Performance Share Agreement - Orbital Sciences Corp. and David W. Thompson
PERFORMANCE SHARE AGREEMENT
This Performance Share Agreement (the "Agreement") is made as of the
18th day of May, 2001 by and between Orbital Sciences Corporation, a Delaware
corporation (the "Company"), and David W. Thompson, Chairman 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 80,000 Performance Shares, which shall have the features
set forth below. The date of the grant of the Performance Shares is May 18,
2001, the date on which the grant was approved by the Committee.
a. Vesting. The 80,000 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,
2002 and 2003 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>
80,000 March 31, 2001 Fair Market Value Fair Market Value
on March 31, 2001 on March 31, 2002
80,000 March 31, 2002 Fair Market Value Fair Market Value
on March 31, 2002 on March 31, 2003
</TABLE>
<PAGE>
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,
2003 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>
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, 2004,
<PAGE>
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.
c. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes any prior
communications, agreements or understandings, whether oral or
written, with respect to the matters contained herein. The
invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this agreement as of
May 18, 2001.
ORBITAL SCIENCES CORPORATION
By: _______________________________ _______________________________
Kelly H. Burke David W. Thompson
Chairman of the Human Resources Chairman and
and Nominating Committee Chief Executive Officer