Performance Share Agreement - Orbital Sciences Corp. and David W. Thompson
PERFORMANCE SHARE AGREEMENT
This Performance Share Agreement (the "Agreement") is made as of the
21st day of July, 1999 by and between Orbital Sciences Corporation, a Delaware
corporation (the "Company"), and David W. Thompson, the President and Chief
Executive Officer of the Company (the "Executive").
WHEREAS, the Human Resources and Nominating Committee of the Board of
Directors of the Company (the "Committee") has determined that it is desirable
and in the best interests of the Company to grant to the Executive the right to
receive performance share units (the "Performance Shares"), in order to provide
the Executive with further incentive to enhance the profitability and financial
strength of the Company by linking a component of the Executive's compensation
to Company stock value, which Performance Shares entitle the Executive to
receive an annual bonus measured by the increased value of the Company's common
stock, par value $.01 per share (the "Common Stock").
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereby agree as follows:
1. GRANT OF PERFORMANCE SHARES. The Company hereby grants to the
Executive a total of 100,000 Performance Shares, which shall have the features
set forth below. The date of the grant of the Performance Shares is July 21,
1999, the date on which the grant was approved by the Committee.
a. Vesting. The 100,000 Performance Shares shall vest
immediately.
b. Performance Bonus Calculation. Until expiration or
termination, each vested Performance Share shall
entitle the Executive to receive a bonus (the
"Performance Bonus"). The Performance Bonus shall be
calculated on each of March 31, 2000 and 2001 with
respect to the aggregate number of Performance Shares
that have vested as of March 1 of such year. The
Performance Bonus shall be equal to the increase, if
any, from the Base Price to the Anniversary Valuation
Price, as illustrated below for each applicable
calendar year.
<TABLE>
<CAPTION>
NUMBER OF ANNIVERSARY
PERFORMANCE SHARES BASE DATE BASE PRICE VALUATION PRICE
------------------ --------- ---------- ---------------
<S> <C> <C> <C>
100,000 July 21, 1999 $30.00 Fair Market Value
on March 31, 2000
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
100,000 March 31, 2000 Fair Market Value Fair Market Value
on March 31, 2000 on March 31, 2001
</TABLE>
<PAGE> 3
c. Payment of Performance Bonus. The Performance Bonus,
if any, shall be paid in cash in the form of a credit
to the Executive's account under the Company's 1995
Deferred Compensation Plan. Such payment shall be
made as soon as practicable after calculation of the
Performance Bonus. Fifty percent (50%) of such credit
shall vest immediately, with the other Fifty percent
(50%) vesting on March 31 of the subsequent year.
d. Expiration. The Performance Shares shall expire on
April 1, 2001 unless this Agreement is terminated
according to its terms at an earlier time.
e. Fair Market Value. For purposes of this Agreement,
the Fair Market Value shall be equal to the average
closing sales price of the Common Stock on the
national securities exchange on which the Common
Stock is then principally traded, calculated for the
first 20 trading days in March of the applicable
valuation year.
2. LIMITATION ON TRANSFER. The Performance Shares are not transferable
by the Executive.
3. PERFORMANCE SHARE ADJUSTMENTS.
a. Changes in Stock. If the outstanding shares of Common
Stock of the Company are increased, decreased,
changed into or exchanged for a different number or
kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend,
stock split or reverse stock split, upon
authorization of the Board, a proportionate
adjustment shall be made in the number or kind of
Common Stock subject to the Performance Shares, so
that the proportionate interest of the Executive
immediately following such event shall, to the extent
practicable, be the same as immediately prior to such
event. Any such adjustment to Performance Shares
shall include a corresponding proportionate
adjustment in the Base Price per share of Common
Stock.
b. Reorganization in Which the Company is the Surviving
Corporation. Subject to subparagraph (c) below, if
the Company shall be the surviving corporation in any
reorganization, merger or consolidation of the
Company with one or more other corporations, the
Performance Shares shall pertain to and apply to the
securities to which a holder of the number of shares
of Common Stock subject to the Performance Shares
would have been entitled immediately following such
reorganization, merger or consolidation, with a
corresponding proportionate adjustment in the Base
Price per share of Common Stock so that the aggregate
Base Price thereafter shall be the same as the
aggregate Base Price of the Common Stock remaining
subject to the Performance Shares immediately prior
to such reorganization, merger or consolidation.
<PAGE> 4
c. Reorganization in Which the Company is Not the
Surviving Corporation or Sale of Assets or Stock.
Upon the dissolution or liquidation of the Company,
or upon a merger, consolidation or reorganization of
the Company with one or more other corporations in
which the Company is not the surviving corporation,
or upon a sale of substantially all the assets of the
Company to another corporation, or upon any
transaction (including, without limitation, a merger
or reorganization in which the Company is the
surviving corporation) approved by the Board which
results in any person or entity owning Eighty percent
(80%) or more of the combined voting power of all
classes of the stock of the Company, unless provision
is made in writing in connection with such
transaction for the assumption of this Agreement with
such adjustments as the Board deems appropriate with
respect to the features, terms and conditions of the
Performance Shares, the Performance Shares hereunder
shall immediately entitle the Executive to a
Performance Bonus in an amount equal to the
difference between the applicable Base Price and the
Fair Market Value of the per share Common Stock on
the trading date immediately preceding the closing
date of such Transaction, and any unpaid portion of a
previously vested Performance Bonus shall be
immediately paid.
d. Adjustments. In all cases, the nature and extent of
adjustments under this Section 3 shall be determined
by the Committee in its sole discretion, and any such
determination as to what adjustments shall be made,
and the extent thereof, shall be final and binding.
4. WITHHOLDING OF TAXES. The parties hereto recognize that the Company
may be obligated to withhold federal, state and local income taxes and Social
Security taxes to the extent that the Executive realizes ordinary income in
connection with receipt of the Performance Bonus pursuant to this Agreement. The
Executive agrees that the Company may withhold amounts needed to cover such
taxes from payments otherwise due and owing to the Executive.
5. DISCLAIMER OF RIGHTS. No provision in this Agreement shall be
construed to confer upon the Executive the right to be employed by the Company,
or to interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of the Executive at any time, or to
terminate any employment or other relationship between the Executive and the
Company.
6. INTERPRETATION OF PERFORMANCE SHARE AGREEMENT. All decisions and
interpretations made by the Committee or the Board of Directors of the Company
with regard to any questions arising under this Agreement shall be binding and
conclusive on the Company and the Executive.
7. TERMINATION. Except as otherwise provided herein, this Agreement
shall terminate and all rights and obligations of the parties hereunder shall be
void and of no effect immediately upon the date the Executive ceases to hold the
same, equivalent or higher grade office as that office set forth in the first
paragraph of this Agreement or March 31, 2002,
<PAGE> 5
whichever occurs first. For purposes of this Agreement, an approved leave of
absence shall not be deemed an event resulting in the Executive ceasing to hold
such office under this Agreement. An approved leave of absence shall mean an
absence approved by the Committee for military leave, sick leave, or other bona
fide leave, as long as the Executive's right to re-employment is guaranteed by
contract, statute or the policy of the Company.
8. MISCELLANEOUS
a. Title and Headings. Titles and headings of sections
of the Agreement are for convenience of reference
only and shall not affect the construction of any
provision of this Agreement.
b. Governing Law. This Agreement shall be governed by,
interpreted under and construed and enforced in
accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the
State of Delaware.
IN WITNESS WHEREOF, the parties have executed this agreement
as of July 21, 1999.
ORBITAL SCIENCES CORPORATION
By: /s/ Kelly H. Burke /s/ David W. Thompson
------------------ ---------------------
Kelly H. Burke David W. Thompson
Chairman of the Human Resources President and
and Nominating Committee Chief Executive Officer