Stock Option Agreement

ORION NETWORK SYSTEMS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

This Stock Option Agreement (the "Option Agreement") is made as of the day of , , by and between , a corporation (the "Company"), and (the "Optionee").

WHEREAS, the Company has determined that it is desirable and in its best interests to grant to the Optionee an option to purchase a certain number of shares of the Company's Common Stock, par value $.01 per share ("Stock"), in consideration of the Optionee's service to the Company commencing as Chairman of the Executive Committee of the Board of Directors, all according to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, the parties hereto do hereby agree as follows:

1. Grant of Option. Subject to the approval of the Option (as defined below) by stockholders of the Company within one year of the date hereof, the Company hereby grants to the Optionee the right and option (the "Option") to purchase from the Company, on the terms and subject to the conditions hereinafter set forth, shares of Stock. The date of grant of this Option is , the date on which the grant of the Option was approved by the Board of Directors. This Option is not granted pursuant to the Company's Stock Option Plan and shall not constitute an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

2. Price. The purchase price (the "Option Price") for the shares of Stock subject to the Option granted by this Option Agreement is per share which is deemed to be the fair market value.

3. Exercise of Option.

A. Vesting. The Option shall be exercisable in parts and for the numbers of shares at such time as the Option vests according to the following schedule, subject to the continued service of Optionee as Chairman of the Executive Committee or in another executive role as of such date:

(i) Options to purchase shares of Stock shall vest and become exercisable on or prior thereto as the Board of Directors, in its sole discretion determines;

(ii) Options to purchase shares of Stock and all options not yet vested under Clause (i) above shall vest and become exercisable at such date as the Company successfully completes one of the following during Optionee's tenure as Chairman or within six (6) months thereafter, all as reasonably determined by the Board of Directors:

(a) refinancing of the Chase obligations for the Orion 1 satellite; or

(b) securing financing for the construction, launch and insurance for Orion 2 or Orion 3, other than financing provided by the vendor or provider of satellite, launch vehicle or insurance; or

(c) completion of a substantial acquisition or relationship with a strategic partner; and

(iii) Notwithstanding the foregoing, all Options shall become immediately vested upon the sale or merger of the Company during Optionee's tenure as Chairman or within six (6) months thereafter, all as reasonably determined by the Board of Directors.

(iv) The determination of the Board of Directors related to the vesting of Options shall be final and conclusive.

B. Time of Exercise of Option. The Optionee may exercise vested Options (subject to the limitations on exercise set forth in Subsection F below), in whole or in part, at any time and from time to time, prior to the expiration of five years after the date of grant of the Option, subject to earlier termination of the Option as provided in Subsection F below; provided, however, that no single exercise of the Option shall be for less than shares, unless the number of shares purchased is the total number at the time available for purchase under this Option.

C. Exercise by Optionee. During the lifetime of the Optionee, only the Optionee (or, in the event of the Optionee's legal incapacity or incompetency, the Optionee's guardian or legal representative) may exercise the Option.

D. Death. In the event of the Optionee's death prior to the termination of the Option, the personal representative or legatees or distributees of the Optionee's estate, as the case may be, shall have the right (subject to the limitations on exercise set forth in Subsection F below) to exercise all or any part of the Option at any time within after the date of the Optionee's death.

E. Termination of Option. The Option shall terminate upon the earlier of (i) the expiration of a period of five years after the date of grant of the Option, as set forth in Section 1 above, (ii) after the date of the Optionee's death.

F. Limitations on Exercise of Option. Notwithstanding the foregoing Subsections of this Section, in no event may the Option be exercised, in whole or in part, after five years following the date upon which the Option is granted, as set forth in Section 1 above, or after the occurrence of an event referred to in Section 7 below which results in termination of the Option. In no event may the Option be exercised for a fractional share.

G. Reduction in Number of Shares Subject to Option. The number of shares of Stock which may be purchased upon exercise of the Option pursuant to this Section shall be reduced by the number of shares of Stock previously purchased upon exercise of the Option pursuant to this Section.

4. Method of Exercise of Option. Subject to the terms and conditions of this Option Agreement, the Option may be exercised by delivering written notice of exercise to the Company on any business day, at its principal office, addressed to the attention of the Treasurer of the Company, which notice shall specify the number of shares for which the Option is being exercised, and shall be accompanied by payment in full of the Option Price of the shares for which the Option is being exercised.

Payment of the Option Price for the shares of Stock purchased pursuant to the exercise of the Option shall be made in cash or in cash equivalent, or shares of Stock valued at Fair Market Value in the same manner as options are valued under the Company's non-employee director stock option plan.

Shares of Stock acquired by the Optionee through exercise of an Option may be surrendered in payment of the Option Price; provided, however, that any Stock surrendered in payment must have been (a) held by the Optionee for more than six months at the time of surrender or (b) acquired under an Option granted not less than six months prior to the time of surrender.

Payment in full of the Exercise Price need not accompany the written notice of exercise provided the notice directs that the Stock certificate or certificates for the shares for which the Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Option and, at the time such Stock certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents acceptable to the Company) equal to the Exercise Price.

If the person exercising the Option is not the Optionee, such person shall also deliver with the notice of exercise appropriate proof of his or her right to exercise the Option.

An attempt to exercise the Option granted hereunder other than as set forth above shall be invalid and of no force and effect.

Promptly after exercise of the Option as provided for above, the Company shall deliver to the person exercising the Option a certificate or certificates for the shares of Stock being purchased.

5. Limitations on Transfer. No Option is transferable by the Optionee, other than by will or the laws of descent and distribution in the event of death of the Optionee.

6. Rights as Shareholder. Neither the Optionee nor any executor, administrator, distributee or legatee of the Optionee's estate shall be, or have any of the rights or privileges of, a shareholder of the Company in respect of any shares of Stock issuable hereunder unless and until such shares have been fully paid and certificates representing such shares have been endorsed, transferred and delivered, and the name of the Optionee (or of such personal representative, administrator, distributee or legatee of the Optionee's estate) has been entered as the shareholder of record on the books of the Company.

7. Effect of Changes in Capitalization.

A. Changes in Stock. If the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split-up, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the date the Option is granted, a proportionate and appropriate adjustment shall be made by the Company in the number and kind of shares subject to the Option, so that the proportionate interest of the Optionee immediately following such event shall, to the extent practicable, be the same as immediately prior to such event. Any such adjustment in the Option shall not change the total Option Price with respect to shares subject to the unexercised portion of the Option but shall include a corresponding proportionate adjustment in the Option Price per share.

B. Reorganization in Which the Company Is the Surviving Corporation. Subject to Subsection C of this Section, if the Company shall be the surviving corporation in any reorganization, merger or consolidation of the Company with one or more other corporations, the Option shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to the Option would have been entitled immediately following such reorganization, merger or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the Option 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 of 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, the Option hereunder shall terminate, except to the extent provision is made in connection with such transaction for the continuation and/or the assumption of the Option, or for the substitution for the Option of new options covering the stock of a successor company, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Option shall continue in the manner and under the terms so provided. In the event of any such termination of the Option, the Optionee shall have the right (subject to the limitations on exercise set forth in Subsection E of Section 3 above), for 30 days immediately prior to the occurrence of such termination, to exercise the Option in whole or in part, whether or not the Optionee was otherwise entitled to exercise such Option at the time such termination occurs. The Company shall send written notice of an event that will result in such a termination to the Optionee not later than the time at which the Company gives notice thereof to its shareholders.

D. Adjustments. Adjustments specified in this Section relating to stock or securities of the Company shall be made by the Board of Directors of the Company, whose determination in that respect shall be final, binding and conclusive. No fractional shares of Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share or unit.

8. General Restrictions. The Company shall not be required to sell or issue any shares of Stock under the Option if the sale or issuance of such shares would constitute a violation by the individual exercising the Option or by the Company of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject to the Option upon any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Option. Specifically in connection with the Securities Act of 1933 (as now in effect or as hereafter amended), unless a registration statement under such Act is in effect with respect to the shares of Stock covered by the Option, the Company shall not be required to sell or issue such shares unless the Board of Directors of the Company has received evidence satisfactory to it that the holder of the Option may acquire such shares pursuant to an exemption from registration under such Act. Any determination in this connection by the Company shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended). The Company shall not be obligated to take any affirmative action in order to cause the exercise of the Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that the Option shall not be exercisable unless and until the shares of Stock covered by the Option are registered or are subject to an available exemption from registration, the exercise of the Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.

9. Withholding of Taxes. Although the Optionee is an independent contractor, the parties hereto recognize that the Company or a Subsidiary may be obligated, under certain circumstances, to withhold federal and local income taxes and Social Security taxes to the extent that the Optionee realizes ordinary income in connection with the exercise of the Option or in connection with a disposition of any shares of Stock acquired by exercise of the Option. The Optionee agrees that the Company or a Subsidiary may withhold amounts needed to cover such taxes from payments otherwise due and owing to the Optionee, and also agrees that upon demand the Optionee will promptly pay to the Company or a Subsidiary having such obligation any additional amounts as may be necessary to satisfy such withholding tax obligation. Such payment shall be made in cash or cash equivalent.

10. Notification of Disposition. The Optionee agrees to notify the Company in writing of any disposition of shares of stock acquired by the Optionee pursuant to the exercise of this Option within thirty days of such disposition.

11. Disclaimer of Rights. No provision in this Option Agreement shall be construed to confer upon the Optionee the right to be employed by the Company or any Subsidiary, or to interfere in any way with the right and authority of the Company or any subsidiary either to increase or decrease the compensation of the Optionee at any time, or to terminate any employment or other relationship between the Optionee and the Company or any Subsidiary.

12. Interpretation of this Option Agreement. All decisions and interpretations made by the Committee or the Board of Directors of the Company with regard to any question arising under this Option Agreement shall be binding and conclusive on the Company and the Optionee and any other person entitled to exercise the Option as provided for herein.

13. Governing Law. This Option Agreement is executed pursuant to and shall be governed by the laws of the State of Delaware (but not including the choice of law rules thereof).

14. Binding Effect. Subject to all restrictions provided for in this Option Agreement and by applicable law relating to assignment and transfer of this Option Agreement and the option provided for herein, this Option Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and assigns.

15. Notice. Any notice hereunder by the Optionee to the Company shall be in writing and shall be deemed duly given if mailed or delivered to the Company at its principal office, addressed to the attention of the Committee, or if so mailed or delivered to such other address as the Company may hereafter designate by notice to the Optionee. Any notice hereunder by the Company to the Optionee shall be in writing and shall be deemed duly given if mailed or delivered to the Optionee at the address specified below by the Optionee for such purpose, or if so mailed or delivered to such other address as the Optionee may hereafter designate by written notice given to the Company.

16. Entire Agreement. This Option Agreement constitutes the entire agreement and supersedes all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. Neither this Option Agreement nor any term hereof may be amended, waived, discharged or terminated except by a written instrument signed by the Company and the Optionee; provided, however, that the Company unilaterally may waive any provision hereof in writing to the extent that such waiver does not adversely affect the interests of the Optionee hereunder but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

IN WITNESS WHEREOF, the parties hereto have duly executed this Option Agreement, or caused this Option Agreement to be duly executed on their behalf, as of the day and year first above written.

Orion Network Systems, Inc. 4124/97