1
EXHIBIT 10.4
AMENDED AND RESTATED OPTION AGREEMENT
entitling the holders to acquire common shares
in the capital of
XXXXXXXXX, XXXXXXXXX AND ASSOCIATES LTD.
(amalgamated pursuant to the laws of Canada)
WHEREAS the Optionholders and Holdco entered into an amended and
restated secondary option agreement (the "ORIGINAL OPTION AGREEMENT") dated June
29, 2000, pursuant to which Holdco granted the Optionholders an option to
purchase certain common shares in the capital of the Corporation;
AND WHEREAS in accordance with the terms of the Letter Agreement (as
defined below), the parties thereto agreed, among other things, to amend and
restate the terms of the Original Option Agreement (which are hereby repealed
and replaced in their entirety) on the terms and conditions set out herein;
In consideration of the mutual agreements contained herein (the receipt
and adequacy of which are acknowledged), the parties agree as follows:
1. DEFINITIONS. As used in this Option Agreement, the following terms have
the following meanings:
(a) "AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT" means the
amended and restated registration rights agreement dated of
even date herewith among the CAI Entities, CAI Managers & Co.,
L.P, Numberco, the Institutional Investor, Holdco and Orbital;
(b) "ARM'S LENGTH" has the meaning specified in the Income Tax Act
(Canada);
(c) "BUSINESS DAY" means any day of the year, other than a
Saturday, a Sunday and any statutory holiday in Vancouver,
British Columbia, Toronto, Ontario or New York, New York;
(d) "CAI ENTITIES" means CAI Capital Partners and Company II,
L.P., CAI Partners and Company II, L.P., and CAI Capital
Partners and Company II-C, L.P., and "CAI ENTITY" means any
one of them;
(e) "CAPITAL REORGANIZATION EVENT" has the meaning ascribed
thereto in Section 8(a);
2
-2-
(f) "COMMON SHARES" means common shares of the Corporation;
(g) "CORPORATION" means XxxXxxxxx, Xxxxxxxxx and Associates Ltd.;
(h) "CUSTODIAL AGENT" has the meaning ascribed thereto in Section
18(a);
(i) "EXERCISE PRICE" has the meaning ascribed thereto in Section
2;
(j) "HOLDCO" means MDA Holdings Corporation;
(k) "HOLDCO FLOOR PRICE" has the meaning ascribed thereto in
Section 11(d);
(l) "HOLDCO SALE PRICE" has the meaning ascribed thereto in
Section 11(d);
(m) "INSOLVENCY OPTION EVENT" means
(i) If Orbital shall become subject to Chapter 11
proceedings or other proceedings under U.S.
bankruptcy or similar laws and, in the event of an
involuntary proceeding, the continuance of such
proceeding for a period of 30 consecutive calendar
days;
(ii) If there shall be a material breach of the covenants
set forth in Section 9 or Section 3.7 of the Amended
and Restated Registration Rights Agreement; or
(iii) If there shall be any filing under Canadian, U.S. or
other bankruptcy or similar laws in respect of Holdco
and, in the event of an involuntary proceeding, the
continuance of such proceeding for a period of 30
consecutive calendar days.
(n) "INSTITUTIONAL INVESTOR" means Ontario Teachers Pension Plan
Board;
(o) "LETTER AGREEMENT" means the letter agreement dated April 12,
2001 among the CAI Entities, Numberco, the Institutional
Investor, Holdco and Orbital;
(p) "NUMBERCO" means 597858 B.C. Ltd.;
(q) "OFFER" has the meaning ascribed thereto in Section 11(a);
(r) "OPTIONS" has the meaning ascribed thereto in Section 2;
(s) "OPTION AGREEMENT" means this amended and restated option
agreement, including any schedules attached hereto;
3
-3-
(t) "OPTIONED SHARES" has the meaning ascribed in Section 2;
(u) "OPTIONHOLDERS" has the meaning ascribed thereto in Section 2;
(v) "OPTIONHOLDER FLOOR PRICE" has the meaning ascribed thereto in
Section 11(e);
(w) "OPTIONHOLDER SALE PRICE" has the meaning ascribed thereto in
Section 11(e);
(x) "OPTIONS" has the meaning ascribed thereto in Section 2;
(y) "ORBITAL" means Orbital Sciences Corporation;
(z) "PERSON" means a natural person, partnership, limited
partnership, limited liability company, body corporate, joint
stock company, trust, unincorporated association, joint
venture or other entity or a governmental entity, and pronouns
have a similarly extended meaning;
(aa) "PLEDGE AND CUSTODIAL AGREEMENT" has the meaning ascribed
thereto in Section 18(a);
(bb) "PURCHASED SHARES" has the meaning ascribed thereto in the
Letter Agreement;
(cc) "PURCHASE PRICE" means the purchase price per Common Share as
set out in the Letter Agreement, which, prior to any
adjustments in accordance with the Letter Agreement, shall be
Cdn $14.00 per Common Share;
(dd) "PURCHASERS" means the CAI Entities and Numberco, and
"PURCHASER" means any one of them;
(ee) "REMAINING SHARES" has the meaning ascribed thereto in Section
11(a);
(ff) "SOURCING AND STRUCTURING FEE" has the meaning ascribed
thereto in Section 7(a);
(gg) "SUBSIDIARY" means a subsidiary of the Corporation within the
meaning of the Canada Business Corporations Act;
(hh) "TERMINATION DATE" means May 31, 2001 or in the event that any
Optionholder or any transferee or assignee is unable to obtain
financing or all necessary regulatory approvals in connection
with any intended exercise of an Option prior to such time,
such date not later
4
-4-
than June 30, 2001 as specified by such Optionholder in
writing on or prior to May 31, 2001; and
(ii) "TRANSFER" has the meaning ascribed thereto in Section 9(a).
2. GRANT OF OPTIONS. Holdco hereby grants the Purchasers (the Purchasers
and any subsequent assignee or transferee being called the
"OPTIONHOLDERS" or "HOLDERS" and any one of them an "OPTIONHOLDER" or
"HOLDER") the irrevocable right and option (the "OPTIONS"), exercisable
at any time or from time to time on or prior to the Termination Date,
to acquire from Holdco an aggregate of 5,650,000 Common Shares (as
adjusted in accordance with Section 8 hereof) (the "OPTIONED SHARES")
free of any and all liens or encumbrances, for an exercise price (the
"EXERCISE PRICE") of Cdn $14.25 per Optioned Share (as adjusted in
accordance with Sections 8 and 27 hereof and subject to Section 7
hereof), upon the terms and conditions set out in this Option
Agreement.
3. TERMINATION OF OPTION. Notwithstanding anything to the contrary
contained herein, if an Insolvency Option Event occurs on or prior to
the Termination Date, each Optionholder shall be entitled, in its sole
discretion at any time prior to the Termination Date, to immediately
terminate this Agreement with respect to such Optionholder and by
notice in writing to Holdco, whereupon the Option represented hereby
shall be deemed to be automatically exercised for an exercise price per
Optioned Share equal to the Exercise Price; provided, however, that in
no event shall any of the Optioned Shares subject to such exercise be
transferred to any Optionholder prior to the payment of the Exercise
Price therefor in accordance with Sections 5, 7 and 27; and provided
further, that the obligations of the Purchasers pursuant to Section
11(e) shall survive any termination of this Agreement pursuant to this
Section 3.
4. NO EXERCISE AFTER EXPIRY. If an Optionholder has not given notice of
exercise of the Option to Holdco in full or the Option has not
otherwise been exercised on or prior to the Termination Date, the
unexercised portion of the Option shall thereafter be void.
5. EXERCISE OF OPTION.
(a) An Optionholder may exercise the Options by giving notice of
exercise to Holdco, at any time, in whole or in part, on or
prior to the Termination Date. Such notice shall set out the
number or percentage of Common Shares the Optionholder is
acquiring. Within 3 Business Days of the date of the delivery
of a notice of exercise, payment in accordance with Section 13
by the Optionholder of the Exercise Price of the Common Shares
which may be acquired pursuant to such exercise
5
-5-
(prior to taking into account the payment set out in Section
7) shall be delivered to Holdco and simultaneously therewith
the Common Shares shall be transferred by Holdco and a
certificate for the Common Shares purchased shall be delivered
by Holdco to the Optionholder either endorsed in blank or
accompanied by a duly completed, transferable stock power of
attorney (with signatures "medallion" guaranteed and together
with any other documents required by MDA's transfer agent in
connection with such purchase). In addition, in connection
with any exercise of the Option, the provisions of Section
12(d) shall apply mutatis mutandis with respect to the
completion of any such exercise.
(b) At any time prior to the Termination Date, an Optionholder
may, in lieu of exercising any of the Options that it is
entitled to exercise in accordance with this Option Agreement,
provide written notice to Holdco requesting Holdco to sell any
or all of the Optioned Shares with respect to those Options
pursuant to a public offering in respect of which the price at
which the Optioned Shares to be sold pursuant to such public
offering as set out in the applicable underwriting agreement
(the "PUBLIC OFFERING SALE PRICE") is expected to be
determined prior to the Termination Date. If an Optionholder
gives such notice, Holdco and Orbital agree to co-operate in
full with the Optionholder in connection with such public
offering, including without limitation, participating in the
prospectus process, assisting with access for due diligence
purposes, and signing any requested underwriting or
indemnification agreements on terms not materially more
adverse to them than those applicable in the Corporation's
initial public offering. In addition, on the closing date of
such public offering, Holdco agrees to pay (or, at the written
request of the Optionholder, irrevocably direct the
underwriters to pay) to the Optionholder, by certified cheque,
bank draft or wire transfer, (A) an amount equal to 50% of the
amount by which (i) the proceeds of the public offering with
respect to the sale of the Optioned Shares (net of applicable
underwriting commissions and all non-reimbursed and reasonable
expenses (provided that such expenses shall not exceed US
$100,000 in the aggregate) incurred by them in connection
therewith), exceed (ii) the product of (x) Cdn. $14.25 per
share, and (y) the total number of Optioned Shares sold
pursuant to the public offering, plus (B) a sourcing and
structuring fee in an amount equal to 2% of the product of
$14.25 and the number of Optioned Shares sold in the public
offering (net of applicable underwriting commissions incurred
by Holdco and Orbital in connection therewith). If, for any
reason, the Public Offering Sale Price cannot be determined on
or prior to the
6
-6-
Termination Date, the Optionholder shall continue to have all
rights with respect to the Optioned Shares and the Remaining
Shares set out in this Option Agreement (including, without
limitation, the right to exercise the Option on or prior to
the Termination Date), notwithstanding any delivery of a
notice in accordance with this Section 5(b). Further, if, for
any reason, the Public Offering Sale Price cannot be
determined prior to the Termination Date, the Optionholder(s)
that exercised its rights pursuant to this Section 5(b) shall
promptly pay Holdco and Orbital all non-reimbursed and
reasonable expenses (provided that such expenses shall not
exceed US $100,000 in the aggregate) incurred by Holdco and
Orbital in connection with such public offering. For greater
certainty, the parties acknowledge and agree that in no event
shall Holdco be required under this Section 5(b) to enter into
any underwriting agreement in which the Public Offering Sale
Price, net of applicable underwriting commissions incurred by
Holdco and Orbital, is less than $14.25 per share.
6. RIGHT OF EACH OPTIONHOLDER. The Optionholders shall be entitled to
purchase the following number of Optioned Shares: (i) as to the CAI
Entities, 2,650,000 Optioned Shares, proportionate to their respective
holdings of common shares of the Corporation on the date of the Letter
Agreement and prior to the completion of the transactions contemplated
therein, and (ii) as to Numberco, 3,000,000 Optioned Shares (or in such
other proportions as any of the CAI Entities and Numberco may otherwise
agree among themselves and jointly notify to Holdco).
7. FEES.
(a) In connection with any exercise of the Option by an
Optionholder in accordance with Section 5(a), or upon any
deemed exercise thereof in accordance with Section 3 and upon
the delivery of a notice of exercise together with the
aggregate amount payable by the Optionholder as set out in
Section 3 or Section 5(a) in connection with such exercise,
Holdco shall pay the Purchaser that was the original holder of
such Option (and, for greater certainty, not to any assignee
of the Option), or as it may direct, a sourcing and
structuring fee (the "SOURCING AND STRUCTURING FEE") in the
amount of 2% of the aggregate amount payable by the
Optionholder to Holdco as set out in Section 3 or Section
5(a), as applicable, in connection with such exercise. The
Sourcing and Structuring Fee shall be paid to such Purchaser
in the manner set out in Section 7(b).
7
-7-
(b) If the Optionholder exercising the Option is the Purchaser
that was the original holder of such Option (and, for greater
certainty, is not an assignee of the Option) or if, at the
time of any deemed exercise thereof in accordance with Section
3, the Optionholder is the Purchaser that was the original
holder of such Option (and, for greater certainty, is not an
assignee of the Option), the Sourcing and Structuring Fee
shall be offset against the amounts otherwise payable to
Holdco by the exercising Optionholder. If, on the other hand,
the Optionholder exercising the Option is not the Purchaser
that was the original holder of such Option (an assignee of
the Option), or if, at the time of any deemed exercise thereof
in accordance with Section 3, the Optionholder is not the
Purchaser that was the original holder of such Option (an
assignee of the Option), Holdco shall pay (or, at such
Purchaser's written request, irrevocably direct the
Optionholder to pay from the amounts otherwise payable by the
Optionholder to Holdco) the Sourcing and Structuring Fee to
such Purchaser by certified cheque, bank draft or wire
transfer.
8. ANTI-DILUTION.
(a) If and whenever at any time prior to the expiry date there
occurs any of the following events (each a "CAPITAL
REORGANIZATION EVENT"):
(i) a reclassification of the Common Shares or a capital
reorganization of the Corporation or a subdivision or
consolidation of the Common Shares; or
(ii) an amalgamation, merger or other combination of the
Corporation with or into any other Person or any plan
of arrangement to which the Corporation is a party;
or
(iii) the issuance to all or substantially all of the
holders of Common Shares of any rights, options,
warrants or other similar securities to acquire
Common Shares or securities exchangeable or
convertible into Common Shares; or
(iv) the declaration of a dividend on the Common Shares
payable in Common Shares or any right, options,
warrants or other similar securities to acquire
Common Shares or securities exchangeable or
convertible into Common Shares to all or
substantially all of the holders of Common Shares; or
(v) the making or payment of any other distribution of
property or assets, including cash dividends, to all
or substantially all of the
8
-8-
holders of Common Shares (excluding normal course
cash dividends, in the aggregate not to exceed 10% of
the Corporation's annual net profits in any year),
then, thereafter if an Optionholder is entitled to acquire
Common Shares hereunder at any date subsequent to the record
date or the effective date of such Capital Reorganization
Event, as appropriate, the Optionholder shall be entitled to
receive and shall accept, in lieu of the number of Common
Shares then sought to be obtained by him hereunder, the number
of Common Shares or other securities or property of the
Corporation or of the Person resulting from such Capital
Reorganization Event that such Optionholder would have been
entitled to receive on such Capital Reorganization Event if,
on the record date or the effective date thereof, as the case
may be, the Optionholder had already been the registered
holder of the number of additional Common Shares then sought
to be obtained by him pursuant to the provisions hereof. The
entitlement of an Optionholder to receive any rights, options
or warrants or other securities referred to in this Section 8
shall, if appropriate, be subject to the payment by the
Optionholder of the purchase price thereof and the
satisfaction of all other appropriate conditions precedent to
the issuance thereof, such entitlement to be determined as
though the date for such payment and the fulfilment of such
conditions were the date of delivery to the Optionholder of
any Common Shares or other securities or property it is
entitled to with respect to such Capital Reorganization Event.
(b) The adjustments provided for herein and the classes of
securities or property of the Corporation or any Person which
are to be received by an Optionholder hereunder are
cumulative. After any adjustment pursuant hereto, the term
"Common Shares" where used in this Option Agreement shall be
interpreted to mean securities of any class or classes and
property that, as a result of all prior adjustments pursuant
hereto, an Optionholder is entitled to receive hereunder, and
the number of Common Shares to be issued to the Optionholder
hereunder shall be interpreted to mean the number and classes
of securities and property of the Corporation or any Person
which, as a result of all prior adjustments pursuant hereto,
the Optionholder is entitled to receive hereunder.
(c) In addition to the adjustment of the number of Common Shares
to which Optionholder would be entitled in (a) above, the
Exercise Price, as contemplated elsewhere in this Option
Agreement, and for greater certainty, the floor prices set
forth in Sections 11(d) and 11(e), shall also be adjusted
accordingly to preserve the same economic result.
9
-9-
9. RESTRICTIONS ON TRANSFER BY HOLDCO AND ORBITAL.
(a) During the term of this Option Agreement, Holdco shall not
sell, assign, transfer, pledge, encumber or otherwise deal
with or dispose of (collectively, a "TRANSFER") any of the
Optioned Shares owned by it except in the manner expressly
permitted in this Option Agreement, without the prior express
written consent of each of the Optionholders.
(b) During the term of this Option Agreement, Orbital shall ensure
that at all times Holdco is directly or indirectly
wholly-owned by Orbital and no other Persons and shall not
Transfer any of the securities of Holdco owned by it or permit
Holdco to issue any securities to any other Person, wind up,
consolidate or dissolve or to amalgamate or merge with any
other Person, without the prior express written consent of
each of the Optionholders. Notwithstanding the foregoing,
Orbital shall be entitled to pledge any or all of the
securities of Holdco held by it to a bona fide arm's length
lender or lenders (the "LENDER") to Orbital from time to time
as security for indebtedness of Orbital owed to such Lender
provided that such Lender acknowledges in writing to the
Optionholders that (i) until a default under the pledge, the
pledged securities shall continue to be registered in the name
of Orbital and Orbital shall be entitled to exercise all
rights in respect thereof (including voting rights and
director nomination rights), and (ii) if the Lender commences
enforcement proceedings or otherwise realizes on the pledged
securities following default, the Lender shall immediately
notify the Optionholders and its interest in the pledged
securities shall be subject to the provisions of this Option
Agreement applicable thereto as and to the same extent as
though the Lender were Orbital.
10. PERMITTED TRANSFERS BY HOLDCO.
(a) Holdco may transfer all or any of its Optioned Shares to a
direct or indirect wholly-owned Subsidiary of Holdco which
executes and delivers to the parties and the Custodial Agent,
as applicable, a counterpart copy of this Option Agreement and
the Pledge and Custodial Agreement or a written agreement in
form and substance satisfactory to the other parties and the
Custodial Agent, as applicable, agreeing to be bound by the
terms and conditions of this Option Agreement and the Pledge
and Custodial Agreement as if it were Holdco, provided that no
such Subsidiary shall cease to be wholly-owned (directly or
indirectly) by Holdco without first transferring all of such
Optioned Shares back to Holdco, but in the event of any such
transfer Holdco shall continue to be liable for any default in
the
10
-10-
performance of any obligations of such Subsidiary under this
Option Agreement and the Pledge and Custodial Agreement, as
applicable.
(b) Holdco shall be entitled to transfer Optioned Shares pursuant
to the provisions of Section 5(b) and Section 11 hereof.
11. RIGHT OF FIRST REFUSAL; RESALES BY PURCHASERS, ETC.
(a) If at any time after the Termination Date and on or prior to
June 30, 2002, Holdco is the holder of any Optioned Shares
(collectively, including any shares into which such Optioned
Shares may be reclassified, sub-divided, consolidated or
converted and any rights and benefits arising therefrom,
including any dividends or distributions of securities or
property which may be declared in respect thereof, the
"REMAINING SHARES") and Holdco desires to sell all or any of
the Remaining Shares to a third party with whom Holdco is
dealing at Arm's Length, Holdco shall obtain from the third
party a bona fide offer (an "OFFER") in writing which Offer
shall be irrevocable for a period ending not sooner than the
expiration of the 30-day period during which the Optionholders
may exercise their purchase rights as set out in Section
11(b), and which Offer it is ready and willing to accept, to
purchase all or that portion of the Remaining Shares that it
desires to sell on the terms and conditions and for the amount
set forth in the Offer by certified cheque, bank draft or wire
transfer, and shall give notice in writing to the
Optionholders of the receipt of the Offer within 10 days
thereof together with a copy thereof.
(b) The Optionholders shall have the irrevocable right,
exercisable by written notice given to Holdco (with a copy to
the other Optionholders) within 30 days after the giving of
the notice by Holdco, to purchase the Remaining Shares that
are the subject matter of the Offer for the amount set forth
in the Offer, in the same proportions as the Optionholders are
entitled to purchase Optioned Shares as set out in Section 6
(or in such other proportions as any of them may agree among
themselves and jointly notify Holdco), and except as set out
in this Section 11(b) and Section 11(f), on the terms of the
Offer. Subject to Section 11(f), following an exercise of the
purchase rights set forth in this Section 11(b) with respect
to all (but not less than all) of the Remaining Shares which
are subject to the Offer, each Optionholder exercising such
rights and Holdco shall complete the purchase and sale of such
Remaining Shares (including the making of all payments
required in connection with such exercise in accordance with
Section 13, and all deliveries set out in Section 12) on the
date specified by the exercising Optionholder that is not
later than 30 days following the
11
-11-
earlier of (i) the expiration of the 30-day period during
which the Optionholders may exercise their purchase rights as
set out in this Section 11(b) and (ii) the date on which the
exercise notice is given pursuant to this Section 11(b). If
the consideration for the Remaining Shares as set out in the
Offer involves a transfer of property other than cash, then
the Optionholders shall be entitled, in lieu of transferring
such non-cash property as a part of the purchase, to pay the
cash equivalent of such property, which shall be the fair
market value thereof as at the date of the exercise by the
Optionholder(s) of its purchase rights hereunder and as is
reasonably determined by the exercising Optionholder(s) and
Holdco in good faith, or if they are unable to agree on such
fair market value, by Xxxxxx Xxxxxxxx (or if it is unable or
unwilling to act with respect to such determination, by Ernst
and Young, or if both Xxxxxx Xxxxxxxx and Xxxxx and Xxxxx are
unable or unwilling to act, such other firm as they shall
jointly designate). The costs of any such determination shall
be shared equally between the exercising Optionholders on the
one hand and Holdco on the other hand. Unless the purchase
rights set forth in this Section 11(b) are exercised with
respect to all of the Remaining Shares that are the subject of
the Offer, Section 11(c) shall apply.
(c) If following compliance with Section 11(b) there shall remain
Remaining Shares that are the subject matter of the Offer
which no Optionholder has elected to purchase, the exercise by
any Optionholder of its rights pursuant to Section 11(b) shall
be null and void, and Holdco may accept the Offer and complete
the transaction with the said third party, in each case, only
with respect to the Remaining Shares that are the subject of
the Offer in accordance with the terms and conditions of such
third party's Offer, provided that if the sale of such
Remaining Shares to the third party is not completed within 90
days following the expiration of the 30-day period during
which the Optionholders may exercise their purchase rights as
set out in Section 11(b), the provisions of Section 11(b)
shall again apply to any proposed sale of such Remaining
Shares. The Optionholders, before instructing the Custodial
Agent to release the Remaining Shares to be transferred to the
third party, shall be entitled to require proof that the sale
is taking place in accordance with the third party's Offer and
Holdco agrees that it shall not be entitled to have such
shares released before it has furnished such proof and made
arrangements with the Optionholders satisfactory to them for
the immediate payment, of the amounts, if any, payable by
Holdco to them pursuant to Section 11(d) with respect to any
such sale.
12
-12-
(d) If at any time on or prior to June 30, 2002, Holdco completes
the sale of any Remaining Shares to a third party in
accordance with Section 11(c) for a net price per Remaining
Share (the "HOLDCO SALE PRICE") that exceeds Cdn. $15.00 (as
the same may be adjusted as set out below, the "HOLDCO FLOOR
PRICE"), then immediately following the completion of any such
sale, Holdco shall pay to the Purchasers (and, for greater
certainty, not to any assignee hereof) pro rata to their
respective holdings of Common Shares on the date of the Letter
Agreement and prior to the completion of the transactions
contemplated therein (or in such other proportions as they may
agree among themselves and jointly notify Holdco) by certified
cheque, bank draft or wire transfer, an amount per remaining
share sold that is equal to 50% of the amount by which the
Holdco Sale Price exceeds the Holdco Floor Price. For purposes
hereof, if there occurs one or more Capital Reorganization
Events on or prior to June 30, 2002, the Holdco Floor Price
shall be adjusted with respect to each such Capital
Reorganization Event in the manner set out in Section 8(c),
mutatis mutandis. This Section 11(d) shall, for greater
certainty, also not apply to any sale of shares by Holdco
pursuant to a public offering as described in Section 5(b).
(e) If at any time on or prior to June 30, 2002, a Purchaser has
acquired any Common Shares pursuant to the exercise of the
Options and such Purchaser completes the sale of any of such
Common Shares to a third party on or before June 30, 2002 for
a net price per Common Share (the "OPTIONHOLDER SALE PRICE")
that exceeds Cdn. $14.25 (as the same may be adjusted as set
forth below, the "OPTIONHOLDER FLOOR PRICE"), then immediately
following the completion of any such sale, the Purchaser shall
pay to Holdco in accordance with Section 13, as additional
consideration for the exercise of the Options, an amount per
each such Common Share sold by the Purchaser in such third
party sale, that is equal to 50% of the amount by which the
Optionholder Sale Price exceeds the Optionholder Floor Price.
For purposes hereof, if there occurs one or more Capital
Reorganization Events on or prior to June 30, 2002, the
Optionholder Floor Price shall be adjusted with respect to
each such Capital Reorganization Event in the manner set out
in Section 8(c), mutatis mutandis. In the alternative, in the
event any Purchaser (and, for greater certainty, not any
subsequent Optionholder) sells any Option to a third party
prior to the exercise of such Option, such Purchaser shall pay
to Holdco in accordance with Section 13 an amount that is
equal to 50% of all net proceeds from such sale. The
provisions of this Section 11(e) shall not apply to any
subsequent exercise of any such Option or to any sale by a
third party of such Option or of Common Shares which are
acquired pursuant to
13
-13-
the exercise of any Option which was sold to such third party
in accordance with this Section 11(e). This Section 11(e)
shall, for greater certainty, also not apply to any sale of
shares by Holdco pursuant to a public offering as described in
Section 5(b).
(f) Notwithstanding Section 11(b), the parties acknowledge and
agree that (i) an Optionholder's obligation to complete any
purchase under this Section 11 shall be subject, in any event,
to its receipt of all necessary third party consents required
under any contracts to which the Corporation or any subsidiary
is a party and all governmental and regulatory consents and
approvals in connection therewith, and (ii) the date on which
an Optionholder is required to complete any purchase of
Remaining Shares in accordance with Section 11(b) shall be
extended, as is necessary, for the Optionholder to obtain such
consents and approvals for a period of not more than 60 days
from the expiry of the 30 day notice period set out in Section
11(b). In the event that any such third party, governmental or
regulatory consents or approvals are needed, the
Optionholders, agree to use their reasonable efforts to obtain
such consents or approvals as promptly as possible and Orbital
and Holdco agree to fully co-operate with the Optionholders
with respect to obtaining such consents.
(g) In connection with any sale of Common Shares by Holdco or any
Purchaser which is subject to Sections 11(d) or (e), the
seller of the Common Shares shall deliver a certificate to the
other parties to this Option Agreement certifying that the
sale of such Common Shares was made pursuant to an arm's
length transaction and that the seller of such Common Shares
is not entitled to any consideration in respect of such sale
(including, without limitation, any undisclosed fees or rights
to share in, or receive any other compensation in respect of,
any future proceeds resulting from resales of such shares by
the third party buyer) other than the Optionholder Sale Price
or the Holdco Sale Price, as applicable, and any other
consideration disclosed in such certificate. Any such
consideration disclosed in the certificate shall, if and when
received, be treated as part of the Optionholder Sale Price or
the Holdco Sale Price, as applicable, and appropriate payments
shall be made with respect thereto as contemplated in Section
11(d) and 11(e), as the case may be. This Section 11(g) shall
survive the termination of this Agreement.
12. SALE PROVISIONS.
At or prior to the completion of any sale of Remaining Shares pursuant
to Section 11(b), Holdco shall:
14
-14-
(a) assign and transfer to the purchaser the Remaining Shares to
be sold and deliver the share certificate(s) representing such
Remaining Shares either endorsed in blank or accompanied by a
duly completed, transferable stock power of attorney (with
signatures "medallion" guaranteed and together with any other
documents required by MDA's transfer agent in connection with
such purchase);
(b) do all other things required in order to deliver good and
marketable title to the Remaining Shares to be sold to the
purchaser free and clear of any encumbrances whatsoever;
(c) deliver to the parties hereto and the purchaser all necessary
documents (which documents shall be in form and substance
reasonably satisfactory to the purchaser) required to comply
fully with the intent of this Option Agreement; and
(d) if at completion, the Remaining Shares to be sold by Holdco
are not free and clear of all encumbrances, the purchaser may,
without prejudice to any other rights which it may have,
purchase the Remaining Shares from Holdco subject to such
encumbrances and, in such event, the purchaser shall, at
completion, assume all obligations and liabilities with
respect to such encumbrances and the purchase price payable by
the purchaser for the Remaining Shares shall be satisfied, in
whole or in part, as the case may be, by such assumption or
payment and the amount so assumed or paid, as determined by
the purchaser acting reasonably and upon prior written notice
to Holdco, shall be deducted from the purchase price payable
to Holdco at completion; provided, however, that if Holdco has
given notice to the purchaser that it is contesting any such
encumbrance in good faith, then the purchaser will not make
any such payment until such contest is resolved, unless it is
required to do so in accordance with any applicable law.
13. PAYMENTS. Upon the written request of Holdco given to an Optionholder
not less than two Business Days prior to the date that any amount is
required to be paid to Holdco in accordance with this Agreement, the
Optionholder shall pay when such amount is due, the U.S. dollar
equivalent (based on a rate of exchange available to the Optionholder
at its bank on the Business Day prior to the date such amount is due)
of such amount, net of any foreign exchange costs actually incurred by
it. All payments to Holdco hereunder shall be made by certified check,
bank draft or wire transfer, as Holdco may designate in writing at
least two Business Days' prior to the date that each payment is due.
15
-15-
14. TRANSFERS. This Option Agreement and all rights hereunder may be
transferred or assigned in whole or in part by a Purchaser or an
Optionholder without the prior written consent of Holdco, provided that
if such assignment includes an assignment of rights under Section
11(b), such assignment shall not result in the applicability of
additional third party, governmental consents or regulatory consents or
approvals which would reasonably be expected to delay the completion of
the purchase and sale of such shares under such Section for a period in
excess of 60 days.
15. LIABILITY OF HOLDCO. Subject to the provisions of applicable law, the
Optionholders shall be entitled to the rights and privileges attaching
to the Options and the Remaining Shares set forth in this Option
Agreement, and the transfer of Common Shares by Holdco upon the
exercise of Options or the rights set out in Sections 11(b) or (d) by
the Optionholders in accordance with the terms and conditions herein
contained, shall discharge the responsibilities of Holdco to such
extent.
16. SHAREHOLDING. Unless otherwise agreed to in writing by the
Optionholders, Holdco shall be the registered and beneficial owner of
Optioned Shares and the Remaining Shares free and clear of all liens or
encumbrances (other than pursuant to the arrangements described in
Section 18) so as to permit the Optionholders to obtain Optioned Shares
and the Remaining Shares and other securities and/or rights which they
are entitled to acquire upon the exercise of the rights conferred
hereunder.
17. TRANSFER OF OPTIONS BY OPTIONHOLDERS. The Optionholders may transfer
and assign their respective rights under this Option Agreement to a
U.S. commercial bank or stockbroker of their choice as their respective
agent at the time that the pledge of shares referred to below is
entered into. In connection with this transfer, Orbital, Holdco and the
Optionholders agree (i) to make any reasonable non-economic amendments
which may be requested by the U.S. commercial bank or stockbroker, (ii)
to fully indemnify, in connection with its custodial obligations, the
U.S. commercial bank or stockbroker (except for wilful default of its
obligations), and (iii) that any transfer pursuant to this Section 17
shall not be deemed a sale to a third party for purposes of Section
11(e) and the provisions of Section 11(e) shall apply, mutatis
mutandis, to any sale of Common Shares or the Option by the transferee
under this Section 17 as if such transferee were an Optionholder.
18. PLEDGE OF SHARES.
(a) To secure the performance of the obligations of Holdco
hereunder, Holdco agrees to immediately pledge and grant a
security interest in the Optioned Shares and the Remaining
Shares and shall deliver,
16
-16-
pledge and grant a security interest in form and substance
satisfactory to the Optionholders to the U.S. commercial bank
or stockbroker selected above as agent for the Optionholders
(the "CUSTODIAL AGENT"), and place in the custody of the
Custodial Agent, in accordance with the provisions of the
pledge and custodial agreement (as the same may be modified by
any supplemental direction, amended or replaced from time to
time, the "PLEDGE AND CUSTODIAL AGREEMENT") dated as of June
12, 2000 among Holdco, the Optionholders, and RBC Dominion
Securities Corporation (a copy of which is attached hereto as
Schedule "A"), certificates representing the Optioned Shares
(and, as applicable, the Remaining Shares).
(b) Upon the execution of this Option Agreement, Holdco and the
Optionholders shall execute and deliver irrevocable
instructions to the Custodial Agent substantially in the form
of Schedule "B" hereto. Holdco and the Optionholders further
agree that, effective as of the date of this Option Agreement,
(i) all references in the Pledge and Custodial Agreement to
the Secondary Option Agreement shall be deemed to refer to
this Agreement, (ii) all references in the Pledge and
Custodial Agreement to "Pledged Shares" shall be deemed to
refer to the Optioned Shares and, as applicable, the Remaining
Shares, (iii) the provisions of Section 7 of the Pledge and
Custodial Agreement shall be of no force and effect, (iv) in
the event of any inconsistency between any provision of, on
the one hand, the Pledge and Custodial Agreement and, on the
other hand, any provision of this Option Agreement or the
Letter Agreement, the terms of this Option Agreement or the
Letter Agreement, as applicable, shall be determinative, and
(v) Holdco and the Optionholders will provide any instructions
to the Custodial Agent which are necessary or appropriate to
effectuate the terms of this Section 18(b).
19. AMENDMENT. The terms of this Option Agreement may be amended, subject
to all required regulatory approvals, by agreement among Orbital (as
applicable), Holdco and the Optionholders.
20. ASSIGNMENT. This Option Agreement shall, subject to compliance with the
provisions hereof, enure to the benefit of the Optionholders and their
respective successors and assigns and shall be binding upon Orbital and
Holdco and their successors and permitted assigns (whether by way of
amalgamation, merger, plan of arrangement or divestiture). Orbital and
Holdco may only assign their respective rights and obligations
hereunder with the prior written consent of the Optionholders.
17
-17-
21. NOTICE. Except as otherwise expressly provided in this Agreement, all
notices and other communications provided for hereunder shall be in
writing and shall be deemed to have been given or made when delivered
by hand or sent by facsimile (if promptly confirmed by mail):
(a) If to Orbital, if delivered by hand or sent by facsimile to
its offices at 00000 Xxxxxxxx Xxxx., Xxxxxx, Xxxxxxxx 00000,
Attention: Legal Department, Fax: (000) 000-0000 or to such
other address as Orbital may from time to time hereafter
designate by written notice given hereunder;
(b) If to the CAI Entities, if delivered by hand or sent by
facsimile to them c/o CAI Managers & Co., L.P., 000 0xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10153 U.S.A., Attention:
Xxxxxxx Xx, Fax: (000) 000-0000 or such other address as the
CAI Entities may from time to time hereafter designate by
written notice given hereunder;
(c) If to Numberco, if delivered by hand or sent by facsimile to
it c/o McCullough O'Xxxxxx Xxxxx 0000-000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0, Attention: Xxxxxxxx
XxXxxxxxxx, Fax: (000) 000-0000 or such other address as
Numberco may from time to time hereafter designate by written
notice given hereunder; and
(d) If to Holdco, if delivered by hand or sent by facsimile to MDA
Holdings Corporation c/o Orbital Sciences Corporation, 00000
Xxxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxx, 00000, Attention: Legal
Department, Fax (000) 000-0000 or to such other address as
Holdco may from time to time hereafter designate by written
notice given hereunder.
22. GOVERNING LAW. This agreement and the Options granted hereunder shall
be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.
23. COMPLIANCE. Orbital shall cause Holdco to comply with its obligations
hereunder and shall be responsible for any failure by Holdco to do so.
24. NUMBERCO. Numberco acknowledges and agrees that it is acting as bare
trustee and agent for an investor, the identity of which has been
disclosed to the other parties hereto, and that it will not hold the
investor's Common Shares and the rights under this Agreement for the
benefit of any other person without the prior written consent of the
other parties, such consent not to be unreasonably withheld. Such
investor shall be entitled to the rights and subject to the obligations
of Numberco hereunder directly. Numberco
18
-18-
shall at all times be controlled by such investor. Nothing in this
Section 24 shall prejudice Numberco's rights under Section 20.
25. OPERATIVE DATE. If the date for the happening of an event shall fall on
a day which is not a Business Day, then that event shall occur on the
next day following which is a Business Day.
26. TERMINATION. This Agreement shall terminate on July 1, 2002. The
termination of this Agreement at such time shall have no effect upon
any obligation of any party to satisfy any obligations owing by it
under this Agreement prior to the date of such termination.
27. REPRICING. The parties acknowledge and agree that it is intended that
the price per share for the Optioned Shares and the Remaining Shares
does not exceed 115% of the "market price" of the Common Shares
determined in accordance with the regulations under the Securities Act
(Ontario) and that any recalculation of "market price" would be
inappropriate in the circumstances. However, the parties agree that if
any regulatory authority or court of competent jurisdiction decides at
any time to recalculate the "market price" and as a result determines
that the price per share exceeds such 115% of the "market price", the
price per share will be reduced to that price which is either (a)
determined by such court or regulatory authority to be 115% of the
"market price", or (b) the price which the parties, acting in good
faith, believe to be 115% of the "market price". If necessary, Holdco
agrees to refund such amount to the Purchasers as is required to comply
with the foregoing. For greater certainty, this provision shall survive
the consummation of the transactions contemplated hereby and any
termination of this Agreement.
28. ENTIRE AGREEMENT. This Option Agreement, the Pledge and Custodial
Agreement and the Letter Agreement constitute the entire agreement
between the parties to this Option Agreement with respect to the
matters referred to herein and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written,
of such parties with respect thereto. There are no representations,
warranties, conditions or other agreements, express or implied,
statutory or otherwise, between the parties to this Option Agreement in
connection with the subject matter of this Option Agreement except as
specifically set forth herein and therein and none of such parties has
relied or is relying on any other information, discussion or
understanding in entering into and completing the transactions
contemplated in this Option Agreement, the Pledge and Custodial
Agreement and the Letter Agreement. In the event that any provision of
this Option Agreement is inconsistent with any provision of the Pledge
and Custodial Agreement or
19
-19-
the Letter Agreement, the provisions of this Option Agreement shall
supersede and take precedence over any such other provision.
29. COUNTERPARTS. This Option Agreement may be executed in one or more
counterparts and all such counterparts taken together shall be deemed
to constitute one and the same instrument.
20
-20-
IN WITNESS WHEREOF Holdco, Orbital and the Optionholders have caused this Option
Agreement to be signed by their respective duly authorized officers as of May
30, 2001.
CAI CAPITAL PARTNERS AND COMPANY II, L.P. BY ITS GENERAL
PARTNER CAI CAPITAL PARTNERS GP & CO., L.P., BY ONE OF
ITS GENERAL PARTNERS MANTHING II CO.
By:
---------------------------------------------------
Name: Xxxxxxx Xx
Title: President
CAI PARTNERS AND COMPANY II, L.P. BY ITS GENERAL PARTNER
CAI PARTNERS GP & CO., L.P., BY ONE OF ITS GENERAL
PARTNERS, MANTHING II CO.
By:
---------------------------------------------------
Name: Xxxxxxx Xx
Title: President
CAI CAPITAL PARTNERS AND COMPANY II-C, L.P., BY ITS
GENERAL PARTNER CAI CAPITAL PARTNERS XX XX-C INC.
By:
---------------------------------------------------
Name: Xxxxxxx Xx
Title: Assistant Secretary
597858 B.C. LTD., AS AGENT
By:
---------------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
21
-21-
MDA HOLDINGS CORPORATION
By:
---------------------------------------------------
Name:
Title:
ORBITAL SCIENCES CORPORATION (AS TO SECTIONS
5(b), 9(b), 11(f), 19, 20, 21, 23 AND 28 ONLY)
By:
---------------------------------------------------
Name:
Title:
22
TRANSFER OF OPTION
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________________, Options held by the undersigned to
acquire __________________________________ Common Shares of XxxXxxxxx, Xxxxxxxxx
and Associates Ltd. represented hereby and irrevocably constitutes and appoints
____________________________the attorney of the undersigned to transfer the said
Options with full power of substitution hereunder.
DATED the day of , .
------------------------- ------------------- ------------------------
---------------------------------------------- ----------------------------------------------------
Witness Authorized Signatory of Optionholder
23
EXERCISE FORM
TO: XXXXXXXXX, XXXXXXXXX AND ASSOCIATES LTD. AND MDA HOLDINGS CORPORATION
The undersigned hereby exercises the right to acquire of the
Common Shares of XxxXxxxxx, Xxxxxxxxx and Associates Ltd. (the "Corporation")
(or such number of other securities, money or property to which the Option
Agreement entitles the undersigned, in lieu thereof or in addition thereto,
according to the terms thereof) from MDA Holdings Corporation or its permitted
assignee:
Such securities, money or property are to be transferred as follows:
Name:
(Print Clearly)
-----------------------------------------------------------------
Address in Full
-----------------------------------------------------------------
Number or percentage of Common Shares:
--------------------------------------------------------------------------------
DATED the day of , .
------------------------- -------------------- ------------------------
------------------------------------
Authorized Signatory of Optionholder
------------------------------------
Print full name
24
SCHEDULE "A"
FORM OF PLEDGE AND CUSTODIAL AGREEMENT
25
SCHEDULE "B"
IRREVOCABLE DIRECTION
TO: RBC DOMINION SECURITIES CORPORATION (THE "CUSTODIAL AGENT")
XXX XXXXXXX XXXXX, 000 XXXXXXXX, XXX XXXX, XX 00000-0000
ATTENTION: XXXXX X. BLISETT, TELECOPIER NUMBER (000) 000-0000
WITH A COPY TO XXXXXXX XXXXXXX (000) 000-0000
RE: PLEDGE AND CUSTODIAL AGREEMENT - HOLDING OF PLEDGED SECURITIES
--------------------------------------------------------------------------------
We refer to the Pledge and Custodial Agreement (the "PLEDGE AND
CUSTODIAL AGREEMENT") dated July 12, 2000 among MDA Holdings Corporation
("HOLDCO"), the Custodial Agent, CAI Capital Partners and Company, II, L.P., CAI
Partners and Company II L.P., CAI Capital Partners and Company II-C, L.P. and
597858 B.C. Limited (collectively, the "OPTIONHOLDERS") pursuant to which the
Custodial Agent agreed to act as agent of the Optionholders for the purpose of
holding certain common shares (the "PLEDGED SHARES") in the capital of XxxXxxxxx
Xxxxxxxxx and Associates Ltd. that were pledged to it in accordance with the
terms of a secondary option agreement dated June 29, 2000 between the same
parties, as the same was amended and restated on the date hereof (the "OPTION
AGREEMENT").
In accordance with the Option Agreement, 5,650,000 of the Pledged
Shares will continue to be pledged by Holdco to the Optionholders and are hereby
delivered to you to be held by you in accordance with the Pledge and Custodial
Agreement. Each of the undersigned hereby directs you to hold such Pledged
Shares in accordance with the terms of the Pledge and Custodial Agreement.
This shall be your good, sufficient and irrevocable authority for doing
the foregoing.
26
-3-
This irrevocable direction may be executed in one or more counterparts
and all such counterparts taken together shall be deemed to constitute one and
the same instrument.
DATED this ____ day of May, 2001.
CAI CAPITAL PARTNERS AND COMPANY II, L.P.
By:
-----------------------------------------------
Name:
Title:
CAI PARTNERS AND COMPANY II, L.P.
By:
-----------------------------------------------
Name:
Title:
CAI CAPITAL PARTNERS AND COMPANY II-C, L.P.
By:
-----------------------------------------------
Name:
Title:
597858 B.C. LTD.
By:
-----------------------------------------------
Name:
Title:
27
-4-
MDA HOLDINGS CORPORATION
By:
-----------------------------------------------
Name:
Title:
