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Exhibit 4.5
AMENDED AND RESTATED
COLLATERAL PLEDGE AND SECURITY AGREEMENT
AMENDED AND RESTATED COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated
as of July 12, 1999 (this "Agreement"), made by EarthWatch Incorporated (the
"Company"), a Delaware corporation having its principal office at 1900 Pike
Road, Longmont Colorado, 80501, in favor of The Bank of New York, a New York
banking corporation, having its principal corporate trust office at 101 Barclay
Street, Floor 21 West, New York, New York 10286 in its capacity as collateral
agent (referred to herein as the "Collateral Agent") for itself and for the
ratable benefit of the holders from time to time of the Existing Notes and the
Permitted Specified Indebtedness referred to below. This Agreement amends,
restates and supersedes in its entirety that certain Collateral Pledge and
Security Agreement dated as of April 8, 1999, between the Company and the
Collateral Agent.
* * * * * *
BACKGROUND
A. In connection with the Recapitalization Transaction, the Company is
issuing certain notes (herein referred to as the "Existing Notes")
pursuant to the Existing Notes Indenture, in replacement of the
Original Notes issued under the Original Indenture.
B. It is an integral part of the consummation of the Recapitalization
Transaction that the Company cause the First QuickBird Launch
Insurance to be issued in favor of the Collateral Agent as sole loss
payee, as security for the Existing Notes Obligations in the amount
of up to the Existing Notes Obligations Cap.
C. The Company may incur one or more issues of Permitted Specified
Indebtedness, which will also be secured by the First QuickBird
Launch Insurance, as security for the Permitted Specified
Indebtedness Obligations in the amount of up to the Permitted
Specified Indebtedness Cap.
D. It is the intent of the parties that certain Original Collateral
shall secure the Existing Notes Obligations until the delivery by the
Company to the Collateral Agent of the First QuickBird Launch
Insurance meeting the terms of this Agreement.
E. It is the intent of the parties that any distributions in respect of
the Collateral, including any distributions in respect of payments to
the Collateral Agent under the First QuickBird Launch Insurance shall
be distributed in accordance with Section 8(d) hereof.
NOW THEREFORE, in order to induce, and in consideration of, the
execution and delivery of the Transaction Documents and for other good and
valuable consideration, the
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receipt and sufficiency of which is hereby acknowledged by the Company, the
Company hereby covenants and agrees with, and (in Section 4 below) represents
and warrants to the Collateral Agent for the benefit of the Secured Parties as
follows:
Section 1. Defined Terms. Capitalized terms that are used herein and
not otherwise defined herein shall have the meanings ascribed to such terms in
the Existing Notes Indenture. All definitions shall be equally applicable to the
singular and plural forms of the terms defined. The use of the word "including"
shall be deemed to mean "including, without limitation." In addition to the
terms defined in the introductory and background paragraphs of this Agreement,
the following terms shall have the meanings indicated below:
"Collateral" means all of the following, whether now owned or
hereafter acquired:
(i) the First QuickBird Launch Insurance;
(ii) all accounts, contract rights, instruments, investment property
and general intangibles relating to the First QuickBird Launch Insurance,
including without limitation any, premiums, unearned premiums and premium
refunds; and
(iii) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for,
and proceeds, issues, returns, rents, profits and products of, each of the
foregoing.
"Collateral Agent" means The Bank of New York in its capacity as
collateral agent for itself and for the ratable benefit of the other Secured
Parties, and its successors and assigns.
"Collateral Agent Expenses" means the costs and expenses incurred by
the Collateral Agent in connection with the sale or other disposition of the
Collateral and any and all other fees, expenses or other amounts payable to the
Collateral Agent and its agents pursuant to this Agreement, including, without
limitation, expenses of the Collateral Agent and its agents, including the fees
and expenses of its outside counsel and internal counsel, and all expenses,
liabilities and advances made or incurred by the Collateral Agent in connection
therewith or pursuant to Section 7 hereof and amounts payable pursuant to
Section 17 hereof.
"Default" and "Event of Default" shall each have the meanings ascribed
to such terms in the Existing Notes Indenture or any Permitted Specified
Indebtedness Agreements.
"Excess Proceeds Distributions" shall have the meaning ascribed to
such term in Section 8(d) hereof.
"Existing Notes" means the Notes issued pursuant to and as defined in
the Existing Notes Indenture.
"Existing Notes Indenture" means that certain Amended and Restated
Senior Notes Indenture dated as of April 8, 1999 between the Company and the
Existing Notes
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Indenture Trustee, pursuant to which the Existing Notes were issued in
replacement of the Original Notes, as from time to time amended, modified or
supplemented.
"Existing Notes Indenture Trustee" means The Bank of New York, as
indenture trustee under the Existing Notes Indenture and any successors or
assigns.
"Existing Notes Obligations" means the Existing Notes and all other
obligations under and in respect of the Existing Notes Indenture, whether for
principal, premium, interest, fees or otherwise.
"Existing Notes Obligations Cap" means FIFTY-SIX MILLION DOLLARS
($56,000,000).
"Filing Offices" means (i) the Secretary of State of Colorado and
(ii) the County Clerk of Boulder, Colorado.
"First QuickBird Launch Insurance" means the "EarthWatch, Incorporated
- QuickBird Launch and In-Orbit Operations Insurance Policy" in respect of the
First QuickBird Satellite, in substantially the form attached as Exhibit A
hereto, as such policy may from time to time be amended, modified, supplemented
or replaced, including for the purpose of increasing the insurance amount on
account of the issuance of Permitted Specified Indebtedness.
"First QuickBird Satellite" means the QuickBird-1 spacecraft
manufactured pursuant to the contract for QuickBird Spacecraft number
SE.IM.PRJ.0004.A, dated June 9, 1998, between Ball Aerospace & Technologies
Corp. and the Company (as such contract may from time to time be amended,
changed, modified, revised or supplemented, including amendments and exhibits
attached thereto), and related attached components and equipment.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President or any other Director of the
Company or (ii) the Chief Financial Officer, the Treasurer or any Assistant
Treasurer, the Company Secretary or any Company Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof.
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company.
"Original Collateral" shall have the meaning ascribed to such term in
Section 25 hereof.
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"Original Indenture" means that certain Senior Notes Indenture dated
as of March 19, 1997 between the Company and the Original Notes Indenture
Trustee, pursuant to which the Original Notes were issued.
"Original Notes" means the "Notes" issued pursuant to and as defined
in the Original Indenture.
"Original Notes Indenture Trustee" means The Bank of New York, as
indenture trustee under the Original Indenture.
"Original Pledge Agreement" shall have the meaning ascribed to such
term in Section 25 hereof.
"Permitted Insurance Modification" means the following particular
specified amendments and modifications to the First QuickBird Launch Insurance:
(a) amendments and modifications to cure any ambiguity, defect or
inconsistency in the First QuickBird Launch Insurance or to
increase the rights and benefits in favor of the Collateral Agent
in respect of the First QuickBird Launch Insurance; provided that
such amendments or modifications shall not, directly or
indirectly, adversely affect the interests of the Collateral Agent
or any other Secured Party in any material respect;
(b) amendments and modifications to the launch schedule set forth in
paragraph 9 of the declarations section of the First QuickBird
Launch Insurance; and
(c) amendments and modifications in the "Definitions" section of the
First QuickBird Launch Insurance which only amend or modify the
definitions of the specific defined terms set forth on Schedule II
attached hereto.
"Permitted Specified Indebtedness" means one or more issues of
Indebtedness in the form of notes or a bank loan facility resulting in aggregate
net proceeds to the Company not to exceed $130,000,000, after any amounts paid
in respect of any underwriting discounts and commissions, fees, expenses and
other costs payable by the Company and associated with such issuance of such
notes or creation of such bank loan facility, as the case may be, incurred after
the Closing Date and so specified as Permitted Specified Indebtedness by the
Company at the time of incurrence pursuant to an officers' certificate delivered
to the Trustee under the Indenture; which Indebtedness (i) shall be equal in
priority of payment or subordinate in right of payment with the Existing Notes
and (ii) shall be an obligation of the Company only and not any Subsidiary of
the Company.
"Permitted Specified Indebtedness Agreements" means any indenture,
credit agreement or other agreement governing the terms of any Permitted
Specified Indebtedness, as from time to time amended, modified or supplemented.
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"Permitted Specified Indebtedness Cap" means the original principal
amount of Indebtedness in the form of notes or a bank loan facility resulting
in aggregate net proceeds to the Company not to exceed $130,000,000, after any
amounts paid in respect of any underwriting discounts and commissions, fees,
expenses and other costs payable by the Company, and associated with such
issuance of such notes or creation of such bank loan facility, as the case may
be, and original issue discount or interest accrued on such indebtedness from
the issue date(s) through the earlier of June 30, 2000 and the date of first
intentional ignition of the launch vehicle for the First QuickBird Satellite.
"Permitted Specified Indebtedness Obligations" means the Permitted
Specified Indebtedness and all other obligations under and in respect of the
Permitted Specified Indebtedness Agreements, whether for principal, premium,
interest, fees or otherwise.
"Permitted Specified Indebtedness Representative" means any indenture
trustee, agent or similar Person with respect to Permitted Specified
Indebtedness, including any successors or assigns.
"Proceeds" means "proceeds," as such term is defined in Section
9-306(1) of the UCC, and, in any event, shall include, without limitation, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to the Company or the Collateral Agent from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to the Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Proceeds Distributions" shall have the meaning ascribed to such term
in Section 8(d) hereof.
"Returned Insurance Premiums" shall have the meaning ascribed to such
term in Section 8(g) hereof.
"Secured Obligations" means, collectively, the Existing Notes
Obligations, the Permitted Specified Indebtedness Obligations and the Collateral
Agent Expenses.
"Secured Parties" means the Collateral Agent, the Existing Notes
Indenture Trustee, any Permitted Specified Indebtedness Representative and any
holders or other obligees from time to time of the Existing Notes Obligations or
any Permitted Specified Indebtedness Obligations.
"Termination Date" means the date two years following the first
intentional ignition of the launch vehicle for the First QuickBird Satellite;
provided that there has been no event of loss under the First QuickBird Launch
Insurance or other event causing payment under the First QuickBird Launch
Insurance.
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"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment.
perfection or priority of the Collateral Agent's security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" means the Uniform
Commercial Code as in effect in such other Jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
Section 2. Assignment and Grant of Security Interest. As collateral
security for the full and prompt payment when due (whether at stated maturity,
by acceleration or otherwise) of, and the performance of, all the Secured
Obligations, the Company hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, and hereby grants to the
Collateral Agent, for itself and the ratable benefit of the Secured Parties, a
continuing security interest in all of the Company's right, title and interest
in, to and under the Collateral. This Agreement secures the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Secured Obligations.
Section 3. Rights of the Collateral Agent; Limitations on the
Collateral Agent's Secured Obligations. (a) It is expressly agreed by the
Company that, anything herein to the contrary notwithstanding, the Company shall
remain liable under each of its contracts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder and the
Company shall perform all of its duties and obligations thereunder, all in
accordance with and pursuant to the terms and provisions of each such contract.
Neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any contract by reason of or arising out of this
Agreement or the granting of a security interest in any contract (including the
First QuickBird Launch Insurance) to the Collateral Agent or the receipt by the
Collateral Agent or any other Secured Party of any payment relating to any such
contract pursuant hereto, nor shall the Collateral Agent nor any other Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of the Company under or pursuant to any contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any contract, or to present or file any claim, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(b) The Company hereby authorizes the Collateral Agent to collect
directly from any Person any proceeds in respect of the Collateral, including,
without limitation, any payments under or in respect of the First QuickBird
Launch Insurance. In the event that the Company receives any amount or other
proceeds in respect of the First QuickBird Launch Insurance or other Collateral
from the relevant insurance company or any other Person other than the
Collateral Agent in accordance with this Agreement, the Company shall cause such
amounts to be held in trust for the benefit of the Collateral Agent and
immediately turned over to the Collateral Agent in the same form received with
appropriate endorsements.
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Section 4. Representations and Warranties. The Company hereby
represents and warrants to the Collateral Agent, as of the Issue Date, as
follows:
(a) The Company is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, having good title
thereto, free and clear of any and all Liens, except for the assignment,
security interest and other rights granted pursuant to this Agreement.
(b) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except such as
may have been filed by the Company in favor of the Collateral Agent pursuant to
this Agreement.
(c) The Company's place of business (or the chief executive office if
it has more than one place of business), the places where its records concerning
the Collateral are kept is set forth on Schedule 1 attached hereto.
(d) A true and correct copy of the policy relating to the First
QuickBird Launch Insurance is attached as Exhibit A hereto, which policy
includes the Collateral Agent as sole loss payee thereon and is in full force
and effect.
(e) Upon the occurrence of (i) the execution and delivery of this
Agreement by the Collateral Agent and the Company, (ii) the procurement of the
First QuickBird Launch Insurance in accordance with this Agreement, (iii) the
filing of a copy of this Agreement with the Filing Offices, (iv) the filing of a
UCC financing statement describing the Collateral with the Filing Offices and
(v) the delivery to the Collateral Agent of the original insurance policy in
respect of the First QuickBird Launch Insurance, the Collateral Agent shall have
a first priority, perfected security interest in the Collateral, free and clear
of any and all Liens.
Section 5. Covenants. The Company covenants and agrees with the
Collateral Agent that from and after the Closing Date and until the Secured
Obligations are fully and indefeasibly satisfied in cash or the Termination Date
otherwise occurs:
(a) Further Documentation; Pledge of Instruments. At any time and from
time to time, at the sole expense of the Company, the Company will promptly and
duly execute and deliver any and all such further instruments and documents and
take such further action as may be necessary and desirable to obtain the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, securing all consents and approvals necessary or
appropriate for the assignment of, or grant of a security interest in, the First
QuickBird Launch Insurance (or any other contract constituting Collateral held
by the Company or in which the Company has any rights not heretofore assigned)
to the Collateral Agent, the execution and filing of any financing or
continuation statements under the UCC or any other required filings with respect
to the Liens, assignments and security interests granted hereby and the delivery
to the Collateral Agent of any Collateral constituting instruments or investment
securities under the UCC. Without limiting the foregoing, the Company will
perform all acts as may be necessary or desirable to create and maintain in
favor of the Collateral Agent a first
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priority perfected security interest in the Collateral. To the extent permitted
by applicable law, the Company authorizes the Collateral Agent to sign any
financing or continuation statement instead of the Company.
(b) Limitation on Liens on Collateral. The Company will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral (other than
the Lien in favor of the Collateral Agent created hereby), and will defend the
right, title and interest of the Collateral Agent in and to any of the Company's
rights in the Collateral and in and to the Proceeds thereof constituting
Collateral against the claims and demands of all Persons whomsoever.
(c) Maintenance of Insurance. The Company shall comply in all respects
with the insurance requirements set forth in Section 4.9 of the Existing Notes
Indenture. Without limiting the generality of the foregoing, the Company shall
take all actions necessary to continue the First QuickBird Launch Insurance in
full force and effect (including payment of all premiums) and to cause the
Collateral Agent to be the sole loss payee on the First QuickBird Launch
Insurance.
(d) Limitations on Disposition. The Company will not sell, assign,
lease, transfer or otherwise dispose of any of the Collateral or any interest
therein to any Person other than the Collateral Agent.
(e) Notices. The Company will advise the Collateral Agent promptly,
in reasonable detail, (i) of any material Lien or claim made or asserted against
any of the Collateral, (ii) of any material change in the composition of the
Collateral, (iii) of any claim under the First QuickBird Launch Insurance or any
event causing the payment of any sums (including return of premium) in respect
of the First QuickBird Launch Insurance and (iv) of the occurrence of any other
event which could reasonably be expected to have a material adverse effect on
the aggregate value of the Collateral or in the security interests created
hereunder. The Company will promptly provide the Collateral Agent with copies of
any and all notices received from or provided to any insurance company or agent
in respect of the First QuickBird Launch Insurance. Without limiting the
generality of the foregoing, the Company will promptly provide the Collateral
Agent, the Existing Notes Indenture Trustee and any Permitted Specified
Indebtedness Representative with any information regarding the First QuickBird
Launch Insurance as such Person shall reasonably request.
(f) First QuickBird Launch Insurance. The Company shall not permit any
amendment, modification or termination of the First QuickBird Launch Insurance,
or any settlement in respect of any claim thereunder, without the written
consent of the Collateral Agent. The Company shall comply with all terms and
conditions of the First QuickBird Launch Insurance and will act promptly and
diligently in the enforcement of all rights, the protection of all benefits and
the prosecution of any claims under the First QuickBird Launch Insurance. In
respect of the First QuickBird Launch Insurance, the Company shall not permit
there to be (i) any loss payee, other than the Collateral Agent or (ii) any
insured party or additional insured party, other than the Company. The Company
shall not permit there to be any original policy in
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respect of the First QuickBird Launch Insurance other than any such original
which is delivered to the Collateral Agent.
(g) Continuous Perfection. The Company will not change its name,
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith misleading within the
meaning of Section 9-402(7) of the UCC (or any other then applicable provision
of the UCC) unless the Company shall have given the Collateral Agent at least 60
days' prior written notice thereof and shall have taken all action (or made
arrangements to take such action substantially simultaneously with such change
if it is impossible to take such action in advance) necessary or reasonably
requested by the Collateral Agent to amend such financing statement or
continuation statement so that it is not misleading. The Company will not change
its place of business or its chief executive office (if it has more than one
place of business) or remove its records from any location, unless it gives the
Collateral Agent at least 60 days' prior written notice thereof and has taken
such action as is necessary to cause the security interest of the Collateral
Agent in the Collateral to continue to be perfected.
Section 6. The Collateral Agent's Appointment as Attorney-in-Fact.
(a) The Company hereby irrevocably constitutes and appoints the Collateral Agent
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Company and in the name of the Company or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which the
Collateral Agent may deem necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives the Collateral Agent the power and right, but not the duty, on behalf of
the Company, without notice to or assent by the Company to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any Collateral
and, in the name of the Company or in its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys due
under any Collateral whenever payable and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral and
to pay any required insurance premiums and related costs and expenses; and
(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due, and to become due
thereunder, directly to the Collateral Agent or as the Collateral Agent
shall direct; (B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any
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time, in respect of or arising out of any, Collateral; (C) to sign and
indorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications
and notices in connection with accounts, general intangibles, instruments
and other items constituting or relating to the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
the Company with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Collateral Agent may
deem appropriate; and (G) generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Collateral Agent were the absolute
owner thereof for all purposes, and to do, at the Collateral Agent's
option and the Company's expense, at any time, or from time to time, all
acts and things which the Collateral Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and the Collateral
Agent's Lien therein, in order to effect the intent of this Agreement, all
as fully and effectively as the Company might do.
(b) The Collateral Agent agrees that, except upon the occurrence and
during the continuance of any Event of Default, it will forbear from exercising
the power of attorney or any rights granted to the Collateral Agent pursuant to
this Section 6; provided that the Collateral Agent may exercise any such power
of attorney or other rights notwithstanding the absence of an Event of Default
if such exercise is necessary or desirable for the grant to, or maintenance in
favor of, the Collateral Agent of the first priority security interest in the
Collateral intended by this Agreement. The Company hereby ratifies, to the
extent permitted by law, all that any said attorney shall lawfully do or cause
to be done by virtue hereof. The power of attorney granted pursuant to this
Section 6, being coupled with an interest, shall be irrevocable until the
Secured Obligations are indefeasibly paid in full in cash.
(c) The powers conferred on the Collateral Agent hereunder are solely
to protect the Collateral Agent's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Collateral Agent shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Company for any act or failure
to act, except for its own gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. The Collateral Agent shall not
be required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured it.
(d) The Company also authorizes the Collateral Agent, at any time and
from time to time, including, but not limited to, upon the occurrence and during
the continuance of an Event of Default, (i) to communicate in its own name with
any party to any contract constituting Collateral with regard to the assignment
of the right, title and interest of the Company in and
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under the Contracts constituting Collateral hereunder and other matters relating
thereto and (ii) to execute, in connection with the sale or other realization
provided for in Section 8 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral. Nothing in
this Agreement shall be construed to limit the power of the Collateral Agent at
anytime and from time to time to communicate with any insurance company or any
agent in respect of the First QuickBird Launch Insurance or otherwise exercise
any rights or powers granted to it under the First QuickBird Launch Insurance.
Section 7. Performance by the Collateral Agent of the Company's
Obligations. If the Company fails to perform or comply with any of its
agreements contained herein, and the Collateral Agent shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of the Collateral Agent incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then in effect in
respect of the Secured Obligations, shall be payable by the Company to the
Collateral Agent on demand and shall constitute Secured Obligations secured
hereby.
Section 8. Remedies; Rights Upon an Event of Default; Allocation and
Payment of Proceeds Distributions; Special Provisions Regarding Return of
Premiums Under First QuickBird Launch Insurance. (a) If an Event of Default
shall occur and be continuing, the Collateral Agent may exercise, in addition to
all other rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the UCC and other
applicable law. Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Collateral Agent, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
the Company or any other Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived to the maximum extent permitted by
the UCC and other applicable law), may forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange or broker's board or any of the Collateral Agent's offices or
elsewhere at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Collateral Agent
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption,
which equity of redemption the Company hereby releases (subject as aforesaid).
The Company further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at the Company's premises or
elsewhere. The Collateral Agent shall apply or hold the net proceeds of any such
collection, recovery receipt, appropriation, realization or sale, as provided in
Section 8(d) hereof, the Company remaining liable for any deficiency remaining
unpaid after such application, and only after so paying over such net proceeds
to the holders of Secured Obligations to the extent provided in Section 8(d) and
after the payment by the Collateral Agent of any other amount required by any
provision of law, including Section 9-504(1)(c) of the UCC, need the Collateral
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<PAGE>
Agent account for the surplus, if any, to the Company. To the maximum extent
permitted by applicable law, the Company waives all claims, damages, and demands
against the Collateral Agent arising out of any repossession, retention or sale
of the Collateral. The Company agrees that the Collateral Agent need not give
more than ten days' notice (which notification shall be deemed given when
delivered on an overnight basis, postage prepaid, addressed to the Company at
its address referred to in Section 12) of the time and place of any public sale
or of the time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Company shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Collateral Agent is entitled, the
Company also being liable for the fees and disbursements of any attorneys
employed by the Collateral Agent to collect such deficiency.
(b) The Company also agrees to pay all costs of the Collateral Agent,
including, without limitation, fees and disbursements of Collateral Agent's
attorneys, incurred in connection with the enforcement of any of its rights and
remedies under this Agreement.
(c) The Company hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.
(d) Subject to clause (g) below, any cash held or received by the
Collateral Agent as Collateral and all cash proceeds received by the Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral (including, without limitation, any payment in
respect of the First QuickBird Launch Insurance) (collectively, "Proceeds
Distributions"), shall be applied, distributed or held by the Collateral Agent,
whether or not there then exists any Default or Event of Default, as follows:
First, Proceeds Distributions shall be applied to the payment of and
reserve for Collateral Agent Expenses;
Second, Proceeds Distributions shall be reserved for the benefit of
the appropriate Secured Party to be applied equally and ratably to make an
Offer to Purchase the Existing Notes Obligations and to the Permitted
Specified Indebtedness Obligations in accordance with Section 4.16 of the
Existing Indenture and the equivalent provision of the Permitted Specified
Indebtedness Agreements, in each case to the extent of the Existing Notes
Obligations Cap and the Permitted Specified Indebtedness Cap;
Finally, after reserving an amount sufficient for the payment and
reserve in full in cash of all of the Secured Obligations as set forth
above in paragraph "First" and "Second" of clause (d) of this Section 8,
any remaining Proceeds Distributions ("Excess Proceeds Distributions")
shall be distributed by the Collateral Agent to the Company, or its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same as a court of competent jurisdiction may direct.
(e) It is the intent, as a matter of timing and accommodation only,
that any Excess Proceeds Distributions shall be distributed to the Company or
otherwise in accordance
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<PAGE>
with paragraph "Finally" of clause (d) of Section 8 above substantially
concurrently with the setting aside or reserve of Proceeds Distribution
sufficient for the payment of the Secured Obligations as provided in paragraphs
"First" and "Second" of such clause (d); provided that nothing shall diminish
the prior and senior interest of the Secured Creditors in the Collateral and the
Proceeds Distributions to the extent of the Secured Obligations as contemplated
herein. In the event that the Secured Obligations are not or have not been paid
in full as contemplated by clause (d) of Section 8 above, notwithstanding the
distribution of Proceeds Distributions to the Company, the Company agrees to
promptly return or cause the return of such Proceeds Distributions to the
Collateral Agent to the extent necessary to so fully provide for the Secured
Obligations as contemplated herein.
(f) Any distribution and payment to the Secured Parties in respect of
the Existing Notes Obligations and the Permitted Specified Indebtedness
Obligations pursuant to paragraph "Second" of clause (d) of this Section 8 shall
be treated as a prepayment, without premium, of the accreted value of, and
accrued and unpaid interest, if any, on, the Existing Notes Obligations and the
Permitted Specified Indebtedness Obligations, as the case may be, to the extent
of such distribution and payment in respect thereof and the accreted value of
the Existing Notes Obligations and the Permitted Specified Indebtedness
Obligations, as applicable, and accrued and unpaid interest thereon, shall be
deemed reduced by the aggregate amount of any such distribution and payments.
(g) Subject to the following sentence, in the event that the
Collateral Agent receives any Proceeds Distributions that constitute the return
of insurance premiums ("Returned Insurance Premiums") under the First QuickBird
Launch Insurance in accordance with the terms thereof, the Collateral Agent
shall hold all Returned Insurance Premiums for a period of 180 days following
receipt before distributing such amounts in accordance with clause (d) of this
Section 8. In the event that the Company delivers an Officers' Certificate to
the Collateral Agent prior to the expiration of such 180 day period which (i)
states that such Returned Insurance Premiums shall be used directly for the
payment of premiums for First QuickBird Launch Insurance complying in all
respects with the provisions of Section 4.9(b) of the Existing Notes Indenture
and (ii) provides instructions for the payment of such premiums directly to the
insurer(s) or their agents, the Collateral Trustee shall promptly pay such
Returned Insurance Premiums in accordance with such payment instructions.
Section 9. Limitation on the Collateral Agent's Duty in Respect of
Collateral. The Collateral Agent shall not have any duty as to any Collateral in
its possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto, except that the Collateral
Agent shall use reasonable care with respect to the Collateral in its possession
or under its control. In accordance with Section 9-207 of the UCC, the
Collateral Agent shall be deemed to have used reasonable care if it observes
substantially the same standard of care with respect to the custody or
preservation of the Collateral as it observes with respect to similar assets
owned by the Collateral Agent. Without limiting the generality of the foregoing,
the Collateral Agent shall not be under any obligation to take any steps to
preserve rights in the Collateral against any other parties, to sell the same if
it threatens to decline in value, or to exercise any rights
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<PAGE>
represented thereby (including rights with respect to calls, conversions,
exchanges, maturities, or tenders); provided, however, that the Collateral Agent
may, at its option, do so, and any and all reasonable expenses incurred in
connection therewith shall be for the account of the Company. Upon written
request of the Company, the Collateral Agent shall account for any moneys
received by it in respect of any foreclosure on or disposition of the Collateral
owned by the Company.
Section 10. Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Company
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of this
Agreement, the Existing Notes, the Permitted Specified Indebtedness or any
other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Secured
Obligations, or any other amendment, waiver or modification of any term of,
or any consent to any departure from any requirement of, this Agreement,
the Existing Notes, the Permitted Specified Indebtedness or any other
agreement or instrument relating thereto;
(iii) any exchange, release or non-perfection of any security interest
or lien on any other collateral, or any release or amendment or waiver of
any term of any guaranty of, or security for, or consent to departure from
any requirement of any guaranty or other credit support of or for, all or
any of the Secured Obligations; or
(iv) all suretyship defenses and any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a borrower,
a pledgor or a surety.
Section 11. Choice of Law and Venue; Jury Trial Waiver. THE VALIDITY
OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE
RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF. WHEREVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE ONLY TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY AND WITHOUT INVALIDATING THE REMAINING
PROVISIONS OF THIS AGREEMENT; THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK OR, AT THE SOLE OPTION OF THE COLLATERAL AGENT, IN ANY OTHER COURT IN WHICH
COLLATERAL AGENT
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<PAGE>
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. THE COMPANY AND THE COLLATERAL
AGENT WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 11. TO THE
EXTENT PERMITTED BY LAW, THE COMPANY AND COLLATERAL AGENT EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND COLLATERAL
AGENT EACH REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 12. Notices. All notices or demands by any party hereto to
the other party and relating to this Agreement shall be sent by telecopy,
promptly confirmed in writing, or nationwide overnight delivery service (with
charges prepaid) and (i) if to the Collateral Agent, addressed to such address
set forth under the signature bloc for the Collateral Agent as set forth in this
Agreement, or at such other address as the Collateral Agent shall have specified
to the Company in writing and (ii) if to the Company, addressed to it at 1900
Pike Road, Longmont, Colorado, 80501, Telecopier No: 303-682-3848, or at such
other address as the Company shall have specified to the Collateral Agent in
writing; provided, however, that any such communication to the Company may also,
at the option of the Secured Party making the communication, be delivered by any
other means either to the Company at its address specified above or to the
Chairman of the Board, Chief Executive Officer, Chief Operating Officer,
President, Chief Financial Officer or Treasurer of the Company.
Section 13. Amendments and Waivers in Writing.
(a) No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Company therefrom shall in any event be
effective unless the same shall be in writing, and signed by the Collateral
Agent and the Company, and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose for which given.
(b) As provided in Section 5(f) of this Agreement, the Company shall
not permit any amendment, modification or termination of the First QuickBird
Launch Insurance without the written consent of the Collateral Agent. The
Collateral Agent shall consent to any proposed amendment or modification to the
First QuickBird Launch Insurance that constitutes a Permitted Insurance
Modification no later than ten days after delivery to the Collateral Agent of an
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<PAGE>
Officers' Certificate (i) stating that such amendment or modification
constitutes a Permitted Insurance Modification and (ii) stating that such
amendment or modification will not, directly or indirectly, have a material
adverse effect on the value of the Collateral, the rights and benefits of the
Company or the Collateral Agent under the First QuickBird Launch Insurance, the
Lien of the Collateral Agent on the Collateral or the rights and benefits of the
Collateral Agent hereunder. The Company will concurrently deliver a copy of such
Officers' Certificate to the Existing Notes Indenture Trustee and any Permitted
Specified Indebtedness Representative.
Section 14. No Waiver; Remedies.
(a) No failure on the part of the Collateral Agent or any Secured
Party to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative, may be exercised
singly or concurrently, and are not exclusive of any remedies provided by law or
any other agreement.
(b) Failure by the Collateral Agent or any other Secured Party at any
time or times hereafter to require strict performance by the Company or any
other Person of any of the provisions, warranties, terms or conditions contained
in this Agreement, the Existing Notes Indenture, any Permitted Specified
Indebtedness Agreements or any other agreements now or at any time or times
hereafter executed by the Company or any such other Person and delivered to the
Collateral Agent or any other Secured Party shall not waive, affect or diminish
any right of the Collateral Agent or any other Secured Party at any time or
times hereafter to demand strict performance thereof, and such right shall not
be deemed to have been modified or waived by any course of conduct or knowledge
of the Collateral Agent or any other Secured Party, or any agent, officer or
employee of such Secured Party.
Section 15. Counterparts; Facsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of a manually executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by facsimile also shall deliver a manually executed counterpart
of this Agreement but the failure to deliver a manually executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Agreement.
Section 16. Successors and Assigns. This Agreement and all obligations
of the Company hereunder shall be binding upon the legal representatives,
successors and assigns of the Company, and shall, together with the rights and
remedies of the Collateral Agent hereunder, inure to the benefit of the
Collateral Agent for the benefit of the Secured Parties, and their respective
successors and assigns, including any subsequent holder of any Secured
Obligations; provided, however, that the Company may not assign this Agreement
or any rights or duties hereunder without the Collateral Agent's prior written
consent.
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<PAGE>
Section 17. Compensation: Indemnification. The Company shall pay to
the Collateral Agent the following compensation: (i) $3,500, as an acceptance
fee, payable upon execution hereof and (ii) $5,000 as an annual fee, first
payable upon execution of this Agreement, then on each anniversary thereof. The
reasonable compensation of the Collateral Agent shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Collateral Agent upon request for all reasonable out-of-pocket expenses and
advances incurred or made by the Collateral Agent. Without limiting the
generality of the foregoing, the Company shall pay, indemnify, hold harmless and
defend the Collateral Agent, the Existing Notes Indenture Trustee and any
Specified Indebtedness Agreement Representative and their respective directors,
officers, agents and employees for, from and against any and all claims,
actions, costs, damages, obligations, liabilities and expenses, including
reasonable fees and disbursements of counsel and other advisors and consultants
(including any insurance advisors retained to review the First QuickBird Launch
Insurance, whether prior or subsequent to an Event of Default) retained by them,
arising from this Agreement, the Existing Notes Indenture, any Permitted
Specified Indebtedness Agreement and the Collateral Agent's acceptance of, or
performance under, this Agreement.
Section 18. Effectiveness. Except as provided in the following
sentence, this Agreement shall be binding and deemed effective when executed by
the Company and the Collateral Agent. The provisions of Section 4(d) shall
become effective upon the delivery to the Collateral Agent of the policy in
respect of the First QuickBird Launch Insurance.
Section 19. Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
Section 20. Integration. This Agreement reflects the entire
understanding of the parties with respect to the subject matter of the security
interest contemplated hereby for the benefit of the Secured Parties and this
Agreement shall not be contradicted or qualified by any other agreement, oral or
written, before the Issue Date.
Section 21. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, and the term "including" is not limiting. The
words "hereof," "herein," "hereby," "hereunder," and other similar terms refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
Section 22. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.
Section 23. Exculpation. No Person in or connected to the Secured
Parties shall have any obligation or liability whatsoever under any governing
agreement relating to any of the Collateral, or for the obligations of the
Company, by reason of or arising out of this Agreement, nor shall any Person in
or connected to the Secured Parties be required or obligated in any
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manner to perform or fulfill any of the obligations of the Company in connection
with the Collateral.
Section 24. Termination. This Agreement insofar as it relates to the
Company and the security interest created and continued hereby by the Company
shall terminate on the Termination Date, at which time (at the Company's cost
and expense, to be paid in advance on or prior to the Termination Date) the
Collateral Agent shall execute and deliver to the Company all UCC termination
statements and similar documents and take such further action that the Company
shall reasonably request to evidence or more fully effect such termination;
provided, however, that the provisions of Section 17 and any other requirement
for reimbursement of expenses and indemnification with respect to events
occurring on or before the Termination Date shall continue in full force and
effect following such Termination Date and the occurrence of the Termination
Date shall not discharge or novate any rights accruing to the Collateral Agent
or any other Secured Party prior thereto.
Section 25. Special Provisions Relating to Certain Preexisting
Collateral. Pursuant to that certain Collateral Pledge and Security Agreement
dated as of March 19, 1997 made by the Company and the Original Notes Indenture
Trustee (the "Original Pledge Agreement"), the Company pledged and granted to
the Original Notes Indenture Trustee for its benefit and for the ratable benefit
of the holders of the Original Notes a first priority security interest in and
to certain collateral described therein ("Original Collateral") to secure
certain "Obligations" (as defined therein) in respect of the Original Notes. The
Company hereby reaffirms the pledge and grant in the Original Pledge Agreement
and acknowledges and agrees that notwithstanding any contrary provision in any
document, instrument or otherwise, the Original Pledge Agreement is hereby
amended so that the "Obligations" secured thereby expressly include the Existing
Notes Obligations and such "Obligations" (as so amended) shall be entitled to
all the benefits and protections of the Original Pledge Agreement and the UCC.
The Company also acknowledges and agrees that the Original Notes Indenture
Trustee shall not be required to effectuate the release of all remaining
Original Collateral, as contemplated in connection with the Recapitalization
Transactions, until and unless, prior to or concurrently with such time, (a) the
Company (i) delivers to the Collateral Agent the First QuickBird Launch
Insurance meeting the requirements of this Agreement and the Existing Notes
Indenture and (ii) performs all other acts necessary or desirable for the
perfection of the assignment and grant of a security interest in the Collateral
contemplated by this Agreement and (b) the premium for such insurance in the
amount of at least the Existing Notes Obligations Cap has been fully paid for,
or the Company has purchased United States Treasuries in an amount sufficient to
pay the unpaid premium and pledged such securities to the Collateral Agent
pursuant to the Pledge Agreement dated as of the date hereof among the Company,
the Collateral Agent and The Bank of New York, as securities intermediary.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Collateral Agent have duly
executed and delivered this Agreement on the date first above written.
THE COMPANY
EARTHWATCH INCORPORATED,
a Delaware corporation
/s/ Herbert F. Satterlee III
By_____________________________
Name: HERBERT F. SATTERLEE III
Title: President & CEO
THE BANK OF NEW YORK, as Collateral
Agent
By_____________________________
Name:
Title:
Address for notice:
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
IN WITNESS WHEREOF, the Company and the Collateral Agent have
duly executed and delivered this Agreement on the date first above written.
THE COMPANY
EARTHWATCH INCORPORATED,
a Delaware corporation
By_____________________________
Name:
Title:
THE BANK OF NEW YORK, as Collateral
Agent
/s/ Walter N. Gitlin
By_____________________________
Name: WALTER N. GITLIN
Title: Vice President
Address for notice:
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
<PAGE>
SCHEDULE I
LOCATION OF RECORDS AND CERTAIN COLLATERAL
Tax Identification Number: 31-1420852
Place of
Business* and
Location of Records
EarthWatch Incorporated
1900 Pike Road
Longmont, CO 80501
The records in respect of the Collateral will be maintained in the safe
within the Accounting Department at the above location.
-------------------
* Indicates chief executive officer if there is more than one place of business.
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SCHEDULE II
Amendments or modifications to the following definitions in the "Definitions"
section of the First QuickBird Launch Insurance shall be Permitted Insurance
Modifications.
Section Defined Term
------- ------------
2. Intentional Ignition
3. Launch Services Agreement
4. Launch Services Contractor
5. Launch Vehicle
6. Satellite
7. Satellite Performance Specifications
8. Terminated Ignition
9. Underwriting Information
10. Partial Loss
11. Partial Loss Amount
12. Partial Loss Fraction
13. Projected Commercial Value
14. Achieved Commercial Value
15. Design Commercial Value
16. Design Lifetime
17. Remaining Lifetime
18. Bus Throughput
19. Instrument Output
20. Normalized Size
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DRAFT
EXHIBIT A
EARTHWATCH INCORPORATED
QUICKBIRD 1 SATELLITE LAUNCH AND IN-ORBIT OPERATIONS INSURANCE
DECLARATIONS
1. Named Insured
EarthWatch Incorporated
2. Named Insured's Address
1900 Pike Road
Longmont, Colorado 80501-6700
United States of America
3. Additional Insured
The Bank of New York in its capacity as Collateral Agent.
4. Additional Insured's Address
Attention: Corporate Trust Administration
101 Barclay Street, Floor 21 West
New York, New York 10286
USA
5. Losses Payable
Losses under this Policy shall be adjusted with the Named Insured and shall
be payable to the Additional Insured, or to its order, as the sole loss
payee. The Insurers consent, agree and acknowledge that the Additional
Insured has been granted a security interest in all of the Named Insured's
right, title and interest under this Policy as collateral security for the
payment and performance of the Named Insured's obligations to the Secured
Parties.
6. Policy Period
Thirty-six (36) months, commencing at 12:01 am local time at the Named
Insured's Address on March 15, 1999.
7. Amount of Insurance
The Amount of Insurance for the Satellite declared hereon is
US$230,000,000. The minimum Amount of Insurance for the Satellite shall be
US$200,000,000.
EarthWatch, Incorporated - QuickBird Launch and In-Orbit Operations Insurance
Policy EarthWatch Confidential - Draft - 25/th/ June 1999 Page 1
<PAGE>
8. Attachment of Risk
Risk of loss under this Policy shall attach at Intentional Ignition,
provided Intentional Ignition occurs during the Policy Period.
9. Termination of Risk
Risk of loss under this Policy shall terminate for the Satellite upon the
earliest of the following:
a. upon Terminated Ignition, subject to Condition 23. (Reinstatement of
Coverage and Reattachment of Risk following Terminated Ignition); or
b. at 12:01 AM local time at the Named Insured's address on the day which
is twenty-four (24) months following Attachment of Risk; or
c. when the Satellite is agreed to be a Total Loss under this Policy; or
d. when agreed claims under this Policy for the Satellite equal the
Amount of Insurance for the Satellite; or
e. at the expiration of the Policy Period.
In the event a launch occurs within the Policy Period but insufficient time
remains for b. above to occur before the Policy Period expires, the
Insurers agree to extend the Policy Period to expire upon the earliest of
b., c., or d. above.
10. Premium
Premium for the Satellite shall be calculated by multiplying the declared
Amount of Insurance by the premium rate of thirteen and one-tenth percent
(13.1%).
The premium is deemed fully earned at Attachment of Risk, subject to
Condition 23. (Reinstatement of Coverage and Reattachment of Risk following
Terminated Ignition).
Premium for the Satellite shall be payable as follows:
a. A deposit premium of five percent (5%) of the premium due for the
Satellite shall be payable no later than 1/st/ June 1999,
b. Seventy-five percent (75%) of the premium due for the Satellite shall
be payable no later than thirty (30) days before Attachment of Risk is
expected to occur.
<PAGE>
c. Ten percent (10%) of the premium due for the Satellite shall be
payable one hundred twenty (120) days after Attachment of Risk occurs,
and
d. Ten percent (10%) of the premium due for the Satellite shall be
payable three hundred sixty-five (365) days after Attachment of Risk
occurs.
In the event of a claim arising hereunder which exceeds the premium paid,
the balance of the Premium shall become due and payable forthwith.
Should the launch of the Satellite be canceled or delayed beyond the Policy
Period before its Attachment of Risk, the Insurers recognize that risk will
not attach under this Policy. In this case, the Insurers agree to return to
the Additional Insured any premium paid, without interest, within thirty
(30) days of notification from the Named Insured or Additional Insured that
the launch has been canceled or will be delayed beyond the Policy Period.
Upon return of said premium, this Policy shall be deemed null and void.
If premium has been paid to the Insurers, and the Satellite's scheduled
launch date is delayed more than three (3) calendar months from its last
advised scheduled launch date, at the Named Insured's request, the Insurers
will return such premium without interest. The return premium will be paid
by the Insurers to the Additional Insured within thirty (30) days from the
date they receive the Insured's or Additional Insured's written request for
such return.
11. Launch Schedule
The preliminary Launch Schedule is as follows:
---------------------------------------------------------------------
Satellite Launch Vehicle Scheduled Launch Date
---------------------------------------------------------------------
QuickBird-1 Cosmos Q4 1999
---------------------------------------------------------------------
12. Franchise
No claim will be payable under this policy unless the amount of any and all
agreed claims is greater than US$34,500,000. In the event the amount of any
and all agreed claims is greater than US$34,500,000 the full amount of the
agreed claim(s) will be payable in accordance with Condition 5 of this
policy.
<PAGE>
INSURING AGREEMENT
In consideration of the payment of the Premium, in reliance upon the statements
in the Declarations and in the Underwriting Information provided to the
Insurers, and subject to all of the terms, conditions, limitations and
exclusions of this Policy, the Insurers agree with the Insured as follows for
the Satellite:
a. In the event of a Terminated Ignition that results in damage to the
Satellite, to indemnify the Named Insured up to the applicable Amount
of Insurance for all necessary costs resulting from the Terminated
Ignition which are directly incurred by the Named Insured in de-mating
the Satellite from the Launch Vehicle, Satellite defueling operations,
disassembling, testing, inspecting, transporting, repairing,
refurbishing, storing, assembling and integrating, retesting and
restoring the Satellite to flightworthy condition, such that a
subsequent Intentional Ignition can occur; and/or
b. In the event of a Partial Loss due to an occurrence between Attachment
of Risk and Termination of Risk, to indemnify the Named Insured for
the applicable Partial Loss Amount under provision of Definition 10.a.
(Partial Loss) or to indemnify the Insured for any loss or damage
under the provision of Definition 10.b. (Partial Loss); and/or
c. In the event of a Total Loss due to an occurrence between Attachment
of Risk and Termination of Risk, to pay the Named Insured the Amount
of Insurance stated in Declaration 7 (Amount of Insurance).
Except as provided for Condition 23. (Reinstatement of Coverage and Reattachment
of Risk following Terminated Ignition) and in Condition 21 (Corrective Measures)
of this Policy, in no event shall the total amount paid for claims under this
Policy exceed the Amount of Insurance as stated in Declaration 7 (Amount of
Insurance) of this Policy.
A loss shall not be covered under this Policy unless the occurrence giving rise
to such loss has manifested itself by telemetry or payload performance data or
lack thereof, or any other ground measurement, recorded between Attachment of
Risk and Termination of Risk and the Insured has filed a proof of loss with the
Insurers in respect of such loss in accordance with Condition 3 (Insured's
Duties) of this Policy.
In the event of a loss under this Policy where a Satellite can be operated in
any one of several configurations, the configuration to be used in calculating
the Projected Commercial Value shall be that which minimizes the claim. The
Named Insured may operate the Satellite, after loss, in a different
configuration than that upon which a claim was adjusted.
<PAGE>
In the event of a Partial Loss or Total Loss, the Insured shall, using
reasonable business judgment, demonstrate that the Satellite cannot be used for
its intended commercial purposes.
In the event the Insured has previously been indemnified for a loss on a
Satellite under this Policy, the amount of indemnity for a subsequent loss on
that Satellite shall be adjusted to eliminate any duplicative recovery for loss.
<PAGE>
DEFINITIONS
1. Contract
"Contract" means, as applicable:
a. the Contract for QuickBird Spacecraft number SE.1M.PRJ.0004.A, dated
June 9, 1998 between Ball Aerospace & Technologies Corp. and the Named
Insured including Amendments and Exhibits attached thereto (these need
to be specified);
b. the Agreement for QuickBird Sensor Subsystem number SE.1M.SSS.002.A
dated October 14, 1996 between Eastman Kodak Company and the Named
Insured including Attachments and Amendments attached thereto (these
need to be specified;
c. the Agreement for EarthWatch QuickBird Solar Array Assembly number
SE.1M.EPS.004 dated August 27, 1997 between Fokker Space B.V. and the
Named Insured including Attachments and Amendments attached thereto
(these need to be specified),
and including any subsequent change, revision, amendment, waiver,
modification or other executed agreement the Insurers have accepted in
writing in accordance with Condition 18 (Material Changes), which
acceptance shall not be unreasonably withheld.
2. Intentional Ignition
"Intentional Ignition" means the issuance of the launch command from the
launch sequencer.
3. Launch
Following Intentional Ignition the flow of fuel or oxidizer into any of the
first stage engines of the Launch Vehicle.
4. Launch Services Agreement
"Launch Services Agreement" means the launch services agreement dated July
1, 1998 between the Named Insured and the Launch Services Contractor, and
including any subsequent change, revision, amendment, waiver, modification
or other executed agreement the Insurers have accepted in writing in
accordance with Condition 18 (Material Changes), which acceptance shall not
be unreasonably withheld.
5. Launch Services Contractor
<PAGE>
"Launch Services Contractor" means United Start Corporation.
6. Launch Vehicle
"Launch Vehicle" means the Cosmos launch vehicle designated by the Launch
Services Contractor and to be used for the launch of the Satellite in
accordance with the Launch Services Agreement.
7. Satellite
"Satellite" means the QuickBird-1 spacecraft manufactured and to be
launched pursuant to the Contract and Launch Services Agreement.
8. Satellite Performance Specifications
"Satellite Performance Specifications", also referred to as the "SPS",
means the collection of documents which represent the flowdown of
requirements to various subsystems from a single, top-level, set of
specifications, incorporated in the Contract.
9. Terminated Ignition
"Terminated Ignition" shall mean that, following Intentional Ignition,
Launch does not occur and the launch pad is declared by the Launch Services
Contractor to have been returned to the level of safety equivalent to that
which existed immediately prior to Attachment of Risk.
10. Underwriting Information
"Underwriting Information" means the documentation provided to the Insurers
by the Insured with respect to the subject matter of this Policy.
11. Partial Loss
"Partial Loss" means:
a. the Projected Commercial Value is less than the Design Commercial
Value but where the Satellite is not a Total Loss; or
b. such other loss not contemplated by paragraph a. of this Definition,
in which event the Insured shall clearly establish the alternative
basis for loss of Design Commercial Value and in which case the
Insured, using reasonable judgment and after examining all the
technical alternatives for correcting the failure, demonstrates that
the Satellite cannot be used for its intended commercial purposes.
<PAGE>
12. Partial Loss Amount
"Partial Loss Amount" means an amount calculated as follows:
Partial Loss Amount = (Amount of Insurance) * (PLF)
Where
PLF means Partial Loss Fraction
13. Partial Loss Fraction
"Partial Loss Fraction" means the value determined by the formula:
PLF = 1 - (PCV/DCV)
Where
PLF means Partial Loss Fraction
PCV means Projected Commercial Value
DCV means Design Commercial Value
14. Projected Commercial Value
"Projected Commercial Value" means the commercial value over the 5-year
mission life predicted at some intermediate point during the Satellite's
lifetime. It is the sum of the Achieved Commercial Value at that time plus
the remaining value extrapolated using the Satellite's performance values
at that time. It is determined according to the following formula:
PCV = ACV + (INST\\OUTPUT\\ X BUS\\THROUGHPUT\\ X RL\\ORBITS\\)
where
PCV means Projected Commercial Value
ACV means Achieved Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT \\ means Bus Throughput
RL\\ORBITS\\ means Remaining Lifetime
<PAGE>
15. Achieved Commercial Value
"Achieved Commercial Value" means the commercial value of the spacecraft
calculated at some intermediate point during the spacecraft's lifetime and
is determined according the formula:
n=actual
ACV = E INST \\OUTPUT\\ (n) x BUS \\THROUGHPUT\\ (n)
n=1
Where
ACV means Achieved Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT \\ means Bus Throughput
(n) means the number of each orbit starting with n=1 and incrementing by 1
for each additional orbit .
(n actual) means the actual number of orbits at the date ACV is calculated.
16. Design Commercial Value
"Design Commercial Value" means the full value of the Satellite in terms of
its imaging potential assuming it performs according to the SPS over its 5-
year mission life and determined according to the formula:
DCV = INST\\OUTPUT\\ X BUS\\THROUGHPUT\\ X DL\\ORBITS\\
Where
DCV means Design Commercial Value
INST\\OUTPUT\\ means Instrument Output
BUS\\THROUGHPUT\\ means Bus Throughput
DL\\ORBITS\\ means Design Lifetime
17. Design Lifetime
"Design Lifetime" means the amount of time expressed in orbits that the
Satellite is expected to successfully operate on its intended orbit and is
defined as a number between zero (0) and 27,200 and which shall be advised
to Insurers no later than thirty (30) days before Launch.
18. Remaining Lifetime
"Remaining Lifetime" means the amount of time expressed in orbits that the
Satellite is expected to successfully operate on its intended orbit from a
specified moment in time and
<PAGE>
is defined as a number between zero (0) and 27,200, or such number as was
advised to Insurers in Definition 16. Design Lifetime.
19. Bus Throughput
"Bus Throughput" means a normalized measure (from 0 to 1) of the
Satellite's ability to support the acquisition, on-board storage, and
transmission of commercially usable imagery and is determined by the
following formula:
BUS\\THROUGHPUT\\ = /N/\\events\\
-------------
19
where N\\events\\ is the number of imaging events the spacecraft is able to
complete successfully during the 23.5 minute imaging period of the design
imaging sequence of the Satellite.
20. Instrument Output
"Instrument Output" means the commercially useful image width that the
instrument can produce. The panchromatic band is worth four times the
collective multispectral bands, so that INST \\OUTPUT\\is determined by
the following formula:
INST \\OUTPUT \\= 0.8 x NS\\pan\\ + 0.05 x NS\\blue\\ +0.05 x NS\\green\\
+0.05 x NS\\red\\ +0.05 x NS\\NIR\\
Where
NS means Normalized Size
NS\\pan\\ means Normalized Size of the panchromatic band
NS\\blue\\, NS\\green\\, NS\\red\\ and NS\\NIR\\ mean Normalized Size of
the multispectral bands
21. Normalized Size
Normalized Size means the size of an image relative to its design width. It
is measured in each individual band (pan, blue, green, red, or NIR), and is
given by the following formula:
<TABLE>
<S> <C>
NS\\xxx\\=Largest number of contiguous taps in band xxx that meet images quality reqts.
-----------------------------------------------------------------------------
Total number of taps in band xxx
</TABLE>
An NS value of 1 represents a full-width image, whereas an NS value of 0.5
represents a half-width image.
<PAGE>
The normalized image size NS counts the number of contiguous taps which
meet minimum image quality requirements. A tap will meet the minimum image
quality requirements if the following criteria for M\\band\\ and N\\ID\\
are met:
M\\band\\ more than 3, where M\\band\\ = A x T x MTF\\NYQ\\
------------------
B x T + n/2/\\RMS\\
In this equation:
T = the ratio of the average response of the band for a
given Earth radiance to the pre-launch value;
MTF\\Nyq\\ = the band MTF at the so-called Nyquist frequency (a
spatial frequency equal to 1/2 times the reciprocal of
the detector spacing) for that band;
n\\RMS\\ = the number of root-mean-square (RMS) counts of temporal
noise from the sensor in that band with no significant
illumination;
A, B = constant values specific to each band, given in Table 1.
---------------------------------------------------------
Pan Blue Green Red NIR
----------=========================================================
A 129 42.1 75.6 71.6 76.1
-------------------------------------------------------------------
B 3.90 1.64 2.17 1.49 1.23
-------------------------------------------------------------------
Table 1. Parameters for image quality equation.
M\\band\\ is a close approximation to the low-light SNR x MTF specification
given in the Spacecraft Performance Specification.
and
N\\ID\\, where N\\ID\\ represents the number of inoperable detectors
22. Total Loss
"Total Loss" means:
a. the complete loss, destruction or failure of the Satellite; or
b. a loss or failure such that the Projected Commercial Value is reduced
to be less than thirty-four percent (34%) of the Design Commercial
Value.
<PAGE>
23. Collateral Agent
"Collateral Agent" means The Bank of New York, a New York banking
corporation, having its principal corporate trust office at 101 Barclay
Street, Floor 21 West, New York, New York 10286 in its capacity as
collateral agent for itself and for the ratable benefit of the other
Secured Parties, and its successors and assigns.
24. Secured Parties.
"Secured Parties" means Collateral Agent, the Existing Notes Indenture
Trustee, any Permitted Specified Indebtedness Representative and any
holders or other obligees from time to time of the Existing Notes
Obligations or any Permitted Specified Indebtedness Obligations, all as
defined in the Collateral Pledge and Security Agreement between the Insured
and The Bank of New York dated as of April 7, 1999 as from time to time
amended or otherwise modified.
24. Insured
Insured means the Named Insured and Additional Insured named herein.
<PAGE>
EXCLUSIONS
This Policy does not apply to loss, damage or failure caused by or resulting
from:
1. War, hostile or warlike action in time of peace or war, including action in
hindering, combating or defending against an actual, impending or expected
attack by:
a. any government or sovereign power (de jure or de facto);
b. any authority maintaining or using a military, naval or air force;
c. any military, naval or air force; or
d. any agent of such government, power, authority or force.
2. Any anti-satellite device, or device employing atomic or nuclear fission
and/or fusion, or device employing laser or directed energy beams.
3. Insurrection, strikes, riots, civil commotion, rebellion, revolution, civil
war, usurpation or action taken by a government or governmental authority
in hindering, combating or defending against such an occurrence, whether
there be a declaration of war or not.
4. Confiscation by order of any government or governmental authority or agent
(whether secret or otherwise) or public authority.
5. Nuclear reaction, nuclear radiation or radioactive contamination of any
nature, whether such loss or damage be direct or indirect, except for
radiation naturally occurring in the space environment.
6. Electromagnetic or radio frequency interference, except for physical damage
to the Satellite directly resulting from such interference.
7. Willful or intentional acts of the Insured and/or its contractors or
subcontractors designed to cause loss or failure of a Satellite and/or
Launch Vehicle except for the acts of the range safety officer acting
within the limit of his authority; however, this exclusion shall not apply
to actions of any employees, contractors or subcontractors of the Named
Insured while acting outside of their authorized responsibilities, and
without the knowledge of the Named Insured.
8. Third party liability.
<PAGE>
CONDITIONS
1. Declarations
By the acceptance of this Policy, the Insured agrees that the statements in
the Declarations and the Underwriting Information are its agreements and
representations, and are, to the best of its knowledge and belief, true,
and that this Policy is issued in reliance upon such agreements and the
truth of such representations. This Policy embodies all agreements existing
between the Insured and the Insurers.
2. Due Diligence
The Insured shall use due diligence and do and concur in doing all things
practicable to avoid or diminish any loss under this Policy and shall act
at all times as if uninsured.
3. Insured's Duties
In the event of an occurrence likely to result in a claim with respect to
the Satellite under this Policy, the Insured shall:
a. file a notice of occurrence with the Insurers. The notice of
occurrence shall:
i. be in writing and contain sufficient particulars to identify the
Insured and all reasonably obtainable information describing the
circumstances of the occurrence as appropriate; and
ii. be filed with the Insurers as soon as possible but not later than
the earlier of:
A. thirty (30) days after any officer and/or the program
manager of the Insured becomes aware of the occurrence; or
B. thirty (30) days after the applicable Termination of Risk;
and
b. if a claim is to be made with respect to the Satellite, file a proof
of loss with the Insurers as soon as practicable but in any event no
later than one hundred and eighty (180) days after filing the
applicable notice of occurrence with the Insurers.
The proof of loss shall:
i. state the date, time, nature and probable cause of each occurrence
that results in a claim;
ii. state the basis for the amount of the claim;
iii. establish the occurrence by telemetry data or lack thereof, or any
other ground measurement, recorded between Attachment of Risk and
Termination of Risk;
iv. be signed and sworn to by an officer of the Insured;
<PAGE>
v. be notarized as to the signatory of the proof of loss; and
vi. include such other information as the Insurers may reasonably require
or request, in accordance with Condition 4 (Access to Information).
The Insurers shall accept, reject, or request further clarification
regarding a filed proof of loss within thirty (30) days of its receipt.
4. Access To Information
The Insured shall respond to all specific reasonable requests from the
Insurers regarding the launch, design, test, manufacturing, quality control
and performance information available to the Insured relating to the
subject matter of this Policy. Information provided in accordance with this
Condition and relating solely to technical aspects of the Satellite shall
not be provided to the Additional Insured in accordance with Condition 24,
unless the Additional Insured specifically requests such information. In
the event that the Additional Insured requests such information, the
Insured shall have no obligation to provide such should the provision of
such be contrary to U.S. law and regulations.
In the event that a notice of occurrence is filed under Condition 3
(Insured's Duties), the Insured shall do the following:
a. conduct review sessions with the Insurers to discuss any issues
relating to the occurrence;
b. be diligent in securing the Insurers' access to all information used
in or resulting from any investigation or review of the causes or
effects of the loss or failure; and
c. make available for inspection and copying all information necessary to
establish the loss and verify the accounting methods employed to
compute any return or recovery claim payment.
To the extent that any information requested by the Insurers in accordance
with this Condition is subject to proprietary information non-disclosure
agreements or, disclosure restrictions under any export license issued by
the United States government in connection with the Contract or any
contract between the Named Insured and its contractors or sub-contractors,
the Insured shall use its best efforts to obtain such information.
5. Claims Payment
Payment for a loss shall be made within sixty (60) days after the Insurers
agree to the applicable Proof of Loss.
The Amount of Insurance for the Satellite will be reduced by the amount of
any claim payment previously made to the Insured in respect of such
Satellite, from the date of the occurrence giving rise to the claim.
<PAGE>
6. Net Present Value
All losses which relate to the future rather than to the present operation
of the Satellite will be calculated by discounting from the day the proof
of loss is agreed to the first day each loss is expected to materialize.
Discounting will be performed to the time of agreement of the proof of loss
discounting the amount of the agreed claim. The interest rate to be used
for discounting shall be the yield on U.S. Treasury bills of one (1) year
maturity as of the date of the agreement of the proof of loss.
7. Arbitration
Any dispute arising from this Policy, shall be referred by the Insured
and/or the Insurers to be finally settled by arbitration pursuant to the
Rules of the American Arbitration Association by a majority decision of
three (3) arbitrators appointed in accordance with the said Rules of
Arbitration.
Each party to the dispute shall bear the expense of preparing and
presenting its own case, regardless of the outcome of the arbitration. The
expense of the arbitration shall be equally divided between such parties.
The place of arbitration shall be Denver, Colorado, United States of
America and the language of the arbitration shall be English
8. Abandonment
In the event of loss, there shall be no abandonment of any property to the
Insurers unless the Insurers give their written consent.
9. Subrogation
To the extent of any claim payment under this Policy, the Insurers shall be
subrogated to all of the Insured's rights of recovery thereof against any
person or organization. The Insured shall do nothing to prejudice such
rights and shall execute and deliver instruments and papers and do whatever
else is necessary to secure such rights. The Insured shall cooperate with
the Insurers and, upon the Insurers' request, and at the Insurers' expense,
shall assist in effecting settlement, securing evidence, and in the conduct
of suits.
<PAGE>
The Insurers agree not to exercise rights of subrogation against any
subsidiary or affiliated company of the Insured or any company managed by
the Insured; and the Insurers agree not to exercise rights of subrogation,
to the extent the Insured has waived rights in written contracts prior to
Attachment of Risk, against United Start Corporation, Lockheed Martin
Astronautics, Ball Aerospace & Technologies Corp., Kodak, Fokker or any of
their respective governments, contractors or sub-contractors.
After inception of the Policy, the Insured shall not agree to any further
waiver of rights of recovery under the terms of the Contract or under the
terms of any future contracts relating to the subject matter of this Policy
without the prior written consent of the Insurers.
10. Changes
Notice to or knowledge possessed by any agent or other person shall not
effect a waiver or change in any part of this Policy nor estop the Insurers
nor the Insured from asserting any right under the terms of this Policy.
The terms of this Policy may be waived or changed only upon mutual
agreement between the Insured and the Insurers and evidenced by an
endorsement issued by the Insurers to form a part of this Policy.
11. Assignment
The Insurers shall not be bound by any assignment of interest under this
Policy unless the Insured obtains the written agreement of the Insurers
before assignment.
Notwithstanding the foregoing, Insurers acknowledge that the Insured,
pursuant to the Collateral Pledge Agreement by and among The Bank of New
York and EarthWatch Incorporated, shall assign all of Named Insured's
rights in and to the proceeds under this Policy, effective as of the time
this Policy takes effect; and Insurers consent to and waive notice of such
assignment.
12. Misrepresentation and Fraud
This Policy shall be null and void if the Insured knowingly conceals or
misrepresents, in writing or otherwise, any material fact or circumstance
concerning the insurance provided under this Policy or the subject matter
hereof.
This Policy shall also be null and void if the Insured defrauds or attempts
to defraud the Insurers whether before or after loss.
In the event of this Policy being declared null and void by the Insurers in
accordance with their rights pursuant to this Condition, the Insurers shall
notify the Insured in writing and this Policy will become null and void ab
initio.
<PAGE>
13. Cancellation
This Policy may be canceled only by mutual agreement in writing between the
Insured and the Insurers, or unilaterally by the Insurers for non-payment
of Premium.
In the event of non-payment of Premium, the Insurers shall provide written
notice to the Insured of such cancellation stating a date when, not less
that fifteen (15) days thereafter, such cancellation shall be effective. In
the event the due Premium is paid in full within the notice period, the
applicable notice of cancellation by the Insurers shall cease to have any
force or effect. In the event of non-payment of Premium, the Additional
Insured shall have the right, but not the obligation, to the pay the
Premium on behalf of the Named Insured.
14. Return of Claim Payment
Where:
a. claim payment has been made under this Policy; and
b. the Insurers and the Insured subsequently agree in writing to reduce
or eliminate the claim because of events occurring after payment of
the claim by the Insurers,
the Additional Insured shall return to the Insurers, within thirty (30)
days of such an agreement, all amounts, without interest, by which the
claim has been reduced or eliminated.
Reasonable sums expended by the Insured to reduce or eliminate the loss
shall be deducted from any claim payments returnable to the Insurers
pursuant to this Condition. The applicable Amount of Insurance will be
reinstated to the extent of the agreed amount by which the claim has been
reduced or eliminated from the date of the occurrence giving rise to such
claim.
15. Salvage
In the event a claim for loss is paid hereunder, the Insurers shall have,
at their option, the right to receive the maximum salvage, if any, from or
title to the Satellite in the event the Insurers have paid a claim for a
Total Loss, or salvage from the portion of the Projected Commercial Value
for which a claim for Partial Loss has been paid.
With the written consent of Insurers the Insured may continue to operate
that portion of capacity of the Satellite for which a claim for a Partial
Loss is paid hereunder. In such event, the Insurers shall receive ten
percent (10%) of the gross operating revenue from that portion of capacity
of the Satellite for which a claim has been paid hereunder or fair market
value of equivalent goods or services derived with respect to such capacity
after the said
<PAGE>
loss is paid, up to the amount of the payments made by the Insurers in
respect of such capacity of the Satellite under this Policy.
In the event the Insured with the consent of the Insurers sells, leases or
otherwise disposes of the Satellite for which a claim for Total Loss is
paid hereunder or a portion of Satellite life or capacity for which a claim
for Partial Loss is paid hereunder, the Insurers shall receive ninety
percent (90%) of the proceeds of the sale, up to the amount of payment made
by the Insurers for the Satellite or portion of the Satellite life or
capacity for which a claim was paid under this Policy. The Insured shall be
permitted to deduct from any such sale proceeds any reasonable costs
incurred by the Insured with the consent of the Insurers directly related
to such sale.
The Insurers acknowledge and agree that in the event the Insurers have paid
a claim for a Total Loss and the Satellite is offered for sale pursuant to
the exercise of the Insurers' rights under this Condition, they shall meet
with the Insured for discussions about the business and financial issues
associated with the offer for sale, including the following conditions:
a. for a period of six (6) months from the date when the Insurers notify
the Insured in writing they plan to sell the Satellite, the Insurers
shall offer the Insured the first right of refusal for the purchase of
the Satellite at identical terms of any offer to purchase the
Satellite received from a bona fide purchaser;
b. the exercise of such rights by the Insurers will be limited by the
rights of the Named Insured pursuant to the Contract; and
c. the Insured shall, subject to the Contract, provide to the Insurers
such documents as are reasonably necessary to operate the Satellite
and/or sell the Satellite to a third party provided that the Insurers
and/or third party purchaser of the Satellite execute non-disclosure
agreements required by the owners of such documents and comply with
any export license issued by the U. S. Government relating to the
Satellite.
16. Use of the Satellite After Loss
The Insured may use the Satellite and/or that portion for which a claim for
Total Loss or Partial Loss is paid hereunder for scientific and/or
incidental communications purposes that do not produce operating revenue or
income of any nature. Such use shall:
a. be subject to the prior written agreement of the Insurers; and
b. not reduce claim payments made by the Insurers or affect salvage paid
under this Policy.
<PAGE>
17. Titles
The titles of the various sections and paragraphs of this Policy, and of
any endorsements or supplemental agreements attached to or incorporated
into this Policy, are inserted solely for convenience and shall not be
deemed to limit or otherwise affect the terms contained in the paragraphs
to which they relate.
18. Material Changes
If:
a. the Named Insured shall waive or modify any of the material technical
specifications or requirements of the Contract(s), the Satellite
Performance Specifications and\or Launch Service Contract(s); or
b. the Insured becomes aware of any material change in any of the
Underwriting Information previously provided to the Insurers; or
c. the Named Insured shall change, revise or amend the Contract(s),
the Insured shall promptly notify Insurers of any change, waiver,
modification, revision and\or amendment. The Insurers shall have the right
to review all of the terms and conditions of this Policy with the Insured
and to the extent any change, waiver, modification, revision and\or
amendment results in a material increase in risk of loss or material change
in insurable interest under this Policy, to re-negotiate the affected terms
under this Policy.
In the event any change, waiver, modification, revision and\or amendment
results in a material increase in risk of loss or material change in
insurable interest under this Policy, Insurers shall promptly notify the
Insured to this effect.
If the Insured does not so notify the Insurers of any change, waiver,
modification, revision or amendment as required above, any loss resulting
directly from any change, waiver, modification, revision and\or amendment
shall not be covered by this Policy.
Total Loss or Partial Loss or change in the operating status of the
Satellite which occurs after Attachment of Risk will not be considered a
material change in information for the Satellite.
19. Governing Law
This Policy shall be governed by and construed in accordance with the laws
and regulations of the State of Colorado, United States of America and
without regard to its choice of law provisions.
<PAGE>
20. Other Insurance
With prior approval of the Insurers and the Additional Insured, the Insured
may secure other in-orbit operations insurance for the Satellite provided
that, in the event the Insured recovers on claims in respect of the
Satellite under one or more policies for which the Insured also recovers
under this Policy, the Insured's recovery under this Policy shall be
reduced by a proportional amount reflecting such other recoveries.
21. Corrective Measures
If, in the opinion of the Insurers, a loss covered by this Policy can be
reduced or eliminated by changes to ground installations, computer software
or other measures of a similar nature to be undertaken at the Insurers'
sole cost and expense, the Insured agrees to discuss the feasibility of
such corrective measures with the Insurers.
In the event the Insured agrees to take the corrective measures as stated
above but such measures do not achieve satisfactory correction of or
compensation for the loss, the Insurers will bear the necessarily incurred
cost and expense in addition to the applicable Amount of Insurance or, in
the event of Partial Loss, in addition to the amount of claim payable.
22. Inspection And Audit
In the event that the Insured makes a claim under this Policy, subject to
Condition 4 (Access to Information), the Insurers, through their authorized
representative, shall be privileged to inspect the books and records of the
Insured pertaining to the subject matter of this insurance during the
Policy Period or within a period of up to three years after a claim is made
under this Policy.
23. Reinstatement of Coverage and Reattachment of Risk following Terminated
Ignition
a. In the event of a Terminated Ignition such that a subsequent
Intentional Ignition can occur for the affected Satellite during the
Policy Period and there is no damage to either the Launch Vehicle or
the Satellite, the Insurers agree to reattach coverage under this
Policy if the Named Insured provides the Insurers as its
certification, certification it has received from the launch vehicle
services contractor and the Satellite manufacturer that, to the best
of the launch vehicle services contractor's and Satellite
manufacturer's knowledge and belief, no damage to the Launch Vehicle
or the Satellite, respectively, has occurred and the Satellite and
Launch Vehicle are in flightworthy condition.
b. In the event of a Terminated Ignition which results in damage to
either the Satellite or the Launch Vehicle but is not a Total Loss,
such that a subsequent Intentional Ignition can occur during the
Policy Period the Insurers agree to reattach coverage under this
Policy if the Named Insured provides the Insurers as its
certification,
<PAGE>
certification it has received from the Satellite manufacturer and the
launch vehicle services contractor that the damage has been
satisfactorily repaired, and that to the best of such manufacturer's
and contractor's knowledge and belief the Satellite and Launch Vehicle
are in flightworthy condition.
c. In the event of a Terminated Ignition which results in a claim under
this Policy but not a Total Loss, such that a subsequent Intentional
Ignition can occur prior to expiry of the Policy period and (b) above
is satisfied, Insurers upon written notification from the Insured
prior to reattachment agree to reinstate the Amount of Insurance if
the Insured pays the Insurers an additional premium calculated at the
basic premium rate stated in Declaration 8 applied to the amount of
indemnification paid under the Insuring Agreement. In such event, the
additional premium shall be due and payable as soon as practicable,
but no later than three (3) business days following the reattachment.
d. In the event of a Terminated Ignition such that the Insured determines
that a subsequent launch will not occur under this Policy for the
affected Satellite, this Policy shall terminate with respect to said
Satellite and;
i) In the event the Insured does not make a claim for loss
arising between Attachment of Risk and said Terminated
Ignition the Insurers will retain premium calculated at a
rate of 0.50% applied to the applicable Amount of Insurance
and return all other premium received hereunder for the
Satellite, without interest, within thirty (30) days from
the date the Insurers are advised accordingly by the
Insured; or
ii) In the event the Insured has made a claim for loss arising
between Attachment of Risk and said Terminated Ignition, the
Insurers will earn full premium for the Satellite.
24. Notices
Unless otherwise provided for in this Policy, all written communications
under this Policy, including but not limited to correspondence, notices,
consents, and requests, shall be addressed as follows:
a. If to the Named Insured:
EarthWatch Inc.
Attention: Director of Contracts
1900 Pike Road
Longmont, CO 80501-6700
USA
Facsimile: +1-303-682-3848
<PAGE>
b. If to the Insurers:
Willis Inspace
6700-A Rockledge Drive
Bethesda, MD 20817
USA
Facsimile: +1-301-897-8603.
Unless otherwise provided for in this Policy, the Additional Insured shall
receive copies of all written communications sent by or received by the
Insured. Such copies shall be delivered by the Insured to:
The Bank of New York
Attention: Corporate Trust Administration
101 Barclay Street, Floor 21 West
New York, New York 10286
USA
Facsimile: +1-212-815-5915
Where practical, all notices shall be given by facsimile transmission
unless adequate notice can be given by registered mail.
Notice to the Additional Insured includes receipt of the sole original
policy as executed by the Insurers and the Insured. Such sole original
policy shall be provided by Willis Inspace.
25. Negotiation of Claims
In the event that the Insurer disputes a claim or a claimed amount
submitted under the Policy, the Named Insured cannot agree to a compromise
of the claim or a claimed amount without the consent of the Additional
Insured.
<PAGE>
*** Endorsement to ACE policy ***
Due to their corporate requirements resulting from their Bermuda domicile, ACE
require the notices to Willis Inspace be sent to our London office and the
arbitration condition read as follows. Only the ACE policy would have these
different notice and arbitration conditions implemented by way of endorsement.
Endorsement No. 1 - (Applicable to ACE Bermuda Insurance Ltd.)
It is hereby noted and agreed that with effect from inception the following
changes are made to the Policy:
1. Condition 7 Arbitration is deleted in its entirety and replaced with the
following:
7. Arbitration:
------------
All disputes and differences arising under or in connection with this
Policy shall be referred to arbitration under ARIAS Arbitration Rules.
The Arbitration Tribunal shall consist of three (3) arbitrators, one
(1) to be appointed by the Named Insured, one (1) to be appointed by
the Insurer and the third to be appointed by the two (2) appointed
arbitrators.
The third member of the Tribunal shall be appointed as soon as
practicable (and no later than twenty eight (28) days) after the
appointment of the two (2) party-appointed arbitrators. The
Arbitration Tribunal shall be constituted upon the appointment of the
third arbitrator.
Where the Named Insured or the Insurer fails to appoint an arbitrator
within fourteen (14) days of being called upon to do so or where the
two (2) party-appointed arbitrators fail to appoint a third within
twenty-eight (28) days of their appointment, then upon application
ARIAS (UK) will appoint an arbitrator to fill the vacancy. At any
time prior to the appointment by ARIAS (UK) the party or arbitrators
in default may make such appointment.
The Arbitration Tribunal may in its sole discretion make such orders
and directions as it considers to be necessary for the final
determination of the matters in dispute. The Tribunal shall have the
widest discretion permitted under the law governing the arbitral
procedure when making such orders or directions.
The seat of the arbitration shall be London, England.
All other Terms, Conditions, Limitations and Exclusions, as contained in the
Policy, remain unaltered.
* * * * *
