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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
ORION NETWORK SYSTEMS, INC.
---------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
68628K104
---------
(CUSIP Number)
Charles E. Gaba, Esq.
British Aerospace North America, Inc.
15000 Conference Center Drive
Chantilly, Virginia 20151
(703) 227-1510
---------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 7, 1997
------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 68628K104 Page 2 of _____ Pages
---------
1 Name of Reporting Person
S.S. or I.R.S. Identification Nos. of Above Person
British Aerospace North America, Inc.
2 Check the Appropriate Box If a Member of a Group*
a. / /
b. / /
3 SEC Use Only
4 Source of Funds* N/A
5 Check box if disclosure of legal proceedings is required pursuant to
item 2(d) or 2(e) / /
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of
Shares
Beneficially 8 Shared Voting Power
Owned By 6,816,001
Each
Reporting 9 Sole Dispositive Power
Person
With
10 Shared Dispositive Power
6,816,001
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,816,001
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
13 Percent of Class Represented By Amount in Row (11)
29.31%
14 Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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SCHEDULE 13D
CUSIP No. 68628K104 Page 3 of _____ Pages
---------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
British Aerospace Plc
2 Check the Appropriate Box If a Member of a Group*
a. / /
b. / /
3 SEC Use Only
4 Source of Funds*
N\A
5 Check box if disclosure of legal proceedings is required pursuant to
item 2(d) or 2(e) / /
6 Citizenship or Place of Organization
England and Wales
7 Sole Voting Power
Number of
Shares
Beneficially 8 Shared Voting Power
Owned By 6,816,001
Each
Reporting 9 Sole Dispositive Power
Person
With
10 Shared Dispositive Power
6,816,001
11 Aggregate Amount Beneficially Owned by Each Reporting Person
6,816,001
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /
13 Percent of Class Represented By Amount in Row (11)
29.31%
14 Type of Reporting Person*
CO, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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This Amendment No. 1 to the original statement of beneficial
ownership on Schedule 13D filed by the parties hereto on February 10, 1997 has
been prepared to report (i) the receipt by BANA (as hereinafter defined) of
341,106 shares of Common Stock of the Issuer in payment of dividend and interest
obligations of the Issuer on Convertible Instruments issued on January 31, 1997,
(ii) the granting of a purchase option by BANA to Loral Space & Communications
Ltd. ("Loral") in connection with a proposed merger transaction between Loral
Satellite Corporation ("Sub") and the Issuer, (iii) the agreement between Loral
and BANA pursuant to which 3,571,429 shares of Issuer Common Stock owned by BANA
were released from the Principal Stockholder Agreement and (iv) the sale of
834,225 shares of Issuer Common Stock by BANA. Defined terms used herein that
are not otherwise defined herein have the meanings ascribed to them in the
Reporting Persons' original Schedule 13D filing.
Item 2. Identity and Background
Item 2 is hereby amended to read in its entirety as follows:
This statement of beneficial ownership interest is being filed
by the following persons: (i) British Aerospace North America, Inc. ("BANA"), a
Delaware corporation, and (ii) British Aerospace Plc ("PLC"), a company existing
under the laws of England and Wales. BANA, formerly known as British Aerospace
Holdings, Inc., is a direct, wholly owned subsidiary of PLC.
The principal business office and principal business activity
of each of the Reporting Persons is as follows:
(a) BANA:
15000 Conference Center Drive
Chantilly, Virginia 20151
Principal Business Activity:
Top-tier U.S. holding company for PLC's U.S.
interests.
(b) PLC:
Warwick House, P.O. Box 87
Farnborough Aerospace Centre
Farnborough, Hampshire, GU14 6YU, United Kingdom
Principal Business Activity:
Parent holding company that through its subsidiaries
is principally engaged in the defense business
(manufacture and sale of military aircraft, guided
weapons, ordnance and electronic systems), the
commercial aerospace business (design and production
of wings for Airbus Industrie jets, manufacture of
regional airliners and turboprop aircraft and
secondary marketing and servicing of commercial
aircraft) and the property development business.
Information regarding the executive officers and directors of
each of the Reporting Persons is as follows:
(a) Name - Refer to Annex A
(b) Residence or business Address - Refer to Annex A
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(c) Present principal occupation or employment - Refer
to Annex A
(d)-(e) During the last five years none of the Reporting
Persons and none of the directors or executive
officers who are identified on Annex A has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party
to a civil proceeding of a judicial or administrative
body of competent jurisdiction that resulted in a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to U.S. federal or state securities laws or
finding any violations with respect to such laws.
(f) Citizenship - Refer to Annex A
Item 4. Purpose of Transaction
Item 4 is hereby supplemented as follows:
As an inducement for Loral and Sub to enter into an Agreement
and Plan of Merger ("Merger Agreement") with the Issuer, BANA agreed to grant
Loral and Sub an option exercisable in certain circumstances to purchase all of
the shares of Issuer Common Stock held by BANA (including shares of Common Stock
underlying the Convertible Instruments held by BANA). BANA has also agreed to
vote in favor of the transactions contemplated by the Merger Agreement and to
vote against certain actions that may be adverse to the consummation of the
proposed merger transaction. BANA has appointed Loral and Sub as its proxy for
such purposes. If a merger is consummated pursuant to the terms of the Merger
Agreement, BANA will receive shares of common stock in Loral in exchange for its
interest in the Issuer. The terms of the option arrangement are set out in a
Principal Stockholder Agreement dated October 7, 1997 and as amended and
restated as of December 1, 1997 among Loral, Sub, the Issuer and several
stockholders of the Issuer, including BANA. The option is not presently
exercisable.
Pursuant to an agreement dated February 24, 1998 (the "Letter
Agreement") BANA, Loral and Sub agreed that the terms and conditions of the
Principal Stockholder Agreement would not apply to 3,571,429 Common Shares of
the Issuer owned by BANA ("Released Shares") and that BANA would be permitted to
sell such Released Shares. As noted below in Item 5(c) BANA sold 834,225
Released Shares on February 25, 1998. Depending upon economic and market
conditions and such other considerations as it deems relevant, BANA presently
intends to sell some or all of the remaining Released Shares in one or more
private resale transactions.
Item 5. Interest in Securities of the Issuer
Items 5(a), (b), and (c), are hereby amended to read as
follows:
(a) BANA owns 1,071,026 shares of Common Stock, 52,636 shares of Series
C Stock that as of February 1, 1998 were convertible into 3,007,771 shares of
Common Stock and the Debenture. As of February 1, 1998 the Debenture was
convertible into 3,571,429 shares of Common Stock. BANA has converted
approximately $11,679,164 of the principal amount of the Debenture (originally
$50,000,000) in connection with the sale of 834,225 shares of Common Stock. As a
result, BANA presently owns or has an immediate right to acquire upon conversion
6,816,001 shares of Common Stock or approximately 29.31% of the total number of
shares of Common Stock issued and outstanding, as calculated in accordance with
Rule 13d-3(d)(1). As of February 25, 1998 BANA would also be entitled to an
additional 34,234 shares of Common Stock of the Issuer, assuming full conversion
on that date of each of Convertible Instruments, based upon a conversion price
of $14.00 per share with respect to the Debenture and a determination price of
$17.50 per share of Issuer Common Stock with respect to the Series C Stock. In
addition, W. Anthony Rice, a director of the Issuer, has the options to acquire
20,000
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shares of Common Stock. Mr. Rice is entitled to exercise the options for a price
equal to 100% of the fair market value of Common Stock as of the date his
options were granted.
As a result of its ownership of all of the issued and
outstanding shares of BANA, PLC may be deemed to be the indirect beneficial
owner of all of the shares of Common Stock and Convertible Instruments owned
directly by BANA. Mr. Rice has sole ownership of the option to acquire shares
held in his name, and he disclaims beneficial ownership of any Common Stock or
Convertible Instruments owned by BANA.
(b) By reason of its direct ownership of 100% of the voting securities
of BANA, PLC may be deemed to share voting and dispositive power over all the
shares of Common Stock and Convertible Instruments directly owned by BANA.
(c) On February 25, 1998 BANA sold 834,225 shares of Common Stock at a
net price of $17 5/8 per share. The shares were sold in the market in conformity
with the terms of Rule 144. Neither of the Reporting Persons and none of the
other persons named in response to Item 2 thereof have purchased any shares of
Common Stock of the Issuer during the past sixty days. Pursuant to the terms of
the Convertible Instruments on February 1, 1998, BANA was issued an aggregate of
341,106 additional shares of Common Stock by the Issuer, in part as a dividend
payment on the Series C Stock and in part as an interest payment on the
Debenture.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer
Item 6 is hereby amended to add the following:
As noted in Item 4, BANA entered into (i) a Principal Stockholder
Agreement with Loral and Sub in order to induce Loral and Sub to enter into the
Merger Agreement with the Issuer and (ii) a Letter Agreement with Loral and Sub
pursuant to which BANA may sell up to 3,571,429 shares of Common Stock,
notwithstanding the terms of the Principal Stockholder Agreement. The following
summaries of the material terms of each agreement that relate to the Issuer's
securities are qualified by reference to the full text of such agreements, each
of which is filed herewith as an exhibit to this statement on Schedule 13D.
Principal Stockholder Agreement, dated as of October 7, 1997 among
Loral, Sub, Issuer and certain stockholders of Issuer, including BANA -
As an inducement to Loral and Sub to enter into the Merger Agreement
with Issuer, BANA, among certain other stockholders of the Issuer,
agreed to grant Loral and Sub an option to purchase all of the shares
of Common Stock owned by BANA (including all of the shares of Common
Stock into which the Convertible Instruments may be converted). If the
option is exercised BANA will receive shares of common stock of Loral
with a value of $17.50 per share of Issuer Common Stock owned by BANA
(subject to adjustment if Loral common stock trades either above or
below a target range during a specified determination period). This
option will terminate no later than June 30, 1998 and may terminate
earlier in certain circumstances, including upon the effectiveness of
any merger of Sub and the Issuer. Loral's ability to exercise this
option is contingent upon the occurrence of one or more of the
following events (none of which has occurred to date): (i) the board
of directors of the Issuer modifies or withdraws its approval of the
Merger Agreement in a manner adverse to Loral, (ii) stockholder
approval of the Merger Agreement is not obtained at a meeting of the
stockholders of the Issuer and there is a third party acquisition
proposal pending at the time of such negative vote, (iii) the Issuer
enters into an agreement with any person other than Loral or its
affiliates to sell 20% or more of the Issuer's voting securities or 20%
or more of the assets of the Issuer or its subsidiaries, or (iv) any
person (other than Loral or its affiliates) shall have commenced or
filed a registration statement for a tender or exchange offer for, or
shall have
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acquired the right to purchase, securities representing 35% or more of
the voting power of the Issuer. Under the Principal Stockholders
Agreement each of the stockholders signatory thereto, including BANA
agrees not to sell, transfer, pledge, or otherwise dispose of the
shares owned by such stockholder (except pursuant to the agreement) and
agrees not to acquire any additional shares in the Issuer (except
pursuant to the Issuer's stock purchase plan or pursuant to the terms
of outstanding convertible instruments) without the prior written
consent of Loral. As noted above in Item 4, pursuant to the terms of
the Principal Stockholders Agreement, BANA has agreed to vote in favor
of the transactions contemplated by the Merger Agreement, to vote
against certain actions that may be adverse to the consummation of the
proposed merger transaction, and has appointed Loral and Sub as its
proxy for such purpose. The Principal Stockholders Agreement was
executed as of October 7, 1997 and was amended and restated as of
December 1, 1997 solely for the purpose of properly identifying the
parties to the agreement.
Letter Agreement, dated February 24, 1998 among Loral, Sub and BANA -
The Letter Agreement releases 3,571,429 shares of Common Stock of the
Issuer owned by BANA from the terms of the Principal Stockholder
Agreement, allowing BANA to sell such Released Shares. Under the terms
of the Letter Agreement BANA may sell the Released Shares in registered
sales, Rule 144 transactions, to qualified institutional buyers and in
exempt private resale transactions to persons and groups who own less
than 5% of the voting securities of the Issuer. BANA may not sell any
Released Shares anytime after Loral exercises its option under the
Principal Stockholder Agreement. The Letter Agreement also provides (i)
for BANA to vote any Released Shares it owns at the time of the vote on
the merger in favor of the merger and (ii) for any then unsold Released
Shares to be disposed of in accordance with the terms of the merger.
Item 7. Materials to be filed as Exhibits
Item 7 is amended to include the following:
10. Principal Stockholder Agreement dated October 7, 1997
among Loral Space & Communications Ltd., Loral
Satellite Corporation, Orion Network Systems, Inc.
and certain stockholders of Orion Network Systems,
Inc., including BANA (formerly known as British
Aerospace Holdings, Inc.).
11. Letter Agreement dated February 24, 1998 among Loral
Space and Communications Ltd., Loral Satellite
Corporation and BANA.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: February 26, 1998
BRITISH AEROSPACE NORTH AMERICA, INC.
By: /s/ Charles E. Gaba
-----------------------------
Name: Charles E. Gaba
Title: Vice President
BRITISH AEROSPACE Plc
By: /s/ David Parkes
-----------------------------
Name: David Parkes
Title: Assistant Secretary
Page 8
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ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS
BRITISH AEROSPACE PLC
- ---------------------
NON-EXECUTIVE DIRECTORS
- -----------------------
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
Mr. Robert Bauman P.O. Box 87 U.S.
Chairman Farnborough Aerospace Centre
Farnborough, Hants GU14 6YU
England
- --------------------------------------------------------------------------------
Sir Robin Adair Biggam 33 Foley Street U.K.
Director; London, England W1P 7LB
Chairman
Independent Television
Commission
- --------------------------------------------------------------------------------
Lord Hesketh 33 Cork Street U.K.
(Thomas Alexander) 5th Floor
Director London, England W1X 1HB
- --------------------------------------------------------------------------------
Mr. Keith Clark Brown 25 Cabot Square U.K.
Director; Canary Wharf
Managing Director London, England B14 4QA
Morgan Stanley International
- --------------------------------------------------------------------------------
Sir Ronald Clause Hampel 9 Millbank U.K.
Director; London, England SW1P 3JF
Executive Chairman
I.C.I. Plc
================================================================================
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BRITISH AEROSPACE PLC
- ---------------------
EXECUTIVE DIRECTORS
- -------------------
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
Sir Richard Evans P.O. Box 87 U.K.
Executive Director Farnborough Aerospace Centre
and Chief Executive Farnborough, Hants GU14 6YU
England
- --------------------------------------------------------------------------------
Mr. Michael Turner P.O. Box 87 U.K.
Executive Director and Farnborough Aerospace Centre
Group Managing Director Farnborough, Hants GU14 6YU
England
- --------------------------------------------------------------------------------
Mr. Richard Lapthorne P.O. Box 87 U.K.
Executive Director and Farnborough Aerospace Centre
Finance Director Farnborough, Hants GU14 6YU
England
- --------------------------------------------------------------------------------
Mr. John Weston P.O. Box 87 U.K.
Executive Director and Farnborough Aerospace Centre
Group Managing Director Farnborough, Hants GU14 6YU
England
================================================================================
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BRITISH AEROSPACE PLC
- ---------------------
EXECUTIVE OFFICERS
- ------------------
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
Stuart Carroll, Esq. P.O. Box 87 U.K.
Secretary Farnborough Aerospace Centre
Farnborough, Hants GU14 6YU
England
- --------------------------------------------------------------------------------
Mr. David Brent P.O. Box 87 U.K.
Treasurer Farnborough Aerospace Centre
Farnborough, Hants GU14 6YU
England
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BRITISH AEROSPACE NORTH AMERICA, INC.
- -------------------------------------
DIRECTORS
- ---------
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
Mr. Robert Leonard Kirk 1101 Wilson Boulevard U.S.
Chairman; Suite 1200
British Aerospace North Arlington, Virginia 22209
America, Inc.
- --------------------------------------------------------------------------------
Sir Richard Evans P.O. Box 87 U.K.
Director; Farnborough Aerospace Centre
Executive Director Farnborough, Hants GU14 6YU
British Aerospace Plc England
- --------------------------------------------------------------------------------
Mr. Samuel L. Higginbottom One Alhambra Plaza U.S.
Director; Suite 1115
Chairman and CEO (retired) Coral Gables, Florida 33134
Rolls Royce, Inc.
- --------------------------------------------------------------------------------
Mr. Michael Raoul-Duval 17 Wilderness Gale U.S.
Director; Sante Fe, New Mexico 87501
Investment Banker
================================================================================
BRITISH AEROSPACE NORTH AMERICA, INC.
- -------------------------------------
OFFICERS
- --------
================================================================================
Name and Title; Principal Address Citizenship
Occupation
- --------------------------------------------------------------------------------
Paul L. Harris 15000 Conference Center Drive U.S.
Senior Vice President & Conference Center Drive
General Manager Chantilly, Virginia 20151
British Aerospace North
America, Inc.
- --------------------------------------------------------------------------------
Charles E. Gaba 15000 Conference Center Drive U.S.
Vice President, General Conference Center Drive
Counsel & Secretary Chantilly, Virginia 20151
British Aerospace North
America, Inc.
- --------------------------------------------------------------------------------
Richard E. Wise 1101 Wilson Boulevard U.K.
Vice President - Government Suite 1200
Programs Arlington, Virginia 22209
British Aerospace North
America, Inc.
- --------------------------------------------------------------------------------
David P. Loose 15000 Conference Center Drive U.S.
Treasurer Conference Center Drive
British Aerospace North Chantilly, Virginia 20151
America, Inc.
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Patricia L. Maskell 15000 Conference Center Drive U.S.
Assistant Secretary Conference Center Drive
British Aerospace North Chantilly, Virginia 20151
America, Inc.
================================================================================
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EXHIBIT INDEX
EXHIBIT TITLE
NO.
10. Principal Stockholder Agreement, dated October 7, 1997, as
amended December 1, 1997 among Loral Space & Communications
Ltd., Loral Satellite Corporation, Orion Network Systems, Inc.
and certain stockholders of Orion Network Systems, Inc.,
including British Aerospace North America, Inc. (formerly
known as British Aerospace Holdings, Inc.)
11. Letter Agreement dated February 24, 1998 among Loral Space and
Communications Ltd., Loral Satellite Corporations and British
Aerospace North America, Inc.
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PRINCIPAL STOCKHOLDER AGREEMENT
THIS PRINCIPAL STOCKHOLDER AGREEMENT, dated as of October 7th, 1997
(this "Agreement") among Loral Space & Communications Ltd., a Bermuda company
("Acquiror"), Loral Satellite Corporation, a Delaware corporation, a wholly
owned subsidiary of Acquiror ("Sub"), Orion Network Systems, Inc., a Delaware
corporation ("Company"), and each other person and entity listed on the
signature pages hereof (each, a "Stockholder").
WHEREAS, as of the date hereof, each Stockholder holds of record or
beneficially owns the number of shares of common stock, $.01 par value (the
"Common Stock") of the Company set forth opposite such Stockholder's name on
Exhibit A;
WHEREAS, as of the date hereof, certain Stockholders also hold of
record or beneficially own the number of shares of the Company's Series A 8%
Cumulative Redeemable Convertible Preferred Stock ("Series A Shares"), Series B
8% Cumulative Redeemable Convertible Preferred Stock ("Series B Shares"), and/or
Series C 6% Cumulative Redeemable Convertible Preferred Stock ("Series C Shares,
and together with the Series A Shares and Series B Shares, the "Preferred
Stock"), set forth opposite such Stockholder's name on Exhibit A (all such
Preferred Stock, together with all shares of Common Stock currently held and all
shares of Common Stock and Preferred Stock hereafter acquired by the
Stockholders (including but not limited to shares acquired upon the exercise of
options, warrants or rights or the conversion or exchange of convertible or
exchangeable securities) being referred to herein as the "Shares");
WHEREAS, as of the date hereof, certain Stockholders also hold the
Company's Convertible Junior Subordinated Debentures due February 1, 2012 (the
"Debentures") in the principal amount set forth opposite such Stockholder's name
on Exhibit A;
WHEREAS, Acquiror, Sub and the Company have entered into an Agreement
and Plan of Merger dated as of the date hereof (the "Merger Agreement";
capitalized terms used but not otherwise defined in this Agreement have the
meanings assigned to such terms in the Merger Agreement), which provides, upon
the terms and subject to the conditions set forth therein, for the merger of Sub
with and into the Company (the "Merger");
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WHEREAS, as a condition to the willingness of Acquiror and Sub to
enter into the Merger Agreement and in furtherance of the acquisition of the
Company by Acquiror, Acquiror and Sub have required that the Stockholders agree,
and in order to induce Acquiror and Sub to enter into the Merger Agreement, each
Stockholder has agreed, severally and not jointly, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
agreements contained herein, the parties hereto agree as follows:
Article I.
GRANT OF OPTION AND EXERCISE; TRANSFER AND
VOTING OF SHARES; DEBENTURES
Section 1.1. Grant of Option.
Subject to the terms and conditions set forth herein, each Stockholder
hereby severally and not jointly grants to Acquiror an irrevocable option (the
"Option") to purchase all (but not less than all) of such Stockholder's Shares
held on the date of option exercise (and to require the conversion of all (but
not less than all) of such Stockholder's Debentures into Shares immediately
prior to the Closing (defined in Section 1.3 below) hereunder, and upon such
conversion such Shares shall be subject to the Option hereunder) for the number
of fully paid and nonassessable Acquiror Shares (as adjusted pursuant to Section
2.5 of the Merger Agreement) equal to the number of Shares to be purchased by
Acquiror multiplied by the Exchange Ratio (calculated using the Notice Date as
if it were the "Closing Date" (as defined in the Merger Agreement) for purposes
of calculating the Determination Price), together with the associated rights
under Acquiror's Rights Agreement ("Acquiror Rights Plan") dated as of March 27,
1996 between Acquiror and The Bank of New York, as Rights Agent (together, the
"Purchase Price").
Section 1.2. Exercise of Option.
(a) Provided that neither Acquiror nor Sub shall be in material breach
of their respective agreements or covenants contained in the Merger Agreement,
Acquiror may exercise the Option, in whole (but not in part) with respect to all
of the Shares of all of the Stockholders covered hereby (but not less than all),
at any time following the occurrence of any event described in Section 1.9 (a
"Purchase Event"); provided that, the Option shall terminate
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and be of no further force and effect upon the earliest to occur of (i) the
Effective Time, (ii) June 30, 1998, or (iii) termination of the Merger Agreement
by Acquiror or Sub in accordance with the terms thereof.
(b) If Acquiror exercises the Option hereunder (except following
termination of the Merger Agreement by the Company) (i) neither Acquiror nor Sub
shall terminate the Merger Agreement under any circumstances except Section
9.1(a) (with approval of the Company) and Section 9.1(c) of the Merger
Agreement, (ii) all conditions set forth in Section 8.2 and Section 8.3 (other
than Section 8.2(c) and Section 8.3(c), but it is understood and agreed that
receipt of an initial FCC order shall be deemed to satisfy Section 8.2(c) and
Section 8.3(c) for this purpose) of the Merger Agreement shall be deemed waived
by each of Acquiror, Sub, and the Company, respectively, (iii) Acquiror and Sub
shall each use their reasonable best efforts to consummate the Merger (or the
Exchange Offer as applicable) as promptly as practicable, except to the extent
that (and so long as) consummation of the Merger (or the Exchange Offer as
applicable) would violate applicable law (and if consummation of the Merger
would violate applicable law, but conducting the Exchange Offer would not
violate applicable law, Acquiror shall conduct the Exchange Offer pursuant to
the requirements of Section 7.15 (including Section 7.15(g)), except as
otherwise provided in this paragraph rather than the Merger).
(c) If following the exercise of the Option there is an Acquisition
Proposal pending prior to consummation of the Merger or the Exchange Offer, and
such Acquisition Proposal includes a per Share price higher than the per Share
consideration to be paid in the Merger or the Exchange Offer as applicable (a
"Topping Bid"), Acquiror shall have the right to tender the Shares purchased
under the Option into the Topping Bid or otherwise support the Topping Bid and
realize value therefrom, and Acquiror's obligations under the Merger Agreement
(and Section 1.6 hereof) shall (if not previously terminated) be suspended
during the pendency of the Topping Bid; provided, however, that such obligations
shall cease to be suspended if the Topping Bid ceases to be pending without a
majority of the Shares having been acquired pursuant to the Topping Bid.
Section 1.3. Closing Date.
In the event Acquiror wishes to exercise the Option, which may only be
exercised in whole (but not in part), with respect to all of the Shares of all
of the
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Stockholders covered hereby it shall send to each Stockholder a written notice
(the date of which being herein referred to as the "Notice Date") specifying a
place and date not earlier than five business days nor later than 20 Business
Days from the Notice Date for the closing of such purchase (the "Closing Date");
provided that if the closing of the purchase and sale pursuant to the Option
(the "Closing") cannot be consummated by reason of any applicable judgment,
decree, order, law or regulation, Acquiror shall use its commercially reasonable
efforts to resolve such matters and close as promptly as practicable. Without
limiting the foregoing, if prior notification to or approval of any regulatory
authority is required in connection with such purchase, Acquiror and, if
applicable, a Stockholder shall promptly file the required notice or application
for approval and shall expeditiously process the same (and such Stockholder
shall cooperate with Acquiror in the filing of any such notice or application
and the obtaining of any such approval).
Section 1.4. Payment and Delivery of Certificates.
(a) Subject to the terms and conditions of this Agreement, in reliance
on the representations, warranties and covenants of each Stockholder contained
herein and in full payment for the Shares, at the Closing, Acquiror will
deliver, or cause to be delivered, to each Stockholder, certificates
representing the Acquiror Shares to be paid pursuant to Section 1.1 duly issued
to each Stockholder, together with any necessary stock transfer stamps properly
affixed. Subject to the terms and conditions in this Agreement, in reliance on
the representations, warranties and covenants of the Acquiror contained herein
and in the Merger Agreement, at the Closing, the Stockholders shall deliver to
Acquiror certificates representing the Shares sold by the Stockholders to
Acquiror at the Closing, duly endorsed in blank or accompanied by stock powers
duly executed by the Stockholders in blank, in proper form for transfer.
(b) No certificates or scrip representing less than one share of
Acquiror Shares shall be issued upon the exercise of the Option. In lieu of any
such fractional share, each Stockholder who would otherwise have been entitled
to a fraction of a share of Acquiror Shares upon exercise of the Option shall be
paid at the Closing cash (without interest) in an amount equal to such
Stockholder's fractional part of a share of Acquiror Shares multiplied by the
last reported sale price of Acquiror Shares, as reported on the NYSE, on the
Closing Date.
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Section 1.5. Legends.
(a) Each Stockholder shall instruct the Company to cause each certificate
of any Stockholder evidencing the Shares to bear a legend in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS
AND CONDITIONS OF THE PRINCIPAL STOCKHOLDER AGREEMENT DATED AS OF OCTOBER
7, 1997 AS IT MAY BE AMENDED, AMONG LORAL SPACE & COMMUNICATIONS LTD.,
LORAL SATELLITE CORPORATION, ORION NETWORK SYSTEMS, INC. ("ISSUER") AND THE
REGISTERED HOLDER OF THIS CERTIFICATE, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
(b) In the event that the Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate evidencing such Shares without the legend required by Section
1.5(a).
Section 1.6. Voting Agreement; Agreement to Tender.
(a) Each Stockholder and Acquiror hereby severally and not
jointly agrees that from the date hereof to the earlier to occur of the
termination of the Merger Agreement or the Effective Time, at any meeting of the
stockholders of the Company, however called, and in any action by consent of the
stockholders of the company, such Stockholder and Acquiror shall vote the
Shares: (i) in favor of the Merger, the Merger Agreement (as amended from time
to time) and the transactions contemplated by the Merger Agreement
(collectively, the "subject transactions"), (ii) against any proposal for any
recapitalization, merger (other than the Merger), sale of assets or other
business combination between the Company and any person or entity (other than
Acquiror or Sub) or any other action or agreement that would result in a breach
of any covenant or any other obligation or agreement of the Company under the
Merger Agreement or which would result in any of the conditions to the Merger
Agreement not being fulfilled and (iii) against the following actions (other
than pursuant to the terms of this Agreement or the Merger Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of it Subsidiaries; (B) any
sale, lease or transfer by the Company of a material amount of assets (including
stock) of the Company or any of its Subsidiaries; or a reorganization,
restructuring, recapitalization, special dividend, dissolution or liquidation of
the Company or any of its Subsidiaries; or (C)(1)
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any change in a majority of the persons who constitute the board of directors of
the Company or any of its Subsidiaries; (2) any change in the present
capitalization of the Company or any of its Subsidiaries including any proposal
to sell a substantial equity interest in the Company or any of its Subsidiaries;
(3) any amendment to the Company or any of its Subsidiaries' charters or
By-laws; (4) any other change in the Company or any of its Subsidiaries'
corporate structure or business; or (5) any other action which, in the case of
each of the matters referred to in clauses (C)(1), (2), (3) or (4), is intended,
or could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement.
(b) Each Stockholder and Acquiror severally and not jointly agrees that it
shall not enter into any agreement or understanding the effect of which would be
inconsistent with or violative of the provisions and agreements contained
herein, including in this Section 1.6. Further, each Stockholder and Acquiror
severally and not jointly agrees that it will, if the Board of Directors of the
Company fails or refuses (other than as a result of breach by Acquiror or any of
its Affiliates of the Merger Agreement or because the Acquiror and its
Affiliates will not or cannot satisfy the conditions precedent thereto) to
submit the subject transactions to the Company's stockholders, vote all Shares
held of record or beneficially owned by it to (i) call or cause to be called a
special meeting of stockholders of the Company (or effect a written consent) to
remove the directors of the Company who have so failed or refused, or to
increase the size of the Board of Directors and elect a majority of new
directors who will submit the subject transactions to the stockholders of the
Company for a vote, and (ii) use its reasonable efforts to effect such removal
and replacement, or increase and election, and the submission of the subject
transactions to the stockholders of the Company; and (iii) at any time after
initial approval by the stockholders of the Company of the subject transactions,
if so requested by Acquiror, to approve all or any actions incident to the
subject transactions or the other matters referred to in this Section 1.6 by
stockholder written consent.
(c) If there is an Exchange Offer pursuant to Section 7.15 of the Merger
Agreement, each Stockholder agrees to tender such Stockholder's Shares into the
Exchange Offer (including all Shares issusable upon conversion of the
Debentures; provided, however, that actual conversion need not be effected until
consummation of the Exchange Offer).
Section 1.7. No Disposition or Encumbrance of Shares and Options.
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Except to the extent set forth in Exhibit B, each Stockholder
hereby severally and not jointly covenants and agrees that, from the
date hereof to the termination of the rights of Acquiror under this
Agreement, it shall not, and shall not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or
create or permit to exist any Encumbrance (as hereinafter defined) on
the Shares owned by such Stockholder at any time prior to the
Effective Time.
Section 1.8. Voting of Shares; Further Assurances.
(a) Each Stockholder, by this Agreement, with respect to its Shares, does
hereby constitute and appoint Sub and Acquiror, or any nominee of Sub and
Acquiror, with full power of substitution, from the date hereof to the earlier
to occur of the termination of the Merger Agreement or the Effective Time, as
its true and lawful attorney and proxy (its "Proxy"), for and in its name, place
and stead, to vote each of such Shares as its Proxy, at every annual, special or
adjourned meeting of the stockholders of the Company, including the right to
sign its name (as stockholder) to any consent, certificate or other document
relating to the Company that the law of the State of Delaware may permit or
require:
(i) in favor of the Merger, the Merger Agreement (as amended
from time to time) and the transactions contemplated by the Merger
Agreement;
(ii) against any Acquisition Proposal for any
recapitalization, merger (other than the Merger), sale of assets or
other business combination between the Company and any person or
entity (other than Acquiror or Sub) or any other action or agreement
that would result in a breach of any covenant or any other obligation
or agreement of the Company under the Merger Agreement or which could
result in any of the conditions to the Merger Agreement not being
fulfilled; and
(iii) against (A) any extraordinary corporate transaction,
such as a merger, consolidation or other business combination
involving the Company or any of its Subsidiaries, (B) any sale, lease,
or transfer by the Company of a material amount of assets (including
stock) of the Company or any of its Subsidiaries, or a reorganization,
restructuring, recapitalization, special dividend, dissolution or
liquidation of the Company or any of its Subsidiaries; or (C) (1) any
change in a majority of the persons who constitute the board of
directors of the Company or any of its Subsidiaries; (2) any change in
the present capitalization of the Company or any of its Subsidiaries
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including any proposal to sell a substantial equity interest in the Company or
any of its Subsidiaries; any amendment of the Company or any of its
Subsidiaries' charters or By-laws; (4) any other change in the Company or any of
its Subsidiaries' corporate structure or business; or (5) any other action
which, in the case of each of the matters referred to in clauses (C)(1), (2),
(3) or (4), is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone, or materially adversely affect the Merger and the
transactions contemplated by this Agreement.
THIS POWER OF ATTORNEY IS IRREVOCABLE, IS GRANTED IN
CONSIDERATION OF ACQUIROR AND SUB ENTERING INTO THE MERGER AGREEMENT
AND IS COUPLED WITH AN INTEREST SUFFICIENT IN LAW TO SUPPORT AN
IRREVOCABLE POWER. This appointment shall revoke all prior attorneys
and proxies appointed by any Stockholder at any time with respect to
the Shares and no subsequent attorneys or proxies will be appointed by
such Stockholder, or be effective, with respect thereto during the
term of this Agreement.
(a) Each Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in Sub
and Acquiror the power to carry out and give effect to the provisions of this
Agreement.
(b) Nothing contained in this Section 1.8 shall be construed to
invalidate any action taken by a Stockholder in accordance with Section 1.8.
Section 1.9. Purchase Events.
Acquiror may exercise the Option only if one or more of the
following events has occurred:
(a) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval or recommendation of the Merger or
the Merger Agreement in any manner adverse to Acquiror, or approved or
recommended any Acquisition Proposal (as defined in the Merger Agreement), or
shall have adopted a resolution to take any of the foregoing actions;
(b) (i) the approval of the Merger Agreement by the stockholders of
the Company shall have not been obtained by reason of the failure to obtain the
required vote at the Stockholders' Meeting (as defined in the Merger Agreement)
and (ii) at the time of such negative vote there shall be pending an Acquisition
Proposal (as defined in the Merger Agreement);
(c) the Company or any of its Subsidiaries shall have
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entered into any agreement with any person (other than Acquiror or any of its
affiliates), the Board of Directors of such entity shall have approved,
recommended or resolved to enter into an agreement with any person, or the
Company shall have publicly announced its intention to take any of the foregoing
actions, with respect to the sale of 20% or more (in voting power) of the voting
securities of the Company or of 20% or more (in fair market value) of the assets
of the Company and its Subsidiaries, on a consolidated basis, however such
transaction may be effected; or
(d) any person (other than Acquiror or any of its affiliates), shall
have commenced (as such term is defined in Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or shall have filed a
registration statement under the Securities Act of 1933, as amended (the "Act"),
with respect to a tender or exchange offer for securities representing 35% or
more of the voting power of the Company; or the acquisition, by any person or
group (as defined in Section 13(d) of the Exchange Act), other than Acquiror or
any of its affiliates, of beneficial ownership of (as defined in the Rule 13d-3
under the Exchange Act), or the right to acquire beneficial ownership of,
securities representing 35% or more of the voting power of the Company;
provided that no event set forth in this Section 1.9 shall be deemed to
occur solely by reason of any agreement, or any action that is taken,
or of any event that occurs, for which Acquiror has given its prior
written consent. As used in this Agreement, "person" shall have the
meaning specified in Section 13(d)(3) of the Exchange Act.
Section 1.10. Convertible Debentures.
Each Stockholder that holds Debentures agrees that all Debentures held
by such Stockholder shall be converted into shares of Common Stock (together
with any shares of Common Stock representing accrued but unpaid interest on the
Debentures) in accordance with Section 15.1 of the Debenture Purchase Agreement,
dated as of January 13, 1997, as amended as of January 31, 1997, among the
Company, British Aerospace Holdings, Inc. and Matra Marconi Space UK Limited
(the "Debenture Agreement") relating thereto immediately prior to the Effective
Time (except if converted prior to such date), and at such time, converted into
the right to receive in the Merger Acquiror Shares in accordance with the terms
of the Merger Agreement. In consideration for the foregoing, such Stockholder
waives its rights under Section 11.3 of the Debenture Agreement with respect to
the consummation of the Merger.
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Section 1.11. Control Shares
The Company hereby waives its rights under Article ELEVENTH, Section
H, of its Restated Certificate of Incorporation with respect to all Shares
acquired pursuant to exercise of the Option, and hereby agrees, promptly
following any such exercise, to exchange for such Shares an equal number of duly
authorized, but unissued Shares, which upon issuance will be validly issued,
fully paid and nonassessable Shares, and which will not be "control shares"
within the meaning of such Article ELEVENTH.
Article II.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to Acquiror as follows:
Section 2.1. Due Organization, Authorization, etc.
Such Stockholder (if it is a corporation, partnership or other legal
entity) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization. Such Stockholder has
all requisite power (corporate or otherwise) to execute and deliver this
Agreement, to grant the Option and to consummate the transaction contemplated
hereby. The execution and delivery of this Agreement, the appointment of
Acquiror and Sub as such Stockholder's Proxy, the granting of the Option and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action (corporate or otherwise) on the part of such
Stockholder. This Agreement has been duly executed and delivered by or on behalf
of such Stockholder and, assuming its due authorization, execution and delivery
by Acquiror, constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms.
Section 2.2. No Conflicts, Required filings and Consents.
(a) The execution and delivery of this Agreement by such Stockholder
does not, and the performance of this Agreement by such Stockholder will not,
(i) conflict with or violate the Certificate of Incorporation by By-Laws or
other similar organizational documents of such Stockholder (in the case of a
Stockholder that is a corporation, partnership or other legal
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entity), (ii) conflict with or violate any statute, law, ordinance, rule,
regulation, order, decree or judgment applicable to such Stockholder or by which
it or any of its properties is bound or affected, or (iii) result in any breach
of or constitute a default (with or without notice or lapse of time, or both)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the property or assets of such Stockholder or (if such Stockholder is a
corporation, partnership or other legal entity) any of its subsidiaries,
including, without limitation, the Shares, pursuant to, any indenture or other
loan document provision or other contract, license, franchise, permit or other
instrument or obligation to which such Stockholder is a party or by which such
Stockholder or any of its properties is bound or affected, except, in the case
of clauses (ii) and (iii), for any such breaches, defaults or other occurrences
that would not prevent the performance by such Stockholder of its obligations
under this Agreement.
(b) The execution and delivery of this Agreement by such Stockholder
do not, and the performance of this agreement by such Stockholder will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent the
performance by the Stockholder of its obligations under this Agreement.
Section 2.3. Title to Shares.
Such Stockholder has, and the transfer by the Stockholder of the
Shares hereunder will pass, good and marketable title to the Shares listed on
Exhibit A hereto, free and clear of any pledge, lien, security interest,
mortgage, charge, claim, equity, option, proxy, voting restriction, right of
first refusal, limitation on disposition, adverse claim of ownership or use or
encumbrance of any kind ("Encumbrances"), except to the extent disclosed on
Exhibit B and for Shares sold prior to the Closing as permitted under Section
1.8.
Section 2.4. No Brokers.
Except as contemplated in the Merger Agreement, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement.
Section 2.5. Investment Intent, Etc.
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Each Stockholder is acquiring the Acquiror Shares, together with the
associated rights, to be received in the Merger or pursuant to the exercise of
the Option, for its own account for investment and not with a view towards the
resale, transfer or distribution thereof, nor with any present intention of
distributing the Acquiror Shares. Each Stockholder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act. Each Stockholder
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in Acquiror and is
able to bear the economic risk of such investment for an indefinite period of
time.
Article III.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Section 3.1. Authority Relative to the Agreement.
(a) Acquiror has the corporate power to execute and deliver this Agreement
and to carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by Acquiror's Board of Directors. The Agreement constitutes a
valid and binding obligation of Acquiror, enforceable against Acquiror in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. No other corporate proceedings on the part
of Acquiror are necessary to authorize the execution and delivery by Acquiror of
this Agreement or the consummation of the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, does not and will not result in the change
in conversion ratios, conversion rights or voting rights, or the breach,
violation, default (with or without notice or lapse of time, or both),
termination, cancellation or acceleration of any obligation, or the loss of a
material benefit, under (i) the Acquiror's Memorandum of Association or bye-laws
or (ii) any indenture or other loan document provision or other contract,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to Acquiror or
any of its Subsidiaries or their respective properties or assets, other than, in
the case of clause (ii)
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only, (A) any breaches, violations, defaults, terminations, cancellations,
accelerations or losses which, either singly or in the aggregate, will not have
a Acquiror Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby.
Section 3.2. Representations in Merger Agreement.
Acquiror represents and warrants to each Stockholder that the
representations and warranties set forth in Article V of the Merger
Agreement were (or will be) true and correct when made and on and as of the
date of any action taken by Acquiror hereunder (including without
limitation exercise of the Option) with the same effect as though such
representations and warranties had been made on and as of such date (except
for representations and warranties that speak as of a specific date or
time, which need only be true and correct as of such date or time), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Acquiror Material Adverse Effect" set forth therein) does not have an
Acquiror Material Adverse Effect, and such representations and warranties
shall be deemed incorporated herein; provided, however, that incorporated
representations and warranties which relate to the Merger Agreement shall
be deemed for purposes of this Section to have been modified to relate only
to this Agreement.
Article IV.
DISTRIBUTIONS; ADJUSTMENT UPON
CHANGES IN CAPITALIZATION.
(a) Any dividends or other distributions (whether payable in cash,
stock or otherwise) by the Company with respect to any Shares purchased
hereunder with a record date on or after the Closing Date will belong to
Acquiror. If any such dividend or distribution belonging to Acquiror is paid by
the Company to the Stockholder, the Stockholder shall hold such dividend or
distribution in trust for the benefit of Acquiror and shall promptly remit such
dividend or distribution to Acquiror in exactly the form received, accompanied
by appropriate instruments of transfer. If on or after the date of this
Agreement there shall occur any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, as a result of which shares of
any class of stock, other securities, cash or other property shall be issued in
respect of any Shares or if any Shares shall be changed into the same or
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another class of stock or other securities, then, upon exercise of the Option,
Acquiror shall receive for the aggregate price payable upon exercise of the
Option with respect to the Shares, all such shares of stock, other securities,
cash or other property issued, delivered or received with respect to such Shares
(or if the Option shall not be exercised, appropriate adjustment shall be made
for purposes of the calculations set forth in this Agreement).
(b) Any dividends or other distributions (whether payable in cash,
stock or otherwise) by Acquiror with respect to any Acquiror Shares issued
hereunder with a record date on or after the Closing Date will belong to the
Stockholder to which such Acquiror Shares were issued. If on or after the date
of this Agreement there shall occur any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by Acquiror, as a result of
which shares of any class of stock, other securities, cash or other property
shall be issued in respect of any Acquiror Shares or if any Acquiror Shares
shall be changed into the same or another class of stock or other securities,
then, upon exercise of the Option, each Stockholder shall receive for the
aggregate price payable to such Stockholder upon exercise of the Option, all
such shares of stock, other securities, cash or other property issued, delivered
or received with respect to the Acquiror Shares to be delivered to such
Stockholder (or if the Option shall not be exercised, appropriate adjustment
shall be made for purposes of the calculations set forth in this Agreement).
Article V.
NO SOLICITATION OF TRANSACTIONS.
Each Stockholder severally and not jointly covenants
and agrees that in its capacity as a stockholder of the Company it
shall not, through any officer, director, employee, representative,
agent or direct or indirect stockholder of the Company or any Company
Subsidiary, directly or indirectly, take any action to (i) encourage,
initiate or solicit the submission of any proposal that constitutes an
Acquisition Proposal, (ii) enter into any agreement with respect to or
accept any Acquisition Proposal or (iii) facilitate any inquiries or
the making of any proposal that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal. The Stockholder shall
promptly notify Acquiror in writing of any request for information or
Acquisition Proposal, specifying reasonable details of any inquiry or
Acquisition Proposal, and shall keep Acquiror informed as to the status
of any such
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discussions or negotiations. Each Stockholder severally and not
jointly further agrees to use its best efforts as a stockholder to
cause the Company not to, directly or indirectly, solicit, initiate,
seek, or encourage (including by way of furnishing information or
assistance), or take other action to facilitate, any inquiries or the
making of any proposal which constitutes or may reasonably be expected
to lead to, an Acquisition Proposal.
Article VI.
COVENANTS OF THE STOCKHOLDERS.
Section 6.1. Negative Covenants.
Each Stockholder agrees, until the Option has terminated, not to:
(a) sell, transfer, pledge, assign or otherwise dispose of, or enter
into any contract, option or other arrangement with respect to the sale,
transfer, pledge, assignment or other disposition of, the Shares owned by such
Stockholder to any person other than Acquiror or Acquiror's designee and except
as contemplated in Exhibit B;
(b) acquire any additional shares of Common Stock without the prior
consent of Acquiror other than pursuant to rights under the Company Stock
Purchase Plans, options outstanding on the date of this Agreement, or Shares
issued in payment of interest on the Debentures or dividends on the Series C
Shares;
(c) deposit any Shares into a voting trust or grant a proxy or enter
into a voting agreement with respect to any Shares, except for this Agreement;
or
(d) take any action that would make any representation or warranty of
such Stockholder contained herein untrue or incorrect or would result in a
breach by such Stockholder of its obligations under this Agreement or a breach
by the Company of its obligations under the Merger Agreement.
Section 6.2. Reliance; Further Assurances.
Each Stockholder understands and acknowledges that Acquiror
and Sub are entering into the Merger Agreement in reliance upon each
Stockholder's execution and delivery of this Agreement. If Acquiror
shall exercise the Option in accordance with the terms of this
Agreement, from time to time and without additional consideration the
Stockholder will execute and deliver, or cause to be executed and
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delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as Acquiror may
reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement, including the transfer of
the Shares to Acquiror and the release of any and all Encumbrances
with respect thereto.
Section 6.3. Transfer of Acquiror Shares by British
Aerospace.
British Aerospace Space Systems, Inc. and British Aerospace Holdings,
Inc. (collectively, "BAe") and Acquiror agree to consult and cooperate with
respect to the orderly disposition of Acquiror Shares obtained by BAe. BAe
agrees that for a period of twelve months from the date it acquires the Acquiror
Shares it will not, and will cause each of its affiliates not to, sell or
otherwise transfer any Acquiror Shares other than by means of a block trade (or
a series of block trades) with an entity that qualifies as a block trade
positioner (as that term is defined and/or interpreted under the federal
securities laws and the rules and regulations promulgated thereunder) who is
experienced in block trade transactions. BAe shall consult with Acquiror prior
to such sale and seek the consent of Acquiror to such sale, which consent shall
not be unreasonably withheld, conditioned or delayed. In the event of such
withholding of consent, BAe shall have the right to revise the proposed sale,
and Acquiror shall reconsider the revised sale in accordance with the standard
of this Section. No delay in any proposed sale shall be beyond the expiration of
the twelve-month period. As an alternative to conducting block trades, BAe shall
have the right to sell all (but not less than all) of its Acquiror Shares
pursuant to an underwritten sale with an underwriter reasonably acceptable to
Acquiror. In such event, Acquiror shall modify the registration statement filed
pursuant to Section 6.5 (or file a separate registration statement meeting the
requirements of Section 6.5) to enable BAe to effect such sale. Except as
provided in the prior sentence, Acquiror shall not be obligated to conduct a
"road show" or otherwise support such sale.
Section 6.4. Affiliate Agreement.
Each Stockholder acknowledges that such Stockholder may be
deemed an affiliate (as defined in Rule 12b-2 of the rules promulgated
under the Exchange Act) of the Company, Acquiror or Sub, and further
acknowledges and agrees to transfer, sell or otherwise dispose of
Acquiror Shares (including Acquiror Shares acquired upon the exercise
of options, warrants or rights or the conversion or exchange of
convertible or exchangeable securities) only (a) if such
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transfer, sale or disposition is registered under the Act, (b) is in
compliance with the requirements of paragraphs (c) and (d) of Rule 145
promulgated under the Act ("Rule 145") (as indicated in the
restrictive legend that will appear on the stock certificate), or (c)
pursuant to another exemption from registration under the Act for such
offer and sale. Each Stockholder agrees not to make an illegal
"distribution" (within the meaning of the Act and Rule 145) of
Acquiror Shares. Acquiror shall be entitled to place restrictive
legends upon certificates for each Stockholder's Acquiror Shares to
enforce the applicable provisions of law and this Agreement and
Acquiror shall not be required to maintain the effectiveness of the
Proxy Registration Statement (or Exchange Registration Statement, as
the case may be) under the Act for the purposes of resale of Acquiror
Shares by each Stockholder.
Section 6.5. Registration Rights.
(a) In the event that Acquiror exercises the Option, as
promptly as practicable following the closing date for the exchange
offer referred to in Section 1.2 above (but not more than 60 days
following the Closing Date), Acquiror shall (i) file a shelf
registration statement covering all Acquiror Shares for the purposes
of resale of Acquiror Shares by each Stockholder and (ii) use its
reasonable best efforts to cause such shelf registration statement to
become and remain effective for the resale of all Acquiror Shares
issued pursuant to this Agreement; provided, however, that Acquiror
shall be required to include in such registration statement only those
Acquiror Shares as to which the Stockholder holding such Acquiror
Shares agrees to sell such shares in compliance with the requirements
of paragraphs (c) and (d) of Rule 145 that would have been applicable
to such sale if such Acquiror Shares had been registered under the
Proxy Registration Statement (or Exchange Registration Statement, as
the case may be) rather than such shelf registration statement.
(b) Registrations effected under this Section shall be
effected at Acquiror's expense, including the fees and expenses of one
counsel to the holders of Acquiror Shares, but excluding underwriting
discounts and commissions to brokers or dealers. In connection with
each registration under this Section, Acquiror shall indemnify and
hold each holder of Acquiror Shares whose shares are registered
pursuant to such registration statement (a "Holder of Acquiror
Shares"), its underwriters and each of their respective affiliates
harmless against any and all losses, claims, damages, liabilities and
expenses (including,
17
<PAGE>
without limitation, investigation expenses and fees and disbursements
of counsel and accountants), joint or several, to which such Holder of
Acquiror Shares, its underwriters and each of their respective
affiliates may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
such registration statement (including any prospectus therein), of any
amendment or supplement thereto, 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, other than such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) which arise out of are based
upon an untrue statement or alleged untrue statement of a material
fact contained in written information furnished by a Holder of
Acquiror Shares to Acquiror expressly for use in such registration
statement; provided, however, that the foregoing indemnity shall not
inure to the benefit of any Holder of Acquiror Shares, its
underwriters or respective affiliates, if a copy of the prospectus was
not sent or given by or on behalf of such person to the person
purchasing the Shares, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to
such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(c) In connection with any registration statement pursuant
to this Section, each Holder of Acquiror Shares agrees to furnish
Acquiror with such information concerning itself and the proposed sale
or distribution as shall reasonably be required in order to ensure
compliance with the requirements of the Securities Act. Each Holder of
Acquiror Shares shall indemnify and hold Acquiror, its underwriters
and each of their respective affiliates harmless against any and all
losses, claims, damages, liabilities and expenses (including without
limitation investigation expenses and fees and disbursements of
counsel and accountants), joint or several, to which Acquiror, its
underwriters and each of their respective affiliates may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in written information
furnished by any Holder of Acquiror Shares to Acquiror expressly for
use in such registration statement. In no
18
<PAGE>
event shall the liability of any Holder of Acquiror Shares or any
affiliate thereof under this Section be greater in amount than the
dollar amount of the proceeds received by such Holder of Acquiror
Shares upon the sale of the Acquiror Shares giving rise to such
indemnification obligation.
(d) Upon the issuance of Acquiror Shares hereunder, Acquiror
will use its reasonable best efforts promptly to list such Acquiror
Shares with the New York Stock Exchange or on such national or other
exchange on which Acquiror Shares are at the time principally listed.
Article VII.
MISCELLANEOUS
Section 7.1. Non-Survival of Representations, Warranties and
Agreements.
All representations, warranties and agreements made by the
parties to this Agreement shall terminate at the Closing except for
those which by their terms are to be performed after the Closing.
Section 7.2. Expenses.
All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses.
Section 7.3. Notices.
All notices or other communications under this Agreement
shall be in writing and shall be given by delivery in person, by
facsimile, cable, telegram, telex or other standard form of
telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows (or such other
address for a party as shall be specified in a notice given in
accordance with this Section 7.3) and shall be deemed to have been
given one business day after transmission by facsimile of other
standard form of telecommunications or four days after deposit in the
US mail:
19
<PAGE>
If to the Company:
Orion Network Systems, Inc.
2440 Research Boulevard
Suite 400
Rockville, Maryland 20850
Telecopier No.: (301) 258-3300
Attention: President
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Telecopier No.: (202) 637-5910
Attention: Anthony S. Harrington, Esq.
If to a Stockholder, at the address or facsimile number of such
Stockholder set forth on Exhibit A, with a copy to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Telecopier No.: (202) 637-5910
Attention: Anthony S. Harrington, Esq.
If to Acquiror or Sub, at:
Loral Space & Communications Ltd.
600 Third Avenue
New York, New York 10016
Telecopier No.: (212) 338-5350
Attention: Eric J. Zahler, Esq.
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopier No.: (212) 821-8111
Attention: Bruce R. Kraus, Esq.
20
<PAGE>
Section 7.4. Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
revisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction. If any provision of this Agreement is so broad
as to be unenforceable, the provision shall interpreted to be only so
broad as is enforceable.
Section 7.5. Entire Agreement.
This Agreement and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto.
No addition to or modification of any provision of this Agreement
shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
Section 7.6. Assignment, Binding Effect.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Acquiror or Sub may assign
all or any of their rights and obligations hereunder to any affiliate
of Acquiror, provided that no such assignment shall relieve Acquiror
or Sub of its obligations hereunder if such assignee does not perform
such obligations. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this
Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 7.7. Specific Performance.
The parties hereto agree that irreparable damage would occur
in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed
21
<PAGE>
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any Delaware Court, this being in
addition to any other remedy to which they are entitled at law or in
equity.
Section 7.8. Confidentiality and Public Announcements.
The parties recognize that successful consummation of the
transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to the matters referred to herein. In
this connection, pending public disclosure thereof, each of the
parties hereto severally and not jointly agrees not to disclose or
discuss such matters with anyone not a party to this Agreement (other
than its counsel, advisors, corporate parents and Affiliates) without
the prior written consent of the other parties hereto, except for
filings required pursuant to the Exchange Act and the rules and
regulations thereunder or disclosures its counsel advises are
necessary in order to fulfill its obligations imposed by law or the
requirements of any securities exchange. At all times during the terms
of this Agreement, the parties hereto will consult with each other
before issuing or making any reports, statements or releases to the
public with respect to this Agreement or the transactions contemplated
hereby and will use good faith efforts to agree on the text of public
reports, statements or releases. For purposes of this Section, any
consultation or consent required of from the Stockholders may be
obtained from Gustave M. Hauser.
Section 7.9. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to
its rules of conflict of laws.
Section 7.10. Readings.
Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
Section 7.11. Counterparts.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered
shall be an original, but all such
22
<PAGE>
counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each signed
by less than all, but together signed by all of the parties hereto.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Principal Stockholder Agreement to be executed and delivered as of
the date first written above.
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric J. Zahler
-------------------------------------------
Name: Eric J. Zahler
Title: Vice President, General
Counsel and Secretary
LORAL SATELLITE CORPORATION
By: /s/ Eric J. Zahler
-------------------------------------------
Name: Eric J. Zahler
Title: Vice President, General
Counsel and Secretary
ORION NETWORK SYSTEMS INC.
By: /s/ W. Neil Bauer
-------------------------------------------
Name: W. Neil Bauer
Title: President and Chief Executive Officer
BRITISH AEROSPACE SPACE SYSTEMS, INC.
By: /s/ William Anthony Rice
-------------------------------------------
Name: William Anthony Rice
Title: Director
BRITISH AEROSPACE HOLDINGS, INC.
By: /s/ William Anthony Rice
-------------------------------------------
Name: William Anthony Rice
Title: Director
FLEET VENTURE RESOURCES, INC.
24
<PAGE>
By:/s/ Robert M. Van Degna
-------------------------------------------
Name: Robert M. Van Degna
Title: Chairman and Chief Executive Officer
/s/ John V. Saeman
-------------------------------------------
John V. Saeman
/s/ W. Neil Bauer
-------------------------------------------
W. Neil Bauer
/s/ Gustave M. Hauser
-------------------------------------------
Gustave M. Hauser
/s/ Sidney S. Kahn
-------------------------------------------
Sidney S. Kahn
/s/ John G. Puente
-------------------------------------------
John G. Puente
25
<PAGE>
EXHIBIT A
Common Series A Series B Series C Convertible
Stock Preferred Preferred Preferred Debentures
------ --------- --------- --------- -----------
British Aerospace Space
Systems, Inc. 729,921 _____ _____ 3,007,770 3,571,429
British Aerospace
Holdings, Inc.
Warwick House, PO Box 87
Farnborough Aerospace
Centre
Farnborough
Hants, GU146YU
Telecopier No.:
(011) 441-252-383488
John V. Saeman 1,394,078 58,823 16,339 _____ _____
Medallion Enterprises,
LLC
3200 Cherry Creek
South Dr.
Suite 570
Denver, CO 80209
Telecopier No.:
(303) 722-0443
W. Neil Bauer(1)(2) _____ _____ _____ _____ _____
Orion
2440 Research Blvd.
Suite 400
Rockville, MD 20850
Telecopier No.: (301) 258-3300
Gustave M. Hauser 352,355 58,823 16,339 _____ _____
Hauser Communications,
Inc.
712 Fifth Avenue
41st Floor
New York, NY 10019
Telecopier No.: (212) 956-
(303) 722-1413
26
<PAGE>
Sidney S. Kahn 207,260 _____ 8,169 _____ _____
14 East 60th Street
Suite 500
New York, NY 10022
Telecopier No.:
(212) 750-8904
John G. Puente(2) 321,501 1,411 392 _____ _____
10500 Willowbrook Dr.
Potomac, MD 20854
Telecopier No.:
(301) 299-9691
Fleet Venture _____ 588,234 155,194 _____ _____
Resources, Inc.
c/o Fleet Equity Partners
RI MO F12C
50 Kennedy Plaza
Providence, RI 02903
Telecopier No.:
(401) 278-6387
(1) Does not include shares purchased under Employee Stock Purchase Plan.
(2) Does not include shares beneficially owned by wife.
27
<PAGE>
EXHIBIT B
Each of the Stockholders shall have the right to transfer
Shares to (a) any member of such Stockholder's immediate family, (b)
any trust or similar instrument for estate planning purposes or (c)
any charitable organization, foundation or similar entities; provided,
however, such transfer may be made to any such permitted transferee
only if such permitted transferee shall agree in writing to all of the
terms, conditions and restrictions set forth in this Agreement
regarding Shares received by such permitted transferee.
28
<PAGE>
[LETTERHEAD OF BRITISH AEROSPACE NORTH AMERICA, INC.]
February 24, 1998
Loral Space & Communications Ltd.
Loral Satellite Corporation
600 Third Avenue
New York, NY 10016
Attention: Eric Zahler, Esq.
General Counsel
Dear Sirs,
We are writing to confirm out understanding with respect to the
termination of your Option and associated rights over 3,571,429 shares of Common
Stock of Orion Network Systems, Inc. ("Orion") pursuant to the following terms
and conditions:
(i) The terms and conditions of the Principal Stockholder Agreement
shall immediately cease to apply to 3,571,429 shares of Common
Stock of Orion owned by us (hereinafter "Released Shares"). For
avoidance of doubt, the Released Shares may come from shares of
Common Stock received by us upon conversion of some or all of our
Debenture.
(ii) You hereby agree that the Released Shares may be offered, sold,
transferred, pledged or otherwise disposed of by or on behalf of
us (subject to compliance with applicable securities laws)
provided that (i) all sales (if any) of the Released Shares are
made (A) pursuant to Rule 144 or (B) pursuant to an effective
registration statement under the Securities Act of 1933 (the
"1933 Act") or (C) to "Qualified Institutional Buyers" as defined
in Rule 144(A) or (D) in other private resale transactions exempt
from registration under the 1933 Act to persons or groups that
own less than 5% of the voting securities of Orion and (ii) no
further sales of Released Shares are made any tme after Loral
exercises its Option under the Principal Stockholder Agreement.
(iii) We hereby agree to vote the Released Shares we are entitled to
vote in favor of the merger of Loral Satellite Corporation with
and into Orion at the special meeting of Orion stockholders at
which such merger will be considered. We hereby further agree
that (i) any Released Shares not disposed of by us prior to the
merger will be disposed of in accordance with the terms of the
merger and (ii) that any Loral shares received by us with
<PAGE>
respect to any such Released Shares will be subject to the terms
of the Principal Stockholder Agreement.
(iv) All of the terms and conditions of the Principal Stockholder
Agreement applicable to us shall continue in full force and
effect, except as to the Released Shares. Defined terms used in
this letter agreement that are not otherwise defined herein shall
have the meaning ascribed to them in the Principal Stockholder
Agreement.
You also hereby agree with us that the following agreements and
representations apply to our understanding:
- The mutual promises contained herein constitute sufficient
consideration for this agreement.
- The terms and conditions of this letter agreement may only be
altered, amended, added to or otherwise changed by a futher
agreement in writing signed by us and by you.
- This letter agreement shall be construed and enforced in
accordance with the laws of the State of New York.
- Nothing in this letter is intended to confer upon or give any
rights to any third parties.
- The terms of this letter agreement are binding upon each of
the parties hereto and each party hereby acknowledges that it
has the power and authority to execute and deliver this
letter agreement and to abide by its terms.
<PAGE>
If you are in agreement with the foregoing, so indicate by executing
each of the two copies of this letter in the space provided below. Please then
return one executed copy of this letter agreement to Charles E. Gaba, Esq. At
British Aerospace North America, Inc. 15000 Conference Center Drive, Suite 200,
Chantilly, Virginia 20151-3819.
Very truly yours,
BRITISH AEROSPACE NORTH AMERICA, INC.
By: /s/ Charles E. Gaba
---------------------------------
Name: Charles E. Gaba
Title: Vice President, General Counsel
& Secretary
The undersigned hereby agrees to the terms and conditions of the
foregoing letter agreement:
LORAL SPACE & COMMUNICATIONS LTD.
By: /s/ Eric Zahler
---------------------------------
Name : Eric Zahler
Title: Senior Vice President,
General Counsel & Secretary
LORAL SATELLITE CORPORATION
By: /s/ Eric Zahler
--------------------------
Name : Eric Zahler
Title: Vice President
