1
EXHIBIT 10.12.1
PERFORMANCE SHARE AGREEMENT
This Performance Share Agreement (the "Agreement") is made as of the
23rd day of October, 1996 by and between Orbital Sciences Corporation, a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxx, the President and
Chief Executive Officer of the Company (the "Executive").
WHEREAS, the Human Resources and Nominating Committee of the Board of
Directors 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 (the "Shares").
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. GRANT OF PERFORMANCE SHARES. The Company hereby grants to the
Executive a total of 150,000 Performance Shares, which shall have the features
set forth below. The date of the grant of the Performance Shares is October
23, 1996, the date on which the grant was approved by the Committee.
a. Vesting. 50,000 Performance Shares shall vest
immediately, with an additional 50,000 vesting on each of January 30, 1997 and
1998.
b. Performance Bonus Calculation. Until they expire or
are terminated, each vested Performance Share shall entitle the Executive to
receive a bonus (the "Performance Bonus"). The Performance Bonus shall be
calculated on each of January 31, 1997, 1998 and 1999 with respect to the
aggregate number of Performance Shares that have vested as of January 1 of such
year. The Performance Bonus shall be equal to the increase, if any, from the
Base Price and Anniversary Valuation Price as illustrated below for each
applicable calendar year.
NUMBER OF PERFORMANCE ANNIVERSARY
--------------------- -----------
SHARES BASE DATE BASE PRICE VALUATION PRICE
------ --------- ---------- ---------------
50,000 January 30, 1996 $13.16 Fair Market Value
on January 30,
1997
100,000 January 30, 1997 Fair Market Value on Fair Market Value
January 30, 1997 on January 30,
1998
150,000 January 30, 1998 Fair Market Value on Fair Market Value
January 30, 1998 on January 30,
1999
2
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 50% vesting on January 30 of the subsequent year.
d. Expiration. The Performance Shares shall expire on
February 1, 1999 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
Shares on the national securities exchange on which Shares are then principally
traded or, if that measure of price is not available, on a composite index of
such exchanges or, if that measure of price is not available, in a national
market system for securities, calculated for the 20 trading days immediately
prior to the applicable valuation date.
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 the
Company are increased, decreased, changed into or exchanged for a different
number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse
stock split, upon authorization of the Board, a proportionate adjustment shall
be made in the number or kind of Shares 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.
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 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 so that the aggregate Base
Price thereafter shall be the same as the aggregate Base Price of the Shares
remaining subject to the Performance Shares immediately prior to such
reorganization, merger or consolidation.
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
80 percent or more of the combined voting power of all classes of stock of the
Company, unless provision is made in writing in connection with such
transaction for
2
3
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 Shares 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 the 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 office set forth in the first paragraph of this
Agreement or January 30, 2000, 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.
3
4
IN WITNESS WHEREOF, the parties have executed this agreement as of
October 23, 1996.
ORBITAL SCIENCES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
Senior Vice President and Chief Financial Officer
/s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx
4
