Document:

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                                                                    EXHIBIT 10.3

EXECUTION COPY
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                          SUBSIDIARY GUARANTY AGREEMENT

                          Dated as of January 31, 2000

              Re:        $13,333,333 12% Senior Notes
                                Due June 14, 2001
                                       of
                          Orbital Sciences Corporation

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                                TABLE OF CONTENTS

                          (Not a part of the Agreement)

<TABLE>
<CAPTION>
SECTION                                                   HEADING                                                   PAGE

<S>                                                                                                                    <C>
Parties.................................................................................................................1

Recitals................................................................................................................1

SECTION 1.         DEFINITIONS..........................................................................................2

SECTION 2.         GUARANTY OF NOTES AND NOTE AGREEMENT.................................................................2

SECTION 3.         GUARANTY OF PAYMENT..................................................................................2

SECTION 4.         GENERAL PROVISIONS RELATING TO THE GUARANTY..........................................................3

SECTION 5.         REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.....................................................7

SECTION 6.         AMENDMENTS, WAIVERS AND CONSENTS.....................................................................9

SECTION 7.         NOTICES..............................................................................................9

SECTION 8.         MISCELLANEOUS.......................................................................................10

Signatures.............................................................................................................12

ATTACHMENTS TO SUBSIDIARY GUARANTY AGREEMENT:

EXHIBIT A   --     Subsidiary Guaranty Supplement
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                          SUBSIDIARY GUARANTY AGREEMENT

          Re:               $13,333,333 12% Senior Notes
                                Due June 14, 2001
                                       of
                          Orbital Sciences Corporation
                ------------------------------------------------

       This SUBSIDIARY GUARANTY AGREEMENT dated as of January 31, 2000 (the or
this "Guaranty") is entered into by the undersigned, together with any entity
which may become a party hereto by execution and delivery of a Subsidiary
Guaranty Supplement in substantially the form set forth as EXHIBIT A hereto (a
"Guaranty Supplement") (which parties are hereinafter referred to individually
as a "Guarantor" and collectively as the "Guarantors").

                                    RECITALS

       A.     Each Guarantor is a subsidiary of Orbital Sciences Corporation, a
Delaware corporation (the "Company").

       B.     The Company has entered into a Note Agreement dated as of June 1,
1995 (as amended from time to time, the "Note Agreement") with The Northwestern
Mutual Life Insurance Company (the "Initial Note Purchaser," together with its
successors and assigns the "Holders"), providing for, among other things, the
issue and sale by the Company to the Initial Note Purchaser of the Company's
$20,000,000 10.50% Senior Notes due June 14, 2001 (the "Notes"). As of the date
hereof, $13,333,333 in aggregate principal amount of the Notes remain
outstanding, and the Notes accrue interest at the rate of 12%.

       C.     As security for the Notes, the Holders have required as a
condition to the granting by certain Subsidiaries (as defined in the Note
Agreement) of the Company of Liens created pursuant to that Second Amended and
Restated Security Agreement dated as of November 30, 1999 among the Company and
the other parties named therein, that the Company cause the undersigned to enter
into this Guaranty and cause each Subsidiary from time to time required under
Section 5.18 of the Note Agreement to enter into a Guaranty Supplement, and the
Company has agreed to cause the undersigned to execute this Guaranty and to
cause each Subsidiary from time to time required under Section 5.18 of the Note
Agreement to execute a Guaranty Supplement, in each case in order to induce the
Holders to consent to the granting of the Liens hereinbefore referred to and
thereby benefit the Company and its Subsidiaries.

       NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency whereof are hereby
acknowledged, each Guarantor does hereby covenant and agree, jointly and
severally, as follows:

<PAGE>   4

SECTION 1.    DEFINITIONS

       Capitalized terms used herein shall have the meanings set forth in the
Note Agreement unless herein defined or the context shall otherwise require.

SECTION 2.    GUARANTY OF NOTES AND NOTE AGREEMENT.

       (a)    Each Guarantor jointly and severally does hereby irrevocably,
absolutely and unconditionally guarantee unto the Holders: (1) the full and
prompt payment of the principal of, premium, if any, and interest on the Notes
from time to time outstanding, as and when such payments shall become due and
payable whether by lapse of time, upon redemption or prepayment, by extension or
by acceleration or declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal, premium, if any, or
interest at the rate set forth in the Notes) in Federal or other immediately
available funds of the United States of America which at the time of payment or
demand therefor shall be legal tender for the payment of public and private
debts and (2) the full and prompt payment, upon demand by any Holder of all
costs and expenses, legal or otherwise (including reasonable attorneys' fees),
if any, as shall have been expended or incurred in the protection or enforcement
of any rights, privileges or liabilities in favor of the Holders under or in
respect of the Notes, the Note Agreement or under this Guaranty or in any
consultation or action in connection therewith or herewith.

       (b)    The liability of each Guarantor under this Guaranty shall be
limited to an amount equal to a maximum amount as will, after giving effect to
such maximum amount and all other liabilities of such Guarantor, contingent or
otherwise, result in the obligations of such Guarantor hereunder not
constituting a fraudulent transfer, obligation or conveyance.

SECTION 3.    GUARANTY OF PAYMENT.

       This is a guarantee of payment and each Guarantor hereby waives, to the
fullest extent permitted by law, any right to require that any action on or in
respect of any Note or the Note Agreement be brought against the Company or any
other Person or that resort be had to any direct or indirect security for the
Notes or for this Guaranty or any other remedy. Any Holder may, at its option,
proceed hereunder against any Guarantor in the first instance to collect monies
when due, the payment of which is guaranteed hereby, without first proceeding
against the Company or any other Person and without first resorting to any
direct or indirect security for the Notes or for this Guaranty or any other
remedy. The liability of each Guarantor hereunder shall in no way be affected or
impaired by any acceptance by any Holder of any direct or indirect security for,
or other guaranties of, any Indebtedness, liability or obligation of the Company
or any other Person to any Holder or by any failure, delay, neglect or omission
by any Holder to realize upon or protect any such guarantees, Indebtedness,
liability or obligation or any notes or other instruments evidencing the same or
any direct or indirect security therefor or by any approval, consent, waiver, or
other action taken, or omitted to be taken by any such Holder.

       The covenants and agreements on the part of the Guarantors herein
contained shall take effect as joint and several covenants and agreements, and
references to the Guarantors shall take

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effect as references to each of them and none of them shall be released from
liability hereunder by reason of the guarantee ceasing to be binding as a
continuing security on any other of them.

SECTION 4.    GENERAL PROVISIONS RELATING TO THE GUARANTY.

       (a)    Each Guarantor hereby consents and agrees that any Holder or
Holders from time to time, with or without any further notice to or assent from
any other Guarantor may, without in any manner affecting the liability of any
Guarantor under this Guaranty, and upon such terms and conditions as any such
Holder or Holders may deem advisable:

              (1)    extend in whole or in part (by renewal or otherwise),
       modify, change, compromise, release or extend the duration of the time
       for the performance or payment of any Indebtedness, liability or
       obligation of the Company or of any other Person secondarily or otherwise
       liable for any Indebtedness, liability or obligations of the Company on
       the Notes, or waive any Default with respect thereto, or waive, modify,
       amend or change any provision of any other agreement or waive this
       Guaranty; or

              (2)    sell, release, surrender, modify, impair, exchange or
       substitute any and all property, of any nature and from whomsoever
       received, held by, or for the benefit of, any such Holder as direct or
       indirect security for the payment or performance of any Indebtedness,
       liability or obligation of the Company or of any other Person secondarily
       or otherwise liable for any Indebtedness, liability or obligation of the
       Company on the Notes; or

              (3)    settle, adjust or compromise any claim of the Company
       against any other Person secondarily or otherwise liable for any
       Indebtedness, liability or obligation of the Company on the Notes.

       Each Guarantor hereby ratifies and confirms any such extension, renewal,
change, sale, release, waiver, surrender, exchange, modification, amendment,
impairment, substitution, settlement, adjustment or compromise and that the same
shall be binding upon it, and hereby waives, to the fullest extent permitted by
law, any and all defenses, counterclaims or offsets which it might or could have
by reason thereof, it being understood that such Guarantor shall at all times be
bound by this Guaranty and remain liable hereunder.

       (b)    Each Guarantor hereby waives, to the fullest extent permitted by
law:

              (1)    notice of acceptance of this Guaranty by the Holders or of
       the creation, renewal or accrual of any liability of the Company, present
       or future, or of the reliance of such Holders upon this Guaranty (it
       being understood that every Indebtedness, liability and obligation
       described in SECTION 2 hereof shall conclusively be presumed to have been
       created, contracted or incurred in reliance upon the execution of this
       Guaranty);

              (2)    demand of payment by any Holder from the Company or any
       other Person indebted in any manner on or for any of the Indebtedness,
       liabilities or obligations hereby guaranteed; and

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              (3)    presentment for the payment by any Holder or any other
       Person of the Notes or any other instrument, protest thereof and notice
       of its dishonor to any party thereto and to such Guarantor.

       The obligations of each Guarantor under this Guaranty and the rights of
any Holder to enforce such obligations by any proceedings, whether by action at
law, suit in equity or otherwise, shall not be subject to any reduction,
limitation, impairment or termination, whether by reason of any claim of any
character whatsoever or otherwise and shall not be subject to any defense,
set-off, counterclaim (other than any compulsory counterclaim), recoupment or
termination whatsoever.

       (c) The obligations of the Guarantors hereunder shall be binding upon
the Guarantors and their successors and assigns, and shall remain in full force
and effect irrespective of:

              (1)    the genuineness, validity, regularity or enforceability of
       the Notes, the Note Agreement or any other agreement or any of the terms
       of any thereof, the continuance of any obligation on the part of the
       Company or any other Person on or in respect of the Notes or under the
       Note Agreement or any other agreement or the power or authority or the
       lack of power or authority of the Company to issue the Notes or the
       Company to execute and deliver the Note Agreement or any other agreement
       or of any Guarantor to execute and deliver this Guaranty or to perform
       any of its obligations hereunder or the existence or continuance of the
       Company or any other Person as a legal entity; or

              (2)    any default, failure or delay, willful or otherwise, in the
       performance by the Company, any Guarantor or any other Person of any
       obligations of any kind or character whatsoever under the Notes, the Note
       Agreement, this Guaranty or any other agreement; or

              (3)    any creditors' rights, bankruptcy, receivership or other
       insolvency proceeding of the Company, any Guarantor or any other Person
       or in respect of the property of the Company, any Guarantor or any other
       Person or any merger, consolidation, reorganization, dissolution,
       liquidation, the sale of all or substantially all of the assets of or
       winding up of the Company, any Guarantor or any other Person; or

              (4)    impossibility or illegality of performance on the part of
       the Company, any Guarantor or any other Person of its obligations under
       the Notes, the Note Agreement, this Guaranty or any other agreements; or

              (5)    in respect of the Company or any other Person, any change
       of circumstances, whether or not foreseen or foreseeable, whether or not
       imputable to the Company or any other Person, or other impossibility of
       performance through fire, explosion, accident, labor disturbance, floods,
       droughts, embargoes, wars (whether or not declared), civil commotion,
       acts of God or the public enemy, delays or failure of suppliers or
       carriers, inability to obtain materials, action of any Federal or state
       regulatory body or agency, change of law or any other causes affecting
       performance, or any other

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       force majeure, whether or not beyond the control of the Company or any
       other Person and whether or not of the kind hereinbefore specified; or

              (6)    any attachment, claim, demand, charge, Lien, order,
       process, encumbrance or any other happening or event or reason, similar
       or dissimilar to the foregoing, or any withholding or diminution at the
       source, by reason of any taxes, assessments, expenses, Indebtedness,
       obligations or liabilities of any character, foreseen or unforeseen, and
       whether or not valid, incurred by or against the Company, any Guarantor
       or any other Person or any claims, demands, charges or Liens of any
       nature, foreseen or unforeseen, incurred by the Company, any Guarantor or
       any other Person, or against any sums payable in respect of the Notes or
       under the Note Agreement or this Guaranty, so that such sums would be
       rendered inadequate or would be unavailable to make the payments herein
       provided; or

              (7)    any order, judgment, decree, ruling or regulation (whether
       or not valid) of any court of any nation or of any political subdivision
       thereof or any body, agency, department, official or administrative or
       regulatory agency of any thereof or any other action, happening, event or
       reason whatsoever which shall delay, interfere with, hinder or prevent,
       or in any way adversely affect, the performance by the Company, any
       Guarantor or any other Person of its respective obligations under or in
       respect of the Notes, the Note Agreement, this Guaranty or any other
       agreement; or

              (8)    the failure of any Guarantor to receive any benefit from or
       as a result of its execution, delivery and performance of this Guaranty;
       or

              (9)    any failure or lack of diligence in collection or
       protection, failure in presentment or demand for payment, protest, notice
       of protest, notice of default and of nonpayment, any failure to give
       notice to any Guarantor of failure of the Company, any Guarantor or any
       other Person to keep and perform any obligation, covenant or agreement
       under the terms of the Notes, the Note Agreement, this Guaranty or any
       other agreement or failure to resort for payment to the Company, any
       Guarantor or to any other Person or to any other guaranty or to any
       property, security, Liens or other rights or remedies; or

              (10)   the acceptance of any additional security or other
       guaranty, the advance of additional money to the Company or any other
       Person, the renewal or extension of the Notes or amendments,
       modifications, consents or waivers with respect to the Notes, the Note
       Agreement or any other agreement, or the sale, release, substitution or
       exchange of any security for the Notes; or

              (11)   any merger or consolidation of the Company, any Guarantor
       or any other Person into or with any other Person or any sale, lease,
       transfer or other disposition of any of the assets of the Company, any
       Guarantor or any other Person to any other Person, or any change in the
       ownership of any shares or other equity interests of the Company, any
       Guarantor or any other Person; or

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              (12)   any defense whatsoever that the Company or any other Person
       might have to the payment of the Notes (principal, premium, if any, or
       interest), other than payment thereof in Federal or other immediately
       available funds; or

              (13)   any act or failure to act with regard to the Notes, the
       Note Agreement, this Guaranty or any other agreement or anything which
       might vary the risk of any Guarantor or any other Person; or

              (14)   any other circumstance which might otherwise constitute a
       defense available to, or a discharge of, any Guarantor or any other
       Person in respect of the obligations of any Guarantor or other Person
       under this Guaranty or any other agreement;

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Guaranty and the parties hereto that the obligations of each Guarantor shall be
absolute and unconditional and shall not be discharged, impaired or varied
except by the payment of the principal of, premium, if any, and interest on the
Notes in accordance with their respective terms whenever the same shall become
due and payable as in the Notes provided, at the place specified in and all in
the manner and with the effect provided in the Notes and the Note Agreement, as
each may be amended or modified from time to time. Without limiting the
foregoing, it is understood that repeated and successive demands may be made and
recoveries may be had hereunder as and when, from time to time, the Company
shall default under or in respect of the terms of the Notes or the Note
Agreement and that notwithstanding recovery hereunder for or in respect of any
given default or defaults by the Company under the Notes or the Note Agreement,
this Guaranty shall remain in full force and effect and shall apply to each and
every subsequent default.

       (d)    All rights of any Holder may be transferred or assigned at any
time and shall be considered to be transferred or assigned at any time or from
time to time upon the transfer of such Note whether with or without the consent
of or notice to the Guarantors under this Guaranty.

       (e)    To the extent of any payments made under this Guaranty, the
Guarantors shall be subrogated to the rights of the Holder or Holders upon whose
Notes such payment was made, but each Guarantor covenants and agrees that such
right of subrogation shall be junior and subordinate in right of payment to the
prior indefeasible final payment in cash in full of all amounts due and owing by
the Company with respect to the Notes and the Note Agreement and by the
Guarantors under this Guaranty, and the Guarantors shall not take any action to
enforce such right of subrogation, and the Guarantors shall not accept any
payment in respect of such right of subrogation, until all amounts due and owing
by the Company under or in respect of the Notes and the Note Agreement and all
amounts due and owing by the Guarantors hereunder have indefeasibly been finally
paid in cash in full. If any amount shall be paid to any Guarantor in violation
of the preceding sentence at any time prior to the indefeasible payment in cash
in full of the Notes and all other amounts payable under the Notes, the Note
Agreement and this Guaranty, such amount shall be held in trust for the benefit
of the Holders and shall forthwith be paid to the Holders to be credited and
applied to the amounts due or to become due with respect to the Notes

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and all other amounts payable under the Note Agreement and this Guaranty,
whether matured or unmatured.

       (f)    Each Guarantor agrees that to the extent the Company or any other
Person makes any payment on any Note, which payment or any part thereof is
subsequently invalidated, voided, declared to be fraudulent or preferential, set
aside, recovered, rescinded or is required to be retained by or repaid to a
trustee, receiver, or any other Person under any bankruptcy code, common law, or
equitable cause, then and to the extent of such payment, the obligation or the
part thereof intended to be satisfied shall be revived and continued in full
force and effect with respect to the Guarantors' obligations hereunder, as if
said payment had not been made. The liability of the Guarantors hereunder shall
not be reduced or discharged, in whole or in part, by any payment to any Holder
from any source that is thereafter paid, returned or refunded in whole or in
part by reason of the assertion of a claim of any kind relating thereto,
including, but not limited to, any claim for breach of contract, breach of
warranty, preference, illegality, invalidity, or fraud asserted by any account
debtor or by any other Person.

       (g)    No Holder shall be under any obligation: (1) to marshall any
assets in favor of the Guarantors or in payment of any or all of the liabilities
of the Company under or in respect of the Notes or the obligations of the
Guarantors hereunder or (2) to pursue any other remedy that the Guarantors may
or may not be able to pursue themselves and that may lighten the Guarantors'
burden, any right to which each Guarantor hereby expressly waives.

SECTION 5.    REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS.

       Each Guarantor represents and warrants to each Holder that:

       (a)    Such Guarantor is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a foreign corporation or
other legal entity and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on (1) the
business, operations, affairs, financial condition, assets or properties of such
Guarantor and its subsidiaries, taken as a whole, or (2) the ability of such
Guarantor to perform its obligations under this Guaranty, or (3) the validity or
enforceability of this Guaranty (herein in this Section 5, a "Material Adverse
Effect"). Such Guarantor has the requisite power and authority to own or hold
under lease the properties it purports to own or hold under lease, to carry on
business as now conducted, to execute and deliver this Guaranty and to perform
the provisions hereof.

       (b)    This Guaranty has been duly authorized by all necessary action on
the part of such Guarantor, and this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor enforceable against such Guarantor in
accordance with its terms.

       (c)    The execution, delivery and performance by such Guarantor of this
Guaranty will not (1) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of such Guarantor under, any indenture, mortgage, deed of

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trust, loan, purchase or credit agreement, lease, charter document or by-law, or
any other agreement or instrument to which such Guarantor is bound or by which
such Guarantor or any of its respective properties may be bound or affected, (2)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to such Guarantor or any of its subsidiaries
or (3) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the such Guarantor.

       (d)    No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by such Guarantor of this Guaranty.

       (e)    (1) There are no actions, suits or proceedings pending or, to the
knowledge of such Guarantor, threatened against or affecting such Guarantor or
any property of such Guarantor in any court or before any arbitrator of any kind
or before or by any governmental authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

              (2)    Such Guarantor is not in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any
order, judgment, decree or ruling of any court, arbitrator or governmental
authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any governmental
authority, which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

       (f)    The obligations of such Guarantor under this Guaranty rank at
least pari passu in right of payment with the senior unsecured Indebtedness of
such Guarantor represented by the guaranty given by such Guarantor to the
Collateral Agent pursuant to the Bank Credit Agreement, the Pledge Agreement and
the Security Agreement.

       (g).   Such Guarantor does not intend to hinder, delay or defraud its
creditors by or through the execution and delivery of, or performance of its
obligations under, this Guaranty. There has been provided to such Guarantor a
substantial economic benefit and adequate consideration for the execution and
delivery of this Guaranty because, among other reasons, the proceeds of the
Notes have enhanced the financial position of the Company and its Subsidiaries
taken as a whole.

SECTION 6.    AMENDMENTS, WAIVERS AND CONSENTS.

       (a)    This Guaranty may be amended, and the observance of any term
hereof may be waived (either retroactively or prospectively), with (and only
with) the written consent of each Guarantor and the holders of at least 66-2/3%
in aggregate principal amount of outstanding Notes, except that (1) no amendment
or waiver of any of the provisions of SECTIONS 3 OR 4, or any defined term (as
it is used therein), will be effective as to any Holder unless consented to by
such Holder in writing, and (2) no such amendment or waiver may, without the
written consent of each Holder, (i) change the percentage of the principal
amount of the Notes the Holders of

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which are required to consent to any such amendment or waiver, or (ii) amend
SECTION 2 or this SECTION 6.

       (b)    So long as there are any Notes outstanding, the Guarantors will
not solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions hereof unless each holder of Notes
(irrespective of the amount of Notes then owned by it) shall be informed thereof
by the Guarantors and shall be afforded the opportunity of considering the same
and shall be supplied by the Guarantors with sufficient information to enable it
to make an informed decision with respect thereto. The Guarantors will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, to any holder of Notes
as consideration for or as an inducement to entering into by any holder of Notes
of any waiver or amendment of any of the terms and provisions hereof unless such
remuneration is concurrently offered, on the same terms, ratably to the holders
of all Notes then outstanding. Promptly and in any event within 30 days of the
date of execution and delivery of any such waiver or amendment, the Guarantors
shall provide a true, correct and complete copy thereof to each of the holders
of the Notes.

       (c)    Any amendment or waiver consented to as provided in this SECTION 6
applies equally to all Holders and is binding upon them and upon each future
holder and upon the Guarantors. No such amendment or waiver will extend to or
affect any obligation, covenant or agreement not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Guarantors
and any Holder nor any delay in exercising any rights hereunder shall operate as
a waiver of any rights of any Holder. As used herein, the term "this Guaranty"
and references thereto shall mean this Guaranty as it may from time to time be
amended or supplemented.

       (d)    Solely for the purpose of determining whether the Holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Guaranty, Notes directly or indirectly owned by any Guarantor, the Company or
any of their respective subsidiaries or Affiliates shall be deemed not to be
outstanding.

SECTION 7.    NOTICES.

       All notices and communications provided for hereunder shall be in writing
and sent (a) by facsimile if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:

              (1)    if to the Initial Note Purchaser or the Initial Note
       Purchaser's nominee, to the Initial Note Purchaser or the Initial Note
       Purchaser's nominee at the address specified for such communications in
       Schedule I to the Note Agreement, or at such other address as the Initial
       Note Purchaser or the Initial Note Purchaser's nominee shall have
       specified to any Guarantor in writing,

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              (2)    if to any other Holder, to such Holder at such address as
       such Holder shall have specified to the Guarantors in writing, or

              (3)    if to any Guarantor, to such Guarantor c/o the Company at
       its address set forth at the beginning of the Note Agreement to the
       attention of Chief Financial Officer, or at such other address as such
       Guarantor shall have specified to the Holders in writing.

Notices under this SECTION 7 will be deemed given only when actually received.

SECTION 8.    MISCELLANEOUS.

       (a)    No remedy herein conferred upon or reserved to any Holder is
intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given under this Guaranty now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any default,
omission or failure of performance hereunder shall impair any such right or
power or shall be construed to be a waiver thereof but any such right or power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle any Holder to exercise any remedy reserved to it under the
Guaranty, it shall not be necessary for such Holder to physically produce its
Note in any proceedings instituted by it or to give any notice, other than such
notice as may be herein expressly required.

       (b)    The Guarantors will pay all sums becoming due under this Guaranty
by the method and at the address specified for such purpose in Schedule I to the
Note Agreement, or by such other method or at such other address as any Holder
shall have from time to time specified to the Guarantors in writing for such
purpose, without the presentation or surrender of this Guaranty or any Note.

       (c)    Any provision of this Guaranty that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

       (d)    If the whole or any part of this Guaranty shall be now or
hereafter become unenforceable against any one or more of the Guarantors for any
reason whatsoever or if it is not executed by any one or more of the Guarantors,
this Guaranty shall nevertheless be and remain fully binding upon and
enforceable against each other Guarantor as if it had been made and delivered
only by such other Guarantors.

       (e)    This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of each Holder and its
successors and assigns so long as its Notes remain outstanding and unpaid.

       (f)    This Guaranty may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart

                                      -10-
<PAGE>   13

may consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.

       (g)    This Guaranty shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

                                      -11-
<PAGE>   14

       IN WITNESS WHEREOF, each of the undersigned has caused this Guaranty to
be duly executed by an authorized representative as of this 31st day of January,
2000.

                                       ENGINEERING TECHNOLOGIES, INC.

                                       By
                                          Its
                                             ----------------------------------

                                       ORBITAL COMMERCIAL SYSTEMS, INC.

                                       By
                                          Its
                                             ----------------------------------

                                       ORBITAL SPACE SYSTEMS, INC.

                                       By
                                          Its
                                             ----------------------------------

                                       ORBITAL COMMERCIAL SYSTEMS, INC.

                                       By
                                          Its
                                             ----------------------------------

                                       ORBITAL INTERNATIONAL, INC.

                                       By
                                          Its
                                             ----------------------------------

                                      -12-
<PAGE>   15

                                       ORBITAL SERVICES CORPORATION

                                       By
                                          Its
                                             ----------------------------------

                                       ORBITAL NAVIGATION CORPORATION

                                       By
                                          Its
                                             ----------------------------------

                                       ORBLINK LLC

                                       By
                                          Its
                                             ----------------------------------

                                      -13-
<PAGE>   16

Accepted and Agreed to:

                                       ORBITAL SCIENCES CORPORATION

                                       By
                                          Its
                                             ---------------------------------

                                      -14-
<PAGE>   17

                         SUBSIDIARY GUARANTY SUPPLEMENT

To the Holders of the hereinafter defined Notes
  of Orbital Sciences Corporation
  (the "Company")

Ladies and Gentlemen:

       WHEREAS the Company has issued its $20,000,000 10.50% Senior Notes due
June 14, 2001 (the "Notes") pursuant to the Note Agreement dated as of June 1,
1995 (as amended from time to time, the "Note Agreement") with The Northwestern
Mutual Life Insurance Company (the "Initial Note Purchaser," together with its
successors and assigns the "Holders"). As of the date hereof, $13,333,333 in
aggregate principal amount of the Notes remain outstanding, and the Notes accrue
interest at the rate of 12%.

       WHEREAS, as a condition precedent to the granting by certain Subsidiaries
of the Company of Liens created pursuant to that Second Amended and Restated
Security Agreement dated as of November 30, 1999 among the Company and the other
parties named therein, the Holders have required that from time to time certain
subsidiaries of the Company enter into a Subsidiary Guaranty Agreement as
security for the Notes (the "Subsidiary Guaranty").

       Pursuant to Section ___ of the Note Agreement, the Company has agreed to
cause the undersigned, ____________, a __________ organized under the laws of
______________ (the "Additional Guarantor"), to join in the Subsidiary Guaranty.
In accordance with the requirements of the Subsidiary Guaranty, the Additional
Guarantor desires to amend the definition of Guarantor (as the same may have
been heretofore amended) set forth in the Subsidiary Guaranty attached hereto so
that at all times from and after the date hereof, the Additional Guarantor shall
be jointly and severally liable as set forth in the Subsidiary Guaranty for the
obligations of the Company under the Note Agreement and Notes to the extent and
in the manner set forth in the Subsidiary Guaranty.

       The undersigned is a subsidiary of the Company and is duly authorized to
execute and deliver this Guaranty Supplement to each of you. The execution by
the undersigned of this Guaranty Supplement shall evidence its consent to and
acknowledgment and approval of the terms set forth herein and in the Subsidiary
Guaranty and by such execution the Additional Guarantor shall be deemed to have
made in favor of the Holders the representations and warranties set forth in
Section 5 of the Subsidiary Guaranty.

       Upon execution of this Subsidiary Guaranty Supplement, the Subsidiary
Guaranty shall be deemed to be amended as set forth above. Except as amended
herein, the terms and provisions of the Subsidiary Guaranty are hereby ratified,
confirmed and approved in all respects.

                                    EXHIBIT A
                       (to Subsidiary Guaranty Agreement)

<PAGE>   18

       Any and all notices, requests, certificates and other instruments
(including the Notes) may refer to the Subsidiary Guaranty without making
specific reference to this Subsidiary Guaranty Supplement, but nevertheless all
such references shall be deemed to include this Subsidiary Guaranty Supplement
unless the context shall otherwise require.

       Dated: _________________.

                                       [NAME OF ADDITIONAL GUARANTOR]

                                       By
                                          Its

                                      -2-<PAGE>   1
                                                                    EXHIBIT 10.5

                    MacDONALD, DETTWILER AND ASSOCIATES LTD.
                      1999 STOCK OPTION AND INCENTIVE PLAN

1.     PURPOSE OF THE PLAN

The purpose of this 1999 Stock Option and Incentive Plan is to advance the
interests of MacDonald, Dettwiler and Associates Ltd. ("MDA or "COMPANY") and
its shareholders by enabling MDA and other Participating Companies (as defined
below) to attract and retain highly talented employees, officers and directors
and, subject to applicable laws, consultants, who are in a position to make
significant contributions to the success of MDA, to reward them for their
contributions to the success of MDA, and to encourage them, through share
ownership, to increase their proprietary interest in MDA and their personal
interest in its continued success and progress.

This 1999 Stock Option and Incentive Plan provides for the award of MDA stock
options to acquire MDA common shares.

2.     DEFINITIONS

For the purposes of this Plan and related documents, the following definitions
apply:

       "ACT" means the Canada Business Corporations Act, as amended.

       "AFFILIATE" has the meaning specified in the Act.

       "AWARD AGREEMENT" means the stock option agreement or other written
       agreement between MDA and a Grantee that evidences and sets out the terms
       and conditions of a Grant.

       "BOARD" means the Board of Directors of the Company.

       "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.

       "COMMITTEE" means a committee of the Board designated from time to time
       by resolution of the Board, which committee shall consist of no fewer
       than two members of the Board, none of whom shall be an officer or other
       salaried employee of any Participating Company.

       "COMPANY" or "MDA" means MacDonald, Dettwiler and Associates Ltd., a
       corporation governed by the laws of Canada or any successor thereof.

       "EFFECTIVE DATE" means December 22, 1999.

       "EMPLOYEE" with respect to a Participating Company means an individual
       who is considered an employee of the Participating Company as defined
       under the Income Tax Act, (Canada) as amended, or who is an individual
       who is a full-time or a part-time

<PAGE>   2
                                       2

       dependent contractor of the Participating Company providing services
       normally provided by an employee of the Participating Company and is
       subject to the same control and direction by the Participating Company
       over the detail and methods of work as an employee of the Participating
       Company.

       "FAIR MARKET VALUE OF A SHARE" Means the closing sale price of the Shares
       on the national securities or stock exchange on which the Shares are then
       principally traded or, if that measure of price is not available, in a
       national market system for securities on the date of the Grant (or such
       other date as is specified herein). In the event that there are no sales
       of Shares on any such exchange or market on date of the Grant (or such
       other date as is specified herein), the fair market value of Shares on
       the date of the Grant (or such other date as is specified herein) shall
       be deemed to be the closing sale price on the next preceding day on which
       Shares were sold on any such exchange or market. In the event that the
       Shares are not listed on any such market or exchange on the applicable
       date, a valuation of the fair market value of a Share on such date shall
       be made by the Board in its sole discretion.

       "GRANT" Means an award of an Option under the Plan.

       "GRANTEE" means a person who receives or holds an Option under the Plan.

       "OPTION" Means an option to acquire Shares granted under the Plan.

       "OPTION TERMINATION DATE" is defined in Section 9(b) below.

       "PARTICIPATING COMPANY" means the Company and any Affiliate of the
       Company prior to such event and, following a public offering, means the
       Company and any Subsidiary of the Company.

       "PERSON" shall mean an individual, corporation, partnership, association
       or other person or entity, or any group of two or more of the foregoing
       that have agreed to act together.

       "PLAN" means this 1999 Stock Option and Incentive Plan.

       "SECURITIES LAWS" means all applicable laws, rules, regulations, rules,
       orders, and published policies relating in full or in part to trading in
       securities, to the extent legally enforceable.

       "SHAREHOLDERS AGREEMENT" Means the unanimous shareholders' agreement
       dated December 22, 1999 among the CAI Entities, 597858 B.C. Ltd., as
       agent, Orbital Sciences Corporation and those persons who become parties
       thereto and bound thereto from time to time.

       "SHARES" means common shares in the capital of the Company.

       "SUBSIDIARY" has the meaning specified in the Act.

<PAGE>   3
                                       3

       "TERMINATING TRANSACTION" Means any of the following events: (a) the
       dissolution or liquidation of the Company; (b) a reorganization, merger,
       amalgamation or consolidation of the Company with one or more other
       Persons as a result of which the Company goes out of existence or becomes
       a Subsidiary of a corporation other than a Participating Company
       immediately prior to such event or there has otherwise been an
       acquisition of control of the Company (within the meaning of the Income
       Tax Act (Canada)) by a Person other than a Participating Company
       immediately prior to such event and other than pursuant to the exercise
       of rights under the Treasury Option Agreement or the Secondary Option
       Agreement (each as defined in the Shareholders' Agreement) or (c) a sale
       of all or substantially all of the Company's assets to a Person or entity
       other than a Person that was a Participating Company immediately prior to
       such event; or (d) a sale to one Person (or two or more Persons acting in
       concert), other than to a Participating Company immediately prior to such
       event, of equity securities of the Company resulting in such Person or
       Persons holding Shares representing at least eighty percent (80%) or more
       of the aggregate voting power of all outstanding equity securities of the
       Company.

       "TOTAL DISABILITY" means permanent and total disability as determined in
       the sole discretion of the Board.

3.     ADMINISTRATION OF PLAN

       (a)    Administration by Board. The Plan shall be administered by the
              Board. The Board shall have authority, not inconsistent with the
              express provisions of the Plan, to:

              (i)    award Grants consisting of Options to such eligible persons
                     as the Board may select;

              (ii)   determine the timing of Grants and the number of Shares
                     subject to each Grant;

              (iii)  determine the terms and conditions of each Grant, including
                     the nature and duration of any restriction or condition (or
                     provision for lapse thereof) relating to the vesting or
                     forfeiture of a Grant;

              (iv)   adopt such rules and regulations as the Board may deem
                     necessary or appropriate to carry out the purposes of the
                     Plan; and

              (v)    interpret the provisions of the Plan and of any Grants made
                     hereunder and decide any questions and settle all
                     controversies and disputes that may arise in connection
                     with the Plan.

              All decisions, determinations, interpretations or other actions by
              the Board with respect to the Plan shall be final, conclusive and
              binding on all Persons, including the Company, Participating
              Companies and Grantees and their respective legal representatives,
              their successors in interest and permitted assigns and upon all
              other Persons claiming by, through, under or against any of them.

<PAGE>   4
                                       4

       (b)    Administration and Delegation by Committee. Subject to the Act but
              otherwise in its sole discretion, the Board may delegate some of
              its powers with respect to the Plan to a Committee (in which case
              references to the Board in this Plan shall be deemed to refer to
              the Committee, where appropriate) except for the authority to make
              Grants under the Plan. The delegated authority shall include the
              power to:

              (i)    determine the timing of Grants and the number of Shares
                     subject to each Grant; and

              (ii)   determine the terms and conditions of each Grant, including
                     the nature and duration of any restriction or condition (or
                     provision for lapse thereof) relating to the vesting or
                     forfeiture of a Grant.

4.     SHARES SUBJECT TO THE PLAN

       (a)    Availability. Subject to adjustment as provided in Section 4(c)
              below, the maximum aggregate number of Shares available for
              issuance under the Plan will be six (6) million. The number of
              Shares that may be so reserved and authorized for issuance to any
              one person shall not exceed 5 percent of the total issued and
              outstanding Shares of the Company (calculated on a non-diluted
              basis).

       (b)    Reavailability of Options; Shares to be Delivered. If any Shares
              covered by a Grant are not purchased or are forfeited, or if a
              Grant otherwise terminates without delivery of any Shares subject
              thereto, then the number of Shares so terminated or forfeited
              shall again be available for making Grants under the Plan. Shares
              delivered under the Plan shall be authorized but unissued shares.
              No fractional Shares shall be delivered under the Plan.

       (c)    Changes in Capital. In the event of a stock dividend, share split
              or combination of shares, exchange of securities, distribution
              payable in Shares, recapitalization or other change in MDA's
              capital stock, the number and kind of securities subject to Grants
              then outstanding or subsequently awarded under the Plan, the
              exercise price of any outstanding Option, the maximum number of
              Shares that may be delivered under the Plan, and other relevant
              provisions shall be appropriately adjusted by the Board, so that
              the proportionate interest of the Grantee immediately following
              such event shall, to the extent practicable, be the same as
              immediately before such event.

5.     EFFECTIVE DATE

The Plan shall be effective as of the Effective Date.

6.     AWARD AGREEMENT

Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, to be
executed by MDA and by the Grantee, in such form or forms as the Board shall
from time to time approve containing terms and conditions not inconsistent with
the terms and conditions of this Plan.

<PAGE>   5
                                       5

7.     OPTION EXERCISE PRICE

The Option exercise price for a Share to be issued under the Plan shall be not
less than the Fair Market Value of a Share on the Grant date, as determined by
the Board in its sole discretion.

8.     DISCRETIONARY OPTION PLAN

Grants may be made under the Plan to any Employee or director or officer of any
Participating Company and, subject to Securities Laws, to individuals while
employed as consultants of any Participating Company, in each case as the Board
shall determine and designate from time to time. The Board may set limits on the
number of Options that may be granted to any Person or class of Persons.

9.     VESTING AND TERMINATION OF OPTIONS

       (a)    Vesting of Discretionary Options. Subject to the other provisions
              of this Section 9, Options granted pursuant to Section 8 shall
              vest and become exercisable at such time and in such instalments
              as the Board shall provide in each individual Award Agreement.
              Notwithstanding the foregoing, the Board may, in its sole
              discretion, accelerate the time at which all or any part of an
              Option may be exercised.

       (b)    Termination of Options. Each Option shall expire and terminate on
              such date as the Board shall determine ("OPTION TERMINATION
              DATE"), which in no event shall be later than ten (10) years from
              the date of the Grant of such Option. Upon termination of an
              Option or portion thereof, the Grantee shall have no further right
              to purchase Shares pursuant to such Option.

       (c)    Termination of Employment, Officership or Directorship. In the
              event of the termination of all positions of employment,
              officership or directorship of a Grantee with the Participating
              Companies for any reason other than for "cause" (pursuant to
              Section 11 below) or by reason of death or Total Disability,
              except as may be provided in any Award Agreement all Options that
              are not exercisable shall terminate on the day after notice of
              termination of such position(s) is given. Options that are
              exercisable on such date shall continue to be exercisable for (A)
              three (3) months following the day notice of termination of such
              position(s) was given or (B) the Option Termination Date,
              whichever occurs first; such longer period (not to exceed three
              (3) years following the day notice of termination of such
              position(s) was given) as may be specified in the Grantee's Award
              Agreement. A Grantee who is an Employee, officer or director of a
              Participating Company shall be deemed to have incurred a
              termination and been given notice of termination for purposes of
              this Section 9(c) if such Participating Company ceases to be a
              Participating Company, unless such Grantee is an Employee, officer
              or director of any other Participating Company.

<PAGE>   6
                                       6

       (d)    Rights in the Event of Death. In the event that the employment
              and/or officership and/or directorship of a Grantee with a
              Participating Company is terminated by reason of death, all
              Options that are not exercisable on the day prior to the Grantee's
              death shall terminate on the date of death. Options that were
              exercisable on the date prior to the Grantee's death may be
              exercised by the Grantee's executor or administrator or by the
              Person or Persons to whom the Option is transferred by will or the
              applicable laws of descent and distribution, at any time within
              the one-year period (or such longer period as the Board may
              determine prior to the expiration of such one-year period)
              beginning with the date of the Grantee's death, but in no event
              beyond the Option Termination Date.

       (e)    Rights in the Event of Total Disability. In the event that the
              employment and/or directorship of an Grantee with a Participating
              Company is terminated by reason of Total Disability, all Options
              that are not exercisable shall terminate on the
              employment/officership/directorship termination date. Options that
              were exercisable on the employment/officership/directorship
              termination date may be exercised at any time within the one-year
              period (or such longer period as the Board may determine prior to
              the expiration of such one-year period) beginning with the
              commencement of the Grantee's Total Disability (as determined by
              the Board) but in no event beyond the Option Termination Date.

       (f)    Leave of Absence. An approved leave of absence shall not
              constitute a termination of employment under the Plan. An approved
              leave of absence shall mean an absence approved pursuant to the
              policy of a Participating Company for military leave, sick leave,
              or other bona fide leave, not to exceed ninety (90) days or, if
              longer, as long as the Employee's right to re-employment is
              guaranteed by contract, statute or the policy of a Participating
              Company. Notwithstanding the foregoing, in no event shall an
              approved leave of absence result in an Option surviving beyond the
              Option Termination Date.

10.    EXERCISE OF OPTIONS: NON-TRANSFERABILITY

       (a)    Exercise of Options. Vested Options may be exercised, in whole or
              in part, by giving written notice of exercise to the Company,
              which notice shall specify the number of Shares to be purchased,
              shall be accompanied by payment in full of the purchase price
              therefor in accordance with Section 10(b) below and the full
              amount of any federal, provincial, state and/or withholding and
              other employment taxes applicable to such person as a result of
              such exercise and shall be accompanied by signed copies of the
              document(s) referred to in Section 10(c) below. No Shares shall be
              issued pursuant to the exercise of an Option until full payment of
              the purchase price and applicable withholding tax has been made to
              the Company. Upon receipt of such amounts, the Company shall issue
              forthwith share certificates representing the Shares purchased
              pursuant to the exercise of the Option. Until the share
              certificates representing such Shares have been issued by the
              Company, the Grantee shall have no right to vote or receive
              dividends on or exercise any other rights as a shareholder, with
              respect to optioned Shares notwithstanding the exercise of the
              Option.

<PAGE>   7
                                       7

       (b)    Payment. Full payment of the purchase price for the Shares as to
              which an Option is being exercised shall be made in Canadian
              dollars in cash or by cheque in a form satisfactory to the
              Company.

       (c)    Unanimous Shareholders Agreement. The Shares are subject to the
              terms and conditions of the Shareholders' Agreement. It is a
              condition to the exercise of an Option that the Grantee, if not
              already a party to the Shareholders Agreement, at or before the
              time of the exercise of the Option, must sign and deliver to the
              Corporation an agreement substantially in the form of Schedule "A"
              to the Shareholders Agreement agreeing to be bound thereby as if
              he or she were an original signatory thereto and, if requested by
              the Company, any of the CAI Entities, 597858 B.C. Ltd., or Orbital
              Sciences Corporation or, if applicable, Holdings (as defined in
              the Shareholders Agreement), the Grantee must also sign and
              deliver to the Corporation the Shareholders Agreement in
              counterpart.

       (d)    Non-Transferability of Options. Except as the Board may otherwise
              determine, no Option may be transferred other than by will or by
              the laws of descent and distribution, and during a Grantee's
              lifetime an Option may be exercised only by the Grantee.

11.    FORFEITURE CONDITIONS

The Board may provide in an Award Agreement for conditions of forfeiture for
"cause" of any Grantee's rights with respect to a Grant. "Cause" shall include
engaging in an activity that is detrimental to the Company including, without
limitation, criminal activity, failure to carry out the duties assigned to the
Grantee as a result of incompetence or wilful neglect, conduct casting such
discredit on the Company as in the opinion of the Board justifies termination or
forfeiture of the Grant, or such other reasons, including the existence of a
conflict of interest, as the Board may determine. "Cause" is not limited to
events that have occurred prior to the Grantee's termination of service, nor is
it necessary that the Board's finding of "cause" occur prior to such
termination. If the Board determines, subsequent to a Grantee's termination of
service but prior to the exercise of any rights under a Grant, that either prior
or subsequent to the Grantee's termination the Grantee engaged in conduct that
would constitute "cause", then the rights with respect to a Grant shall be
forfeited.

12.    COMPLIANCE WITH SECURITIES LAWS

       (a)    The delivery of Shares upon the exercise of an Option shall be
              subject to compliance with (i) applicable federal, provincial and
              state laws and regulations, including Securities Laws, (ii) all
              applicable listing requirements of any national securities or
              stock exchange or national market system on which the Shares are
              then listed or quoted, and (iii) Company counsel's approval of all
              other legal matters in connection with the issuance and delivery
              of such Shares. The Company may also require, as a condition to
              exercise of the Option, that the Grantee make such representations
              or agreements as the Company may consider appropriate to ensure
              compliance with applicable Securities Laws.

<PAGE>   8
                                       8

       (b)    All share certificates evidencing Shares issued pursuant to
              exercised Options shall bear an appropriate legend restricting
              transfer.

       (c)    It is the intent of the Company that Grants pursuant to the Plan
              and the exercise of Options granted hereunder will be made
              pursuant to exemptions from applicable Securities Laws and stock
              exchange rules. To the extent that any provision of the Plan or
              action by the Board or any Option does not comply with the
              requirements of applicable Securities Laws and/or stock exchange
              rules, it shall be deemed inoperative to the extent permitted by
              law and deemed advisable by the Board, and shall not affect the
              validity of the Plan, and the Board may make any amendments
              necessary to the Plan or any Option for such purposes.

13.    MERGERS, ETC.

Except as otherwise provided herein, all Options outstanding under the Plan
shall accelerate and become immediately exercisable for a period of not less
than fifteen days (or such longer period as the Board may prescribe) immediately
prior to the scheduled consummation of a Terminating Transaction, which exercise
shall be (i) conditioned upon the consummation of the Terminating Transaction
and (ii) effective only immediately before the consummation of such Terminating
Transaction. Upon consummation of any such event, the Plan and all outstanding
but unexercised Options shall terminate. Notwithstanding the foregoing, to the
extent provision is made in writing in connection with such Terminating
Transaction for the continuation of the Plan and the assumption of Options under
the Plan theretofore granted, or for the substitution for such Options of new
Options covering the shares of a successor company, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares or
units and exercise prices, then the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided, and the acceleration and
termination provisions set forth in the first two sentences of this Section 13
shall be of no effect. The Company shall send written notice of a Terminating
Transaction to all individuals who hold Options not later than fifteen days
prior to the consummation of the Terminating Transaction.

14.    REPURCHASE OF SHARES AND OPTIONS

       (a)    At any time and from time to time prior to the listing of the
              Shares on a national securities or stock exchange or a national
              market system, the Company (or its designee) shall have, and a
              Grantee hereby grants to the Company (or its designee), an
              irrevocable right and option to purchase from a Grantee (or the
              Grantee's legal representative) all or any portion of the Options
              of the Grantee and any Shares acquired by the Grantee pursuant to
              the exercise of Options under this Plan. The Company may exercise
              such right and option by delivering to the Grantee a notice
              specifying the number of Shares and/or Options to be purchased and
              the Fair Market Value of a Share. The Company may assign its right
              and option to purchase a Grantee's Shares and/or Options.

       (b)    The price payable by the Company for Shares acquired pursuant to
              this Section 14 shall be the Fair Market Value of the Shares and
              the price payable by the Company for Options acquired pursuant to
              this Section 14 shall be the amount, if

<PAGE>   9
                                       9

              any, by which the Fair Market Value of a Share exceeds the
              exercise price per Share of such Option multiplied by number of
              Shares issuable upon exercise.

15.    TAXES

The Board shall make such provisions and take such steps as it deems necessary
or appropriate for the withholding of any federal, provincial, state, local and
other tax required by law to be withheld by the Company with respect to the
grant or exercise of Options, or with respect to the disposition of Shares
acquired pursuant to the Plan, including, but without limitation, the deduction
of the amount of any such withholding tax from any compensation or other amounts
payable to a Grantee, or requiring a Grantee (or the Grantee's beneficiary or
legal representative), as a condition of a Grant or exercise of an Option, to
pay to the appropriate Participating Company any amount required to be withheld,
or to execute such other documents as the Board deems necessary or desirable in
connection with the satisfaction of any applicable withholding obligation.

16.    EMPLOYMENT RIGHTS

Neither the adoption of the Plan nor the making of any Grants shall confer upon
any Grantee any right to continue as an Employee, officer or director of any
Participating Company or affect in any way the right of any Participating
Company to terminate the Employee, officer or director at any time. Except as
otherwise specifically provided by the Board in any particular case, the loss of
existing or potential profit in Grants under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a Grantee
even if the termination is in violation of an obligation of the Company to the
Grantee by contract or otherwise.

17.    CORPORATE ACTION

Nothing contained in the Plan or in an Award Agreement shall be construed so as
to prevent any Participating Company from taking corporate action which is
deemed by the Company or the Participating Company, acting in good faith, to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any outstanding Grant, provided that the Company
shall not undertake any such corporate action with the intent to adversely
prejudice any outstanding Grant.

18.    AMENDMENT OR TERMINATION OF PLAN

       (a)    Neither the adoption of the Plan nor the making of any Grants
              shall affect the Company's right to grant Options outside of the
              Plan to any Person that is not subject to the Plan, to issue to
              such Persons Shares as a bonus or otherwise, or to adopt other
              plans or arrangements under which Shares may be issued.

       (b)    The Board may at any time discontinue Grants under the Plan. With
              the consent of the Grantee, the Board may at any time cancel an
              existing Grant in whole or in

<PAGE>   10
                                       10

              part and make any other Grant for such number of Shares as the
              Board specifies. The Board may at any time, prospectively or
              retroactively, amend the Plan or any outstanding Grant for the
              purpose of satisfying any changes in applicable tax laws or
              regulations or for any other purpose that may at the time be
              permitted by law, or may at any time terminate the Plan as to
              further Grants, but no such amendment shall materially adversely
              affect the rights of any Grantee (without the Grantee's consent)
              under any outstanding Grant. In addition, the Board may at any
              time, prospectively or retroactively, amend the Plan without the
              consent of the Grantees for the purpose of complying with the
              requirements of any national securities or stock exchange on which
              the Shares are to be listed.

19.    GENERAL PROVISIONS

       (a)    Titles and Headings. Titles and headings of sections of the Plan
              are for convenience of reference only and shall not affect the
              construction of any provision of the Plan.

       (b)    Governing Law. The Plan 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
              Province of British Columbia and the federal laws of Canada
              applicable therein.

       (c)    Severability. If any provision of the Plan or any Award Agreement
              shall be determined to be illegal or unenforceable by any court of
              law in any jurisdiction, the remaining provisions hereof and
              thereof shall be severable and enforceable in accordance with
              their terms, and all provisions shall remain enforceable in any
              other jurisdiction.

The Plan was duly adopted by the board of directors of the Company as of
December 22, 1999.

                                      ----------------------------------------
                                                  Susan Herlick
                                          Assistant Secretary of the Company

The Plan was duly approved by the shareholders of the Company on December 22,
1999.

                                      ----------------------------------------
                                                  Susan Herlick
                                          Assistant Secretary of the Company

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