of the amount of the fee to be received. Revenue recognition
and profitability, if any, from a particular contract may be adversely affected
to the extent that original cost estimates, estimated costs to complete or
incentive or award fee estimates are revised, delivery schedules are delayed, or
progress under a contract is otherwise impeded.
AUDIT OF U.S. GOVERNMENT CONTRACTS
During 1995, 1994 and 1993, approximately 40%, 45% and 45%, respectively,
of the Company's total annual revenues were derived from contracts with the U.S.
Government and its agencies or from subcontracts with the U.S. Government's
prime contractors. The accuracy and appropriateness of Orbital's direct and
indirect costs and expenses under its U.S. Government contracts are subject to
extensive regulation and audit by the Defense Contract Audit Agency or by other
appropriate agencies of the U.S. Government. These agencies have the right to
challenge Orbital's cost estimates or allocations with respect to any such
contract. Additionally, a substantial portion of payments to the Company under
U.S. Government contracts are provisional payments that are subject to potential
adjustment upon audit by such agencies. Orbital believes that any adjustments
likely to result from pending inquiries or audits of its contracts will not have
a material adverse impact on Orbital's financial condition or results of
operations. Since Orbital's inception, it has not experienced any material
adjustments as a result of any such inquiries or audits.
COMPONENTS, RAW MATERIALS AND CARRIER AIRCRAFT
Orbital purchases a significant percentage of its product components,
including rocket propulsion motors, structural assemblies and electronic
equipment, from third parties. Orbital also occasionally obtains from the U.S.
Government parts and equipment that are used in the production of the Company's
products or in the provision of the Company's services. Orbital has not
experienced material difficulty in obtaining product components or necessary
parts and equipment and believes that alternative sources of supply would be
available, although increased costs could be incurred in securing alternative
sources of supply. The Company's ability to launch its Pegasus and Pegasus XL
vehicles depends on the availability of an aircraft with the capability of
carrying and launching such space launch vehicles. Orbital entered into a
10-year lease in 1992 for a Lockheed L-1011 for the air-launch of the Pegasus
and Pegasus XL vehicles. This L-1011 is also planned to be used for the launch
of the X-34 reusable launch vehicle currently under development for the National
Aeronautics and Space Administration ("NASA"). In the event that the L-1011 were
to be unavailable, the Company would experience significant delays, expenses and
loss of revenues as a result of having to acquire and modify a new carrier
aircraft.
REGULATION
The ability of Orbital to pursue its business activities is regulated by
various agencies and departments of the U.S. Government. Commercial space
launches require licenses from the U.S. Department of Transportation ("DoT") and
operation by Orbital of its leased L-1011 aircraft requires licenses from
certain agencies of the DoT, including the Federal Aviation Administration.
Construction, launch and operation of commercial communications satellites,
including the satellite-based two-way data communications network provided by
the Company's affiliated partnership, ORBCOMM Global L.P. ("ORBCOMM Global"),
require licenses from the U.S. Federal Communications Commission and frequently
require the approval of international and individual country regulatory
authorities. Some planned private remote sensing satellites require a license
from the U.S. Department of Commerce. Exports of Orbital's products, services
and technical information
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frequently require licenses from the U.S. Department of State or the U.S.
Department of Commerce. There can be no assurance that Orbital will continue to
be successful in its efforts to obtain necessary licenses or regulatory
approvals. The inability of the Company to secure any necessary licenses or
approvals could have a material adverse effect on its financial condition or
results of operations.
ORBCOMM
In 1993, Orbital's majority-owned subsidiary, Orbital Communications
Corporation ("ORBCOMM"), and Teleglobe Mobile Partners ("Teleglobe Mobile"), an
affiliate of Teleglobe Inc., formed ORBCOMM Global for the design, development,
construction, integration, testing and operation of a satellite-based, two-way
data communications network (the "ORBCOMM System"). ORBCOMM and Teleglobe Mobile
each hold a 50% interest in ORBCOMM Global and have invested or committed to
invest approximately $75,000,000 and $85,000,000, respectively. ORBCOMM Global
estimates that the cost of construction and deployment of the ORBCOMM System
will be approximately $260,000,000. Through March 31, 1996, ORBCOMM Global has
incurred approximately $124,000,000 for the design, construction, deployment
and/or procurement of satellites, launch vehicles, certain U.S. ground
infrastructure and for market development and regulatory activities. ORBCOMM
Global is in the process of seeking financing to complete construction of the
ORBCOMM System and to fund initial operations. It is expected that the financing
will be non-recourse to Orbital Sciences Corporation. See "Recent Developments"
and "Business -- Satellite-Provided Services." There can be no assurance that
such financing will be successful. In the event that such financing is not
completed or fails to raise sufficient capital to complete construction of the
ORBCOMM System, the Company may be required to increase its equity position. In
addition, if ORBCOMM Global does not otherwise receive the necessary financing,
full development and implementation of the ORBCOMM System would be delayed or
restricted, and the Company could be required to expense part or all or its
investment in the ORBCOMM System. The start-up of the ORBCOMM System will
produce significant ORBCOMM Global operating losses for several years. There can
be no assurance that the ORBCOMM System will be fully constructed and
operational. Even if the ORBCOMM System is fully constructed and operational,
there can be no assurance that an adequate market will develop for ORBCOMM
System services, that ORBCOMM Global will achieve profitable operations, or that
Orbital will recover any of its investment in the ORBCOMM System. Because the
Company has an indirect 50% participating interest in ORBCOMM Global, Orbital
expects to recognize its pro rata share of ORBCOMM Global's profits and losses.
See "Business -- Space Infrastructure -- Space and Electronics Systems."
COMPETITION
Virtually all of the Company's products and services face significant
competition from existing and potential competitors, many of whom are larger and
have substantially greater resources than the Company. The highly competitive
space industry includes both foreign and domestic private and governmental
competitors. The primary competition for the Company's space launch vehicles is
expected to come from launch vehicles currently being developed by Lockheed
Martin Corporation and from launch systems derived from surplus ballistic
missiles that are primarily being made available by the U.S. Government and
certain foreign governments. The Company's satellites, space instruments and
sensors, advanced electronics products, intelligent transportation systems,
ground systems and software, and the marine and outdoor recreation Global
Positioning System ("GPS") satellite-based navigation products of Magellan
Corporation ("Magellan"), a majority-owned subsidiary of the Orbital Sciences
Corporation, each face competition from at least several manufacturers. In
addition, the Company anticipates that the ORBCOMM System will face competition
from numerous existing and potential alternative communications products and
services provided by various companies. There can be no assurance that the
Company will be able to compete successfully in any of the markets for its
products and services.
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BUSINESS
The space products and services provided by Orbital are grouped into three
business sectors: Space Infrastructure, Satellite-Access Products and
Satellite-Provided Services.
SPACE INFRASTRUCTURE
The Space Infrastructure sector includes Launch Systems, Space and
Electronics Systems and Ground Systems and Software.
LAUNCH SYSTEMS. The Company's Launch Systems products include space and
suborbital launch vehicles and other advanced vehicles.
The Company has developed three space launch vehicles: the Pegasus(R)
launch vehicle; the Pegasus XL launch vehicle; and the Taurus(R) launch vehicle.
Orbital's Pegasus and Pegasus XL vehicles are launched from beneath a modified
large aircraft such as the Company's leased Lockheed L-1011 to deploy satellites
weighing up to 1,000 pounds into low-Earth orbit. Through June 1996, the Company
had conducted a total of eight standard Pegasus missions, all of which were
fully or partially successful. Whether a mission is fully or partially
successful depends on the particular mission requirements designated by the
customer. Prior to its first successful flight in March 1996, the modified
Pegasus XL, developed to deploy heavier satellites into orbit, had two
unsuccessful flights, one occurring in June 1994 and the other in June 1995.
Following a comprehensive review of design, assembly, test and operations
procedures, the Pegasus XL returned to flight on March 8, 1996, successfully
launching a satellite for the U.S. Air Force to its intended orbit. On July 2,
1996, the Pegasus XL successfully deployed a satellite for NASA. See "Recent
Developments."
Customers for Pegasus and Pegasus XL launch vehicles include NASA, the U.S.
Air Force, the Defense Advanced Research Projects Agency ("DARPA"), Spain's
National Institute of Aerospace Technology, the Company's affiliated
partnership, ORBCOMM Global, and the Company's wholly owned subsidiary, Orbital
Imaging Corporation ("ORBIMAGE").
The higher capacity Taurus vehicle is a ground-launched derivative of the
Pegasus vehicle that can carry payloads weighing up to 3,000 pounds to low-Earth
orbit and payloads weighing up to 800 pounds to geosynchronous orbit. In March
1994, Orbital successfully launched the first Taurus vehicle, deploying two
satellites for DARPA. The Company received several new Taurus orders in 1995,
including a commercial launch for Ball Corporation ("Ball") carrying a U.S. Navy
satellite scheduled for early 1997, a launch for the U.S. Air Force in 1997, and
options for up to eleven Taurus missions pursuant to a contract award under
NASA's Med-Lite program. The Taurus mission for Ball is also expected to launch
two satellites for ORBCOMM Global as a secondary payload.
Suborbital launch vehicles place payloads into a variety of high-altitude
trajectories but, unlike space launch vehicles, do not place payloads into orbit
around the Earth. The Company's suborbital launch products include suborbital
vehicles and their principal subsystems, payloads carried by such vehicles and
related launch support installations and systems used in their assembly and
operation. The Company offers its customers customized vehicle and payload
design, manufacturing and integration, launch and mission support and tracking
and recovery services, as well as construction and activation of launch pads and
other infrastructure elements. Customers typically use the Company's suborbital
launch vehicles to launch scientific and other payloads and for defense-related
applications such as target and interceptor experiments. Primary customers of
the Company's suborbital launch vehicles include the U.S. Army, the U.S. Navy
and the Ballistic Missile Defense Organization ("BMDO") .
SPACE AND ELECTRONICS SYSTEMS. The Company's Space and Electronics Systems
products enable Orbital to provide its customers fully integrated, low-cost
space systems, networks and related services. The Company's most significant
Space and Electronics Systems products are
8
<PAGE> 10
satellites, space payloads, sensors and instruments, defense electronics and
transportation management systems.
The Company designs and produces small and medium class satellites for
scientific, military and commercial applications. The Company's small satellite
platforms such as PegaStar(TM), MicroStar(TM) and PicoStar(TM) are designed and
manufactured to be launched by the Pegasus or Taurus launch vehicle. The
PegaStar spacecraft is a general purpose spacecraft that has successfully
performed one mission for the U.S. Air Force measuring space radiation and
carrying out related experiments. It is expected to be used for certain of the
Company's satellite-based remote sensing systems, such as the SeaStar(TM) ocean
and land surface environmental monitoring satellite system. See
"-- Satellite-Provided Services." Orbital's MicroStar spacecraft platform is
designed for use in the ORBCOMM System and also for a variety of small space
science and remote sensing projects. In April 1995, the first three MicroStar
spacecraft were deployed, two for the ORBCOMM System, and the other for ORBIMAGE
to monitor lightning and severe weather patterns for NASA. Customers for the
Company's small spacecraft include NASA, the U.S. Air Force and ORBCOMM Global.
In early 1996, DARPA selected the Company for a contract to develop and launch a
specialized MicroStar communications satellite.
Orbital's medium class satellites, such as NASA's TOPEX/Poseidon, NASA's
Upper Atmosphere Research satellite, and the National Oceanic and Atmospheric
Administration's Landsat 4 and Landsat 5 have been in space for several years,
and are used to gather various scientific data, such as ocean topography and
Earth imaging information. In August 1995, Orbital was selected to become the
spacecraft supplier to Johns Hopkins University, which is leading NASA's Far
Ultraviolet Spectroscopy Explorer ("FUSE") program to measure the early
universe's radiation. The FUSE spacecraft is currently scheduled for launch in
1998.
In addition, Orbital designs and manufactures satellite command and data
handling, attitude control and structural subsystems for a variety of commercial
and government customers, and provides a broad range of spacecraft design and
engineering services as well as specialized analytical engineering services for
NASA, the Department of Defense ("DoD"), the Department of Energy and other
customers. Orbital provided engineering support and services for the first
repair mission for the orbiting Hubble Space Telescope, and will provide similar
services on a second repair mission currently scheduled for early 1997.
The Company also develops, manufactures and markets defense electronics,
including advanced avionics and data management systems for aircraft flight
operations and ground support. These systems collect, process and store
mission-critical data for, among other things, mission planning and flight
operations, and manage on-board equipment for strategic and tactical military
aircraft, helicopters, satellites and surface vehicles. The primary customers
for data management systems are the U.S. Navy, the U.S. Air Force, and various
DoD prime contractors and foreign governments.
The Company is also developing and providing satellite-aided fleet
management intelligent transportation systems to various localities. These
systems help manage public bus and light rail systems, provide for voice and
data communications, and transmit precise location information in emergency
situations. In addition to smaller projects in Oregon and Maryland, in early
1996 Orbital was awarded a $30 million contract by the Chicago Transit Authority
to provide a GPS-based fleet management system for approximately 1,300 buses in
the Chicago area. The Company was also recently selected to provide the initial
implementation of a GPS-based fleet management system for New York City. The
initial program will serve approximately 170 city buses and will run from July
1996 to January 1998.
GROUND SYSTEMS AND SOFTWARE. As a result of Orbital's November 1995
acquisition of MacDonald, Dettwiler and Associates, Ltd., Orbital is a leading
supplier of commercial satellite remote sensing ground stations and a provider
of advanced space-qualified software and air navigation systems. The Company's
defense electronics systems have also expanded to include
9
<PAGE> 11
software-intensive systems designed for naval operations, artillery command and
control, radar deception systems and logistics support.
The Company develops, provides and upgrades commercial satellite remote
sensing ground stations and related information processing software. These
ground stations are designed to receive and process data from the eight major
civil and commercial Earth observation satellites currently in operation. In
1995, the Company completed the ground station and mission control and
management systems for the Canadian Space Agency's RADARSAT-1 remote sensing
satellite that was launched successfully in November 1995. The Company also
develops and markets software that generates and processes imagery and mapping
products from satellites and airborne sensors. Customers for the Company's
ground stations and Earth information systems include the European and Canadian
Space Agencies as well as Canadian and foreign government customers.
The Company's aviation systems products include automated aeronautical
information and air traffic management systems. For example, the Company has
developed an off-the shelf, automated aeronautical information management system
that delivers weather and route information directly to a pilot by computer.
These systems are designed to address a growing trend toward commercialization
and automation of air traffic control systems. Faster and less expensive to
operate than traditional manual systems, automated aeronautical information
systems provide pilots and other users with aeronautical and meteorological
information on a timely basis. Customers for the Company's aviation systems
products include the military and civil aviation authorities in various
countries such as Australia, Belgium, Canada, Norway and Switzerland.
SATELLITE-ACCESS PRODUCTS
Orbital's Satellite-Access Products include products provided by its
Magellan subsidiary. Magellan manufactures GPS satellite-based navigation and
other satellite communications products for commercial and consumer markets
including commercial and pleasure marine and general aviation markets, outdoor
recreational users such as hunters and hikers, and professional users such as
geologists, geographers, surveyors, natural resource managers and contractors.
Magellan designs, manufactures and markets hand-held GPS navigators that
provide users with precise positioning and location information. The need for
positioning and location information is central to a broad range of personal and
professional activities including marine navigation, outdoor recreation (e.g.,
hunting and hiking), surveying and general aviation. Magellan focuses its
research, design and engineering activities on the development of GPS navigators
that are reliable, portable, easy to use and highly affordable, targeting the
recreational market. In addition, Magellan has started production and marketing
of the microCOM-M(TM), a small, lightweight and lower-priced INMARSAT satellite
telephone for worldwide voice, fax and data communications, and development of a
hand held messaging communicator for use with the ORBCOMM System. See
"-- Satellite-Provided Services."
SATELLITE-PROVIDED SERVICES
In the Company's Satellite-Provided Services sector, ORBCOMM and ORBIMAGE
are developing satellite-based services to address the markets for global
two-way data communications and information derived from remote sensing of the
atmosphere, oceans and land surfaces.
The ORBCOMM System is designed to provide virtually continuous mobile data
communications coverage over most of the Earth's surface and to permit
subscribers to use inexpensive communicators to send and receive short messages,
high priority alerts and other information, such as the location and condition
of automobiles, trucks, shipping vessels and other remote assets. The Company
believes that the ability to send and receive messages and data without the
geographic limitations of existing data communications systems will stimulate
the growth of new markets for satellite-based data communications and will be
used to supplement terrestrial-based communica-
10
<PAGE> 12
tions systems by providing relatively low-cost coverage in areas outside the
range of such tower-based systems.
The ORBCOMM System design consists of a constellation of up to 28 small
low-Earth orbit satellites, a satellite control center operating and positioning
the satellites, the mobile communicators used by subscribers to transmit and
receive messages to and from the satellites, and the gateways that transmit and
control the flow of data and message communications and other information for
the system. A gateway generally will consist of gateway Earth stations and a
software-based gateway message switching system that processes the message
traffic and provides the interconnection to terrestrial networks. In 1995, in
addition to the successful launch of the first two ORBCOMM satellites, ORBCOMM
completed initial development and construction of the U.S. Gateway, including
four gateway Earth stations located in New York, Washington, Arizona and
Georgia, and tested prototype mobile communicators. Commercial service first
became available in February 1996. The additional ORBCOMM System satellites are
currently being designed and produced by Orbital, with launches of three planes
of eight satellites each currently planned for 1997. Additional gateways are
planned to be owned and operated by ORBCOMM Global licensees in strategic
locations around the world. There can be no assurance that the ORBCOMM System
will be fully constructed and operational. Further, even if the ORBCOMM System
becomes fully constructed and operational, there can be no assurance that an
adequate market will develop for ORBCOMM System services, that ORBCOMM Global
will achieve profitable operations, or that Orbital will recover any of its
investment in the ORBCOMM System.
The Company through its ORBIMAGE subsidiary is currently seeking to develop
and market a broad range of information services that involve identifying and
monitoring global environmental changes and weather patterns and collecting and
disseminating digital land maps and other remote sensing information. Services
to be provided by ORBIMAGE could include high-resolution optical imaging of land
surfaces for geographic information services, mapping, sensing of ocean and
atmospheric conditions and measuring of ozone and other gaseous concentrations
in the atmosphere. In April 1995, ORBIMAGE's first MicroStar satellite,
MicroLab-1, was successfully launched to monitor lightning and severe weather
patterns for NASA. The Company is currently constructing its SeaStar(TM)
satellite, which is designed to produce high-quality color images of the Earth's
land surfaces and oceans. A significant portion of the costs incurred in
developing, constructing, launching and operating SeaStar has been paid by NASA.
The remaining costs will need to be recovered through sales of SeaStar(TM)
images to other government users and commercial customers. There can be no
assurance that the Company will sell sufficient SeaStar(TM) images to recover
all of its costs.
ORBIMAGE is currently exploring potential strategic arrangements for
development of the high-resolution remote sensing business, with Orbital
providing launch services, spacecraft, ground stations and other related
products. There can be no assurance that ORBIMAGE will be able to conclude such
strategic arrangements or develop profitable commercial Earth observation,
remote sensing or environmental monitoring businesses.
Orbital's business is not seasonal to any significant extent.
For additional information on the Company's business, see the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995
incorporated by reference herein.
RECENT DEVELOPMENTS
On July 2, 1996, Orbital's Pegasus XL launch vehicle successfully carried
out its first dedicated mission for NASA, delivering a $67 million Total Ozone
Mapping Spectrometer Earth Probe satellite ("TOMS") into its intended orbit. The
TOMS instrument was designed and built by the Company's space and electronics
group and is to be used to map the development, extent and trends of ozone
depletion occurring in the atmosphere. The TOMS mission is the second Pegasus XL
space mission
11
<PAGE> 13
in 1996, following the successful launch of a U.S. Air Force satellite on March
8, 1996. There are up to three additional Pegasus XL launches for NASA planned
in 1996. On May 17, 1996, the Company's standard Pegasus launch vehicle
successfully launched a satellite for the U.S. Air Force to its intended orbit.
ORBCOMM Global is in the process of seeking financing to complete the
construction of the ORBCOMM System and to fund initial operations. It is
expected that the financing will be non-recourse to Orbital Sciences
Corporation. Proceeds from the financing (approximately $163,000,000) would be
applied to (i) the design, construction, launch, operation and marketing of the
ORBCOMM System through the fourth quarter of 1997, (ii) related development,
operating and management expenses (including cost contingencies) and (iii)
interest expense for two years. There can be no assurance that such financing
will be successful or consummated on the terms or for the amount described. See
"Risk Factors -- ORBCOMM." ORBCOMM Global currently estimates that it has
capital, including existing equity commitments of Teleglobe Mobile and the
Company, sufficient to fund operations at least through the fourth quarter of
1996.
In June 1996, Magellan adopted its 1996 Stock Option Plan (the "Magellan
Plan"). Pursuant to the Magellan Plan, options to purchase up to seven million
shares of Magellan common stock (representing approximately 12.3% of the full
diluted common stock of Magellan) may be granted to Magellan and Orbital
employees. Options granted pursuant to the Magellan Plan generally vest over a
period of three years. On July 1, 1996, options were granted for approximately
six million shares of Magellan stock under the Magellan Plan. Certain provisions
of the Magellan Plan require Magellan to register its common stock with the
Securities and Exchange Commission or to repurchase the Magellan common stock
acquired pursuant to options granted under the Magellan Plan.
The Company was not in compliance as of the end of the first and second
quarters of 1996 with a financial ratio required under its $20 million loan
agreement with The Northwestern Mutual Life Insurance Company ("Northwestern"),
and has received a waiver from Northwestern through August 8, 1996 with respect
to this non-compliance. The Company and Northwestern have agreed in principle to
certain amendments to financial covenants in the loan agreements that, together
with the redemption of the Debentures, are intended to facilitate compliance
with the financial ratios contained in such covenants in future periods, and the
Company expects to execute these amendments prior to August 8, 1996.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Common
Stock to the Purchaser pursuant to the standby arrangements described herein
will be used to effect the redemption of the Debentures not surrendered for
conversion by the Redemption Date. The number of shares of Common Stock to be
acquired by the Purchaser from the Company, and therefore the net proceeds of
this offering, will not be determinable until 5:00 p.m. New York City time on
the Redemption Date. The Company will not receive any proceeds from the issuance
of the Common Stock on conversion of the Debentures.
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<PAGE> 14
CAPITALIZATION
The following table sets forth the short term debt and capitalization of
the Company as of March 31, 1996 and as adjusted to give effect to the assumed
conversion of all outstanding Debentures into shares of Common Stock and the
estimated expenses of this transaction.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED(1)
------------ --------------
<S> <C> <C>
Short-term debt:
Short-term debt(2)....................................... $ 17,700,000 $ 17,700,000
Current portion of long-term debt........................ 6,975,000 6,975,000
------------ -------------
24,675,000 24,675,000
============ =============
Long-term debt:
Long-term obligations, net of current portion............ 17,470,000 17,470,000
10.5% Senior Notes due 2002.............................. 20,000,000 20,000,000
6.75% Convertible Subordinated Debentures due 2003....... 56,000,000 --
------------ -------------
Total long-term debt:......................................... 93,470,000 37,470,000
------------ -------------
Shareholders' equity:
Preferred Stock; par value $.01; 10,000,000 shares
authorized, one share of Series A Voting Preferred
Stock issued and outstanding(3)........................ -- --
Common Stock; par value $.01; 40,000,000 shares
authorized, 26,828,848 shares outstanding, after
deducting 15,735 shares held in treasury; 30,724,500
shares outstanding as adjusted(4)...................... 269,000 308,000
Additional paid-in capital............................... 248,008,000 301,969,000
Unrealized gains on short-term investments............... 66,000 66,000
Cumulative translation adjustment........................ (3,749,000) (3,749,000)
Retained earnings (deficit).............................. (2,524,000) (2,524,000)
------------ -------------
Total shareholders' equity:................................... 242,070,000 296,070,000
------------ -------------
Total capitalization:......................................... $335,540,000 $ 333,540,000
============ =============
</TABLE>
- ---------------
(1) Adjusted to reflect the assumed conversion of $56 million outstanding
Debentures into 3,895,652 shares of Common Stock. As of June 30, 1996,
$55,880,000 was outstanding.
(2) Represents amounts outstanding under the Company's various short-term credit
facilities, including a $25,000,000 uncommitted demand line of credit. See
"Standby Arrangements."
(3) There are also 10,000 shares of Class B Preferred Stock issued by MacDonald
Detwiller Holdings Inc. ("MDA Holdings"), a majority owned subsidiary of
Orbital Sciences Corporation, issued and outstanding. The outstanding shares
of Class B Preferred Stock are held by a third party not related to the
Company.
(4) Excludes 2,875,775 shares of Common Stock subject to issuance under options
outstanding as of March 31, 1996, which options are exercisable at prices
ranging from $1.82 to $20. Includes Exchangeable Non-Voting Shares issued by
MDA Holdings. See "Description of Capital Stock -- Special Voting Share." A
total of 2,975,000 shares of the Company's Common Stock are reserved for
issuance under the Company's stock option plans.
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<PAGE> 15
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded in the NASDAQ National Market System under the
symbol "ORBI." The following table sets forth for the periods indicated the high
and low sales prices of the Common Stock as reported by the NASDAQ National
Market System.
<TABLE>
<CAPTION>
HIGH LOW
---- ------
<S> <C> <C>
1994
First Quarter........................................ $26 1/2 $15 1/4
Second Quarter....................................... $24 1/2 $14
Third Quarter........................................ $18 1/2 $14 1/2
Fourth Quarter....................................... $22 1/2 $15
1995
First Quarter........................................ $20 1/2 $16 1/2
Second Quarter....................................... $22 $15 1/2
Third Quarter........................................ $19 1/4 $16
Fourth Quarter....................................... $16 5/8 $12 3/16
1996
First Quarter........................................ $16 1/8 $13 1/2
Second Quarter....................................... $19 5/8 $13 1/4
Third Quarter (through July 23, 1996)................ $19 1/2 $16 3/8
</TABLE>
On July 23, 1996, the last sale price of the Common Stock, as reported in
the NASDAQ National Market System, was $18 3/8 per share. As of that date, there
were approximately 1481 holders of record of Common Stock.
The Company has never paid any cash dividends on its Common Stock. The
Company presently intends to retain earnings for working capital and product
development and therefore does not anticipate paying cash dividends on the
Common Stock at any time in the near future. In addition, the Company is subject
to certain contractual restrictions on its ability to pay dividends. See Note 9
of Notes to Consolidated Financial Statements incorporated by reference into the
Company's Form 10-K for the Fiscal Year ended December 31, 1995, which is
incorporated by reference herein.
REDEMPTION OF DEBENTURES AND ALTERNATIVES
The Company has called all the Debentures for Redemption on the Redemption
Date (August 14, 1996) at a redemption price of $1,047.25 plus accrued interest
of $30.56 from March 1, 1996 to the Redemption Date for a total of $1,077.81 for
each $1,000 principal amount of Debentures. The Debentures are convertible into
approximately 69.565 shares of Common Stock for each $1,000 principal amount of
Debentures. The right to convert Debentures expires at 5:00 p.m. New York City
time on August 14, 1996. Cash will be paid in lieu of any fractional shares of
Common Stock. Holders who elect to convert their Debentures into Common Stock
will not be entitled to receive interest accrued since March 1, 1996. Any
Debentures not surrendered for conversion on or prior to 5:00 p.m. New York City
time on the Redemption Date will be redeemed.
ALTERNATIVES AVAILABLE TO HOLDERS OF DEBENTURES. Holders of Debentures have the
following alternatives:
1. CONVERSION OF DEBENTURES INTO COMMON STOCK. Debentures may be converted
at the option of the holder into shares of the Company's Common Stock at a price
of $14.375 per share, or approximately 69.565 shares for each $1,000 principal
amount of Debentures prior to 5:00 p.m. New York City time on the Redemption
Date. To convert any Debentures, the holder thereof must surrender to the
Trustee the Debentures duly endorsed to the Company or in blank, by mail to The
14
<PAGE> 16
Bank of New York, Fiscal Agency Dept., 101 Barclay Street, 7E, New York, New
York 10286, or (ii) by hand to The Bank of New York, Corporate Trust Services
Window, 101 Barclay Street, Lobby Level, New York, New York 10286, Attention:
Fiscal Agency Dept. Debentures must be accompanied by a written notice of
election to convert, in the form of a completed and executed Letter of
Transmittal, a copy of which has been provided to all holders of Debentures. Any
Debentures not delivered for conversion will be redeemed on the Redemption Date.
No interest will accrue with respect to the Debentures on or after the
Redemption Date.
No payment or adjustment in respect of interest on the Debentures will be
made upon conversion of the Debentures. No adjustments or payments in respect of
any dividends on the Common Stock issued upon conversion will be made upon the
conversion of Debentures. No fractional shares of Common Stock are issuable upon
conversion. The Company will pay each holder of Debentures the cash equivalent
of any such fractional interest based upon the reported last sale price of the
Common Stock on the NASDAQ National Market System on the day prior to
conversion.
THE CONVERSION RIGHT EXPIRES AT 5:00 P.M. NEW YORK CITY TIME ON AUGUST 14,
1996. DEBENTURES TO BE CONVERTED MUST BE RECEIVED BY THE TRUSTEE PRIOR TO THAT
TIME. FROM AND AFTER THAT DATE AND TIME, HOLDERS OF DEBENTURES WILL BE ENTITLED
ONLY TO THE REDEMPTION PRICE.
The Company's Common Stock is traded on the NASDAQ National Market System
under the ticker symbol "ORBI," and on July 23, 1996, the last reported sales
price of the Common Stock on the NASDAQ National Market System was $18.375 per
share. A holder of Debentures who converted such Debentures on July 23, 1996
would have received Common Stock having a market value, based on the last
reported sales price on the NASDAQ National Market System on that date, of
approximately $1,278.26 for each Debenture converted (including cash, if any,
received in lieu of fractional shares). If such Debentures were surrendered for
redemption on the Redemption Date, such holder would receive $1,077.81 in cash
for each Debenture. While no assurance can be given as to any future prices for
the Common Stock, as long as the market price of the Common Stock (after giving
effect to commissions and any other costs of sale) remains at or above $15.49
per share, upon conversion of their Debentures, holders will receive Common
Stock and cash for fractional shares having a current market value equal to or
greater than the Redemption Price. It should be noted, however, that the price
of the Common Stock received upon conversion will fluctuate in the market. No
assurance is given as to the price of the Common Stock at any future time.
2. REDEMPTION OF DEBENTURES. Any Debentures which have not been converted
into Common Stock on or prior to August 14, 1996, will be redeemed on the
Redemption Date for the Redemption Price. After the Redemption Date, interest
will cease to accrue and holders of Debentures will not have any rights as such
holders other than the right to receive the Redemption Price without interest,
upon surrender of their Debentures. Certificates for Debentures to be
surrendered for redemption must be delivered, together with a completed and
executed Letter of Transmittal, in order to receive payment of the Redemption
Price.
3. SALE OF DEBENTURES THROUGH ORDINARY BROKERAGE TRANSACTIONS. Sales of
Debentures may be made through open market brokerage transactions, and if made
sufficiently in advance of the Redemption Date, buyers thereof may convert
Debentures into Common Stock in the manner described above. After the Redemption
Date, a holder of Debentures will not be entitled to convert Debentures into
Common Stock, which fact is expected to have an impact on the market for
Debentures. Holders of Debentures who wish to make sales should consult with
their own brokers concerning if and when their Debentures should be sold.
15
<PAGE> 17
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summarizes the principal federal income tax consequences to
holders of Debentures, under current law, of the conversion of Debentures into
Common Stock and of the redemption of Debentures. It does not address all
potentially relevant federal income tax matters, including consequences to
persons (such as foreign persons, banks, insurance companies, dealers in
securities or tax-exempt organizations) subject to special provisions of federal
income tax law. The following summary is for general information only, and
holders of Debentures should consult their own tax advisors about the federal,
state, local and foreign tax consequences of the conversion or redemption of
Debentures.
CONVERSION INTO COMMON STOCK. A holder will recognize no gain or loss for
federal income tax purposes on the conversion of a Debenture into shares of
Common Stock, except upon the receipt of cash in lieu of a fractional share. The
receipt of cash in lieu of a fractional share of Common Stock will be taxable as
if the fractional share had been received and then redeemed for the cash, so a
holder will recognize gain or loss equal to the difference between the amount of
cash received and the holder's tax basis in the fractional share. A holder will
not recognize income in respect of interest on Debentures offered for conversion
that accrues after the last interest payment date since such holder will not
receive any payment (or Common Stock) in respect of such accrued interest.
A holder's aggregate tax basis in shares of Common Stock (including any
fractional share interest) received upon conversion will be the same as the
holder's adjusted tax basis in the Debenture converted into such shares.
Accordingly, if a holder converts Debentures into Common Stock and subsequently
sells the Common Stock, he generally will recognize gain or loss equal to the
difference, if any, between his adjusted tax basis in the Debentures converted
(less the portion allocable to any cash payment in lieu of fractional shares)
and the amount realized upon the sale of the Common Stock. If a holder holds a
Debenture as a capital asset, the holder's holding period for shares of Common
Stock (including any fractional share interest) received upon conversion of the
Debenture will include the holder's holding period for the Debenture. In the
case of a holder who acquired a Debenture at a "market discount" within the
meaning of sections 1276 and 1278(a)(2) of the Internal Revenue Code of 1986, as
amended (the "Code"), the amount of accrued market discount that would have been
taxable as ordinary income under section 1276 of the Code upon a taxable
disposition of the Debenture at the time of conversion will attach to, and
generally will be recognized as ordinary income upon disposition of, the Common
Stock received upon conversion of the Debenture.
REDEMPTION. The redemption of a Debenture will be taxable as a sale of the
Debenture. Consequently, a holder generally will recognize gain or loss equal to
the difference, if any, between the holder's adjusted tax basis in the Debenture
and the amount realized by the holder upon the redemption. (The amount realized
for purposes of determining gain or loss will not include the amount paid in
connection with the redemption for accrued interest, which will be taxable as
interest income.) Gain or loss recognized on the redemption of a Debenture
generally will be capital gain or loss if the Debenture is held as a capital
asset, and capital gain or loss will be long-term if the holder's holding period
for the Debenture exceeds one year on the Redemption Date. In the case of a
holder who acquired a Debenture at a market discount within the meaning of
sections 1276 and 1278(a)(2) of the Code, gain recognized upon redemption of the
Debenture will constitute ordinary income to the extent of accrued market
discount not previously included in the holder's income.
BACKUP WITHHOLDING AND INFORMATION REPORTING. To prevent backup
withholding of federal income tax at the rate of 31% from the payment of cash in
lieu of a fractional share or the payment of the redemption price plus interest,
any holder (other than an exempt payee such as a corporation or tax-exempt
organization) must provide a completed Form W-9 upon surrendering Debentures for
conversion or redemption.
16
<PAGE> 18
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
Orbital has authorized 40,000,000 shares of Common Stock, par value $0.01
per share, of which approximately 26,942,493 were issued and outstanding as at
June 30, 1996. Holders of Orbital Common Stock are entitled to one vote per
share on all matters to be voted on by shareholders, including the election of
directors. Subject to the rights of holders of any Orbital preferred stock that
may be issued, holders of Orbital Common Stock are entitled to receive such
dividends as may be declared from time to time by the board of directors of
Orbital from funds legally available therefor. Upon liquidation, dissolution or
winding-up of Orbital, the holders of Orbital Common Stock will be entitled to
share ratably all assets available for distribution to shareholders after
payment of liabilities, subject to prior preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock.
PREFERRED STOCK
Orbital has authorized 10,000,000 shares of preferred stock, $0.01 par
value per share, of which one share is issued. See "Special Voting Share" below.
Orbital's board of directors is authorized, without any further action by the
shareholders, to provide for the issuance of the unissued shares of preferred
stock and to determine the rights, preferences, privileges and restrictions of
the unissued preferred stock.
SPECIAL VOTING SHARE
Orbital has outstanding one share of Series A Special Voting Preferred
Stock, $.01 par value per share (the "Special Voting Share"). Except as
otherwise required by law or Orbital's Restated Certificate of Incorporation,
the holder of record of the Special Voting Share will have a number of votes
equal to the number of shares of Orbital Common Stock issuable upon exchange of
all outstanding Exchangeable Non-Voting Shares issued by Orbital's subsidiary,
MDA Holdings, that are not owned by Orbital or its affiliates. The Exchangeable
Non-Voting Shares are designed to mirror the rights of the Orbital Common Stock
and are exchangeable for shares of Orbital Common Stock under certain
circumstances. The holders of Orbital Common Stock and the Special Voting Share
vote together as a single class on all matters, except as may be required by
applicable law. In the event of any liquidation, dissolution or winding-up of
Orbital, the holder of the Special Voting Share shall not be entitled to receive
any assets of Orbital available for distribution to its shareholders. The holder
of the Special Voting Share shall not be entitled to receive dividends. At such
time as the Special Voting Share has no votes attached to it because there are
no Exchangeable Non-Voting Shares outstanding not owned by Orbital or its
affiliates, the Special Voting Share may be redeemed by resolution of the board
of directors of Orbital Sciences Corporation for $1.00 per share.
TRANSFER AGENT
Orbital's transfer agent with respect to the Common Stock is The First
National Bank of Boston.
STANDBY ARRANGEMENTS
Under the terms and subject to the conditions in the Standby Agreement
dated July 25, 1996 between the Company and the Purchaser (the "Standby
Agreement"), the Purchaser has agreed to purchase from the Company, at a
purchase price of $15.06 per share, for settlement on August 14, 1996, such
number of shares of Common Stock that would have been issuable upon conversion
of all Debentures not surrendered for conversion prior to 5:00 p.m., New York
City time, on the Redemption Date. The Purchaser may also purchase Debentures in
the open market or otherwise
17
<PAGE> 19
prior to 5:00 p.m., New York City time, on the Redemption Date. The Purchaser
has agreed with the Company to convert all Debentures so purchased into Common
Stock.
The Purchaser has advised the Company that it proposes to offer for resale
any shares of Common Stock purchased from the Company or acquired upon
conversion as set forth on the cover page of this Prospectus. The Purchaser may
also make sales of such shares to certain securities dealers at prices that may
reflect concessions from the prices at which such shares are then being offered
to the public. The amount of such concessions will be determined from time to
time by the Purchaser.
Pursuant to the terms of the Standby Agreement and in consideration of the
Purchaser's obligations thereunder, the Company has agreed to pay the Purchaser
the following fee: (i) where the aggregate principal amount of Debentures (a)
that are purchased by the Purchaser in the open market or otherwise prior to
5:00 p.m., New York City time, on the Redemption Date or (b) that are not
tendered to the Company for conversion prior to 5:00 p.m., New York City time,
on the Redemption Date, in each case expressed as a percentage of the total
outstanding principal amount of the Debentures (the "Redemption Percentage") is,
in the aggregate less than or equal to 2.5%, $1,750,000; (ii) where the
Redemption Percentage is greater than 2.5% but less than or equal to 4.0%,
$2,000,000; (iii) where the Redemption Percentage is greater than 4.0%,
$2,250,000. In addition, if the Redemption Percentage is greater than 5.5%, the
Company shall pay to the Purchaser $0.66 per share of Common Stock for all
shares of Common Stock acquired by the Purchaser, either from the Company or as
a result of conversion of Debentures acquired by the Purchaser, in excess of
213,802 shares.
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act of 1933, or
contribute to payments the Purchaser may be required to make in respect thereof.
Under the Standby Agreement, the Company has agreed that it will not,
without the prior written consent of the Purchaser, offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce or file for
the registration of the offering of, any other shares of Common Stock or any
securities convertible into, or exchangeable for, shares of Common Stock for a
period of 90 days following the Redemption Date; provided, however, that during
such time period the Company may issue and sell Common Stock pursuant to any
employee stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the execution time of the Standby Agreement (the
"Execution Time"), and the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding at the
Execution Time.
The Company has agreed to reimburse the Purchaser for its out-of-pocket
expenses up to $100,000.
Deutsche Bank, an affiliate of the Purchaser, provides an uncommitted
demand line of credit to the Company, the availability under which was increased
from $10,000,000 to $25,000,000 in July 1996. As of June 30, 1996, $8,500,000
was outstanding under such demand line.
LEGAL MATTERS
Certain legal matters in connection with the sale of the Common Stock
offered hereby will be passed upon for the Company by Ropes & Gray, Boston,
Massachusetts and for the Purchaser by Cleary, Gottlieb, Steen & Hamilton, New
York, New York.
EXPERTS
The consolidated financial statements and schedules of the Company and
subsidiaries as of December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995 have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
18
<PAGE> 20
- ---------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE PURCHASER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
- ---------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 4
Risk Factors......................... 4
Business............................. 8
Recent Developments.................. 11
Use of Proceeds...................... 12
Capitalization....................... 13
Price Range of Common Stock and
Dividend Policy.................... 14
Redemption of Debentures and
Alternatives....................... 14
Certain Federal Income Tax
Consequences....................... 16
Description of Capital Stock......... 17
Standby Arrangements................. 17
Legal Matters........................ 18
Experts.............................. 18
</TABLE>
- ------------------------------------------------------
[ORBITAL SCIENCES CORPORATION LOGO]
3,887,304 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
PROSPECTUS
JULY 25, 1996
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of issuance and distribution that will be borne by the
Company are as follows:
<TABLE>
<S> <C>
SEC Registration................................................. $ 24,643
Blue Sky Fees and Expenses....................................... 10,000
Accounting Fees and Expenses..................................... 25,000
Legal Fees and Expenses Reimbursement of Purchaser Expenses...... 140,000
NASDAQ Listing Fee............................................... 17,500
Miscellaneous.................................................... 32,857
---------
Total.................................................. $ 250,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law sets forth provisions
that define the extent to which a corporation organized under the laws of
Delaware may indemnify directors, officers, employees or agents. Section 145
provides as follows:
(a) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably
II-1
<PAGE> 22
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b), or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in subsections (a) and
(b). Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this section.
(h) For purposes of this Section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
the provisions of this Section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation
if its separate existence had continued.
(i) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corpora-
II-2
<PAGE> 23
tion which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this Section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Paragraph Ten of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the maximum extent permitted by Delaware
law, indemnify and, upon request, advance expenses to any person:
. . . who is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the fact
that such person is or was or has agreed to be a director or officer of
this Corporation or while a director or officer is or was serving at the
request of this Corporation as a director, officer, partner, trustee,
employee or agent of any corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
against expenses (including attorney's fees and expenses), judgments,
fines, penalties and amounts paid in settlement incurred in connection with
the investigation, preparation to defend or defense of such action, suit,
proceeding or claim, provided, however, that the foregoing shall not
require this Corporation to indemnify or advance expenses to any person in
connection with any action, suit, proceeding, claim or counterclaim
initiated by or on behalf of such person. Such indemnification shall inure
to the benefit of the heirs and legal representatives of such person. Any
person seeking indemnification under this Paragraph 10 shall be deemed to
have met the standard of conduct required for such indemnification unless
the contrary shall be established.
Section 102(b)(7) of the Delaware General Corporation Law permits
corporations to eliminate or limit the personal liability of their directors by
adding to the Certificate of Incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director for (a) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(b) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) payment of dividends or repurchases or
redemptions of stock other than from lawfully available funds, or (d) any
transaction from which the director derived an improper personal benefit.
Paragraph Nine of the Company's Restated Certificate of Incorporation provides
that no director of the Company shall be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that exculpation from liability is not permitted under the
Delaware General Corporation Law as in effect at the time such liability is
determined.
In addition, the Company has entered into substantially identical
indemnification agreements with each of its directors and executive officers and
certain other officers. The Company has agreed, to the full extent permitted by
the Delaware General Corporation Law, as amended from time to time, to indemnify
each indemnitee against all loss and expense incurred by the indemnitee because
he was, is or is threatened to be made a party to any completed, pending or
threatened action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he 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 position with the
Company or any of its affiliates. The indemnitee will be indemnified so long as
he acted in good faith and in a manner reasonably believed by him to be in or
not opposed to the Company's best interests. The agreement further provides that
the indemnification thereunder is not exclusive of any other rights the
II-3
<PAGE> 24
indemnitee may have under the Company's Restated Certificate of Incorporation,
By-Laws or any agreement or vote of stockholders, nor may the Restated
Certificate of Incorporation or By-Laws be amended to affect adversely the
rights of any indemnitee.
Under the Standby Agreement, the Purchaser has agreed to indemnify the
Company's directors and certain of the Company's officers in certain
circumstances against certain liabilities under the 1933 Act.
ITEM 16. EXHIBITS
The following exhibits are filed as part of this report. Where such filing
is made by incorporation by reference to a previously filed statement or report,
such statement or report is identified in parentheses.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- ----------------------------------------------------------------------------
<C> <S>
1. Form of Standby Agreement (transmitted herewith).
4.1 Restated Certificate of Incorporation (transmitted herewith).
4.2 Certificate of Designations for the Company's Series A Special Voting
Preferred Stock (transmitted herewith).
4.3 By-Laws of Orbital Sciences Corporation, as amended on July 27, 1995
(incorporated by reference to Exhibit 3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, dated November 14,
1995).
4.4 Form of Certificate of Common Stock (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-1 (File Number
33-33453) filed on February 9, 1990 and effective on April 24, 1990).
5. Opinion of Ropes & Gray (transmitted herewith) .
23.1 Consent of KPMG Peat Marwick LLP (transmitted herewith).
23.2 Consent of Ropes & Gray (included in Exhibit 5).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
<PAGE> 25
(4) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registration pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the success defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-5
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Loudoun, the Commonwealth of Virginia, on this
23rd day of July, 1996.
ORBITAL SCIENCES CORPORATION
By /s/ DAVID W. THOMPSON
---------------------------
David W. Thompson, Chairman
of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the 23rd day of July, 1996. Each person whose signature
appears below hereby authorizes each of David W. Thompson, Bruce W. Ferguson and
Leslie C. Seeman and appoints each of them singly his attorney-in-fact, each
with full power of substitution, to execute in his name, place and stead, in any
and all capacities, any amendment to this Registration Statement and to file the
same, with exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, making such further changes in this
Registration Statement as the Company deems appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ DAVID W. THOMPSON Chairman of the Board, President and
- ---------------------------------------- Chief Executive Director
David W. Thompson (Principal Executive Officer)
/s/ JEFFREY V. PIRONE Vice President and Controller
- ---------------------------------------- (Principal Financial and Accounting Officer)
Jeffrey V. Pirone
/s/ BRUCE W. FERGUSON Director
- ----------------------------------------
Bruce W. Ferguson
/s/ JAMES R. THOMPSON Director
- ----------------------------------------
James R. Thompson
/s/ JACK A. FROHBIETER Director
- ----------------------------------------
Jack A. Frohbieter
/s/ FRED C. ALCORN Director
- ----------------------------------------
Fred C. Alcorn
</TABLE>
II-6
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ KELLY H. BURKE Director
- ----------------------------------------
Kelly H. Burke
/s/ DANIEL J. FINK Director
- ----------------------------------------
Daniel J. Fink
/s/ LENNARD A. FISK Director
- ----------------------------------------
Lennard A. Fisk
/s/ JACK L. KERREBROCK Director
- ----------------------------------------
Jack L. Kerrebrock
/s/ J. PAUL KINLOCH Director
- ----------------------------------------
J. Paul Kinloch
/s/ DOUGLAS S. LUKE Director
- ----------------------------------------
Douglas S. Luke
/s/ JOHN L. MCLUCAS Director
- ----------------------------------------
John L. McLucas
/s/ HARRISON H. SCHMITT Director
- ----------------------------------------
Harrison H. Schmitt
/s/ SCOTT L. WEBSTER Director
- ----------------------------------------
Scott L. Webster
</TABLE>
II-7
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ------------------------------------------------------------------ --------
<C> <S> <C>
1. Form of Standby Agreement (transmitted herewith)..................
4.1 Restated Certificate of Incorporation (transmitted herewith)......
4.2 Certificate of Designations for the Company's Series A Special
Voting Preferred Stock (transmitted herewith).....................
4.3 By-Laws of Orbital Sciences Corporation, as amended on July 27,
1995 (incorporated by reference to Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1995, dated November 14, 1995)....................................
4.4 Form of Certificate of Common Stock (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1
(File Number 33-33453) filed on February 9, 1990 and effective on
April 24, 1990)...................................................
5. Opinion of Ropes & Gray (transmitted herewith)....................
23.1 Consent of KPMG Peat Marwick LLP (transmitted herewith)...........
23.2 Consent of Ropes & Gray (included in Exhibit 5)...................
</TABLE>
<PAGE> 1
EXHIBIT 1
ORBITAL SCIENCES CORPORATION
6 3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
STANDBY AGREEMENT
New York, New York
July 25, 1996
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
31 West 52nd Street
New York, N.Y. 10019
Ladies and Gentlemen:
Orbital Sciences Corporation, a Delaware corporation (the "Company"),
intends to call for redemption (the "Redemption") on August 14, 1996 (the
"Redemption Date"), all its outstanding 6-3/4% Convertible Subordinated
Debentures due 2003 (the "Redeemable Securities") at the redemption price of
104.725% of outstanding principal amount thereof plus accrued interest from
March 1, 1996 to the Redemption Date of $30.56, for a total redemption price of
$1,077.81 (the "Redemption Price") per $1,000 principal amount of Redeemable
Securities. The Redeemable Securities were issued pursuant to an indenture,
dated as of February 25, 1993 (the "Indenture"), between the Company and
Security Trust Company, National Association, as Trustee (the "Trustee"), and
are convertible thereunder into shares (the "Shares") of the Common Stock, $.01
par value, of the Company ("Common Stock") at the conversion ratio of
approximately 69.565 shares per $1,000 principal amount of Redeemable
Securities at any time prior to 5:00 P.M., New York City time, on the
Redemption Date.
In order to ensure that the maximum number of Redeemable Securities
will be converted and that the Company will have available sufficient funds to
redeem any Redeemable Securities not converted prior to the Redemption Date,
the Company desires to make arrangements pursuant to which Deutsche Morgan
Grenfell/C. J. Lawrence Inc.(the "Purchaser") will, on the Closing Date (as
defined below) and subject to the terms and conditions herein contained,
purchase a number of shares of Common Stock equal to the number of shares of
Common Stock that would have been issuable upon conversion of all Redeemable
Securities that are either (i) duly surrendered for redemption or (ii) not duly
surrendered for conversion prior to 5:00 P.M., New York City time, on the
Redemption Date.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchaser as set forth below
in this Section 1. Certain terms used in this Section 1 are defined in
paragraph (p) hereof.
(a) The Company meets the requirements for use of Form S-3
under the Securities Act of 1933 (the "Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (file 333-____ ) on such
<PAGE> 2
Form, including a related prospectus, for the registration under the
Act of the issuance by the Company of the shares of Common Stock
issuable upon conversion by the Purchaser of Redeemable Securities
and the sale by the Purchaser of any shares of Common Stock that may
be acquired by it hereunder. The Company may have filed one or more
amendments thereto, including the related prospectus, each of which
has previously been furnished to you. The Company will next file with
the Commission one of the following (if required): (i) prior to
effectiveness of such registration statement, a further amendment to
such registration statement, including the form of final prospectus,
(ii) a final prospectus in accordance with Rules 430A and 424(b)(1) or
(4), or (iii) a final prospectus in accordance with Rules 415 and
424(b)(2) or (5). In the case of clause (ii), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in the Prospectus (as
defined below) with respect to the Securities (as defined below) and
the offering thereof. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Securities and the offering thereof and, except to the
extent the Purchaser shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you prior to
the Execution Time or, to the extent not completed at the Execution
Time (as defined below), shall contain only such specific additional
information and other changes (beyond that contained in the latest
Preliminary Prospectus (as defined below)) as the Company has advised
you, prior to the Execution Time, will be included or made therein.
If the Registration Statement contains the undertaking specified by
Regulation S-K Item 512(a), the Registration Statement, at the
Execution Time, meets the requirements set forth in Rule
415(a)(1)(x).
(b) On the Effective Date (as defined below), the
Registration Statement did or will, and when the Prospectus is first
filed (if required) in accordance with Rule 424(b), on the Redemption
Date and on the Closing Date, the Prospectus (and any supplements
thereto) will, comply in all material respects with the applicable
requirements of the Act and the Securities Exchange Act of 1934 (the
"Exchange Act") and the respective rules thereunder; on the Effective
Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b), on the
Redemption Date and on the Closing Date, the Prospectus (together with
any supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or
2
<PAGE> 3
on behalf of the Purchaser specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(c) The Redeemable Securities are convertible into Common
Stock at a conversion price of $14-3/8 per share (equivalent to a
conversion ratio of approximately 69.565 shares per $1,000 principal
amount of Redeemable Securities). At the Execution Time, there was
outstanding up to $55,880,000 aggregate principal amount of Redeemable
Securities; the redemption of all the outstanding Redeemable
Securities had been duly authorized by the Company; by the close of
business on the business day following the date of execution hereof,
all the Redeemable Securities shall have been duly called for
redemption in accordance with the Indenture, and the right to convert
the Redeemable Securities into shares of Common Stock will, as a
result of such call, expire at 5:00 P.M., New York City time, on the
Redemption Date. A copy of the form of notice of redemption and the
related letter of transmittal (collectively, the "Notice of
Redemption") has been heretofore delivered to you. The Indenture and
the Redeemable Securities have been duly authorized, executed and
delivered by the Company and constitute legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms.
(d) The Company has neither taken nor will take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company to facilitate the conversion of the Redeemable Securities.
(e) The Company has neither paid nor given, nor will pay or
give, directly or indirectly, any commission or other remuneration for
soliciting and conversion of Redeemable Securities into Common Stock
and cash.
(f) Neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated, nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under, any law or the
charter or bylaws of the Company or the terms of any material
indenture or other material agreement or instrument (including,
without limitation, the Amended and Restated Credit and Reimbursement
Agreement dated as of September 27, 1994 among the Company and the
banks listed therein, and the Note Agreement dated as of June 1, 1995
between the Company and the Purchaser named in Schedule 1 thereto) to
which the Company or any of its subsidiaries is a party or is bound or
any material judgment, order or decree applicable to the Company or
any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company or any of its subsidiaries.
(g) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations or partnerships, as
the case may be, in good
3
<PAGE> 4
standing under the laws of their respective jurisdictions of
incorporation and are duly qualified to transact business as foreign
corporations or partnerships, as the case may be, and are in good
standing under the laws of all other jurisdictions where the ownership
or leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and its consolidated subsidiaries, taken as
a whole.
(h) The Company and each of its subsidiaries have full power
(corporate or partnership, as the case may be, and other) to own or
lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the
Prospectus; and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it.
(i) The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and the shares of each such
subsidiary that are owned by the Company are owned beneficially by the
Company free and clear of any security interests, liens, encumbrances,
equities or claims.
(j) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. The Securities
have been duly authorized and reserved for conversion by the Company
and, when issued upon conversion and, in the case of the Purchased
Securities (as defined below), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. No
holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for
any of the Securities, and no holder of securities of the Company has
any right which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by such
holder under the Act in the public offering contemplated by this
Agreement.
(k) The capital stock of the Company conforms to the
description thereof contained in the Prospectus.
(l) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such subsidiary, (B) warrants, rights or options to
subscribe for or purchase from the Company or any such subsidiary any
such capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants,
rights or options except for issuances or
4
<PAGE> 5
forfeitures subsequent to the date of the information provided in the
Prospectus, if any, pursuant to the Company's 1990 Stock Option Plan,
1990 Stock Option Plan for Non-Employee Directors, Orbital
Communications Corporation's 1992 Stock Option Plan and Magellan
Corporation's 1996 Stock Option Plan.
(m) KPMG Peat Marwick, who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act, the Exchange Act and the related published rules
and regulations thereunder.
(n) The execution and delivery of this Agreement have been
duly authorized by the Company and this Agreement has been duly
executed and delivered by the Company, and is the valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms.
(o) No legal or governmental proceedings are pending to which
the Company or any of its subsidiaries is a party or to which the
property of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein, and no such proceedings have
been threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties; and no contract or
other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required.
(p) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in
paragraph (a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A
Information. "Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph (a) above, including incorporated documents,
exhibits and financial statements, as amended at the Execution Time
(or, if not effective at the Execution Time, in the form in which it
shall become effective) and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date, shall also mean
such registration
5
<PAGE> 6
statement as so amended. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 415", "Rule 424", "Rule 430A" and
"Regulation S-K" refer to such rules or regulation under the Act.
"Rule 430A Information" means information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule
430A. Any reference herein to the Registration Statement, a
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue
date of such Preliminary Prospectus or the Prospectus, as the case may
be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the filing of any document under the Exchange Act after
the Effective Date of the Registration Statement, or the issue date of
any Preliminary Prospectus or the Prospectus, as the case may be,
deemed to be incorporated therein by reference.
2. Purchase and Conversion of Redeemable Securities. Subject
to the terms and conditions and in reliance upon the representations and
warranties herein set forth:
(a) The Purchaser agrees to surrender for conversion into
Common Stock prior to 5:00 P.M., New York City time, on the Redemption
Date all Redeemable Securities purchased by it pursuant to Section 4
hereof or otherwise acquired by it. The shares of Common Stock issued
to the Purchaser upon the conversion of Redeemable Securities are
referred to as the "Conversion Securities".
(b) If any Redeemable Securities have not been surrendered
for conversion prior to 5:00 P.M., New York City time, on the
Redemption Date, the Company shall sell to the Purchaser, and the
Purchaser shall purchase from the Company, at a purchase price of
$15.06 per share, such number of shares of Common Stock that would
have been issuable upon conversion of all Redeemable Securities not
surrendered for conversion. The Company shall notify the Purchaser of
such number of shares as soon as practicable after the expiration of
convertibility on the Redemption Date and in no event later than 5:00
P.M., New York City time, on the Redemption Date. The shares of
Common Stock to be purchased pursuant to this Section 2(b) are
referred to as the "Purchased Securities" and, together with the
Conversion Securities, the "Securities".
(c) It is understood that the Purchaser intends to resell the
Securities from time to time at prices prevailing in the open market.
(d) The Purchaser agrees to appoint the Trustee as its agent
to accept tenders of Redeemable Securities and authorizes the Company
to advise holders of Redeemable Securities of such appointment.
6
<PAGE> 7
(e) Delivery of and payment for the Purchased Securities
shall be made at 5:00 P.M., New York City time, on the Redemption
Date, which date and time may be postponed by agreement between the
Purchaser and the Company or as provided in Section 10 hereof (such
date and time of delivery and payment for the Purchased Securities
being herein called the "Closing Date"). Delivery of the Purchased
Securities shall be made to the Purchaser for its account against
payment by the Purchaser of the purchase price thereof to or upon the
order of the Company by wire or intra-bank transfer or certified or
official bank check or checks drawn on or by a New York Clearing House
bank and payable in same day funds. Delivery of the Purchased
Securities shall be made at such location as the Purchaser shall
reasonably designate at least one business day in advance of the
Closing Date and payment for the Purchased Securities shall be made at
the office of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza,
New York, New York. Certificates for the Purchased Securities shall
initially be registered in the name of the Purchaser and thereafter
may be exchanged for certificates registered in such names and in such
denominations as the Purchaser may request.
The Company agrees to have the Purchased Securities available
for inspection, checking and packaging by the Purchaser in New York, New York,
not later than 5:00 P.M. on the Closing Date.
3. Compensation. The Company will pay to the Purchaser for
its account the following fee (the "Standby Fee"): (i) where the aggregate
principal amount of Redeemable Securities (a) that are purchased by the
Purchaser as contemplated by Section 4 hereof prior to 5:00 P.M., New York City
time, on the Redemption Date or (b) that are not surrendered for conversion
prior to 5:00 P.M., New York City time, on the Redemption Date, in each case
expressed as a percentage of the total outstanding principal amount of the
Redeemable Securities (the "Redemption Percentage"), is in the aggregate less
than or equal to 2.5%, $1,750,000; (ii) where the Redemption Percentage is
greater than 2.50% but less than or equal to 4.0%, $2,000,000 and (iii) where
the Redemption Percentage is greater than 4.0%, $2,250,000. In addition, if
the Redemption Percentage is greater than 5.5%, the Company shall pay to the
Purchaser $0.66 per share of Common Stock (the "Take Up Fee") for all shares of
Common Stock acquired by the Purchaser, either from the Company or as a result
of the conversion of Redeemable Securities acquired by the Purchaser, in
excess of 213,802 shares.
Such compensation shall be paid to the Purchaser for its
account by wire or intra-bank transfer or certified or official bank check or
checks drawn on or by a New York Clearing House bank and payable in same day
funds on the Redemption Date.
4. Additional Purchases. The Purchaser may purchase
Redeemable Securities, in the open market or otherwise, in such amounts and at
such prices as the Purchaser may deem advisable. All Redeemable Securities so
purchased will be converted by the Purchaser into Common Stock in accordance
with Section 2(a) hereof. The Common Stock acquired by the Purchaser upon
conversion of any Redeemable Securities acquired pursuant to this Section
7
<PAGE> 8
4 may be sold at any time or from time to time by the Purchaser. It is
understood that, for the purpose of stabilizing the price of the Common Stock
or otherwise, the Purchaser may make purchases and sales of Common Stock, in
the open market or otherwise, for long or short account, on such terms as it
may deem advisable and it may overallot in arranging sales.
5. Covenants by the Company. The Company covenants and
agrees with the Purchaser that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination
of the offering of the Securities, the Company will not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the Purchaser a copy for
its review prior to filing and will not file any such proposed
amendment or supplement to which the Purchaser reasonably objects.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph
of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Purchaser of such timely filing. The
Company will promptly advise the Purchaser (i) when the Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the Prospectus, and
any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b), (iii) when, prior to termination
of the offering of the Securities, any amendment to the Registration
Statement shall have been filed or become effective, (iv) of any
request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading,
or if it shall be necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Act or the Exchange Act
or the respective rules thereunder, the Company promptly will (i)
prepare and file with the Commission, subject to the second sentence
of paragraph (a) of this Section 5, an amendment or supplement which
will correct such
8
<PAGE> 9
statement or omission or effect such compliance and (ii) supply any
supplemented Prospectus to the Purchaser in such quantities as the
Purchaser may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Purchaser an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(d) The Company will furnish to the Purchaser and counsel for
the Purchaser, without charge, signed copies of the Registration
Statement (including exhibits thereto) and, so long as delivery of a
prospectus by the Purchaser or a dealer may be required by the Act, as
many copies of each Preliminary Prospectus and the Prospectus and any
supplement thereto as the Purchaser may reasonably request.
(e) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Purchaser may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities.
(f) The Company will (i) mail or cause to be mailed not later
than the business day following the date of execution hereof the
Notice of Redemption by first class mail to the registered holders of
the Redeemable Securities as of the close of business on the date of
execution hereof, which mailing will conform to the requirements of
the Indenture and (ii) publish an advertisement, in form and substance
reasonably satisfactory to the Purchaser, relating to the redemption
of the Redeemable Securities. The Company will not, and will ensure
that the Trustee does not, withdraw or revoke the Notice of Redemption
or attempt to do so.
(g) The Company will direct the Trustee to advise the
Purchaser daily of the amount of Redeemable Securities surrendered in
the previous day for redemption or for conversion.
(h) The Company will not take any action the effect of which
would be to require an adjustment in the conversion price of the
Redeemable Securities.
(i) The Company will not, prior to the Redemption Date and
for a period of 90 days following the Redemption Date, without the
prior written consent of the Purchaser, offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce or
file for the registration of the offering of, any other shares of
Common Stock or any securities convertible into, or exchangeable for,
shares of Common Stock; provided, however, that the Company may issue
and sell Common Stock pursuant to any employee stock option plan,
stock ownership plan or dividend reinvestment plan of the Company in
effect at the Execution Time and the Company may issue Common Stock
issuable upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time.
9
<PAGE> 10
(j) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Securities and Exchange Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba or
with any person or affiliate located in Cuba changes in any material
way, the Company will provide the Department notice of such business
or change, as appropriate, in a form acceptable to the Department.
(k) If at any time during the 60-day period after the
Registration Statement becomes effective, any rumor, publication or
event relating to or affecting the Company shall occur as a result of
which in the Purchaser's opinion the market price of the Common Stock
has been or is likely to be materially adversely affected (regardless
of whether such rumor, publication or event necessitates a supplement
to or amendment of the Prospectus), the Company will consult with the
Purchaser concerning the advisability of issuing a press release or
other public statement responding to or commenting on such rumor,
publication or event including the timing of issuance and the
substance thereof.
6. Conditions to the Obligations of the Purchaser. The
obligations of the Purchaser hereunder to purchase and convert Redeemable
Securities and to purchase any Purchased Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, each Effective Date occurring after
the Execution Time, the Redemption Date and the Closing Date, to the accuracy
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Purchaser agrees in writing to
a later time, the Registration Statement will become effective not
later than 5:30 P.M., New York City time, on the date of execution
hereof; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
(b) On the date of this Agreement and on the Closing Date,
the Company shall have furnished to the Purchaser the opinion of Ropes
& Gray, counsel for the Company, dated the date of this Agreement and
the Closing Date, respectively, to the effect that:
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<PAGE> 11
(i) the Company, and each of the subsidiaries of the
Company identified on Schedule 1 hereto (individually a "Subsidiary"
and collectively the "Subsidiaries"), has been duly incorporated and
is validly existing and in good standing under the laws of the
jurisdiction in which it is chartered or organized, with corporate
power and authority necessary to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction in the United States which requires such
qualification wherein it owns or leases material properties or
conducts material business;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus (except for issuances or forfeitures subsequent to the
date of the information provided in the Prospectus, if any, pursuant
to the Company's 1990 Stock Option Plan, 1990 Stock Option Plan for
Non-Employee Directors , Orbital Communications Corporation's 1992
Stock Option Plan and Magellan Corporation's 1996 Stock Option Plan),
all outstanding shares of capital stock of the Subsidiaries are owned
of record and, to such counsel's knowledge after due inquiry,
beneficially by the Company either directly or through wholly owned
subsidiaries and, to the knowledge of such counsel, after due inquiry,
free and clear of any perfected security interest and other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized, issued and
outstanding capital stock is as set forth in the Prospectus (except
for issuances or forfeitures subsequent to the date of the information
provided in the Prospectus, if any, pursuant to the Company's 1990
Stock Option Plan, 1990 Stock Option Plan for Non-Employee Directors ,
Orbital Communications Corporation's 1992 Stock Option Plan and
Magellan Corporation's 1996 Stock Option Plan); the capital stock of
the Company conforms as to matters of law to the description thereof
contained in the Prospectus; the outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable; the Indenture has been duly authorized, executed and
delivered by the Company and, assuming the due execution and delivery
thereof by the Trustee, constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its
terms; the Redeemable Securities have been duly authorized and
executed by the Company and, assuming due authentication thereof by
the Trustee in accordance with the Indenture, constitute legal, valid
and binding obligations of the Company entitled to the benefits of the
Indenture; assuming the mailing of the Notice of Redemption in
accordance with Section 1(c) hereof, all the Redeemable Securities
will have been duly called for redemption by the close of business on
the date of execution hereof and the right to convert the Redeemable
Securities into shares of Common Stock will expire at 5:00 P.M., New
York City time, on August 14, 1996; the Securities have been duly and
validly authorized, and, when issued and delivered upon conversion of
any Redeemable Securities or to the Purchaser
11
<PAGE> 12
against payment therefor pursuant to this Agreement, will be fully
paid and nonassessable; the certificates for the Securities are in
valid and sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Securities under the Company's Certificate
of Incorporation or By-laws or under Delaware law or otherwise to such
counsel's knowledge after due inquiry;
(iv) to the knowledge of such counsel after due
inquiry, there is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed
as an exhibit, which is not described or filed as required;
(v) the Registration Statement has become effective
under the Act; to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened; and the Registration Statement and the Prospectus (other
than the financial statements and other financial and statistical
information contained therein as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act and the Exchange Act and the
respective rules thereunder;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) no consent, approval, authorization or order
of any court or governmental agency or body is required for the
redemption or conversion of the Redeemable Securities or the
consummation of the transactions contemplated herein, except such as
have been obtained under the Act and such as may be required under the
blue sky laws of any jurisdiction (as to which such counsel need not
express an opinion) in connection with the purchase and distribution
of the Securities by the Purchaser and such other approvals (specified
in such opinion) as have been obtained;
(viii) neither the call of the Redeemable Securities
for redemption, the conversion or redemption thereof, the issue and
sale of the Securities, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach or violation of, or
constitute a default under any law or the charter or by-laws of the
Company or the terms of any indenture, mortgage, deed of trust, lease,
loan agreement or other document or instrument relating to
indebtedness or borrowed money of which such counsel has knowledge, or
any judgment, order or decree known to
12
<PAGE> 13
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries;
(ix) no holders of securities of the Company have
rights to the registration of such securities under the Registration
Statement; and
(x) the statements included or incorporated by
reference in the Prospectus under the captions "Redemption of
Debentures and Alternatives", "Certain Federal Income Tax
Consequences" and "Indemnification Agreements" and the description of
the Company's capital stock included or incorporated by reference into
the Prospectus, insofar as such statements purport to summarize
certain provisions of documents or agreements specifically referred to
therein or matters of law, are correct in all material respects.
In addition, such counsel shall state that such
counsel have participated in conferences with directors, officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Purchaser and counsel for
the Purchaser, at which conferences the contents of the Registration Statement
and the Prospectus and related matters were discussed, and, although such
counsel have not independently verified and are not passing upon and assume no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except to the
extent specified elsewhere in such opinion or with reference to such counsel),
no facts have come to the attention of such counsel that lead such counsel to
believe that, at the Effective Date, the Registration Statement included any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading or that the Prospectus
includes any untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel shall express no view with respect to the financial
statements and related notes, the financial statement schedules or other
financial, statistical and accounting information contained or incorporated by
reference in the Registration Statement or Prospectus).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws of any jurisdiction other than
the State of Delaware or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Purchaser and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
addition, such counsel may state that it has assumed that the laws of the State
of New York are in all respects identical to the laws of the Commonwealth of
Massachusetts. References to the Prospectus in this paragraph (b) include any
supplements thereto on the Closing Date.
13
<PAGE> 14
(c) On the date of this Agreement and on the Closing Date,
the Company shall have furnished to the Purchaser the opinion of (i)
Halprin, Temple & Goodman, special Federal Communications Commission
counsel to the Company stating that the status of regulatory and
licensing matters pertaining to the Company are fairly and accurately
summarized in the Registration Statement and Prospectus and (ii)
Farris, Vaughn, Wills & Murphy with respect to certain matters of
Canadian law.
(d) On the date of this Agreement and on the Closing Date,
the Purchaser shall have received from Cleary, Gottlieb, Steen &
Hamilton, counsel for the Purchaser, such opinion or opinions, dated
the date of this Agreement and the Closing Date, respectively, with
respect to the issuance and sale of the Securities, the Registration
Statement, the Prospectus (together with any supplement thereto) and
other related matters as the Purchaser may reasonably require, and the
Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) On the date of this Agreement, and on each Effective Date
occurring after the Execution Time and on the Closing Date, the
Company shall have furnished to the Purchaser a certificate of the
Company, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the
date of delivery, to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus,
any supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the date of such certificate as if made
on the date of such certificate and the Company has complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the date
of such certificate;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(f) At the Execution Time, on each Effective Date occurring
after the Execution Time on which financial information is included or
incorporated in the Registration Statement or the Prospectus and on
the Closing Date, KPMG Peat Marwick shall have delivered to the
Purchaser a letter or letters, dated as of the date of delivery, in
form and substance satisfactory to the Purchaser, confirming that they
are
14
<PAGE> 15
independent accountants within the meaning of the Act and the Exchange
Act and the respective applicable published rules and regulations
thereunder and that they have performed a review of the unaudited
financial information for the fiscal quarter ended March 31, 1996 in
accordance with Statement of Auditing Standards No. 71 and stating in
effect that:
(i) in their opinion the audited financial
statements and financial statement schedules and any pro forma
financial statements included or incorporated in the
Registration Statement and the Prospectus and reported on by
them comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and the Audit and
Finance, Human Resources and Nominating, and Strategy and
Technology committees of the Company and the Subsidiaries; and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company and its subsidiaries as to transactions and events
subsequent to the date of the most recent audited financial
statements included or incorporated in the Registration
Statement and the Prospectus, nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements
included or incorporated in the Registration
Statement and the Prospectus do not comply in form in
all material respects with applicable accounting
requirements and with the published rules and
regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not
in conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements included or incorporated in the
Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to
the date of the most recent financial statements
(other than capsule information), audited or
unaudited, included or incorporated in the
Registration Statement and the Prospectus, there were
any changes, at a specified date not more than five
business days prior to the date of the letter, in the
long-term debt obligations of the Company and its
subsidiaries, the number of issued shares of capital
stock of the Company, or any decreases in the total
assets or stockholders' equity of the Company as
compared with the amounts
15
<PAGE> 16
shown on the most recent consolidated balance sheet
included or incorporated in the Registration
Statement and the Prospectus, or for the period from
the date of the most recent financial statements
included or incorporated in the Registration
Statement and the Prospectus to such specified date
there were any decreases, as compared with the
corresponding period in the preceding year in
revenues, operating income, gross profit, net income
before income taxes, total or per share amounts of
net income or net interest income of the Company and
its subsidiaries, except in all instances for changes
or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless
said explanation is not deemed necessary by the
Purchaser; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, including the information
included or incorporated in Items 1, 2, 6, 7 and 11 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995, incorporated in the Registration Statement
and the Prospectus, the information included in the
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" included or incorporated in any of
the Company's Quarterly Reports on Form 10-Q incorporated in
the Registration Statement and the Prospectus and any such
information appearing in any Current Report on Form 8-K
incorporated in the Registration Statement and the Prospectus,
agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(f) of this Section 6 or (ii) any material adverse change in the
condition (financial or other), earnings, business or properties of
the Company and its subsidiaries, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement
thereto), the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Purchaser, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
16
<PAGE> 17
(h) At the Execution Time, the Company shall have furnished
to the Purchaser a letter substantially in the form of Exhibit A
hereto from each of the officers of the Company identified in Schedule
2, addressed to the Purchaser, in which each such officer agrees not
to offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce an offering of, any shares of Common Stock
beneficially owned by such person or any securities convertible into,
or exchangeable for, shares of Common Stock prior to the Redemption
Date and for a period of 90 days following the Redemption Date without
the prior written consent of the Purchaser, other than shares of
Common Stock disposed of as bona fide gifts and, in the case of each
of the officers identified in Schedule 2A, except for the sale of not
more than 1,000 shares of Common Stock during such period.
(i) The Company shall have furnished to the Purchaser such
further information, certificates and documents as the Purchaser may
reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Purchaser and counsel for the
Purchaser, this Agreement and all obligations of the Purchaser hereunder may be
canceled at, or at any time prior to, the Closing Date by the Purchaser.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for
the Purchaser, at One Liberty Plaza, New York, New York 10006, on the due date
for delivery thereof.
7. Reimbursement of Purchaser's Expenses. Whether or not the
Redemption is successfully completed or any Notice of Redemption is issued or
mailed, the Company will bear all costs and expenses related to the issue,
sale, delivery and listing of the Securities and redemption of the Redeemable
Securities, including, but not limited to, all costs and expenses in connection
with (i) the preparation and filing of the Registration Statement and
Prospectus and any supplements or amendments thereto; (ii) the redemption of
the Redeemable Securities, including all costs of publication and of printing
and mailing the Registration Statement, Prospectus, any supplements or
amendments thereto and the Notice of Redemption and related letter of
transmittal, (iii) the printing or other production and mailing or delivery of
the Registration Statement, any amendment thereto, the Prospectus, any
amendment or supplement thereto, this Agreement, the Blue Sky memoranda and
related documents; (iv) the preparation, issuance and delivery of the
Securities and delivery to Purchaser of any certificates evidencing the
Securities, including transfer agent's and registrar's fees and all taxes,
including original issue and transfer taxes, on the issuance or sale of the
Securities to Purchaser; (v) the filing fees and expenses (including reasonable
fees and disbursements of counsel) incurred in connection with obtaining or
confirming exemptions, qualification or registration of the Securities under
the Blue Sky or securities laws of the various states and/or incurred in
connection with filings with the Securities and Exchange Commission; (vi) the
reasonable fees
17
<PAGE> 18
and disbursements of counsel to the Purchaser incurred in the preparation of
the Blue Sky memoranda for the Offering and the related filings; (vii) the fees
and expenses of the accountants, counsel and any conversion agent or other
expert or advisor for the Company; (viii) all fees and expenses incurred in
connection with the quotation of the Securities on the Nasdaq National Market
System; (ix) costs of advertising or promotion of the redemption of the
Redeemable Securities or the sale by the Purchaser of any Securities (excluding
tombstone advertisements); (x) all fees of the trustee for the Redeemable
Securities in connection with the performance of the transactions contemplated
hereby; (xi) all transfer taxes as may be imposed on the Purchaser in
connection with their purchase of Redeemable Securities pursuant hereto; and
(xii) all other costs and expenses incidental to the performance by the Company
of its obligations hereunder or in connection herewith. In addition, whether
or not the Redemption is successfully completed or any Notice of Redemption is
issued or mailed, the Company agrees to promptly reimburse Purchaser for its
itemized, reasonable travel, lodging and other out-of-pocket expenses
(including the reasonable fees and expenses of counsel) incurred in connection
herewith, provided that such reimbursement shall not exceed $100,000.00 in the
aggregate without the prior approval of the Company.
8. Indemnification and Contribution. (a) The Company agrees
to indemnify and hold harmless the Purchaser, its directors, officers,
employees and agents and any person who controls the Purchaser within the
meaning of either the Act or the Exchange Act (any and all of which or whom is
referred to herein as an "Indemnified Person") against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or in the Letter of Transmittal, Notice of Redemption or
any other communication to Debenture holders by the Company in connection with
the Redemption or the offering of the Securities, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Purchaser
specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, to the same
18
<PAGE> 19
extent as the foregoing indemnity from the Company to the Purchaser, but only
with reference to written information furnished to the Company by or on behalf
of the Purchaser specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which the Purchaser may otherwise have. The Company acknowledges
that the statements set forth under the heading "Standby Arrangements" in any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the Purchaser for inclusion in any
Preliminary Prospectus or the Prospectus, and the Purchaser confirms that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel reasonably satisfactory to the indemnifying party), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or preceding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
19
<PAGE> 20
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchaser agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and the Purchaser
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Purchaser from the offering of the
Securities; provided, however, that in no case shall the Purchaser be
responsible for any amount in excess of the fees payable by the Company to the
Purchaser pursuant to Section 3 hereof. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Purchaser shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company and
of the Purchaser in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the sum of (i)
the principal amount of Redeemable Securities converted by the Purchaser
pursuant to Section 2(a) hereof and (ii) the net amount paid by the Purchaser
to the Company at the Closing, and benefits received by the Purchaser shall be
deemed to be equal to the total fees payable by the Company to the Purchaser
pursuant to Section 3 hereof. Relative fault shall be determined by reference
to whether any alleged untrue statement or omission relates to information
provided by the Company or the Purchaser. The Company and the Purchaser agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls a
Purchaser within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of a Purchaser shall have the same rights
to contribution as such Purchaser, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
9. Soliciting Conversions. The Purchaser may assist the
Company in soliciting conversion of the Redeemable Securities by the holders
thereof but shall not be entitled to compensation by the Company for any such
assistance.
10. Termination. This Agreement shall be subject to
termination in the sole and absolute discretion of the Purchaser, by notice
given to the Company at any time prior to the Closing Date, in the event that
the Company shall have failed, refused or been unable to perform any
obligations or satisfy any conditions on its part to be performed or satisfied
hereunder at or prior thereto or that, at or prior to the Closing Date (a)
trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market System or trading in the Redeemable
Securities shall have been suspended by the Commission or the Nasdaq National
Market System prior to the Redemption Date; (b)
20
<PAGE> 21
trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market System shall have been suspended or limited or minimum prices
shall have been established on such Exchange or Market System; (c) a banking
moratorium shall have been declared either by Federal or New York State
authorities; or (d) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis, provided that, in the case of an event described in
(a), such event has an adverse effect on the market for the Company's Common
Stock such as to make it, in the judgment of the Purchaser, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Prospectus (exclusive of any supplement thereto) and
provided further that, in the case of an event described in (b), (c) or (d),
the effect of any such event on financial markets is such as to make it, in the
judgment of the Purchaser, impracticable or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
Termination of this Agreement pursuant to this Section 10
shall be without liability of any party to any other party except as provided
in Section 11 hereof.
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Purchaser set forth in or
made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Purchaser or the
Company or any of the officers, directors, employees, agents or controlling
persons referred to in Section 8 hereof, and will survive the conversion of any
Redeemable Securities and the delivery of and payment for any Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or telegraphed and confirmed to it at 21 West 52nd Street, New York,
N.Y. 10019; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 21700 Atlantic Boulevard, Dulles, VA 20166,
attention of the legal department.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parities hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
21
<PAGE> 22
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the Purchaser.
Very truly yours,
Orbital Sciences Corporation
By:
---------------------------
Name:
Title:
The foregoing Agreement is
hereby confirmed and
accepted as of the
date first above written.
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
By:
-----------------------------------
Name:
Title:
22
<PAGE> 23
EXHIBIT A
[Letterhead of senior officers or directors]
ORBITAL SCIENCES CORPORATION
STANDBY AGREEMENT
New York, New York
July __, 1996
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
21 West 52nd Street
New York, N.Y. 10019
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Standby Agreement (the "Standby Agreement") between Orbital Sciences
Corporation, a Delaware corporation (the "Company"), and you as the Purchaser
named therein, relating to a call for redemption by the Company of all of its
outstanding 6-3/4% Convertible Subordinated Debentures Due 2003.
In order to induce you to enter into the Standby Agreement, the
undersigned agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, shares of Common Stock
(as defined in the Standby Agreement) beneficially owned by the undersigned or
any securities convertible into, or exchangeable for, shares of Common Stock
prior to the Redemption Date (as defined in the Standby Agreement) and for a
period of 90 days following the Redemption Date without your prior written
consent, other than shares of Common Stock disposed of as bona fide gifts.(1)
- --------------------
(1) Officers listed in Schedule 2A may include the following language at the
end of this sentence: "and other than up to 1,000 additional shares of
Common Stock" .
<PAGE> 24
If for any reason the Standby Agreement shall be terminated prior to
the Closing Date, the agreement set forth above shall likewise be terminated.
Yours very truly,
-----------------------------------
[Signature of senior officer or
director]
-----------------------------------
[Name and address of
senior officer or director]
24
<PAGE> 25
SCHEDULE 1
LIST OF SUBSIDIARIES
Orbital Communications Corporation
Orbital Imaging Corporation
ORBCOMM Global, L.P.
ORBCOMM USA, L.P.
Orbital Services Corporation
Fairchild Space and Defense Corporation
Magellan Corporation
[MacDonald Dettwiler Technologies Inc.]
<PAGE> 26
SCHEDULE 2
LIST OF CERTAIN OFFICERS
<PAGE> 27
SCHEDULE 2A
LIST OF CERTAIN OFFICERS AUTHORIZED TO SELL UP TO 1,000 SHARES
37
<PAGE> 1
EXHIBIT 4.1
RESTATED
CERTIFICATE OF INCORPORATION
of
ORBITAL SCIENCES CORPORATION
(formerly ORBITAL SCIENCES CORPORATION II)
This Restated Certificate of Incorporation of Orbital Sciences
Corporation (formerly Orbital Sciences Corporation II) (the "Corporation")
restates in its entirety the Corporation's original Certificate of
Incorporation which was filed with the Office of the Delaware Secretary of
State on June 30, 1987. This Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Section 245 of the Delaware
General Corporation Law, and only restates and integrates and does not further
amend the provisions of the Corporation's Certificate of Incorporation as
heretofore amended or supplemented. There is no discrepancy between those
provisions and the provisions of this Restated Certificate.
1. The name of this Corporation is Orbital Sciences Corporation.
2. The registered office of this Corporation in the State of
Delaware is located at 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The purpose of this Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
4. The name and mailing address of the incorporator is: Debra L.
Fitzgerald, Ropes & Gray, 225 Franklin Street, Boston, Massachusetts 02110.
5. The total number of shares of stock that this Corporation
shall have authority to issue is 50,000,000 shares consisting of 40,000,000
shares of Common Stock, $.01 par value per share (the "Common Stock") and
10,000,000 shares of Preferred Stock, $.01 par value per shares (the "Preferred
Stock") which may be issued as follows:
A. The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Certificate of
Incorporation, to provide for the issuance of the shares of Preferred
Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to
time the number of shares to be included in each such series, and to
fix the designations, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or restrictions
thereof. Except as may be required by law, the shares in any series
of Preferred Stock
<PAGE> 2
or any shares of stock of any other class need not be identical. Such
authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
1. The number of shares constituting that series and the
distinctive designation of that series and the stated value
thereof if different from the par value thereof;
2. The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which
date or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that series;
3. Whether that series shall have voting rights in
addition to the voting rights provided by law, and, if so, the
terms of such voting rights;
4. Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such
conversion or exchange, including provision for adjustment of
the conversion or exchange rate in such events as the Board of
Directors shall determine;
5. Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption including the manner of selecting shares for
redemption if less than all shares are to be redeemed, the
date or dates upon or after which they shall be redeemable,
and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different
redemption dates;
6. Whether the series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
7. The right of the shares of that series to the benefit
of conditions and restrictions upon the creation of
indebtedness of the Corporation or any subsidiary, upon the
issuance of any additional stock (including additional shares
of such series or any other series) and upon the payment of
dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by the Corporation,
or any subsidiary, of any outstanding stock of the
Corporation;
8. The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series; and
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<PAGE> 3
9. Any other relative, participating, optional or other
special rights, qualifications, limitations or restrictions of
that series.
B. Any preferential dividends on outstanding shares of Preferred
Stock shall be paid, or declared and set apart for payment, before any
dividends shall be paid or declared and set apart for payment on
outstanding shares of Common Stock or Preferred Stock not entitled to
preferential dividends. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the assets
available for distribution to holders of shares of Preferred Stock of
all series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets shall
be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts
(including unpaid cumulative dividends, if any) payable with respect
thereto.
C. Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or
otherwise) or which, if convertible or exchangeable, have been
converted into or exchanged for shares of stock of any other class or
classes shall have the status of authorized and unissued shares of
Preferred Stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors or as part of
any other series of Preferred Stock all subject to the conditions and
the restrictions on issuance set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issue
of any series of Preferred Stock.
D. Subject to the provisions of any applicable law, this
Certificate of Incorporation and the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders
of outstanding shares of Common Stock shall exclusively possess voting
power for the election of directors and for all other purposes, each
holder of record of shares of Common Stock being entitled to one vote
for each share of Common Stock standing in his name on the books of
the Corporation.
E. Except as otherwise provided by the resolution or resolutions
providing for the issue of any series of Preferred Stock, after
payment shall have been made to the holders of Preferred Stock of the
full amount of dividends to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of
Preferred Stock, the holders of Common Stock shall be entitled, to the
exclusion of the holders of Preferred Stock of any and all series, to
receive such dividends as from time to time may be declared by the
Board of Directors.
F. Except as provided by the resolution or resolutions providing
for the issue of any series of Preferred Stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, after payment shall have been
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<PAGE> 4
made to the holders of Preferred Stock of the full amount to which
they shall be entitled pursuant to the resolution or resolutions
providing for the issue of any series of Preferred Stock, the holders
of Common Stock shall be entitled, to the exclusion of holders of
Preferred Stock of any and all series, to share ratably according to
the number of shares of Common Stock held by them, in all remaining
assets of the Corporation available for distribution.
6. Except as provided to the contrary in the provisions
establishing a class or series of stock, the amount of the authorized stock of
this Corporation of any class or classes may be increased or decreased by the
affirmative vote of the holders of a majority of the stock of this Corporation
entitled to vote.
7. The election of directors need not be by ballot unless the
By-laws shall so require.
8. In furtherance and not in limitation of the power conferred
upon the Board of Directors by law, the Board of Directors shall have power to
make, adopt, alter, amend and repeal from time to time By-laws of this
Corporation, subject to the right of the stockholders entitled to vote with
respect thereto to alter and repeal By-laws made by the Board of Directors.
9. A director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that exculpation from liability is not
permitted under the Delaware General Corporation Law as in effect at the time
such liability is determined. No amendment or repeal of this Paragraph 9 shall
apply to or have any effect on the liability or alleged liability of any
director of this Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
10. This Corporation shall, to the maximum extent permitted under
the law of the State of Delaware as presently in effect, except for Section
145(f) of the General Corporation Law, indemnify and upon request shall advance
expenses to any person who is or was a party or is threatened to be made a
party to any threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer
of this Corporation or while a director or officer is or was serving at the
request of this Corporation as a director, officer, partner, trustee, employee
or agent of any corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, against
expenses (including attorney's fees and expenses), judgments, fines, penalties
and amount paid in settlement incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim,
provided, however, that the foregoing shall not require this Corporation to
indemnify or advance expenses to any person in connection with any action,
suit, proceeding, claim or counterclaim initiated by or on behalf of such
person. Such
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<PAGE> 5
indemnification shall inure to the benefit of the heirs and legal
representatives of such person. Any person seeking indemnification under this
Paragraph 10 shall be deemed to have met the standard of conduct required for
such indemnification unless the contrary shall be established. Any repeal or
modification of the foregoing provisions of this Paragraph 10 shall not
adversely affect any right or protection of a director or officer of this
Corporation with respect to any acts or omissions of such director or officer
occurring prior to such repeal or modification.
11. The number of directors of this Corporation shall consist of
not less than three nor more than fifteen persons, the exact number to be fixed
from time to time by the Board of Directors pursuant to a resolution adopted by
a majority vote of the directors then in office. The Board of Directors shall
be divided into three groups, as nearly equal in number as possible, with the
term of office of the first group to expire at the 1988 annual meeting of
stockholders, the term of office of the second group to expire at the 1989
annual meeting of stockholders and the term of office of the third group to
expire at the 1990 annual meeting of stockholders. At each annual meeting of
stockholders following such initial grouping and election, directors shall be
elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election. Subject to the rights of the holders of
any one or more classes of stock (other than the Corporation's Common Stock)
then outstanding which may be entitled to elect directors voting separately as
a class or classes, newly created directorships resulting from any increase in
the number of directors authorized pursuant to this Paragraph 11 or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be
filled by a majority vote of the directors then in office, and directors so
chosen shall hold office for a term expiring at the annual meeting of
stockholders at which the term of the group to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. No director need
be a stockholder. Each director shall hold office until the annual meeting of
stockholders at which his term of office expires and until his successor is
elected and qualified, or until he sooner dies, resigns, is removed or becomes
disqualified.
12. The stockholder vote required to approve Business Combinations
shall be as set forth in this Paragraph 12 (all capitalized terms being used in
this Paragraph 12 as subsequently defined herein in this Paragraph 12).
A. Higher Vote for Business Combinations. In addition to any
affirmative vote required by law or this Certificate of Incorporation,
and except as otherwise expressly provided in Section C of this
Paragraph 12:
1. any merger or consolidation of the Corporation or a
Subsidiary with or into a Related Person or any other
corporation which is, or after such merger or consolidation
would be, an Affiliate or Associate of a Related Person;
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<PAGE> 6
2. any sale, lease, exchange, transfer or other
disposition (including without limitation the creation of a
mortgage or any other security device), in one transaction or
a series of transactions, of any Substantial Part of the
assets of the Corporation (including without limitation any
voting securities of a Subsidiary) or of a Subsidiary to a
Related Person or to an Affiliate or Associate of a Related
Person;
3. any sale, lease, exchange, transfer or other
disposition, in one transaction or a series of transactions,
of the assets of a Related Person, or an Affiliate or
Associate of a Related Person, to the Corporation or a
Subsidiary in an amount which would immediately prior to such
transaction constitute a Substantial Part of the assets of the
Corporation;
4. any issuance by the Corporation or any Subsidiary of
any securities of the Corporation or of a Subsidiary to a
Related Person or an Affiliate or Associate of a Related
Person, other than pursuant to an employee stock plan approved
by the Continuing Directors and by the stockholders of the
Corporation;
5. any acquisition by the Corporation or a Subsidiary of
any securities of a Related Person or of an Affiliate or
Associate of a Related Person;
6. any adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of a Related Person or any Affiliate or Associate of
a Related Person;
7. any reclassification of securities (including any
reverse stock split) or recapitalization of the Corporation or
any other transaction (whether or not with or into or
otherwise involving a Related Person) which has the effect,
directly or indirectly, of increasing the proportionate share
of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Related Person or
any Affiliate or Associate of any Related Person;
8. any transaction (including a merger or consolidation
of the Corporation with or into a Subsidiary) occurring at a
time when a Related Person exists in which the proportionate
interests of the stockholders of the Corporation in the assets
of the Corporation are unchanged but as a result of which the
provisions of this Paragraph 12 or substantially equivalent
provisions would thereafter cease to be in effect; and
9. any agreement, contract or other arrangement
providing for any of the foregoing transactions;
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<PAGE> 7
shall require the affirmative vote of the holders of not less than
sixty-six and two-thirds percent (66 2/3%) of the outstanding shares
of Voting Stock, voting together as a single class. Such affirmative
vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or in
any agreement with any national securities exchange or otherwise.
B. Definitions of "Business Combinations." The term "Business
Combination" as used in this Paragraph 12 shall mean any transaction
which is referred to an any one or more of paragraphs 1 through 9 of
Section A of this Paragraph 12.
C. When Higher Vote Is Not Required. The provisions of Section A
of this Paragraph 12 shall not be applicable to any particular
Business Combination, and such Business Combination shall require only
such affirmative vote as is required by law and any other provision of
this Certificate of Incorporation, if all of the conditions specified
in any one of the following paragraphs 1, 2 and 3 are met:
1. Approval in Advance by the Board of Directors. The
Board of Directors by a vote of not less than two-thirds of
the Continuing Directors then holding office (a) have
expressly approved in advance either the acquisition of
outstanding shares of Voting Stock, or the issue or sale by
the Corporation of shares of Voting Stock, that caused the
Related Person to become a Related Person and (b) in advance
of such acquisition or issue or sale have expressly determined
that the sixty-six and two-thirds percent (66 2/3%) voting
requirement of Section A of Paragraph 12 shall not be
applicable to Business Combinations with such Related Person.
2. Approval by Continuing Directors. Two-thirds of the
Continuing Directors have approved the Business Combination.
3. Price and Procedure Requirements. All of the
following conditions are met:
(a) The Business Combination is a merger or
consolidation and cash or Fair Market Value of each
of the property, securities or other consideration to
be received per share by the holders of Common Stock
in the Business Combination is not less than the
highest per share price (with appropriate adjustments
for recapitalizations and for stock splits, stock
dividends and like distributions, such distributions
to be valued as of the distribution date) paid by the
Related Person in acquiring any of its holdings of
Common Stock within the two-year period preceding the
earlier of the Business Combination or the first
public announcement of the proposal of the Business
Combination (the "Announcement Date").
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<PAGE> 8
(b) The Business Combination is a merger or
consolidation and the cash or Fair Market Value of
each of the property, securities or other
consideration to be received per share by the holders
of shares of any class of outstanding Voting Stock,
other than Common Stock, in the Business Combination
is not less than the highest per share price (with
appropriate adjustments for recapitalizations and for
stock splits, stock dividends and like distributions,
such distributions to be valued as of the
distribution date) paid by the Related Person in
acquiring any of its holdings of such class of Voting
Stock within the two-year period preceding the
earlier of the Business Combination of the
Announcement Date.
(c) After the Related Person has become a Related
Person and prior to the consummation of such Business
Combination: (i) except as approved by two-thirds of
the Continuing Directors, there shall have been no
failure to declare and pay at the regular date
therefor any full dividends (whether or not
cumulative) on any outstanding Preferred Stock; and
(ii) there shall have been (a) no reduction in the
annual rate of frequency of dividends paid on the
Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved
by two-thirds of the Continuing Directors, and (b) an
increase in such annual rate of dividends as
necessary to reflect any reclassification of
securities (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock,
unless the failure so to increase such annual rate is
approved by two-thirds of the Continuing Directors.
(d) After such Related Person has become a
Related Person, such Related Person shall not have
received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Corporation or a Subsidiary.
(e) A proxy or information statement describing
the proposed Business Combination and complying with
the requirements of the Securities Exchange Act of
1934 and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall be mailed to stockholders of the
Corporation at least forty-five days prior to the
consummation of such Business Combination (whether or
not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent
provisions).
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<PAGE> 9
D. Certain Definitions. For the purpose of this
Paragraph 13:
1. A "Person" means any individual, firm,
partnership, corporation or other person or entity.
2. "Related Person" means any Person that
together with its Affiliates and Associates owns in
the aggregate five percent (5%) or more of the
outstanding shares of the Voting Stock, and any
Affiliate or Associate of any such Person, provided
that "Related Person" shall not include the
Corporation or any Subsidiary.
3. "Substantial Part" means assets having an
aggregate value in excess of five percent (5%) of the
total consolidated assets of the Corporation and its
Subsidiaries as of the end of the Corporation's most
recent fiscal year prior to the time the
determination is made.
4. A Person shall be deemed to "own" any Voting
Stock:
(a) of which such Person or any of its
Affiliates or Associates would be the
beneficial owner, as such term is defined in
Rule 13d-3 promulgated by the Securities and
Exchange Commission (the "Commission") under
the Securities Exchange Act of 1934, as in
effect on January 1, 1988; or
(b) of which such Person or any of its
Affiliates or Associates would be the
beneficial owner, as such term is defined
under Section 16 of the Securities Exchange
Act of 1934 and the rules of the Commission
promulgated thereunder, as in effect on
January 1, 1988; or
(c) which such Person or any of its
Affiliates or Associates has the right to
acquire (whether such right is exercisable
immediately, only after the passage of time
or upon the occurrence of a special event),
pursuant to any agreement, arrangement or
understanding or upon the exercise of
conversion rights, exchange rights, warrants
or options, or otherwise; or
(d) which are owned by any other person
with which such Person or any of its
Affiliates or Associates has any agreement,
arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of
any shares of Voting Stock.
5. For the purposes of paragraphs 3(a) and 3(b)
of Section C of this Paragraph 12, the term "other
consideration to be received" includes, without
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<PAGE> 10
limitation, Voting Stock retained by its existing stockholders
in the event of a Business Combination in which the
Corporation is the surviving corporation.
6. "Continuing Director" means (a) any director who was
a member of the Board of Directors of the Corporation on
January 1, 1988, and (b) any director who was a member of the
Board of Directors of the Corporation immediately prior to the
time that any Related Person involved in the proposed Business
Combination became a Related Person (or, if the transaction
involves more than one Related Person, immediately prior to
the time the first of such Persons to become a Related Person
becomes a Related Person), and (c) any director who is not an
Affiliate or Associate of a Related Person and is designated
for his or her initial term of office by a two-thirds vote of
the Continuing Directors.
7. "Affiliate" or "Associates" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated by
the Commission under the Securities Exchange Act of 1934, as
such Rule was in effect on January 1, 1988.
8. "Voting Stock" means all outstanding shares of
capital stock of the Corporation entitled to vote in the
election of directors and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of the
votes entitled to be cast by such shares.
9. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for
the purposes of the definition of Related Person set forth in
paragraph 2 of this Section D, the term "Subsidiary" shall
mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the
Corporation.
10. "Fair Market Value" means: (i) in the case of stock,
the highest sale price during the thirty-day period
immediately preceding the date in question of a share of such
stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock
is listed, or, if such stock is not listed on any such
exchange, the highest bid quotation with respect to a share of
such stock during the thirty-day period preceding the date in
question on the National Association of Securities Dealers,
Inc., Automated Quotations System or any system then in use,
or if no such quotations are available, the fair market value
on the date in question of a share of such stock as determined
by two-thirds of the Continuing Directors in good faith; and
(ii) in the case of property other than cash or stock,
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<PAGE> 11
the fair market value of such property on the date in question
as determined by two-thirds of the Continuing Directors in
good faith.
11. "Corporation" means Orbital Sciences Corporation.
12. "Common Stock" means any class of common stock of the
Corporation.
13. "Preferred Stock" means any class of preferred stock
of the Corporation.
E. Powers of Continuing Directors. Two-thirds of the Continuing
Directors of the Corporation shall have the power and duty to
determine, on the basis of information known to them after reasonable
inquiry, all facts necessary to determine compliance with this
Paragraph 12, including without limitation (1) whether a Person is a
Related Person, (2) the number of shares of Voting Stock owned by any
Person, (3) whether a Person is an Affiliate or Associate of another,
(4) whether the requirements of paragraph 3 of Section C have been met
with respect to any Business Combination, and (5) whether the assets
which are the subject of any Business Combination have an aggregate
Fair Market Value in excess of the amount set forth in paragraphs 2
and 3 of Section A of this Paragraph 12 and (6) any other facts which
two-thirds of the Continuing Directors determine to be relevant; and
the good faith determination of two-thirds of the Continuing Directors
on such matters shall be conclusive and binding for all the purposes
of this Paragraph 12.
F. Amendment, Repeal, etc. Notwithstanding the fact that a
lesser percentage may be specified by law, this Certificate of
Incorporation or the By-laws of this Corporation, the affirmative vote
of the holders of not less than sixty-six and two-thirds percent (66
2/3%) of the Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent
with, this Paragraph 12 of this Certificate of Incorporation; provided
that this Section F shall not be applicable to any amendment to this
Paragraph 12 of this Certificate of Incorporation, and such amendment
shall require only such affirmative vote as is required by law and any
other provisions of this Certificate of Incorporation, if such
amendment shall have been approved by two-thirds of the Continuing
Directors.
13. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of not less
than sixty-six and two-thirds percent (66 2/3%) of the shares of the capital
stock entitled to vote for the election of directors, voting together as a
single class, shall be required to amend or to adopt any provision inconsistent
with Paragraph 9, Paragraph 10, Paragraph 11, or this Paragraph 13 of this
Certificate of Incorporation.
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<PAGE> 12
14. Any action required or permitted to be taken by the
stockholders of this Corporation must be effected at a duly called annual or
special meeting of stockholders of this Corporation and may not be effected by
any consent in writing by such stockholders.
15. The holders of not less than ten percent (10%) of the capital
stock of this Corporation entitled to vote for the election of directors,
voting together as a class, may request the secretary of the Corporation to
call a special meeting of the Stockholders of the Corporation for such
reasonable purpose and at such reasonable time and place as they may set forth
in their request to the secretary.
16. The books of this Corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be designated by the
Board of Directors or in the By-laws of this Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of the
Corporation this 7th day of February, 1990.
/s/ David W. Thompson
--------------------------------
David W. Thompson
President
Attest:
/s/ Leslie Seeman
- ------------------------------------
Leslie Seeman
Secretary
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<PAGE> 1
EXHIBIT 4.2
ORBITAL SCIENCES CORPORATION
CERTIFICATE OF DESIGNATIONS
SERIES A SPECIAL VOTING PREFERRED STOCK
ORBITAL SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby
certify:
That, pursuant to authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the Corporation, and pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, by an action of unanimous written consent
dated November 8,1995, adopted a resolution providing for the issuance of a
series of special voting preferred stock, which resolution is set forth below:
RESOLVED: That there is hereby created a series of one share of
preferred stock, $.01 par value per share, having the
powers, preferences and relative participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, set forth below,
in addition to those specified in this Corporation's
Restated Certificate of Incorporation (the following,
referred to hereinafter as "this resolution" or "this
Certificate of Designations," is to be filed as part
of a Certificate of Designations under Section 151(g)
of the General Corporation Law of the State of
Delaware):
1. Designation. There shall be a series of Preferred Stock,
the designation of which shall be "Series A Special Voting Preferred
Stock" (hereinafter referred to as the "Series A Special Voting
Preferred Stock") and the number of authorized shares constituting the
Series A Special Voting Preferred Stock shall be one.
2. Voting Rights. In respect of all matters concerning the
voting of shares, except as otherwise required by law, the Series A
Special Voting Preferred Stock shall vote together with the Common
Stock of the Corporation as a single class and such voting rights
shall be identical to those of the Common Stock in all respects. The
holder of record of the share of Series A Special Voting Preferred
Stock shall have a number of votes equal to the product of (a) the
number of Exchangeable Non-Voting Shares ("Exchangeable Shares") of
MacDonald Dettwiler Holdings Inc. (formerly known as 3173623 Canada
Inc.) outstanding from time to time on the record date for determining
stockholders entitled to vote and which are not owned by the
Corporation, any of its subsidiaries or any person directly or
indirectly controlled by or under common control of the Corporation,
in all matters submitted to a vote of stockholders of the Corporation
by (b) the Current Orbital Common Share Equivalent (as such term is
defined in the Provisions Attaching to the Exchangeable Shares which
are attached as Appendix A to the Articles of Arrangement of MacDonald
Dettwiler Holdings Inc. being filed on or about November 17, 1995
under Section 192 of the Canada Business
<PAGE> 2
Corporations Act, as amended from time to time). For the purposes
hereof, "control" (including the correlative meanings, the terms
"controlled by" and "under common control of") as applied to any
person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that
person through the ownership of voting securities, by contract or
otherwise.
3. Liquidation. In the event of any liquidation, dissolution
or winding up of the Corporation, the holder of the Series A Special
Voting Preferred Stock shall not be entitled to receive any assets of
the Corporation available for distribution to its stockholders.
4. Dividends. The holder of the Series A Special Voting
Preferred Stock shall not be entitled to the payment of dividends,
whether payable in cash, property or in shares of capital stock.
5. Certain Contractual Rights. Pursuant to the terms of that
certain Combination Agreement, dated as of August 31, 1995, by and
among the Corporation, MacDonald Dettwiler Holdings Inc. and
MacDonald, Dettwiler and Associates Ltd., one share of Series A
Special Voting Preferred Stock is being issued to the trustee (the
"Trustee") under the Voting and Exchange Trust Agreement, dated as of
November 17, 1995, by and among the Corporation, MacDonald Dettwiler
Holdings Inc. and the Trustee. Section 4.6 of such Voting and
Exchange Trust Agreement provides for notification to the Trustee as
holder of the Series A Special Voting Preferred Stock of the total
number of Exchangeable Shares outstanding from time to time that are
not owned by the Corporation, any of its subsidiaries or any person
directly or indirectly controlled by or under common control of the
Corporation. At such time as the Series A Special Voting Preferred
Stock has no votes attached to it because there are no Exchangeable
Shares outstanding that are not owned by the Corporation, any of its
subsidiaries or any person directly or indirectly controlled by or
under common control of the Corporation, and there are no shares of
stock, debt, options or other agreements of MacDonald Dettwiler
Holdings Inc. that could give rise to the issuance of any Exchangeable
Shares to any person (other than the Corporation, any of its
subsidiaries or any person directly or indirectly controlled by or
under common control of the Corporation), the Series A Special Voting
Preferred Stock may be redeemed by resolution of the Board of
Directors for $1.00 per share.
-2-
<PAGE> 3
IN WITNESS WHEREOF, ORBITAL SCIENCES CORPORATION has caused this
certificate to be signed by Leslie C. Seeman, its Senior Vice President and
Secretary and attested by Susan Herlick, its Assistant Secretary, this 16 day
of November, 1995.
ORBITAL SCIENCES CORPORATION
By: /s/ Leslie C. Seeman
---------------------------------
Leslie C. Seeman
Senior Vice President and Secretary
ATTEST:
By: /s/ Susan Herlick
---------------------------
Susan Herlick
Assistant Secretary
-3-
<PAGE> 1
EXHIBIT 5
[ROPES & GRAY LETTERHEAD]
July 25, 1996
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Ladies and Gentlemen:
This opinion is furnished to you in connection with your registration
statement on Form S-3 (the "Registration Statement"), filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, for the registration of 3,887,304 shares of Common Stock, $0.01 par
value per share (the "Shares"), of Orbital Sciences Corporation, a Delaware
corporation (the "Company"). The Shares are to be sold to Deutsche Morgan
Grenfell/C.J. Lawrence (the "Purchaser") pursuant to the Standby Agreement
dated July 25, 1996 between you and the Purchaser (the "Standby Agreement").
We have acted as counsel for the Company in connection with the
registration of the Shares. For purposes of our opinion, we have examined and
relied upon such documents, records, certificates and other instruments as we
have deemed necessary.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized and that, when issued and sold by the Company pursuant to
the Standby Agreement, they will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as part of the
Registration Statement.
It is understood that this opinion is to be used only in connection
with the offer and sale of the Shares while the Registration Statement is in
effect.
Very truly yours,
/s/ ROPES & GRAY
---------------------------
Ropes & Gray
<PAGE> 1
Exhibit 23.1
ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders
Orbital Sciences Corporation:
We consent to the use of our reports incorporated by reference herein and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Washington, D.C.
July 25, 1996
