<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ORBCOMM GLOBAL, L.P.
(EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 54-1698039
(STATE OR OTHER JURISDICTION OF (PRIMARY INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
AFFILIATE REGISTRANTS
<TABLE>
<S> <C> <C> <C>
ORBCOMM GLOBAL CAPITAL CORP. DELAWARE 4812 N/A
ORBCOMM USA, L.P. DELAWARE 4812 54-1689429
ORBCOMM INTERNATIONAL PARTNERS, L.P. DELAWARE 4812 54-1690862
ORBITAL COMMUNICATIONS CORPORATION DELAWARE 4812 54-1535585
TELEGLOBE MOBILE PARTNERS DELAWARE 4812 98-0135820
(EXACT NAME OF CO-REGISTRANT AS (STATES OR OTHER (PRIMARY INDUSTRIAL (IRS EMPLOYER
SPECIFIES IN THEIR CHARTERS) JURISDICTIONS CLASSIFICATION CODE IDENTIFICATION NOS.)
OF INCORPORATION OR NUMBERS)
ORGANIZATION)
MARY ELLEN SERAVALLI
21700 ATLANTIC BOULEVARD 21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166 DULLES, VIRGINIA 20166
(703) 406-6000 (703) 406-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL INCLUDING AREA CODE, OF AGENT FOR SERVICE)
EXECUTIVE OFFICES)
</TABLE>
PLEASE SEND COPIES OF COMMUNICATIONS TO:
R. RONALD HOPKINSON, ESQ.
LATHAM & WATKINS
885 THIRD AVENUE, SUITE 1000
NEW YORK, NEW YORK 10022-4802
(212) 906-1200
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as possible after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED NOTE PRICE(1) REGISTRATION FEE(1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
14% Series B Senior Notes due 2004 with
Revenue Participation Interest(1)......... $170,000,000 100% $170,000,000 $58,620.69
- ------------------------------------------------------------------------------------------------------------------------
Guarantees of the 14% Series B Senior
Notes
due 2004 with Revenue Participation
Interest(2)............................... N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The registration fee has been calculated pursuant to Rule 457(a) and Rule
457(f)(2) under the Securities Act of 1933. The Proposed Maximum Aggregate
Offering Price is estimated solely for the purpose of calculating the
registration fee.
(2) Represents the guarantees of the 14% Series B Senior Notes due 2004 with
Revenue Participation Interest to be issued by the Guarantors (as defined).
Pursuant to Rule 457(n), no additional registration fee is being paid in
respect of the guarantees.
------------------------
THE REGISTRANTS HEREBY AMEND THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ORBCOMM GLOBAL, L.P.
------------------
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN THE PROSPECTUS
------------------------------------------------- -------------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Forepart of Registration Statement;
Front Cover Page of Prospectus................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover
of Prospectus.................................. Pages; Available Information
3. Risk Factors, Ratio of Earnings to Fixed Charges Prospectus Summary; Risk Factors; The
and Other Information.......................... Company; The Exchange Offer;
Financial Statements; Selected
Financial Data
4. Terms of the Transaction......................... Prospectus Summary; The Exchange
Offer; Description of Senior Notes;
Certain Federal Income Tax
Considerations
5. Pro Forma Financial Information.................. Prospectus Summary; Financial
Statements
6. Material Contacts with the Company Being
Acquired....................................... Not Applicable
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters................................... Not Applicable
8. Interest of Named Experts and Counsel............ Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants...... Not Applicable
11. Incorporation of Certain Information by
Reference...................................... Not Applicable
12. Information with Respect to S-2 or S-3
Registrants.................................... Not Applicable
13. Incorporation of Certain Information by
Reference...................................... Not Applicable
14. Information with Respect to Registrants other Inside Front Cover; Prospectus
than S-2 or S-3 Registrants.................... Summary; Risk Factors;
Capitalization; Financial
Statements; Selected Financial
Data; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Business;
Management; Relationships Among the
ORBCOMM Parties; Description of
Senior Notes
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies........ Not Applicable
16. Information with Respect to S-2 or S-3
Companies...................................... Not Applicable
17. Information with Respect to Companies Other than
S-2 or S-3 Companies........................... Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN THE PROSPECTUS
------------------------------------------------- -------------------------------------
<C> <S> <C>
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited............. Not Applicable
Information if Proxies, Consents or
Authorizations are Not to be Solicited or in an Management; Relationships Among the
Exchange Offer................................. ORBCOMM Parties
</TABLE>
<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. The prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 30, 1996
PROSPECTUS
LOGO
OFFER TO EXCHANGE
14% SERIES B SENIOR NOTES DUE 2004 WITH REVENUE PARTICIPATION INTEREST
FOR ALL OUTSTANDING
14% SENIOR NOTES DUE 2004 WITH REVENUE PARTICIPATION INTEREST
OF
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON ,
1996, UNLESS EXTENDED.
------------------------
ORBCOMM Global, L.P., a Delaware limited partnership (the "Company"), and
its wholly owned subsidiary ORBCOMM Global Capital Corp. (the "Co-Obligor"), as
joint and several obligors, are offering on the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal" which together with the Prospectus
constitute the "Exchange Offer"), to exchange $1,000 principal amount of
registered 14% Series B Senior Notes due 2004 with Revenue Participation
Interest (the "Exchange Notes"), for an equal principal amount of 14% Senior
Notes due 2004 with Revenue Participation Interest (the "Old Notes") of which an
aggregate of $170 million principal amount is outstanding as of the date hereof.
The Company and the Co-Obligor are herein collectively referred to as the
"Issuers." The form and terms of the Exchange Notes will be substantially
identical to the form and terms of the Old Notes except that the Exchange Notes
are registered under the Securities Act of 1933, as amended (the "Securities
Act") and, will not bear legends restricting the transfer thereof. The Exchange
Notes will evidence the same debt as the Old Notes and will be entitled to the
benefits of an Indenture dated as of August 7, 1996, governing the Old Notes and
the Exchange Notes (the "Indenture"). The Indenture provides for the issuance of
both the Exchange Notes and the Old Notes. The Exchange Notes and the Old Notes
are sometimes referred to herein collectively as the "Senior Notes." The holders
of the Senior Notes are sometimes referred to herein collectively as the
"Holders." The Exchange Offer is being made to satisfy certain contractual
obligations of the Issuers.
SEE "RISK FACTORS" ON PAGE 16 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS WHICH HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH
THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE COMPANY WILL ACCEPT FOR EXCHANGE ANY AND ALL VALIDLY TENDERED OLD NOTES ON
OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON , 1996 (IF AND AS
EXTENDED, THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. THE
EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM PRINCIPAL AMOUNT OF OLD
NOTES BEING TENDERED FOR EXCHANGE. OLD NOTES MAY BE TENDERED ONLY IN INTEGRAL
MULTIPLES OF $1,000. IN THE EVENT THE COMPANY TERMINATES THE EXCHANGE OFFER
AND DOES NOT ACCEPT FOR EXCHANGE ANY OLD NOTES, THE COMPANY WILL PROMPTLY
RETURN ALL PREVIOUSLY TENDERED OLD NOTES TO THE HOLDERS THEREOF.
- --------------------------------------------------------------------------------
------------------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 5
The Exchange Notes will mature on August 15, 2004 and will bear fixed
interest at the rate of 14% per annum from their date of issuance. Interest on
the Exchange Notes will be payable semi-annually in arrears on February 15 and
August 15 of each year, commencing February 15, 1997. Revenue Participation
Interest (as defined herein) is payable on the Senior Notes, on each such
interest payment date, in an aggregate amount equal to 5.0% of System Revenue
(as defined herein) for the six-month period ending on December 31 or June 30
most recently completed prior to such interest payment date. Holders of Exchange
Notes will receive interest on February 15, 1997 from the date of initial
issuance of the Exchange Notes, plus an amount equal to the accrued interest on
the Old Notes from the date of original issuance of the Old Notes to the date of
exchange thereof for the Exchange Notes. Such interest will be paid with the
first interest payment on the Exchange Notes. Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of the Exchange Notes.
The Issuers will not be required to make any mandatory redemption or
sinking fund payments with respect to the Senior Notes. The Senior Notes will be
redeemable at the option of the Issuers, in whole or in part, at any time on or
after August 15, 2001 at the redemption prices set forth herein plus accrued and
unpaid interest, if any, to the date of redemption. In the event of a Change of
Control (as defined herein), the Issuers will be required to make an offer to
repurchase the Senior Notes, at a price equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages (if any)
thereon to the date of purchase. See "Description of Senior Notes -- Certain
Covenants -- Repurchase at the Option of Holders -- Change of Control."
The Senior Notes are senior obligations of the Issuers and rank pari passu
in right of payment with all existing and future senior Indebtedness (as defined
herein) of the Issuers and will rank senior in right of payment to any future
subordinated Indebtedness of the Issuers; provided, however, that certain
Indebtedness of the Issuers and their subsidiaries may be secured by assets held
by the Issuers or their subsidiaries subject to certain restrictions described
herein. See "Description of Senior Notes -- Certain Covenants -- Liens." As of
June 30, 1996, after giving effect to the Old Notes Offering, the aggregate
amount of outstanding liabilities (including trade payables) of the Issuers, on
a consolidated basis, would have been approximately $186 million. The Senior
Notes will be fully and unconditionally guaranteed (limited only to the extent
necessary to avoid such Guarantees being considered a fraudulent conveyance
under applicable law) on a joint and several basis (the "Guarantees") by ORBCOMM
USA, L.P., ORBCOMM International Partners, L.P., Orbital Communications
Corporation and Teleglobe Mobile Partners (the "Guarantors"). The Guarantees of
each of the Guarantors will rank pari passu in right of payment with all senior
Indebtedness of the Guarantors and senior in right of payment to all
Indebtedness expressly subordinated to the guarantee of such Guarantor. The
guarantees are non-recourse to the shareholders and/or partners of such
Guarantors (including Orbital Sciences Corporation, Teleglobe Inc. and
Technology Resources Industries Bhd.) and no shareholder or partner of such
Guarantors will have any liability for any claim under the Senior Notes.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Old Notes are designated for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. To
the extent Old Notes are tendered and accepted in the Exchange Offer, the
principal amount of outstanding Old Notes will decrease with a resulting
decrease in the liquidity of the market therefor. Following consummation of the
Exchange Offer, holders of Old Notes who were eligible to participate in the
Exchange Offer but who did not tender their Old Notes will not be entitled to
certain rights under the Registration Rights Agreement (as defined herein), and
such Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity in the market for the Old Notes could be adversely
affected. No assurance can be given as to the liquidity of the trading market
for either the Old Notes or the Exchange Notes.
i
<PAGE> 6
The Issuers will not receive any proceeds from this Exchange Offer. The
Issuers have agreed to bear the expenses of the Exchange Offer. No underwriter
is being used in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUERS ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
The Issuers have filed with the Commission a Registration Statement on Form
S-4 under the Securities Act with respect to the Exchange Notes offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information, exhibits and undertakings contained in the
Registration Statement. For further information with respect to the Company and
the Exchange Notes offered hereby, reference is made to the Registration
Statement, including the exhibits thereto and the financial statements, notes
and schedules filed as a part thereof. As a result of this offering, the Issuers
will become subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The Registration Statement (and
the exhibits and schedules thereto) of which this Prospectus is a part, as well
as the periodic reports and other information required to be filed by the
Issuers with the Commission in the future, may be inspected and copied at the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in New
York, New York, and Chicago, Illinois at the prescribed rates. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
Pursuant to the Indenture, the Issuers have agreed to furnish to the
Trustee (as defined herein) and to registered holders of the Senior Notes,
without cost to the Trustee or such registered holders, copies of all reports
and other information required to be filed by the Issuers with the Commission
under the Exchange Act, whether or not the Issuers are then required by the
rules and regulations of the Commission to file reports with the Commission. The
Issuers will file a copy of such information and reports with the Commission for
public availability. The Issuers will also furnish such other reports as they
may determine or as may be required by law.
ii
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Unless the
context otherwise requires, the terms "Company" or "ORBCOMM" refer to ORBCOMM
Global, L.P., ORBCOMM USA, L.P. ("ORBCOMM USA") and ORBCOMM International
Partners, L.P. ("ORBCOMM International"). Certain capitalized terms used in this
Prospectus are defined in the Glossary. All references in this Prospectus to "$"
or "dollars" are to U.S. dollars. Holders of the Senior Notes should carefully
consider the specific matters set forth under "Risk Factors" beginning on page
16 as well as the other information and data included in this Prospectus.
THE COMPANY
The Company is establishing the first commercial low-Earth orbit ("LEO")
satellite-based mobile data and messaging communications system that will be
available on a global basis (the "ORBCOMM System"). The ORBCOMM System, planned
to be fully deployed in late 1997, is designed to provide reliable, low-cost,
two-way global data and messaging communications through a constellation of 28
LEO satellites and a complement of associated ground infrastructure situated
around the world. The Company believes that there is significant global demand
for its low-cost data and messaging communications services. Major target
markets include worldwide mobile asset tracking; remote industrial monitoring
and control applications; environmental data collection; and real time
person-to-person and machine-to-machine communications, including two-way
Internet electronic mail ("email") communications and recreational and business
messaging. The Company anticipates that the ORBCOMM System will be used: (i) as
a complement to existing or proposed tower-based services such as paging and
other narrowband personal communications services ("PCS"), providing geographic
coverage in areas these systems are unable to reach; and (ii) to enhance data
applications currently being provided through the public switched telephone
network ("PSTN") and the public switched data network ("PSDN"). In addition, the
Company expects that the introduction of its low-cost, reliable data and
messaging communications will lead to the development of new applications and
services.
The Company currently offers commercial intermittent data communications
services in the United States through its existing network, which consists of
two LEO satellites launched in April 1995 and related U.S. ground
infrastructure. When fully deployed, the ORBCOMM System is designed to provide
data and short, alphanumeric paging-like messaging communications coverage
virtually anywhere on the Earth's surface in a reliable and cost-effective
manner. In contrast to "Big LEO" systems, which are designed primarily for voice
applications and require satellite communications systems that are estimated to
cost in excess of $2 billion to construct and deploy, the ORBCOMM System, which
is a "Little LEO" system, is focused on data communications and messaging
applications and will be constructed and deployed for approximately $258 million
(with additional amounts needed to fund initial operation of the ORBCOMM System
and certain debt service obligations). The ORBCOMM System is designed to address
the substantial existing and growing demand for communications services
worldwide, without the high cost and geographic and technical limitations
imposed by other communications systems.
In October 1994, a subsidiary of Orbital Sciences Corporation ("Orbital")
became the first company to be awarded Federal Communications Commission ("FCC")
authority to construct, launch and operate a LEO satellite-based data and
messaging communications system in the United States. Today, the ORBCOMM System
is the only commercial Little LEO system that is fully licensed for all segments
of its system in the United States. Certain portions of the radio spectrum were
allocated by the International Telecommunications Union ("ITU") for use by
Little LEO systems, such as the ORBCOMM System, on an international basis in
1992. The Company intends to enter into agreements with International Licensees,
who will pursue the requisite local regulatory approvals for each foreign
country in which the ORBCOMM System will operate and who will pay fees for
access to the ORBCOMM System in their territory.
In 1995, in addition to the successful launch of the first two ORBCOMM
System satellites, the Company: (i) completed initial development and
construction of the ground infrastructure located in the
1
<PAGE> 8
United States and associated network control systems; and (ii) tested prototype
Subscriber Communicators. The two ORBCOMM System satellites and four U.S. Earth
stations currently are providing data communications services, focused on
monitoring applications, to the U.S. environmental and oil and gas industries,
with tracking and positioning applications targeted for the near future. As of
June 30, 1996, the ORBCOMM System had transmitted in excess of one million
messages and successfully completed extensive internal and third-party testing,
including a rigorous demonstration program conducted by the U.S. Department of
Defense ("DoD") as part of its Joint Warrior Interoperability Demonstration '95.
To use the ORBCOMM System, a user creates a text message utilizing a
computer or Subscriber Communicator device, which message is sent to the nearest
ORBCOMM System satellite and delivered to an ORBCOMM Earth station, which
supports communication with the satellites, and then to the Gateway Switching
System, which processes the messages. Within the Gateway, the message is
processed using a combination of ORBCOMM-developed and commercial email
software, and sent on to its ultimate destination. If desired, an
acknowledgement message is returned to the sender. The final delivery may be to
another Subscriber Communicator or may make use of public/private X.25 data
networks, the Internet, or text-to-fax conversion.
The Company intends to distribute its services globally in a cost-effective
manner through the use of Resellers in the United States and International
Licensees around the world. The Company is in the process of negotiating and
signing agreements with Resellers, each of whom will be responsible for
marketing to end customers in a specific industry and/or market and generally is
expected to develop software applications to facilitate use of ORBCOMM System
services by such industry or market segment. To date, 22 reseller agreements
have been signed with companies including Arinc, Inc., Boatracs, Inc., Corexco
Consulting Services, Inc., Globitrac, Inc., IWL Communications, Inc., QUALCOMM,
Incorporated and the Stevens Water Monitoring Division of Leupold & Stevens,
Inc. The Company has signed 17 Memoranda of Understanding with potential
International Licensees and is in active negotiations with six other potential
International Licensees; taken together, these 23 potential International
Licensees represent approximately 75 countries around the world. The Company
intends to convert its existing Memoranda of Understanding into Service License
Agreements during the next three to 18 months. In addition, the Company has
signed a Service License Agreement with one International Licensee, ORBCOMM
Canada Inc., which is controlled by Teleglobe Inc. ("Teleglobe"), and which has
been given the exclusive right to market services in Canada using the ORBCOMM
System.
ORBCOMM is a limited partnership formed in 1993 to develop, construct,
operate and market the ORBCOMM System. The general and limited partnership
interests in ORBCOMM are held by each of Orbital Communications Corporation
("OCC"), a subsidiary of Orbital, and Teleglobe Mobile Partners ("Teleglobe
Mobile"), a Delaware general partnership whose interests are held by Teleglobe
and Technology Resources Industries Bhd. ("TRI"), a Malaysian holding company
that controls the largest cellular operator in Malaysia. OCC and Teleglobe
Mobile have invested approximately $160 million in the ORBCOMM project. The
Company believes that such equity contributions, together with the proceeds of
the Old Notes Offering (as defined below) and cash expected to be generated from
operations, will be sufficient to fund the ORBCOMM System, including: (i) all
capital expenditures necessary to deploy the ORBCOMM System; and (ii) all
required working capital until at least December 31, 1997, when full deployment
of the ORBCOMM System is planned to have occurred. There can be no assurance,
however, that additional capital will not be necessary.
BUSINESS STRATEGY
The principal elements of the Company's business strategy include:
Real Time, Reliable Worldwide Coverage. The fully deployed ORBCOMM System
has been designed to provide for the delivery and receipt of data communications
and short, alphanumeric paging-like messages anywhere in the world on a highly
efficient and cost-effective basis. The ORBCOMM System's worldwide coverage will
enable it to provide tracking, monitoring and messaging services, including
Internet email capability, to customers that are currently beyond the geographic
reach of existing terrestrial wireline or
2
<PAGE> 9
wireless systems. The ORBCOMM System is designed to deliver reliable
communications services through the use of acknowledgment and store-and-forward
capabilities. ORBCOMM expects that, with a planned constellation of 28
satellites, the ORBCOMM System will provide communications availability
generally exceeding 95% of each 24-hour period in the United States and other
temperate zones in the Northern and Southern Hemispheres and averaging 75% of
each 24-hour period in the equatorial region.
First-to-Market. The ORBCOMM System began providing commercial
intermittent service in February 1996. Prior to commencing commercial
operations, the space segment, network and management control systems, U.S.
Gateway and prototype Subscriber Communicators were tested extensively to ensure
technical viability. The Company believes that the existence of an in-service,
commercially operational system provides substantial "first-to-market" benefits,
including: (i) reducing technical risk; (ii) increasing the attractiveness of
the ORBCOMM System to potential Resellers, International Licensees and
Subscriber Communicator manufacturers; (iii) facilitating and encouraging the
development of software by Resellers and other application developers for a
variety of market applications because of the ability to test the hardware and
software in an actual operating environment; and (iv) developing a customer base
before other competing Little LEO systems are fully deployed, which the Company
believes will not occur before 2000. There can be no assurance, however, that
there will be no delays in the existing schedule associated with the
construction or deployment of the ORBCOMM System.
Global Distribution of Services. The Company believes the ORBCOMM System
can rapidly achieve a global presence in a cost-effective manner by capitalizing
on the significant resources of Resellers and International Licensees worldwide.
The Company plans to provide services in the United States through Resellers,
many of whom have an existing, well-established market presence through their
existing customer bases, market-specific brand name recognition and distribution
networks. Outside the United States, the Company will enter into Service License
Agreements with International Licensees who will be responsible in their
territory for, among other things, procuring and installing the necessary
Gateways, obtaining all regulatory approvals to provide services using the
ORBCOMM System and operating and marketing services using the ORBCOMM System.
The Company intends to select its International Licensees primarily by
evaluating the ability of the International Licensee to distribute and market
successfully the Company's services. Key components of such an evaluation
include the prospective International Licensee's: (i) reputation in the
marketplace; (ii) existing distribution capabilities and infrastructure; (iii)
financial condition and other resources; and (iv) ability to obtain the
requisite local regulatory approvals.
Low-Cost Subscriber Communicators. The Company is committed to promoting
the production of lightweight Subscriber Communicators that have a long battery
life and are widely available at prices attractive to a broad customer base. The
Company has provided extensive design specifications and technical and
engineering support to its various Subscriber Communicator manufacturers. The
Company currently has a development agreement with Kyushu Matsushita Electric
Company, Ltd. (also known as "Panasonic"). The Company is in the process of
finalizing manufacturing and sales support agreements with Panasonic and has
executed Subscriber Communicator Manufacturing Agreements, which include terms
regarding the development, manufacture and sales support for Subscriber
Communicators, with Scientific-Atlanta, Inc ("Scientific-Atlanta"), Magellan
Corporation ("Magellan"), Torrey Science Corporation ("Torrey Science") and
Stellar Electronics Ltd. ("Stellar"), an Israeli company that is a subsidiary of
Tadiran Ltd., a leading Israeli electronics company. Panasonic has received
authorization from the Company to manufacture two basic Subscriber
Communicators, one with and one without the ability to receive positioning
signals from the Global Positioning Satellite ("GPS") system, both of which are
now commercially available. Torrey Science received authorization from the
Company in August 1996 to manufacture a basic Subscriber Communicator and the
Company expects that Torrey Science will have units commercially available in
the first quarter of 1997. The Company believes that once its other Subscriber
Communicator manufacturers have units that are commercially available and once
the overall production volume for Subscriber Communicators increases, the price
for Subscriber Communicators will decline substantially. Panasonic and Stellar
have informed the Company that, in lots of at least several thousand, the price
for their respective Subscriber Communicators will be approximately $550 per
unit.
3
<PAGE> 10
Expertise of Strategic Partners. Orbital and Teleglobe, the Company's
partners, have invested approximately $160 million in the ORBCOMM project. The
Company has used and will continue to use its partners' expertise and
capabilities to enhance the ORBCOMM System, including expertise in the design,
construction and deployment of satellites and the operation of international
wireline and wireless telecommunication services.
Orbital, a Delaware corporation headquartered in Dulles, Virginia and with
offices in five countries, is the founder of the ORBCOMM project, and through
its subsidiary, OCC, has a 50% Participation Percentage interest in ORBCOMM.
Orbital is a space technology and satellite services company, with annual
revenues in 1995 of approximately $364 million, that designs, manufactures,
operates and markets a broad range of space products and services, including
launch systems, satellites, space sensors and electronics, ground systems and
software products, satellite access products and communications and information
services. Under the terms of the Procurement Agreement between Orbital and
ORBCOMM, Orbital will, among other things, construct 34 satellites (including
eight ground spares), launch 26 satellites and, on an optional basis, launch the
eight ground spares. The satellites and launch services are provided on a
fixed-priced basis, although the Procurement Agreement contains certain
performance incentives with respect to the satellites.
Teleglobe, a Canadian corporation with 1995 revenues of approximately C$1.6
billion, provides international telecommunications services to over 240
countries worldwide through a network of submarine cables and satellite Earth
stations. Teleglobe currently has offices in ten countries. Teleglobe is owned
approximately 22% by BCE Inc., which is the largest public corporate entity in
Canada, and indirectly approximately 20% by Telesystem Ltd., which has an
interest in Telesystem International Wireless Corporation N.V. ("TIW"). TIW has
paging and cellular interests in several countries around the world, including
China, Mexico and India. Teleglobe has substantial experience as an
intercontinental provider of telecommunication services and has played and
continues to play an important advisory role in the ORBCOMM project generally
and in the Company's marketing and distribution strategy in particular.
Teleglobe has formed a partnership, Teleglobe Mobile, with TRI to hold its
interest in the ORBCOMM project. TRI operates the largest and one of the
fastest-growing cellular networks in Malaysia, with over 800,000 subscribers.
TRI also has cellular and paging joint ventures in five countries.
The Company's principal executive offices are located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166, and the Company's telephone number is (703)
406-6000. The Company's Web site is located at http://www.orbcomm.net.
SIGNIFICANT MILESTONES
MILESTONES ACHIEVED TO DATE
Through June 30, 1996, the Company has achieved the following milestones:
- FCC Authorization. In October 1994, OCC was granted authority by the FCC
to construct, launch and operate 36 LEO satellites in the United States
(the "FCC License"). In May and June 1995, OCC received FCC authority to
operate its four U.S. Earth stations and to provide services in the
United States to Subscriber Communicators.
- Deployment of First Two Satellites. In April 1995, the first two of the
28 satellites expected to comprise the ORBCOMM System were deployed.
These two satellites are operational.
- Equity Commitments. In September 1995, the partners increased their
committed equity in the ORBCOMM project to a total of approximately $160
million.
- Gateways. As of December 1995, the U.S. Gateway, including three of the
four Earth stations and key portions of the ORBCOMM System's control
segments, was operational. In May 1996, the fourth Earth station became
operational.
- Commercial Service. In February 1996, after extensive testing, the
ORBCOMM System commenced commercial service.
4
<PAGE> 11
- Subscriber Communicators. The Company has reached agreements with
several manufacturers for the development and manufacture of various
types of Subscriber Communicators. Panasonic's Subscriber Communicator
became commercially available in March 1996, and in August 1996 a Torrey
Science Subscriber Communicator passed type acceptance testing.
- Resellers. The Company has signed agreements with 22 Resellers in the
United States who will provide services for, among others, the trucking,
marine, oil and gas and environmental industries.
- International Licensees. The Company has signed Memoranda of
Understanding with 17 potential International Licensees and is in active
discussions with six additional potential International Licensees; taken
together, these 23 potential International Licensees represent
approximately 75 countries around the world. On December 19, 1995, the
Company signed a Service License Agreement with ORBCOMM Canada Inc.
FUTURE MILESTONES
The Company expects to achieve the following future milestones:
- Deployment of Additional Satellites. By the end of 1997, the Company
plans to have launched an additional 26 satellites, for a total
constellation of 28 satellites. The Company has an option to launch an
additional eight ground spare satellites that, if launched as a fourth
plane, would complete deployment of the 36 LEO satellites authorized by
the FCC License.
- Subscriber Communicators. By the first quarter of 1997, the Company
expects that Subscriber Communicators will be commercially available from
Torrey Science and Stellar.
- Resellers. The Company is currently in negotiations with 12 additional
potential Resellers who will provide services for, among others, the
utility, rail carrier and law enforcement industries.
- International Licensees. By December 1997, the Company plans to have
converted its 17 existing Memoranda of Understanding into definitive
Service License Agreements with International Licensees.
- Commencement of Global, Real Time Service. In 1998, following the launch
and deployment of an additional 26 satellites and extensive review of the
fully deployed ORBCOMM System, the Company plans to be able to offer real
time communications services.
CONSTELLATION DESIGN AND IMPLEMENTATION STRATEGIES
The ORBCOMM System has been designed to provide for the delivery and
receipt of short messages anywhere in the world on a highly efficient and
cost-effective basis. The Company believes that multiple aspects of the ORBCOMM
System design will result in a low-cost product offering worldwide and that the
implementation plan for the ORBCOMM System should reduce the risk of cost
overruns, system performance shortfalls and system deployment delays. Important
components of the ORBCOMM System design and implementation strategies include:
(i) the design, development and deployment of a low-cost satellite system; (ii)
the development of a communications protocol specifically designed for data and
messaging communications; (iii) the use of contractual and other means to
mitigate the risk of delays and system failures; and (iv) the use of
advantageous radio frequencies. See "Business -- Constellation Design and
Implementation Strategies."
RECENT DEVELOPMENTS
On August 7, 1996, the Issuers and Guarantors engaged in an offering (the
"Old Notes Offering") of the Old Notes pursuant to exemptions from registration
under the Securities Act.
The net proceeds from the sale of the Old Notes Offering were approximately
$164 million (after deducting discounts and commissions to the initial
purchasers thereof and expenses of the Old Notes Offering). The Company will
apply all the net proceeds of the Old Notes Offering to: (i) the design,
5
<PAGE> 12
construction, launch, operation and marketing of the ORBCOMM System through the
date of full deployment of the ORBCOMM System, including the procurement of
satellites, launch services, launch insurance and U.S. ground segment
components; (ii) related development, operating and marketing expenses; (iii)
the purchase of the Pledged Securities; and (iv) the deposit into a segregated
account an amount sufficient to pay when due all remaining interest and
principal payments on the Company's Loan and Security Agreement with MetLife
Capital Corporation ("MetLife") (the "MetLife Note"). Pending such uses, the net
proceeds will be invested in short-term, investment-grade securities.
The table on the following page summarizes the estimated sources and uses
of capital by ORBCOMM for the period from June 30, 1993 (date of inception)
through December 31, 1997, when full deployment of the ORBCOMM System is planned
to have occurred.
6
<PAGE> 13
SOURCES AND USES OF FUNDING FOR THE ORBCOMM SYSTEM
<TABLE>
<CAPTION>
(IN MILLIONS)
- --------------------------------------------------------------------------------------------
<S> <C>
USES:
ORBCOMM System:
Satellite constellation, ground spares and launch services...................... $202
U.S. ground segment(1).......................................................... 30
Insurance....................................................................... 8
Other system costs(2)........................................................... 18
----
Total system costs.............................................................. 258
Operating expenses and working capital(3)............................................ 26
Excess proceeds of the Old Notes Offering(4)......................................... 13
Debt repayment and interest expense(5)............................................... 29
Pledged Securities(6)................................................................ 24
----
Total uses...................................................................... $350
====
SOURCES:
Partners' capital.................................................................... $160
Other indebtedness................................................................... 5
Net proceeds of the Old Notes Offering(7)............................................ 164
Necessary cash from operations(8).................................................... 21
----
Total sources................................................................... $350
====
</TABLE>
- ---------------
(1) Construction of a substantial number of Gateways located outside of the
United States will be necessary to provide real time services on a global
basis. Procurement of such Gateways will be the responsibility of the
International Licensees and is not reflected in the above table. There can
be no assurance that such International Licensees will be able to fund the
purchase and deployment of such Gateways. See "Risk Factors -- Reliance on
Resellers and International Licensees."
(2) Represents certain project management costs.
(3) Consists of estimated project development and operating and other related
expenses through December 31, 1997.
(4) Represents cash proceeds of the Old Notes Offering in excess of amounts the
Company anticipates will be required through at least December 31, 1997.
This cash will be available to deploy the ORBCOMM System.
(5) Represents required fixed interest payments on the Senior Notes and
scheduled payments of principal and interest (at an interest rate of 9.20%
per annum) on the Company's other indebtedness, in each case through
December 31, 1997. For purposes of this table, the Pledged Securities will
be used to make two semi-annual interest payments on the Senior Notes
required to be made prior to December 31, 1997.
(6) Represents the estimated remaining principal amount of Pledged Securities as
of December 31, 1997 pledged as security for repayment of principal on the
Senior Notes.
(7) Represents $170 million of gross proceeds of the Old Notes Offering
(including funds used to purchase the Pledged Securities), less discounts
and commissions and other expenses of the Old Notes Offering of $6 million.
(8) Represents the additional cash needed through the date of full deployment of
the ORBCOMM System, which is expected to be funded by cash from operations.
It is expected that a significant portion of such cash from operations
through December 31, 1997 will come from licensee fees payable by
International Licensees.
ORBCOMM believes that the net proceeds of the Old Notes Offering and the
capital contributions of the ORBCOMM partners, together with expected cash from
operations, will be sufficient to fund the Company's operations through at least
December 31, 1997, when full deployment of the ORBCOMM System is planned to have
occurred. Additional funds may be necessary in the event of delay, cost overruns
or any shortfall in estimated levels of operating cash flow, or to meet
unanticipated expenses. There can be no assurance that ORBCOMM will be able to
obtain any such additional financing on favorable terms or on a timely basis.
See "Risk Factors -- Potential Additional Capital Requirements."
7
<PAGE> 14
THE EXCHANGE OFFER
The Exchange Offer applies to $170 million aggregate principal amount of
the Old Notes. The form and terms of the Exchange Notes are substantially the
same as the form and terms of the Old Notes except that the Exchange Notes will
be registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The Exchange Notes will evidence the same debt
as the Old Notes and both series of Senior Notes will be entitled to the
benefits of the Indenture and treated as a single class of debt securities
thereunder. See "Description of Senior Notes."
THE EXCHANGE OFFER............ The Issuers are offering to exchange $170
million principal amount of Exchange Notes
for a like principal amount of Old Notes.
Exchange Notes may be exchanged only in
multiples of $1,000 principal amount. The
Issuers will issue the Exchange Notes on or
promptly after the Expiration Date. The terms
of the Exchange Notes and Old Notes are
substantially identical. See "The Exchange
Offer."
Based on an interpretation by the staff of the
Commission set forth in no-action letters
issued to third parties, the Issuers believe
that, with the exceptions discussed herein,
Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may
be offered for resale, resold and otherwise
transferred by any holder thereof (other than
(i) a broker-dealer who purchases such
Exchange Notes directly from the Issuers to
resell pursuant to Rule 144A or any other
available exemption under the Securities Act
or (ii) a person that is an "affiliate" of
the Issuers within the meaning of Rule 405
under the Securities Act) without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided
that (i) the Holder is acquiring the Exchange
Notes in the ordinary course of its business
and (ii) that such Holder is not
participating, and has no arrangement or
understanding with any person to participate,
in the distribution of such Exchange Notes.
However, the Issuers have not sought, and do
not intend to seek, their own no-action
letter, and there can be no assurance that
the Commission's staff would make a similar
determination with respect to the Exchange
Offer. Each broker-dealer that receives
Exchange Notes for its own account in
exchange for Old Notes must acknowledge that
it will deliver a prospectus in connection
with any resale of such Exchange Notes. See
"Plan of Distribution."
RECORD DATE................... The Issuers have fixed the close of business on
September , 1996 as the record date for the
Exchange Offer (the "Record Date") for the
purpose of determining the persons to whom
this Prospectus, together with the
accompanying letter of transmittal (the
"Letter of Transmittal") will initially be
sent.
EXPIRATION DATE............... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1996,
unless extended, in which case the term
"Expiration Date" shall mean the latest date
and time to which the Exchange Offer is so
extended.
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Issuers in whole or in part and from time
to time in its sole discretion. See "The
Exchange Offer -- Certain Conditions to the
Exchange Offer." The Exchange Offer
8
<PAGE> 15
is not conditioned on any minimum aggregate
principal amount of Old Notes being tendered
for exchange.
PROCEDURES FOR TENDERING OLD
NOTES......................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with the Old
Notes and any other required documentation,
to the Exchange Agent (as defined herein) at
the address set forth herein. By executing or
agreeing to be bound by the Letter of
Transmittal, each Holder (other than
participating broker-dealers) will represent
to the Issuers that, among other things, (i)
the Exchange Notes acquired pursuant to the
Exchange Offer are being acquired in the
ordinary course of business of such Holder or
such other person receiving such Exchange
Notes, (ii) neither such Holder nor any such
other person has an arrangement or
understanding with any person to participate
in the distribution of such Exchange Notes,
(iii) such Holder or any such other person
acknowledges and agrees that any person who
is a broker-dealer registered under the
Exchange Act or is participating in the
Exchange Offer for the purposes of
distributing the Exchange Notes must comply
with the registration and prospectus delivery
requirements of the Securities Act in
connection with a secondary resale
transaction of the Exchange Notes acquired by
such person and cannot rely on the position
of the staff of the Commission set forth in
certain no-action letters (see "The Exchange
Offer -- Resale of the Exchange Notes"), (iv)
the holder or any such other person
understands that a resale transaction
described in clause (iii) above and any
resales of Exchange Notes obtained by such
Holder or such other person in exchange for
Notes acquired by such Holder or such other
person directly from the Issuers should be
covered by an effective registration
statement containing the selling
securityholder information required by Item
507 or Item 508, as applicable, of Regulation
S-K of the Commission and (v) neither the
Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the
Securities Act, of the Issuers.
SPECIAL PROCEDURES FOR
BENEFICIAL HOLDERS............ Any beneficial Holder whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee and who wishes to tender such Old
Notes should contact such registered holder
promptly and instruct such registered holder
to tender on its behalf. If such beneficial
holder wishes to tender on its own behalf,
such holder must, prior to completing and
executing the Letter of Transmittal and
delivering such Old Notes, either make
appropriate arrangements to register
ownership of such Old Notes in such holder's
name or obtain a properly completed bond
power from the record holder. The transfer of
registered ownership may take considerable
time and may not be able to be completed
prior to the Expiration Date. See "The
Exchange Offer -- Procedures for Tendering
Old Notes."
9
<PAGE> 16
GUARANTEED DELIVERY
PROCEDURES.................... Holders of Old Notes who wish to tender their
Old Notes and whose Old Notes are not
immediately available or who cannot deliver
their Old Notes and the Letter of Transmittal
or any other documents required by the Letter
of Transmittal to the Exchange Agent prior to
the Expiration Date, must tender their Old
Notes according to the guaranteed delivery
procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS............. Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date. See "The Exchange
Offer -- Withdrawal Rights." Any Old Note not
accepted for exchange for any reason will be
returned without expense to the tendering
Holder thereof as promptly as practicable
after the expiration or termination of the
Exchange Offer. See "The Exchange
Offer -- Procedures for Tendering Old Notes."
ACCEPTANCE OF NOTES AND
DELIVERY OF EXCHANGE NOTES.... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Issuers
will accept for exchange any and all Old
Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The
Exchange Notes issued pursuant to the
Exchange Offer will be delivered promptly
following the Exchange Date. See "The
Exchange Offer -- Terms of the Exchange
Offer."
CONSEQUENCES OF FAILURE TO
EXCHANGE...................... Holders of Old Notes who do not exchange their
Old Notes for Exchange Notes pursuant to the
Exchange Offer will continue to be subject to
the restrictions on transfer of such Old
Notes as set forth in the legend thereon. In
general, Old Notes that are not exchanged
pursuant to the Exchange Offer may not be
offered or sold except pursuant to a
registration statement under the Securities
Act or an exemption from registration
thereunder and in compliance with applicable
state securities laws. In the event the
Issuers complete the Exchange Offer, the
interest rate on Old Notes will remain as
stated thereon and Holders of Old Notes will
have no further rights under the Registration
Rights Agreement (as defined herein).
CERTAIN TAX CONSIDERATIONS.... Latham & Watkins, counsel to the Company, has
advised the Company that because the Exchange
Notes should not be considered to differ
materially from the Old Notes, the exchange
of Exchange Notes for Old Notes should not
result in any material federal income tax
consequences to Holders exchanging Old Notes
for Exchange Notes. For a full description of
the basis of, and limitations on, this
opinion, see "Certain Federal Income Tax
Considerations."
EXCHANGE OFFER; REGISTRATION
RIGHTS........................ The Old Notes were sold by the Issuers on
August 7, 1996. In connection with the sale,
the Issuers and the Guarantors entered into a
Registration Rights Agreement (the
"Registration Rights Agreement") with the
initial purchasers of the Old Notes (the
10
<PAGE> 17
"Initial Purchasers"), providing for the
Exchange Offer. See "The Exchange
Offer -- Purpose of the Exchange Offer."
Pursuant to the Registration Rights Agreement,
the Issuers and Guarantors under certain
circumstances will be required to file as
promptly as practicable a shelf registration
statement (the "Shelf Registration
Statement") to cover resales of the Old Notes
by the holders thereof. See "The Exchange
Offer -- Purpose of the Exchange Offer."
EXCHANGE AGENT................ Marine Midland Bank is the Exchange Agent. The
address and telephone number of the Exchange
Agent are set forth in "The Exchange
Offer -- Exchange Agent."
11
<PAGE> 18
SUMMARY OF TERMS OF THE EXCHANGE NOTES
ISSUERS....................... ORBCOMM Global, L.P. and ORBCOMM Global Capital
Corp.
SECURITIES OFFERED............ $170 million in aggregate principal amount of
14% Senior Series B Notes due 2004 with
Revenue Participation Interest.
INTEREST...................... The Exchange Notes will bear fixed interest at
a rate of 14% per annum from their date of
issuance. Revenue Participation Interest is
payable on the Senior Notes, on each interest
payment date, in an aggregate amount equal to
5.0% of System Revenue for the six-month
period ending on December 31 or June 30 most
recently completed prior to such interest
payment date.
MATURITY...................... August 15, 2004.
INTEREST PAYMENT DATES........ February 15 and August 15, commencing February
15, 1997.
RANKING....................... The Exchange Notes will be senior obligations
of the Issuers and will rank pari passu in
right of payment with all existing and future
senior Indebtedness of the Issuers and will
rank senior in right of payment to any future
subordinated Indebtedness of the Issuers;
provided, however, that certain Indebtedness
incurred by the Issuers and their
subsidiaries in the future may be secured by
assets held by the Issuers or their
subsidiaries subject to certain restrictions
described herein. As of June 30, 1996, after
giving effect to the Old Notes Offering, the
aggregate amount of outstanding liabilities
(including trade payables) of the Issuers, on
a consolidated basis, would have been
approximately $186 million. The Indenture
permits the Issuers to incur additional
Indebtedness, including senior Indebtedness,
subject to certain limitations.
GUARANTEES.................... The Exchange Notes will be fully and
unconditionally guaranteed on a joint and
several basis by the Guarantors, limited only
to the extent necessary for each such
Guarantee to not constitute a fraudulent
conveyance under applicable law. The
Guarantee of each Guarantor will rank pari
passu in right of payment with all senior
Indebtedness of the Guarantors and senior in
right of payment to all Indebtedness
expressly subordinated to the guarantee of
such Guarantor. The guarantees are
non-recourse to the shareholders and/or
partners of such Guarantors (including
Orbital, Teleglobe and TRI) and no
shareholder or partner of such Guarantors
will have any liability for any claim under
the Notes. See "Description of Senior
Notes -- Guarantees."
OPTIONAL REDEMPTION........... The Exchange Notes may be redeemed at the
option of the Issuers, in whole or in part,
at any time on or after August 15, 2001, at a
premium declining to par in 2003, plus
accrued and unpaid interest, if any, to the
date of redemption. See "Description of
Senior Notes -- Optional Redemption."
CHANGE OF CONTROL............. In the event of a Change of Control (as defined
herein), the Issuers will be required to make
an offer to repurchase the Exchange Notes, at
a price equal to 101% of the aggregate
principal amount thereof, plus accrued and
unpaid interest, if
12
<PAGE> 19
any, to the date of repurchase. See
"Description of Senior Notes -- Certain
Covenants -- Repurchase at the Option of
Holders -- Change of Control."
CERTAIN COVENANTS............. The Indenture governing the Senior Notes (the
"Indenture") contains certain covenants that
limit the ability of the Issuers, the
Guarantors and their Restricted Subsidiaries
(as defined) to incur additional Indebtedness
(as defined), pay dividends or make other
additional distributions, repurchase Equity
Interests (as defined) or subordinated
Indebtedness, make certain other Restricted
Payments (as defined), create certain liens,
enter into certain transactions with
affiliates, sell assets, issue or sell Equity
Interests of the Issuers' Restricted
Subsidiaries or enter into certain mergers
and consolidations. The Indenture also
requires the Company to obtain launch vehicle
and in-orbit insurance under certain
circumstances. See "Description of Senior
Notes -- Certain Covenants."
RISK FACTORS
Holders of Senior Notes should carefully consider the factors set forth
under "Risk Factors," as well as other information and data included elsewhere
in this Prospectus.
13
<PAGE> 20
SUMMARY FINANCIAL DATA
The following summary financial data of ORBCOMM have been derived from the
financial statements of ORBCOMM contained herein. The financial data of ORBCOMM
as of and for the six months ended June 30, 1995 and 1996 are unaudited but have
been prepared on the same basis as the audited financial statements and, in the
opinion of management, contain all normal recurring adjustments necessary for
the fair presentation of the results of operations for such periods. The
selected financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements of ORBCOMM, and notes thereto included
elsewhere in this Prospectus. SINCE THE COMPANY ACCOUNTS FOR ITS OWNERSHIP IN
BOTH ORBCOMM USA AND ORBCOMM INTERNATIONAL USING THE EQUITY METHOD, REFERENCE IS
MADE TO THE FINANCIAL STATEMENTS OF ORBCOMM USA AND ORBCOMM INTERNATIONAL
LOCATED ELSEWHERE IN THIS PROSPECTUS.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------ -------------------
1994 1995 1995 1996
---- ------- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME AND EXPENSE DATA:(1)(2)
Total income........................................... $ 0 $ 958(3) $635(3) $ 72
Cost of product sales.................................. 0 0 0 55
Engineering expenses................................... 0 0 0 2,085
Administrative expenses................................ 9 50 0 2,275
Depreciation........................................... 0 0 0 3,042
Equity in earnings (losses) of affiliates(4)........... 0 (853) 0 (1,610)
Excess (deficiency) of income over expenses............ (9) 55 635 (8,995)
OTHER DATA:
Ratio of earnings to fixed charges(5).................. -- -- 2.9x --
---- ------- ---- --------
Deficiency of earnings to fixed charges................ N/A(6) 371 -- (9,179)
---- ------- ---- --------
Pro forma deficiency of earnings to fixed charges(7)... 25,011 (21,477)
------- --------
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
ACTUAL AS ADJUSTED(8)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 1,039 $145,406(9)
Restricted cash........................................ 0 49,000(10)
Mobile Communications Satellite System, net(11)........ 132,896 132,896
Investments in and advances to affiliates(4)........... (108) (108)
Total assets........................................... 134,826 334,559
Long-term debt......................................... 3,732 173,732
Partners' capital...................................... 118,606 148,339
</TABLE>
- ---------------
(1) For the period June 30, 1993 (date of inception) through December 31, 1993,
there were no income and expense transactions.
(2) The Company is a development stage company and had no system revenue for
the periods presented.
(3) Comprises interest income and a non-refundable fee received from a
potential International Licensee.
(4) The Company accounts for its investments in ORBCOMM USA and ORBCOMM
International using the equity method of accounting.
(5) For purposes of determining the ratio of earnings to fixed charges,
"earnings" includes excess (deficiency) of income over expenses adjusted
for fixed charges.
(6) Ratio of earnings to fixed charges is not applicable as there were no fixed
charges during this period.
(7) Pro forma deficiency of earnings to fixed charges is calculated based upon
an interest rate on the Senior Notes of 14% per annum plus the Revenue
Participation Interest and the amortization of deferred financing fees.
(8) As adjusted to reflect the net proceeds from the Old Notes Offering and the
contribution of the balance of the ORBCOMM partners' capital commitments.
(9) Includes $13 million of the net proceeds of the Old Notes Offering
deposited by the Issuers into a segregated account and to be used solely
for purposes of funding the development and deployment of the ORBCOMM
System and related operating expenses. See "Description of Senior
Notes -- Certain Covenants -- Contingency Fund."
(10) Represents the aggregate principal amount of the Pledged Securities, at
approximately $44.8 million, and the amount in the segregated account
related to the MetLife Note, at approximately $4.2 million. See
"Description of Senior Notes -- Security."
(11) Represents the ORBCOMM System.
14
<PAGE> 21
THE ORBCOMM SYSTEM
SUMMARY SATELLITE DATA
The ORBCOMM System is a global satellite communications system comprising a
constellation of LEO satellites, certain terrestrial facilities including
Gateways, network control systems and Subscriber Communicators that is intended
to provide two-way data and messaging communications services throughout the
world. The most significant characteristics of the satellites that comprise the
ORBCOMM System, such as their design specifications, coverage and design life,
as well as licensing and launch information for the satellites, are summarized
in the following table.
<TABLE>
<CAPTION>
NUMBER OF LAUNCH
SATELLITES(1) PLANE LAUNCH DATE VEHICLE LICENSED DESIGN LIFE
------------- ----- ---------------------- ---------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
A. Operational(2)
1. FM 1-2 2 70() April 1995 Pegasus(R) October 20, 1994(3) 4 Years
B. Licensed
1. FM 3-4 2 70() First Quarter 1997(4) Taurus(R)(5) October 20, 1994 5 Years
2. FM 5-12 8 45() Second Quarter 1997(4) Pegasus XL October 20, 1994 5 Years
3. FM 13-20 8 45() Third Quarter 1997(4) Pegasus XL October 20, 1994 5 Years
4. FM 21-28 8 45() Fourth Quarter 1997(4) Pegasus XL October 20, 1994 5 Years
5. FM 29-36(6) 8 45() Optional Pegasus XL October 20, 1994 5 Years
</TABLE>
- ---------------
(1) Each of the satellites that comprise the ORBCOMM System is an Orbital
MicroStar(TM) satellite, weighing approximately 95 pounds and measuring
approximately 41 inches in diameter, 6.5 inches in height, 170 inches in
deployed length and 88 inches in "deployed width at solar arrays." Each of
the ORBCOMM System satellites is currently authorized to operate in the
137.0-138.0 MHz band with a power flux density ("PFD") limit of -125 dB
(W/m(2)/4 kHz) for (satellite-to-subscriber and -Earth station)
transmissions. Also, each satellite currently is authorized to operate at
400.1 MHz ( 25 kHz) for satellite-to-subscriber transmissions with no PFD
limit. Each of the ORBCOMM System satellites also is currently authorized to
operate in the 148.0-149.9 MHz band for uplink (subscriber- and Earth
station-to-satellite) transmissions at five watts. OCC has requested that
the FCC allocate additional frequency located at 137.0-138.0 MHz and
149.9-150.05 MHz for use by Little LEO systems. See
"Business -- Regulation -- Second Processing Round."
(2) The two ORBCOMM System satellites that are currently in orbit provide
communications availability in the United States for approximately 10% of
each 24-hour period (eight to ten passes over a fixed point on the Earth's
surface each day), with maximum outages of approximately nine hours. ORBCOMM
expects that, with a planned constellation of 28 satellites, the ORBCOMM
System will provide communications availability generally exceeding 95% of
each 24-hour period in the United States and other temperate zones in the
Northern and Southern hemispheres and averaging 75% of each 24-hour period
in the equatorial region.
(3) The license for the ORBCOMM System issued to OCC by the FCC on October 20,
1994 supersedes the earlier experimental licenses granted to OCC and
includes the two satellites launched by OCC in April 1995. The October 20,
1994 license grants OCC the authority to construct, launch and operate 36
LEO satellites in the United States.
(4) Each of the future launch dates identified represents the currently targeted
launch date.
(5) These two satellites are intended to be launched as a secondary payload on a
Taurus launch vehicle, also manufactured by Orbital.
(6) These eight satellites represent ground spares that may be deployed as a
fourth plane by the Company, provided that, subject to FCC approval, the
Company may determine not to so deploy such satellites.
15
<PAGE> 22
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Exchange Notes offered hereby.
DEVELOPMENT STAGE COMPANY
Expectation of Continued Losses and Accumulated Deficits. ORBCOMM is a
development stage company that commenced commercial service in the United States
with its first two satellites on February 1, 1996 and, therefore, has generated
only nominal revenues from its limited operations to date. ORBCOMM's activities
have focused primarily on acquisition of U.S. regulatory approvals for operation
of the ORBCOMM System, design, construction and deployment of its initial
satellites and associated network systems, negotiation of reseller agreements,
identification of potential International Licensees in countries outside the
United States, identification of Subscriber Communicator manufacturers and
hiring of management and other key personnel.
The continued development of ORBCOMM's business and deployment of the
ORBCOMM System will require significant capital expenditures, a substantial
portion of which will need to be incurred prior to the realization of
significant revenues from the ORBCOMM System. Together with ORBCOMM's operating
expenses, these capital expenditures will result in a negative cash flow until
an adequate revenue-generating customer base is established. ORBCOMM has
incurred cumulative deficiency of income over expenses of approximately $8.9
million through June 30, 1996 and it expects such losses to continue for the
foreseeable future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company does not expect that the
ORBCOMM System will generate positive cash flow until the ORBCOMM System is
fully deployed and operational, which is expected to occur in 1998. There can be
no assurance that the Company will achieve its objectives by the targeted dates.
See "Business."
Limited Operating and Financial Data. Prospective investors have limited
operating and financial data about the ORBCOMM System on which to base an
evaluation of the ORBCOMM System's performance and an investment in the Senior
Notes. ORBCOMM's ability to provide commercial service on a worldwide basis and
to generate positive operating cash flow will depend on its ability to, among
other things: (i) successfully construct and deploy the remaining satellites in
the ORBCOMM System in a timely manner; (ii) develop Reseller capabilities within
the United States and license arrangements outside the United States sufficient
to capture and retain an adequate customer base; and (iii) through its existing
or proposed International Licensees, obtain the necessary foreign regulatory
authority and construct the necessary ground infrastructure outside the United
States. Given ORBCOMM's limited operating history, there can be no assurance
that it will be able to overcome these barriers, to develop a sufficiently large
revenue-generating customer base to service its indebtedness or to compete
successfully in the communications industry.
Potential Additional Capital Requirements. The Company currently expects
to require approximately $350 million for capital expenditures, development and
operating costs of the ORBCOMM System and the purchase of the Pledged Securities
from June 30, 1993 (date of inception) through at least December 31, 1997, when
full deployment of the ORBCOMM System is expected to have occurred. Through June
1996, the Company had expended approximately $136 million for the design,
construction, deployment and/or procurement of satellites, launch vehicles,
portions of the network control elements and the U.S. ground segment and for
market development and regulatory activities. To finance such expenditures, the
Company has obtained approximately $160 million in equity contributions from its
partners and received net proceeds of approximately $164 million from the Old
Notes Offering and approximately $5 million from proceeds of the Company's
senior secured debt. The Company believes that the net proceeds of the Old Notes
Offering and the capital contributions of the ORBCOMM partners, together with
expected cash from operations, will be sufficient to fund the Company's
operations through at least December 31, 1997, when full deployment of the
ORBCOMM System is planned to have occurred. There can be no assurance that the
Company will generate sufficient cash from operations, or that expenses will not
exceed the Company's estimates, such that additional capital will not be
required. In particular, additional capital would be required in the event that:
(i) there are delays in the deployment of the ORBCOMM System as a result of
launch or satellite failure or otherwise;
16
<PAGE> 23
(ii) the Company incurs additional costs in completing the ORBCOMM System
including as a result of modifying the design of all or a portion of the ORBCOMM
System in the event of any technical difficulties or regulatory requirements;
(iii) there is an increase in the Company's estimated net operating deficit
indirectly as a result of the Company's incurring significant unanticipated
expenses; or (iv) reseller and international licensee agreements for additional
markets or territories are not entered into at the times or on the terms
anticipated by ORBCOMM. See "Business -- Development Milestones." There can be
no assurance that additional capital will be available for any of the foregoing
purposes from the public or private markets or from ORBCOMM's existing partners
on favorable terms or on a timely basis, if at all. A substantial shortfall in
funding would delay or prevent completion of the ORBCOMM System. In view of the
Company's current stage of development, the risk of any of the aforementioned
occurrences is substantial. The Company's ability to achieve positive cash flow
will depend on successful and timely design, construction and deployment of the
ORBCOMM System, the successful marketing of its services by Resellers and
International Licensees, and the ability of the ORBCOMM System to compete
successfully against its competitors, as to which there can be no assurance.
SUBSTANTIAL LEVERAGE; RESTRICTIVE COVENANTS
As of June 30, 1996, on a pro forma basis after giving effect to the Old
Notes Offering and the contribution of the partners' remaining capital
commitments, the Company's total indebtedness would have been $174 million and
its partners' capital accounts would have totaled $148 million. On a pro forma
basis after giving effect to the Old Notes Offering, the Company's deficiency of
earnings before fixed charges to cover fixed charges for the six months ended
June 30, 1996 and the year ended December 31, 1995 would have been $21.4 million
and $25.0 million, respectively.
The Indenture contains, and any additional financing agreements may
contain, certain restrictive covenants. The restrictions contained in the
Indenture affect, and in some cases significantly limit or prohibit, among other
things, the ability of the Company to incur indebtedness, make prepayments of
certain indebtedness, pay dividends, make investments, engage in transactions
with affiliates, issue capital stock, create liens, sell assets and engage in
mergers and consolidations. If the Company fails to comply with the restrictive
covenants in the Indenture, the Company's obligation to repay such obligations
may be accelerated.
The successful implementation of the Company's strategy, among other
things, is necessary for the Company to be able to meet its debt service. The
Company currently has no significant sources of revenue. In addition, the
Company's ability to satisfy its obligations once the ORBCOMM System is
operational will depend on the Company's future performance, which is subject to
a number of factors, many of which are beyond the Company's control. There can
be no assurance that the Company can complete the ORBCOMM System or that, once
completed, the Company will generate sufficient cash flow from operating
activities to meet its debt service and working capital requirements. Any
failure or delay in deployment of the ORBCOMM System could have a material
adverse effect on the Company's business, results of operations and financial
condition, including failure to meet these debt service requirements.
The Company's high degree of leverage could have important consequences to
the Holders of the Senior Notes, including that: (i) a substantial portion of
the Company's net cash provided by operations will be committed to the payment
of the Company's interest expense and principal repayment obligations and will
not be available to the Company for its operations, capital expenditures,
acquisitions or other purposes; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures or
acquisitions may be limited; (iii) the Company will be highly leveraged, which
may place it at a competitive disadvantage and limit the Company's flexibility
in reacting to changes in its business; and (iv) the Company's borrowings under
any Bank Credit Facility may be at variable rates of interest, which would
result in higher interest expense in the event of an increase in interest rates.
See "Description of Senior Notes."
LAUNCH RISKS
For the ORBCOMM System to be fully deployed and offer real time data and
messaging services under the Company's current schedule, ORBCOMM plans to launch
26 satellites during 1997. The Company has
17
<PAGE> 24
contracted with Orbital to provide three separate Pegasus XL launch vehicles to
deploy the satellites eight at a time, and one Taurus launch vehicle to deploy
two satellites. Satellite launches are subject to significant risks, including
failure of the launch vehicle, which may result in disabling damage to or loss
of the satellites, or failure of the satellites to achieve their proper orbit.
There can be no assurance that any of the proposed ORBCOMM System satellite
launches will be successful. Through August 21, 1996, Orbital has conducted a
total of eight standard Pegasus missions, all of which were fully or partially
successful. Whether a mission is fully or partially successful depends on the
particular mission requirements designated by the customer. Prior to its
successful flights in March, July, and August 1996, the modified Pegasus XL, an
enhanced version of the standard Pegasus, had two unsuccessful flights, one
occurring in June 1994 and the other in June 1995. The first Pegasus XL failure
was caused by inaccurate aerodynamic modeling of the vehicle. The second Pegasus
XL failure resulted from human assembly error involving the improper
installation of a small component that prevented the Stage 1/Stage 2 interstage
from properly separating from Stage 2. Following a comprehensive review of
design, assembly, test and operations procedures, the Pegasus XL returned to
flight on March 8, 1996, successfully launching a satellite for the U.S. Air
Force to its intended orbit, and had successful flights on July 2, 1996 and
August 21, in each case delivering a National Aeronautics and Space
Administration ("NASA") satellite to its designated orbit. There are four
additional Pegasus XL launches currently planned before the scheduled deployment
of the remaining ORBCOMM satellites using this launch vehicle. The failure of
any one of these launch vehicles could result in a delay in the deployment of
the ORBCOMM System satellites. For the ORBCOMM System to function at maximum
design efficiency, each individual plane of satellites comprising the
constellation must be deployed into its proper orbit.
Orbital's Pegasus XL vehicle is launched from beneath a modified Lockheed
L-1011 aircraft. In 1992, Orbital entered into a ten-year lease for the Lockheed
L-1011. In the event the L-1011 is unavailable for any reason, the Company would
experience significant timing delays as a result of Orbital having to acquire
and modify a new launch vehicle or the Company having to arrange for deployment
of the satellites using an alternative launch vehicle or by means of a ground
launch. There can be no assurance that another aircraft could be obtained and
properly modified or that alternate launch services could be obtained on a
timely or cost-effective basis, if at all.
ORBCOMM intends to launch two additional satellites in 1997 as a secondary
payload on a Taurus launch vehicle, also manufactured by Orbital. The Taurus
launch vehicle, the design and technology of which is derived largely from the
Pegasus launch vehicle, had a successful first launch in 1994. Because these two
satellites will be launched as a secondary payload, they are subject to the
scheduling restrictions imposed by the availability of the primary payload.
Accordingly, it may not be possible to launch the two satellites at the time
currently planned, if at all.
TECHNOLOGICAL RISKS
Integration and Operation Risks. The ORBCOMM System is exposed to the
risks inherent in a large-scale complex communications system employing advanced
technology. The operation of the ORBCOMM System will require the detailed design
and integration of communications technologies and devices ranging from
satellites operating in space and Subscriber Communicators to Gateways located
around the globe. There can be no assurance that, even if built to
specifications, the ORBCOMM System will function as expected in a timely and
cost-effective manner. The failure of any of the diverse and dispersed elements
to function and coordinate as required could delay the full deployment of the
ORBCOMM System or render it unable to perform at the quality and capacity levels
required for success.
The ORBCOMM satellites have limited redundancy against technical failure
and there can be no assurance of a particular satellite's longevity. A number of
factors will affect the useful lives of the ORBCOMM System satellites, including
quality of construction, expected gradual environmental degradation of solar
panels and durability of component parts. Random failure of satellite components
could result in damage to or loss of a satellite. In rare cases, satellites
could also be damaged or destroyed by electrostatic storms or collisions with
other objects. ORBCOMM's operating results would be adversely affected in the
event the useful life of the satellites were significantly shorter than five
years.
18
<PAGE> 25
The Company has experienced and continues to experience, from time to time,
certain technical difficulties with its initial two satellites, including
outages of certain electronic systems and subsystems resulting in the temporary
inability to process subscriber communications. While the Company believes these
technical difficulties have been addressed as experienced, and that none of the
difficulties has resulted or will result in a significant degradation of
satellite performance, there can be no assurance that performance degradation in
these two satellites will not occur in the future.
In addition, the Company is modifying the existing satellite design to
enhance overall satellite performance. For example, the Company is redesigning
the satellite antenna to increase satellite availability to subscribers and to
increase satellite capacity. While such design modifications will be subject to
extensive design reviews and testing prior to deployment of the satellites,
there can be no assurance that the modifications will be successful or that the
modified satellites will operate as intended.
Development of Subscriber Communicators. The successful operation of the
ORBCOMM System depends on the design, construction and commercial availability
of Subscriber Communicators designed to support the specific needs of users. See
"Business -- The ORBCOMM System -- System Architecture -- Subscriber Segment."
To ensure availability of Subscriber Communicators having different functional
capabilities in sufficient quantities to meet demand, the Company has entered
into a development agreement with Panasonic and is in the process of finalizing
manufacturing and sales support agreements with Panasonic. The Company also has
executed Subscriber Communicator Manufacturing Agreements with Scientific-
Atlanta, Magellan, Torrey Science and Stellar. Panasonic has received
authorization from the Company to manufacture two basic Subscriber
Communicators, one with and one without GPS functionality, both of which are now
commercially available. Torrey Science received authorization from the Company
in August 1996 to manufacture a basic Subscriber Communicator and the Company
expects that Torrey Science will have units commercially available in the first
quarter of 1997. Realization of the full market potential for the Company's
communications services depends upon the availability of Subscriber
Communicators at prices attractive to customers. There can be no assurance that
the Company's Subscriber Communicator manufacturers will successfully design and
manufacture Subscriber Communicators to the Company's specifications or in
sufficient quantities to satisfy the expected needs of the ORBCOMM System, or
that the price of such Subscriber Communicators will decline so as to make them
affordable to the broad customer base intended by the Company.
SCHEDULE DELAYS
Delay in the timely construction, deployment and commercial operation of
the ORBCOMM System could result from a variety of causes, including delays
encountered in the construction, integration and testing of the ORBCOMM System,
a delayed or unsuccessful launch, delays caused by design reviews in the event
of a launch vehicle failure or a loss of satellites, or as the result of a delay
in the FCC's approval of OCC's request for modification of its FCC license filed
in October 1995 (the "Modification Request") or other events beyond the control
of ORBCOMM. The construction schedule for the satellites in the ORBCOMM System
requires a rate for satellite production and testing that is unprecedented for
commercial communications systems. The schedule set forth under the Procurement
Agreement has been delayed six months as a result of, among other things,
enhancements made to the design of the satellites. Although such delay has not
affected the current planned launch dates of the ORBCOMM System satellites, the
contingency period within the overall schedule for the development and
deployment of the ORBCOMM System has been reduced. A significant delay in the
deployment of satellites from the Company's current schedule could materially
and adversely affect the Company's operations. In addition, a significant delay
in the manufacture of Subscriber Communicators could have a material adverse
effect on the Company's results of operations. The success of the ORBCOMM System
depends on Subscriber Communicators being available to potential subscribers on
a timely basis to take advantage of the intermittent data communications
services currently available and the real time data and messaging services that
will be available on full deployment of the ORBCOMM System. There can be no
assurance that the satellites or the Subscriber Communicators will be available
on a timely basis.
19
<PAGE> 26
REGULATORY RISKS
Licensing Risks; Domestic. ORBCOMM's business may be affected by the
regulatory activities of various U.S. government agencies, primarily the FCC. On
October 20, 1994, the FCC granted to OCC the FCC License, authorizing OCC to
construct, launch and operate the ORBCOMM System for the purpose of providing
two-way data and message communications and position determination services in
the United States. Although the FCC License is currently valid, it is subject to
revocation if OCC fails to satisfy certain conditions or to meet certain
prescribed milestones, including the December 2000 milestone by which OCC must
launch 36 satellites, although OCC may determine, subject to FCC approval, to
launch fewer than 36 satellites by such date. While the FCC License is valid for
a period of ten years from the operational date of the first ORBCOMM satellite,
OCC is required, three years prior to expiration of the FCC License, to apply
for a license renewal with the FCC. Although the FCC has indicated that it is
generally inclined to grant renewal applications of existing Little LEO
licensees, there can be no assurance that the FCC will in fact renew the FCC
License. Should the FCC revoke the FCC License or fail to renew the FCC License
on application by OCC, or if OCC fails to satisfy any of the conditions of the
FCC License, such action would have a material adverse impact on ORBCOMM's
business. Finally, the business of ORBCOMM could be adversely affected by the
adoption of new laws, policies or regulations, or changes in the interpretation
or application of existing laws, policies and regulations, that modify the
present regulatory environment. See "Regulation."
ORBCOMM's authorization to provide services is subject to the Modification
Request. This request seeks to modify the frequency plan to permit the ORBCOMM
System to use fewer, higher data rate subscriber downlink channels, which
should, among other things, enable it to avoid interfering with other existing
and proposed systems. The Modification Request has been opposed by numerous
other Little LEO systems. OCC recently reached an agreement with Starsys Global
Positioning, Inc. ("Starsys") and the National Oceanic and Atmospheric
Administration ("NOAA") with respect to technical matters raised by the
Modification Request. While OCC expects that the FCC will grant the Modification
Request in the near future, should the Modification Request be denied or
significantly delayed by the FCC, it could have a material adverse effect on
ORBCOMM's business.
As a private carrier, OCC currently is not subject to the restrictions that
apply to common carriers or to providers of Commercial Mobile Radio Services
("CMRS"). There can be no assurance, however, that in the future, OCC will not
engage in business of a type such that the FCC would deem it a common carrier or
a CMRS provider or that the FCC will not in the future exercise its
discretionary authority to apply the CMRS or common carrier rules to MSS
providers. See "Regulation." The application of these rules could have an
adverse effect on OCC's business by, for instance, requiring OCC to offer all
customers just, reasonable and non-discriminatory rates, by subjecting OCC to
certain tariff filing requirements, by subjecting OCC to state regulation (if
OCC were deemed to be a common carrier) and by subjecting OCC to various alien
ownership and control restrictions applicable to common carriers and CMRS
providers.
LICENSING RISKS; INTERNATIONAL. ORBCOMM's business is affected by the
regulatory authorities of the countries in which it or its International
Licensees will operate. Obtaining local regulatory approval for operation of the
ORBCOMM System will be the responsibility of the International Licensee in each
territory. While International Licensees will be selected, in part, based on
their perceived qualifications to obtain the requisite local approvals, there
can be no assurance that they will be successful in doing so, and if they are
not successful, service will not be available in such territories. Although many
countries have moved to privatize the provision of communications service and to
permit competition in the provision of such services, some countries continue to
require that all communications service be provided by a government-owned
entity. The Company anticipates that most of its International Licensees will be
private entities. Therefore, in those countries that require services to be
provided by a government-owned entity, the Company may be unable to offer
services using the ORBCOMM System. ORBCOMM's inability to offer service in a
foreign country or countries could have a material adverse effect on ORBCOMM's
business. Regulatory provisions in countries in which the Company or its
International Licensees seek to operate may impose impediments on the Company's
or the International Licensees' operations and there can be no assurance that
such restrictions would not be unduly burdensome. ORBCOMM's business may also be
adversely affected by regulatory
20
<PAGE> 27
changes resulting from judicial decisions and/or adoption of treaties,
legislation or regulation by the national authorities where the ORBCOMM System
plans to operate.
The United States, on behalf of OCC, is required to coordinate the
frequencies used by the ORBCOMM System through the ITU. ITU frequency
coordination is a necessary prerequisite to obtaining interference protection
from other satellite systems. There is no penalty for launching a satellite
system prior to completion of the ITU coordination process, although protection
from interference through this process is only afforded as of the date of
successful completion of the process and notification of the system by ITU.
Although the United States has substantially completed the ITU coordination
process with respect to the ORBCOMM System, it is still required to coordinate
the ORBCOMM System with France and Russia. Although the Company believes that
approval of the Modification Request would facilitate its coordination efforts
with Russia and that approval of the Modification Request could facilitate its
coordination efforts with France, there can be no assurance that the FCC will
grant the Modification Request. There also can be no assurance that, even if the
Modification Request is granted, OCC will be successful in coordinating the
ORBCOMM System with the Russian and French systems. Any delay in or failure to
successfully complete the ITU coordination process may result in potential
interference to the ORBCOMM System by other mobile satellite systems operating
internationally, which could have a material adverse effect on ORBCOMM's
business.
LIMITED INSURANCE
The Company expects to obtain launch insurance for each scheduled Pegasus
XL launch that would provide it with the necessary funds to procure a
replacement launch vehicle in the event of a launch vehicle failure. The Company
also expects to procure in-orbit satellite insurance against the failure of
satellites after placement of satellites into commercial service. The foregoing
insurance would not cover the cost to construct replacement satellites in the
event of a launch failure, or the cost to construct and launch satellites in the
event of the loss of satellites after a successful launch but prior to the time
satellites are placed into commercial service. Pursuant to the terms of the
Procurement Agreement, the Company is purchasing eight additional satellites to
be used as ground spares. Such ground spares represent self-insurance against
the risk of a loss of satellites. Until such time as the Company is required to
use its ground spare satellites, ORBCOMM does not intend to obtain insurance to
cover the cost of obtaining replacement satellites in the event of a launch
vehicle failure or an in-orbit failure prior to placement of such satellites
into commercial service. In the event that the Company is required to use its
ground spare satellites, ORBCOMM will be obligated under the terms of the
Indenture to procure insurance for subsequent missions covering a loss of
satellites as a result of a launch vehicle failure or an in-orbit failure prior
to placement of such satellites into commercial service. The Company does not
have in-orbit insurance for the two satellites currently operational and does
not intend to procure launch or in-orbit insurance for the two satellites
currently planned to be launched as a secondary payload on a Taurus launch
vehicle.
Based on current market conditions, the Company expects that premiums for
launch insurance would be less than ten percent for Pegasus XL launches and that
in-orbit satellite insurance after placement of the satellites into commercial
service would be approximately 1.5% to 2% per year. An adverse change in
insurance market conditions or other factors outside the Company's control at
the time the Company seeks to procure such insurance may, however, cause
premiums to be significantly higher than current estimates. The Company believes
that its procurement of the spare satellites will offset in part the risk of a
launch failure. There can be no assurance, however, that launch or satellite
failures will not occur and that launch or in-orbit satellite insurance will be
available to the Company in the future or, if available, at a cost or on terms
acceptable to the Company.
LIMITED LIFE OF SATELLITES
The ORBCOMM System satellites, which constitute a substantial portion of
the Company's total assets, will have a limited useful life. The additional
first-generation satellites are designed to operate for five years. ORBCOMM
anticipates using funds generated from operations to develop a second generation
of satellites. If sufficient funds from operations are not available and ORBCOMM
is unable to obtain financing for the second-generation constellation, ORBCOMM
will not be able to deploy a second-generation satellite
21
<PAGE> 28
constellation to replace first-generation satellites at the end of their useful
lives. There can be no assurance that additional capital will be available to
develop the second generation of satellites on favorable terms or on a timely
basis, if at all.
MARKET ACCEPTANCE
The success of the ORBCOMM System and the Company's ability to pay interest
and principal on the Senior Notes will depend on subscriber acceptance of
ORBCOMM System services. Subscriber acceptance of ORBCOMM System services will
depend on a number of factors, including the technical capabilities of the
ORBCOMM System, the cost of Subscriber Communicators, the price of ORBCOMM
System services and the extent, availability and price of alternative
communications services. There can be no assurance that price, service
limitations or Subscriber Communicator size, weight or cost will not result in
more significant limitations on customer acceptance than the Company
anticipates. The ORBCOMM System will provide a new data transfer and messaging
capacity to certain markets where the Company has identified a demand for such
types of communications services. The Company expects that introduction of the
ORBCOMM System will lead to the development of new applications and services
that will use the capacity provided by the ORBCOMM System. As with any new
service, however, there can be no assurance that development of such
applications will occur.
Realization of the full market potential for the Company's services will
depend on the availability of Subscriber Communicators that are reasonably
priced and that have certain features attractive to the market. One of the
Company's Subscriber Communicator manufacturers, Panasonic, currently has
Subscriber Communicators that are commercially available. The Company expects
that once its other Subscriber Communicator manufacturers have units that are
commercially available and once the overall production volume for Subscriber
Communicators begins to increase, the price for Subscriber Communicators will
decline substantially. Panasonic and Stellar have informed the Company that, in
lots of at least several thousand, the price for their respective Subscriber
Communicators will be approximately $550 per unit. There can be no assurance,
however, that the price of such Subscriber Communicators will decline so as to
make them affordable to a broad customer base. Also, many Subscriber
Communicators are currently being designed to offer particular features the
Company believes will be attractive to potential end-users, such as GPS. There
can be no assurance, however, that the market will demand the types of features
currently offered by or proposed to be offered by these Subscriber
Communicators, that the Company's Subscriber Communicator manufacturers will
continue to manufacture Subscriber Communicators or that technological or other
design developments over the years will not render these Subscriber
Communicators obsolete.
The success of the ORBCOMM System depends in part on the ability of the
Company to offer its data and messaging communications services at rates
attractive to the market. Although the Company believes that its pricing
structure will make the ORBCOMM System an affordable and thus attractive option
for the provision of such services to the industries and markets it has
targeted, the cost to end-users for ORBCOMM System services is largely beyond
the control of the Company.
RELIANCE ON RESELLERS AND INTERNATIONAL LICENSEES
In the United States, ORBCOMM intends to rely on Resellers to market and
distribute its services to retail customers. The willingness of companies to
become Resellers will depend on a variety of factors, including regulatory
restrictions, whether potential Resellers perceive the ORBCOMM System services
to be compatible with their own and whether the proposed compensation provides
an adequate return. ORBCOMM's reseller agreements provide that the Resellers
will use all reasonable commercial efforts to market and distribute ORBCOMM
System services, but in most cases do not require the Resellers to meet
established sales objectives. There can be no assurance that ORBCOMM's Resellers
will successfully develop a retail market and distribute ORBCOMM System
services.
Outside the United States, the Company will enter into Service License
Agreements with International Licensees who will be responsible in their
territory for, among other things, procuring and installing the necessary
Gateways, obtaining all regulatory approvals to provide services using the
ORBCOMM System, and
22
<PAGE> 29
operating and marketing services using the ORBCOMM System. The Company intends
to select its International Licensees primarily by evaluating the ability of the
International Licensee to distribute and market successfully the Company's
services. Key components of such an evaluation include the prospective
International Licensee's: (i) reputation in the marketplace; (ii) existing
distribution capabilities and infrastructure; (iii) financial condition and
other resources; and (iv) ability to obtain the requisite local regulatory
approvals to operate the ORBCOMM System. There can be no assurance that the
Company's International Licensees will be successful in obtaining the requisite
foreign regulatory approvals or, even if successful, that they will successfully
develop a retail market and distribute ORBCOMM System services.
Certain of such Resellers and International Licensees are start-up ventures
with limited financial resources, and there can be no assurance that any such
entities will be successful in their efforts to market effectively the ORBCOMM
System or, in the case of International Licensees, to procure and install the
necessary Gateways and obtain the necessary foreign regulatory authority to
operate their systems.
COMPETITION
Competition in the communications industry is intense, fueled by rapid and
continuous technological advances and alliances between industry participants
seeking to use such advances on an international scale to capture significant
market share. Although no present participant is currently providing the same
global commercial communications services to be provided by the Company, it is
anticipated that the ORBCOMM System will face competition from numerous existing
and potential alternative communications products and services provided by
various large and small companies, including sophisticated two-way
satellite-based data and voice communication services. The Company expects that
potential competitors will include other Little LEO satellite systems and may
include Big LEO and GEO satellite systems and, in some cases, terrestrial
messaging and data systems. If any of the Company's competitors succeed in
marketing and deploying systems with services similar to those expected to be
offered through the ORBCOMM System substantially earlier than the scheduled full
deployment of the ORBCOMM System, the Company's ability to compete in markets
served by such competitors may be adversely affected.
Some of the Company's potential competitors have financial, personnel and
other resources substantially greater than those of the Company. Many of these
competitors are raising capital and may compete with the Company. In addition, a
continuing trend toward consolidation and strategic alliances in the
communications industry could give rise to significant new competitors, and any
foreign competitor may benefit from subsidies from, or other protective measures
by, its home country. There can be no assurance that some of these competitors
will not provide more efficient or less expensive services.
Satellite-based communications systems are characterized by high up-front
costs and relatively low marginal costs of providing service. A number of Big
LEO and GEO systems are presently being proposed, and, while the proponents of
these systems foresee substantial demand for the services they will provide, the
actual level of demand will not become known until such systems are constructed,
launched and begin operations. Big LEO and GEO systems are designed primarily to
provide two-way voice services that require larger, more complex satellites and
require a circuit-oriented connection over their network to transmit even short
messages, which significantly increases their per-message cost. If, however, the
operators of these systems seek to offer services similar to those offered by
the ORBCOMM System, price competition could be intense.
Two other Little LEO systems currently are licensed by the FCC to provide
data and messaging communications services. One system currently expects to
deploy a two-satellite system to transmit health, research and scientific data
on a delayed basis between developing countries and the United States. The
second system expects to construct and operate a multiple-satellite
constellation that could compete with the ORBCOMM System. This system, which is
now owned 80% by GE American Communications Corporation, could have
significantly greater resources than the Company. There are currently eight
applicants (including OCC) before the FCC in a second processing round for
Little LEO systems, the filing period for which closed on November 16, 1994.
Should the FCC approve any one of the competing second round applications, such
licensee could compete with the Company.
23
<PAGE> 30
Terrestrial wireless services have certain key advantages over
satellite-based systems, particularly in urban or densely populated areas, in
terms of signal strength and the ability to penetrate various environments (such
as buildings). By contrast, the ORBCOMM System is unable to penetrate buildings
and has limited application in densely populated areas currently serviced by
terrestrial wireless systems. The ORBCOMM System is not intended to compete with
existing and planned terrestrial data and messaging systems. It is expected,
however, that as terrestrial communications services expand to regions currently
underserved or not served by wireline or wireless systems, demand for ORBCOMM
System services in these regions may be reduced. ORBCOMM may also face
competition in the future from companies using new technologies and new
satellite systems. A number of these new technologies, even if they are not
ultimately successful, could have an adverse effect on ORBCOMM as a result of
their marketing efforts. ORBCOMM's business would be adversely affected if
competitors begin operations or existing or new communication service providers
penetrate ORBCOMM's target markets.
RELIANCE ON SINGLE SUPPLIER; POTENTIAL CONFLICT OF INTEREST
The Company does not independently have, and does not intend to acquire,
except by contracting with other parties, the ability to design, develop,
construct or launch the satellites in the ORBCOMM System. ORBCOMM has contracted
with Orbital to provide these services under the Procurement Agreement. In the
event that Orbital fails to perform its obligations under the Procurement
Agreement, the deployment of the ORBCOMM System may be delayed until ORBCOMM is
able to locate an alternative provider of necessary services to replace Orbital.
In addition, a material adverse impact on Orbital and its business may adversely
affect Orbital's ability to perform under the Procurement Agreement. The Company
has not identified any alternate provider of the services currently being
provided by Orbital, and there can be no assurance that such an alternative
service provider would be available or, if available, would be available at a
cost or on terms favorable to the Company.
Orbital, through OCC, has a substantial interest in the Company.
Accordingly, a conflict of interest may exist between the Company and Orbital
under the Procurement Agreement and other related agreements between Orbital and
OCC. Pursuant to the ORBCOMM Partnership Agreement, significant amendments to
the Procurement Agreement, or other transactions between the Company and
Orbital, are subject to the approval of Teleglobe Mobile. There can be no
assurance, however, that the potential conflict of interest between the Company
and Orbital would not have a material adverse effect on the Company.
MARKET ESTIMATES
The Company's description of potential markets for its mobile data and
messaging communications service offerings and estimates of the Company's
addressable markets that are discussed in this Prospectus under the caption
"Business -- The ORBCOMM System" represent the Company's estimates as of the
date hereof with respect to such markets. Such market descriptions and estimates
are based on a number of assumptions, some of which may be incorrect or may not
materialize, and unanticipated events may occur that could affect actual
business realized for ORBCOMM System services. Consequently, actual markets
should be expected to vary from the addressable markets discussed herein, and
these variations may be material.
DEPENDENCE ON KEY MANAGEMENT AND QUALIFIED PERSONNEL
The Company's success will depend on the efforts of its management team and
its ability to attract and retain qualified management and personnel in the
future. The Company has no employment contract with any employee and is subject
to the loss of one or more key employees at any time. In addition, the Company
must rely on several employees of Orbital who play a key role in the performance
of Orbital's obligations under the Procurement Agreement. The Company has no
control over the relationship between Orbital and such employees. The Company
could be materially and adversely affected by the loss of one or more key
employees.
24
<PAGE> 31
RELATIONSHIP BETWEEN STRATEGIC PARTNERS
ORBCOMM is a partnership whose two partners, OCC and Teleglobe Mobile, each
hold a 50% Participation Percentage in the Company. Under the terms of the
ORBCOMM Partnership Agreement, substantially all actions by the Company require
the approval of at least a majority-in-interest (i.e., partners holding a
majority of the Participation Percentage in the Company). Therefore, under the
current ownership structure, if OCC and Teleglobe Mobile do not agree on a
course of action for the Company, a deadlock would occur. Generally, there is no
mechanism in the ORBCOMM Partnership Agreement or any other agreement for
resolving such a deadlock. The result of a deadlock between the strategic
partners could have a material adverse effect on the Company.
RISKS OF INTERNATIONAL OPERATIONS
ORBCOMM expects to derive substantial revenues by providing international
communications services. Such operations are subject to certain risks such as
changes in domestic and foreign government regulations and communications
standards, licensing requirements, tariffs or taxes and other trade barriers,
exchange controls, and political and economic instability, including
fluctuations in the value of foreign currencies which may make payment in U.S.
dollars more expensive for foreign customers.
RISK THAT THE COMPANY IS TREATED AS A PUBLICLY TRADED PARTNERSHIP
In general, a partnership is not a taxable entity for United States federal
income tax purposes. Certain partnerships ("publicly traded partnerships"),
however, are treated as corporations for federal tax purposes if interests in
the partnership are traded on an established securities market or on a secondary
market (or a substantial equivalent thereof). Treasury Regulations provide
generally that, for this purpose, an "interest in a partnership" includes any
financial instrument or contract the value of which is determined in whole or in
part by reference to the partnership (including the results of partnership
operations). The Regulations make an exception to this rule, however, for any
financial instrument or contract that (i) is treated as debt for federal tax
purposes and (ii) is not convertible into or exchangeable for an interest in the
capital or profits of the partnership and does not provide for a payment of
equivalent value. Such an instrument is not treated as an "interest in the
partnership" for purposes of these rules. The Company believes that the Senior
Notes are properly treated as debt for federal income tax purposes and, although
the Senior Notes provide for contingent interest that is based on the gross
revenues of the Company, that such Senior Notes do not provide for payments that
are equivalent in value to an interest in partnership capital or profits.
Therefore, the Company intends to report as a partnership, rather than as a
publicly traded partnership taxable as a corporation, for federal income tax
purposes. If, however, the Internal Revenue Service successfully took a contrary
position, the Company would be treated as a corporation for federal tax
purposes, which would reduce the amount of the Company's after-tax income
available to meet its obligations under the Senior Notes.
FRAUDULENT CONVEYANCE CONSIDERATIONS -- SUBSIDIARY GUARANTEES
The obligations of the Company under the Senior Notes are guaranteed,
jointly and severally, by the Guarantors, including the Guarantees (the
"Subsidiary Guarantees") by ORBCOMM USA and ORBCOMM International (the
"Subsidiary Guarantors"). It is possible that creditors of the Subsidiary
Guarantors may challenge the Subsidiary Guarantees as a fraudulent conveyance
under relevant federal and state statutes, and, under certain circumstances
(including a finding that a Subsidiary Guarantor was insolvent at the time its
Subsidiary Guarantee was issued), a court could hold that the obligations of a
Subsidiary Guarantor under a Subsidiary Guarantee may be voided or are
subordinate to other obligations of a Subsidiary Guarantor. In addition, it is
possible that the amount for which a Subsidiary Guarantor is liable under a
Subsidiary Guarantee may be limited. The measure of insolvency for purposes of
the foregoing may vary depending on the law of the jurisdiction that is being
applied. Generally, however, a company would be considered insolvent if the sum
of its debts is greater than all of its property at a fair valuation or if the
present fair saleable value of its assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and mature. The Indenture provides that the obligations of the
Subsidiary Guarantors under the Subsidiary Guarantees will be limited to amounts
that will not result in the
25
<PAGE> 32
Subsidiary Guarantees being a fraudulent conveyance under the applicable law.
See "Description of Senior Notes -- Guarantees."
ABSENCE OF A PUBLIC MARKET
The Old Notes are designated for trading in the PORTAL market, the National
Association of Securities Dealers Inc.'s screen-based automated market for
trading of securities eligible for resale under Rule 144A. The Exchange Notes
are a new issue of securities with no established trading market. Although the
Initial Purchasers of the Old Notes have advised the Issuers that they currently
intend to make a market in the Exchange Notes, they are not obligated to do so
and any market-making activities with respect to the Exchange Notes may be
discontinued at any time without notice. The Issuers do not intend to list the
Exchange Notes on any national securities exchange or to seek admission thereof
to trading in the National Association of Securities Dealers Automated Quotation
System. Accordingly, there can be no assurance as to the development of any
market, or the liquidity of any market that may develop, for the Exchange Notes.
If such a market were to exist, no assurance can be given as to the trading
prices of the Exchange Notes. Future trading prices of Exchange Notes will
depend on many factors, including, among other things, prevailing interest
rates, the Company's results of operations and the market for similar
securities, and, accordingly, the Exchange Notes may trade at a discount from
their principal amount.
FAILURE TO EXCHANGE NOTES
The Exchange Notes will be issued in exchange for Old Notes only after
timely receipt by the Exchange Agent of such Old Notes, a properly completed and
duly executed Letter of Transmittal and all other required documents. Therefore,
holders of Old Notes desiring to tender such Old Notes in exchange for Exchange
Notes should allow sufficient time to ensure timely delivery. Neither the
Exchange Agent nor the Issuers is under any duty to give notification of defects
or irregularities with respect to tenders of Old Notes for exchange. Old Notes
that are not tendered, or are tendered but not accepted, will, following
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof. In addition, any holder of Old Notes who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the Exchange Notes will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or any other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." To the
extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Old Notes were sold by the Issuers on August 7, 1996 (the "Closing
Date") to the Initial Purchasers. The Initial Purchasers subsequently placed the
Old Notes with qualified institutional buyers and institutional accredited
investors in transactions not requiring registration under the Securities Act or
applicable state securities laws, including sales pursuant to Rule 144A under
the Securities Act. As a condition to the sale of the Old Notes, the Issuers,
Guarantors and the Initial Purchasers entered into the Registration Rights
Agreement on August 7, 1996. Pursuant to the Registration Rights Agreement, the
Issuers agreed that, unless the Exchange Offer is not permitted by applicable
law or Commission policy, they would (i) file with the Commission a Registration
Statement under the Securities Act with respect to the Old Notes within 30 days
after the Closing Date, (ii) use their reasonable best efforts to cause such
Registration Statement to become effective under the Securities Act within 150
days after the Closing Date, and (iii) upon effectiveness of the Registration
Statement, commence the Exchange Offer, maintain the effectiveness of the
Registration Statement for at least 30 days (or a longer period if required by
law) and deliver to the Exchange Agent Exchange Notes in the same aggregate
principal amount as the Old Notes that were properly tendered
26
<PAGE> 33
by holders thereof pursuant to the Exchange Offer. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Registration Statement of which this
Prospectus is a part is intended to satisfy certain of the Issuers' obligations
under the Registration Rights Agreement.
RESALE OF THE EXCHANGE NOTES
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to the Issuers, the Issuers believe
that, with the exceptions discussed herein, Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by any person receiving the Exchange Notes, whether or
not that person is the holder (other than any such holder or such other person
that is an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act; provided that (i) the Exchange Notes
are acquired in the ordinary course of business of that holder or such other
person, (ii) neither the holder nor such other person is engaging in or intends
to engage in a distribution of the Exchange Notes, and (iii) neither the holder
nor such other person has an arrangement or understanding with any person to
participate in the distribution of the Exchange Notes. However, the Issuers have
not sought, and do not intend to seek, their own no-action letter, and there can
be no assurance that the Commission's staff would make a similar determination
with respect to the Exchange Offer.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities. Pursuant to the
Registration Rights Agreement, the Company has agreed to make this Prospectus,
as it may be amended or supplemented from time to time, available to
broker-dealers for use in connection with any resale for a period of 180 days
after the Expiration Date. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Issuers will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Issuers will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The Exchange Notes will evidence the same debt as the Old Notes for which
they are exchanged, and are entitled to the benefits of the Indenture. The form
and terms of the Exchange Notes are substantially the same as the form and terms
of the Old Notes except that the Exchange Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer thereof.
As of the date of this Prospectus, $170,000,000 aggregate principal amount
of Old Notes were outstanding. The Issuers have fixed the close of business on
September , 1996, as the Record Date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus, together with the Letter of
Transmittal, will initially be sent. As of the Record Date, there was one
registered holder of Old Notes. Holders of Old Notes do not have any appraisal
or dissenters' rights under the Delaware General Corporation Law or the
Indenture in connection with the Exchange Offer. The Issuers intend to conduct
the Exchange Offer in accordance with the provisions of the Registration Rights
Agreement and the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations of the Commission thereunder.
27
<PAGE> 34
The Issuers shall be deemed to have accepted validly tendered Old Notes
when, as and if the Issuers have given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
for the purpose of receiving the Exchange Notes from the Issuers. If any
tendered Old Notes are not accepted for exchange because of an invalid tender,
the occurrence of certain other events set forth herein or otherwise,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders whose Old Notes are not tendered or are tendered but not accepted
in the Exchange Offer will continue to hold such Old Notes and will be entitled
to all the rights and preferences and subject to the limitations applicable
thereto under the Indenture. Following consummation of the Exchange Offer, the
Holders of Old Notes will continue to be subject to the existing restrictions
upon transfer thereof and the Issuers will have no other obligation to such
Holders of Old Notes to provide for the registration under the Securities Act of
the Old Notes held by them. The Old Notes are designated for trading in the
PORTAL market. To the extent Old Notes are tendered and accepted on the Exchange
Offer, the principal amount of outstanding Old Notes will decrease with a
resulting decrease in the liquidity of the market therefor. Following
consummation of the Exchange Offer, holders of Old Notes who were eligible to
participate in the Exchange Offer but who did not tender their Old Notes will
not be entitled to certain rights under the Registration Rights Agreement, and
such Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity in the market for the Old Notes could be adversely
affected. No assurance can be given as to the liquidity of the trading market
for either the Old Notes or the Exchange Notes.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Issuers will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"-- Fees and Expenses; Solicitation of Tenders."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean , 1996, unless the
Issuers, in their sole discretion, extend the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
To extend the Expiration Date, the Issuers will notify the Exchange Agent
of any extension by oral or written notice and will issue a press release or
other public announcement, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Such
announcement may state that the Issuers are extending the Exchange Offer for a
specified period of time or on a daily basis until 5:00 p.m., New York City
time, on the date on which a specified percentage of Notes are tendered.
The Issuers reserve the right (i) to delay accepting any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not accept Old
Notes not previously accepted if any of the conditions set forth below under
"-- Certain Conditions to the Exchange Offer" shall not have been satisfied and
shall not have been waived by the Issuers, by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
Holders. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by oral or written notice thereof to the
Holders. If the Exchange Offer is amended in a manner determined by the Issuers
to constitute a material change, the Issuers will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to all
Holders, and the Issuers will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the amendment and the
manner of disclosure to Holders, if the Exchange Offer would otherwise expire
during such five to ten business day period. During any extension of the
Expiration Date, all Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Issuers.
Without limiting the manner in which the Issuers may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Issuers shall have no obligation to publish,
28
<PAGE> 35
advertise, or otherwise communicate any such public announcement, other than by
making a timely release to the Dow Jones News Service.
INTEREST ON THE SENIOR NOTES
Fixed interest accrues on the Senior Notes at the rate of 14% per annum.
Fixed Interest and Revenue Participation Interest will be payable in cash
semiannually in arrears on each February 15 and August 15, commencing on
February 15, 1997. No interest will be payable on the Old Notes on the date of
the exchange for the Exchange Notes and therefore no interest will be paid
thereon to the Holders at such time.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Issuers will constitute a binding
agreement between the tendering Holder and the Issuers upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to the Exchange Agent at the address set
forth below under "-- Exchange Agent" on or prior to the Expiration Date. In
addition, either (i) certificates for such Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Notes, if such
procedure is available, into the Exchange Agent's account at the Depositary
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the Holder
must comply with the guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE ISSUERS.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes surrendered for exchange pursuant thereto are tendered (i)
by a registered Holder of the Old Notes who has not completed the box entitled
"Special Insurance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution (as
defined below). In the event that signatures on a Letter of Transmittal or a
notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantee must be made by a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or by a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (collectively, "Eligible Institutions"). If Old Notes are registered
in the name of a person other than the person signing the Letter of Transmittal,
the Old Notes surrendered for exchange must be endorsed by, or be accompanied by
a written instrument or instruments of transfer or exchange, in satisfactory
form as determined by the Issuers in their sole discretion, duly executed by the
registered Holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Issuers in their sole discretion, which determination shall be final and
binding. The Issuers reserve the absolute right to reject any and all tenders of
any particular Old Notes not properly tendered or to not accept any particular
Old Notes which acceptance might, in the
29
<PAGE> 36
judgment of the Issuers or their counsel, be unlawful. The Issuers also reserve
the absolute right in their sole discretion to waive any defects of
irregularities or conditions of the Exchange Offer as to any particular Old
Notes either before or after the Expiration Date (including the right to waive
the ineligibility of any Holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer as
to any particular Old Notes either before or after the Expiration Date
(including the Letter of Transmittal and instructions thereto) by the Issuers
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with the tenders of Old Notes for exchange must be
cured within such reasonable period of time as the Issuers shall determine.
Neither the Issuers, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered Holder or Holders of Old Notes, such Old Notes must be endorsed
or accompanied by an appropriate bond power, in either case signed exactly as
the names of the registered Holder or Holders that appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond power is signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing and, unless waived by the Issuers, proper
evidence satisfactory to the Issuers of their authority to so act must be
submitted.
By tendering, each Holder (other than participating broker-dealers) will
represent to the Issuers that, among other things, (i) the Exchange Notes to be
acquired in exchange for Old Notes tendered in the Exchange Offer will have been
acquired in the ordinary course of business of such Holder or such other person
receiving such Exchange Notes, (ii) neither such Holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such Exchange Notes, (iii) such Holder or any such other person
acknowledges and agrees that any person who is a broker-dealer registered under
the Exchange Act or is participating in the Exchange Offer for the purposes of
distributing the Exchange Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the Exchange Notes acquired by such person and cannot rely
on the position of the staff of the Commission set forth in certain no-action
letters, (iv) the Holder or any such other person understands that a secondary
resale transaction described in clause (iii) above and any resales of Exchange
Notes obtained by such Holder or such other person in exchange for Notes
acquired by such Holder or such other person directly from the Issuers should be
covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (v) neither the Holder nor any such other
person is an "affiliate," as defined in Rule 405 under the Securities Act, of
the Issuers. If the Holder or such other person receiving the Exchange Notes is
a broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making activities or other
trading activities, the Holder or such other person is required to acknowledge
in the Letter of Transmittal that it will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the Holder or such other person will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES; RETURN OF OLD
NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuers will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the Exchange Notes promptly after acceptance of
the Old Notes. See "-- Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Issuers shall be deemed to have accepted
properly tendered Old Notes for exchange when and if the Issuers have given oral
or written notice thereof to the Exchange Agent.
In all cases, issuance of Exchange Notes for Old Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of transfer of such Notes into the Exchange Agent's
account at the Depositary, a properly completed and duly executed Letter of
Transmittal and all other required
30
<PAGE> 37
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if certificates
representing Old Notes are submitted for a greater principal amount than the
Holder desires to exchange, such unaccepted, withdrawn or non-exchanged Old
Notes will be returned without expense to the tendering Holder thereof (or, in
the case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depositary pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with the Depositary) as promptly as practicable after the expiration
or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Depositary for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in the Depositary's systems may make book-entry delivery
of Notes by causing the Depositary to transfer such Old Notes into the Exchange
Agent's account at the Depositary in accordance with the Depositary's procedure
for transfer. However, although delivery of Old Notes may be effected through
book-entry transfer at the Depositary, the Letter of Transmittal or a facsimile
thereof, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at the address set forth below under "-- Exchange Agent" on or prior to
the Expiration Date or the guaranteed delivery procedures described below must
be complied with.
The DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through the DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to the DTC through
the DTC's communication system in place of sending a signed, hard copy Letter of
Transmittal. The DTC is obligated to communicate those electronic instructions
to the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to the DTC and transmitted by the DTC to the Exchange Agent
must contain the character by which the participant acknowledges its receipt of
and agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Issuers (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the Holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three
business days after the date of execution of the Notice of Guaranteed Delivery,
the certificates of all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal, are received by the Exchange Agent within three business days
after the date of execution of the Notice of Guaranteed Delivery.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written or facsimile notice of
withdrawal must be received by the Exchange Agent at the address set forth below
under "-- Exchange Agent." Any such notice of withdrawal
31
<PAGE> 38
must (i) specify the name of the person having tendered the Old Notes to be
withdrawn, (ii) identify the Old Notes to be withdrawn (including the
certificate number or numbers and the principal amount of Old Notes to be
withdrawn), (iii) be signed by the Holder in the same manner as the signature on
the Letter of Transmittal by which such Old Notes were tendered (including any
required signature guarantees) and (iv) specify the name in which such Notes are
to be registered if different from that of the withdrawing Holder. If Old Notes
have been tendered pursuant to the procedure for book-entry described above, any
notice of withdrawal must specify, in lieu of certificate numbers, the name and
number of the account at the Depositary to be credited with the withdrawn Old
Notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Issuers, whose determination shall be final
and binding on all parties. Any Old Notes so withdrawn will be deemed not to
have been validly tendered for exchange for purposes of the Exchange Offer. Any
Old Notes which have been tendered for exchange but which are not exchanged for
any reason will be returned to the Holder thereof without cost to such Holder
(or, in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Depositary pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
the Depositary for the Old Notes) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described under
"-- Procedures for Tendering Old Notes" above at any time on or prior to the
Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Issuers'
obligation to accept for exchange, or exchange Exchange Notes for, any Old Notes
not theretofore accepted for exchange is subject to the following conditions:
(a) no action or proceeding having been instituted or threatened in
any court or by or before any governmental agency with respect to the
Exchange Offer which, in the judgment of the Issuers, might impair the
ability of the Issuers to proceed with the Exchange Offer or have a
material adverse effect on the Issuers and there shall not have occurred
any material adverse development in any existing action or proceeding with
respect to the Issuers or any of their subsidiaries; and
(b) there shall not have been any material change, or development
involving a prospective change, in the business or financial affairs of the
Issuers or any of their subsidiaries which, in the judgment of the Issuers,
would materially impair the Issuers' ability to consummate the Exchange
Offer or have a material adverse impact on the Issuers if the Exchange
Offer is consummated; and
(c) there shall not have been proposed, adopted or enacted any law,
statute, rule or regulation which, in the judgment of the Issuers, might
materially impair the ability of the Issuers to proceed with the Exchange
Offer or have a material adverse effect on the Issuers if the Exchange
Offer is consummated; and
(d) all governmental approvals which the Issuers shall deem necessary
for the consummation of the Exchange Offer as contemplated hereby shall
have been obtained.
If the Issuers determine in good faith that any of the conditions are not
met, the Issuers may (i) refuse to accept any Old Notes and return all tendered
Old Notes to exchanging Holders, (ii) extend the Exchange Offer and retain all
Old Notes tendered prior to the expiration of the Exchange Offer, subject,
however, to the rights of Holders to withdraw such Old Notes (see "-- Withdrawal
Rights") or (iii) waive certain of such unsatisfied conditions with respect to
the Exchange Offer and accept all properly tendered Old Notes which have not
been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Issuers will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to all Holders.
Holders have certain rights and remedies against the Issuers under the
Registration Rights Agreement, including the right to receive liquidated
damages, in the event that (i) an Exchange Offer Registration Statement has not
been filed with the Commission on or prior to 30 days following the Old Notes
Offering, (ii) on or prior to 150 days prior to the Old Notes Offering such
Exchange Offer Registration Statement is not
32
<PAGE> 39
declared effective, (iii) on or prior to 180 days following the Old Notes
Offering the Exchange Offer is not consummated, or (iv) applicable law or
interpretations of the Commission prohibit a Holder from participating in the
Exchange Offer or for any reason the Exchange Offer is not consummated within
180 days of the Old Notes Offering and a Shelf Registration Statement is not
filed or declared effective within the time provided by the Registration Rights
Agreement for such filing or declaration, such liquidated damages to be payable
in cash semiannually in arrears, and to accrue at a rate per annum equal to an
additional one quarter of one percent (0.25%) of the principal amount of the
Senior Notes, which rate will increase by one quarter of one percent (0.25%) for
each 90-day period that such Liquidated Damages continue to accrue, with an
aggregate maximum increase in the interest rate per annum equal to one percent
(1.00%).
The foregoing conditions are for the benefit of the Issuers and may be
asserted by the Issuers in good faith regardless of the circumstances giving
rise to such condition or may be waived by the Issuers in whole or in part at
any time and from time to time in its discretion. The failure by the Issuers at
any time to exercise the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
EXCHANGE AGENT
Marine Midland Bank has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
BY REGISTERED OR CERTIFIED MAIL; BY OVERNIGHT COURIER; OR BY HAND
MARINE MIDLAND BANK
140 BROADWAY
12TH FLOOR
NEW YORK, NEW YORK 10005
(212) 658-6084
ATTENTION: CORPORATE TRUST DEPARTMENT
BY FACSIMILE:
(212) 658-6425
ATTENTION: CORPORATE TRUST DEPARTMENT
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES; SOLICITATION OF TENDERS
The expenses of soliciting tenders will be borne by the Issuers. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Issuers and their affiliates.
The Issuers have not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Issuers, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuers and are estimated in the aggregate to be approximately
$ and include registration fees, fees and expenses of the Exchange Agent
and Trustee, accounting and legal fees and printing costs, among others.
The Issuers will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Old Notes for principal amounts not
33
<PAGE> 40
tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Notes tendered, or if tendered Old Notes are registered in the name
of any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such other taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Issuers. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Issuers since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) Holders in any jurisdiction in which the making
of the Exchange Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Issuers' accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized. The costs of the Exchange Offer will be expensed over the
term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Issuers do not
intend to register the Old Notes under the Securities Act.
34
<PAGE> 41
USE OF PROCEEDS
The Issuers will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Issuers will receive in Exchange Notes
in like principal amount, the terms of which are identical to the Exchange Notes
except that the Exchange Notes will be registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof. The Old Notes
surrendered in exchange for Exchange Notes will be retained by the Issuers and
the Exchange Offer will not result in any increase in the indebtedness of the
Issuers.
CAPITALIZATION
The following table sets forth the capitalization of ORBCOMM at June 30,
1996 on a historical basis and as adjusted to give effect to the Old Notes
Offering and the application of the net proceeds therefrom, and the contribution
of the remaining balance of the ORBCOMM partners' capital commitments.
<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents...................................... $ 1,039 $ 145,406(1)
Restricted cash................................................ 0 49,000(2)
-------- -----------
Total cash and cash equivalents and restricted
cash............................................... 1,039 194,406
======== =========
Long-term debt:
Senior Notes.............................................. -- 170,000(3)
Other debt(4)............................................. 3,732 3,732
-------- -----------
Total long-term indebtedness......................... 3,732 173,732
Partners' capital.............................................. 118,606 148,339
-------- -----------
Total capitalization................................. $122,338 $ 322,071
======== =========
</TABLE>
- ---------------
(1) Includes $13 million of the net proceeds of the Old Notes Offering deposited
by the Issuers into a segregated account and used solely for the purposes of
funding the development and deployment of the ORBCOMM System and related
operating expenses. See "Description of Senior Notes -- Certain
Covenants -- Contingency Fund."
(2) Represents the aggregate principal amount of the Pledged Securities,
estimated at approximately $44.8 million, and the amount in the segregated
account related to the MetLife Note, estimated at approximately $4.2
million. See "Description of Senior Notes -- Security."
(3) Approximately $44.8 million of the debt proceeds were used to purchase the
Pledged Securities, which will, in turn, be used to service interest
payments on the Notes through August 15, 1998.
(4) Represents the outstanding balance as of June 30, 1996 of the MetLife Note,
which is secured and bears interest at 9.2% per annum.
35
<PAGE> 42
SELECTED FINANCIAL DATA
The following selected income and expense data of ORBCOMM for the years
ended December 31, 1994 and 1995 and the selected balance sheet data of ORBCOMM
at December 31, 1993, 1994 and 1995 have been derived from the audited financial
statements of ORBCOMM. The selected financial data of ORBCOMM as of and for the
six months ended June 30, 1995 and 1996 are unaudited but have been prepared on
the same basis as the audited financial statements and, in the opinion of
management, contain all normal recurring adjustments necessary for the fair
presentation of the financial position and results of operations for such
periods. The selected financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of ORBCOMM and notes
thereto included elsewhere in this Prospectus. SINCE THE COMPANY ACCOUNTS FOR
ITS OWNERSHIP IN BOTH ORBCOMM USA AND ORBCOMM INTERNATIONAL USING THE EQUITY
METHOD, REFERENCE IS MADE TO THE FINANCIAL STATEMENTS OF ORBCOMM USA AND ORBCOMM
INTERNATIONAL LOCATED ELSEWHERE IN THIS PROSPECTUS.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------ ----------------------
1994 1995 1995 1996
---- ------- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME AND EXPENSE DATA:(1)(2)
Total income....................................... $ 0 $ 958(3) $635(3) $ 72
Cost of product sales.............................. 0 0 0 55
Engineering expenses............................... 0 0 0 2,085
Administrative expenses............................ 9 50 0 2,275
Depreciation....................................... 0 0 0 3,042
Equity in earnings (losses) of affiliates(4)....... 0 (853) 0 (1,610)
Excess (deficiency) of income over expenses........ (9) 55 635 (8,995)
OTHER DATA:
Ratio of earnings to fixed charges(5).............. -- -- 2.9x --
---- ------- ---- --------
Deficiency of earnings to fixed charges............ N/A(6) 371 -- (9,179)
---- ------- ---- --------
Pro forma deficiency of earnings to fixed
charges(7)....................................... 25,011 (21,477)
------- --------
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
DECEMBER 31, DECEMBER 31, DECEMBER 31, -------------------------------
1993 1994 1995 ACTUAL AS ADJUSTED(8)
------------ ------------ ------------ ------------ ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........ $ 0 $ 5,000 $ 1,785 $ 1,039 $ 145,406(9)
Restricted cash.................. 0 0 0 0 49,000(10)
Mobile Communications Satellite
System, net(11)................ 43,925 68,647 106,990 132,896 132,896
Investments in and advances to
affiliates(4).................. 0 0 (192) (108) (108)
Total assets..................... 47,666 73,647 109,030 134,826 334,559
Long-term debt................... 0 5,000 4,174 3,732 173,732
Partners' capital................ 47,666 58,509 94,601 118,606 148,339
</TABLE>
- ---------------
(1) For the period June 30, 1993 (the date of inception) through December 31,
1993, there were no income and expense transactions.
(2) The Company is a development stage company and had no system revenue for
the periods presented.
(3) Comprises interest income and a non-refundable fee received from a
potential International Licensee.
(4) The Company accounts for its investments in ORBCOMM USA and ORBCOMM
International using the equity method of accounting.
(5) For purposes of determining the ratio of earnings to fixed charges,
"earnings" includes excess (deficiency) of income over expenses adjusted
for fixed charges.
(6) Ratio of earnings to fixed charges is not applicable as there were no fixed
charges during this period.
(7) Pro forma deficiency of earnings to fixed charges is calculated based upon
an interest rate on the Notes of 14% per annum plus the Revenue
Participation Interest and the amortization of deferred financing fees.
(8) As adjusted to reflect the net proceeds from the Old Notes Offering and the
contribution of the balance of the ORBCOMM partners' capital commitments.
(9) Includes $13 million of the net proceeds of the Old Notes Offering
deposited by the Issuers into a segregated account and to be used solely
for purposes of funding the development and deployment of the ORBCOMM
System and related operating expenses. See "Description of Senior
Notes -- Certain Covenants -- Contingency Fund."
(10) Represents the aggregate principal amount of the Pledged Securities, at
approximately $44.8 million, and the amount in the segregated account
related to the MetLife Note, at approximately $4.2 million. See
"Description of Senior Notes -- Security."
(11) Represents the ORBCOMM System.
36
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In 1990, Orbital formed OCC to develop and operate the first global two-way
data and messaging communications system. In March 1992 and May 1993, the FCC
awarded OCC experimental licenses to develop and test a limited Little LEO
service. These licenses permitted the launch of two satellites, the construction
of two Earth stations and the provision of service to up to 1,000 Subscriber
Communicators. Following receipt of these experimental licenses, OCC sought a
strategic equity partner who could offer both financial and communications
experience, and in 1993, formed ORBCOMM with Teleglobe Mobile, an affiliate of
Teleglobe. Teleglobe Mobile agreed to acquire 50% of ORBCOMM in a two-stage
transaction. Teleglobe subsequently sold 30% of its interest in Teleglobe Mobile
to TRI for $43.9 million. In September 1995, Teleglobe Mobile agreed to invest
an additional $75 million, bringing its total capital commitment to
approximately $85 million. At that time, OCC committed approximately an
additional $10 million to the project, bringing its total investment commitment
to approximately $75 million. As of August 7, 1996, Teleglobe Mobile and OCC
have invested an aggregate of approximately $160 million in the ORBCOMM project.
On October 20, 1994, OCC was granted authority by the FCC to construct,
launch and operate 36 satellites for the purpose of providing two-way data and
message communications and position determination services.
By April 1995, ORBCOMM successfully launched the initial two satellites,
completed construction and testing of various network operating systems,
substantially completed the U.S. Gateway and transmitted test messages via
prototype Subscriber Communicators. After experiencing initial operating
anomalies related to satellite positioning and gateway-to-satellite
communications, the satellites are functional and currently are providing
commercial intermittent data communications services to the environmental and
oil and gas industries in the United States.
On August 7, 1996, ORBCOMM completed the Old Notes Offering.
ORGANIZATIONAL STRUCTURE; FINANCIAL REPORTING
Simultaneous with the formation of ORBCOMM, OCC and Teleglobe Mobile formed
two marketing partnerships, ORBCOMM USA and ORBCOMM International (collectively,
the "Marketing Partnerships"), with the exclusive right to market the ORBCOMM
System in the United States and internationally, respectively. ORBCOMM is a 98%
general partner in each of the Marketing Partnerships, while OCC and Teleglobe
Mobile control the remaining 2% of ORBCOMM USA and ORBCOMM International,
respectively. OCC retains control over the applicable FCC licenses and the
ORBCOMM System, consistent with FCC regulations.
Pursuant to the terms of the Partnership Agreements: (i) OCC and Teleglobe
Mobile share equal responsibility for the operational and financial affairs of
ORBCOMM; (ii) OCC generally controls the operational and financial affairs of
ORBCOMM USA; and (iii) Teleglobe Mobile generally controls the operational and
financial affairs of ORBCOMM International. Since OCC and Teleglobe Mobile have
effective control over ORBCOMM USA and ORBCOMM International, respectively,
ORBCOMM accounts for the Marketing Partnerships using the equity method of
accounting. ORBCOMM does not consolidate, and therefore does not report on its
financial statements, ORBCOMM USA's and ORBCOMM International's actual assets,
liabilities and operating revenues and expenses. Instead, ORBCOMM's pro rata
share of the results of the Marketing Partnerships are recorded under the
caption "Equity in Earnings (Losses) of Affiliates" in ORBCOMM's financial
statements. Correspondingly, ORBCOMM's investment in the Marketing Partnerships
is carried at cost, subsequently adjusted for the pro rata share of net income
and losses, additional capital contributions and distributions under the caption
"Investments in and Advances to Affiliates." Holders of Senior Notes are also
encouraged to refer to the financial statements of both ORBCOMM USA and ORBCOMM
International included elsewhere in this Prospectus.
37
<PAGE> 44
ORBCOMM USA pays to OCC an Output Capacity Charge that is a quarterly fee
equal to 23% of its total aggregate revenues for such calendar quarter in
exchange for the exclusive right to market, sell, lease and franchise all
ORBCOMM System output capacity in the United States and exclusive use of the
System Assets located in the United States. OCC, in turn, pays to the Company a
System Charge that is a quarterly fee equal to the Output Capacity Charge minus
1.15% of Total Aggregate Revenues in consideration of the construction and
financing of the System Assets.
ORBCOMM International pays to Teleglobe Mobile an International Output
Capacity Charge equal to 23% of its total aggregate revenues for a calendar
quarter in exchange for the exclusive right to market, sell, lease and franchise
all ORBCOMM System output capacity outside the United States. Teleglobe Mobile,
in turn, pays to the Company an International System Charge in consideration of
the grant to Teleglobe Mobile of the exclusive right to market, sell, lease and
franchise all ORBCOMM System output capacity outside the United States.
SERVICE ROLL-OUT
The roll-out of ORBCOMM System services will occur in two stages. In the
United States, it is currently possible to serve several market segments that
can benefit from intermittent service, such as oil and gas pipeline monitoring,
certain environmental monitoring, and tracking and positioning applications. As
additional satellites are added to the constellation, it will become possible to
serve additional market segments such as certain messaging applications that
require real time services.
Intermittent service commenced in the United States in February 1996.
Service outside the United States will be provided as International Licensees
receive regulatory approval and build network ground systems.
REVENUE
Currently, during the period of commercial intermittent service, ORBCOMM
USA is building an initial base of subscribers in the United States through the
negotiation and execution of agreements with Resellers. The Resellers purchase
ORBCOMM System services directly from ORBCOMM USA and resell these services to
end-users in a specific industry and/or market.
In the United States, service pricing is based on many variables, including
the availability and cost of substitute services, the cost of providing service
and the nature of the user application. Pricing generally incorporates an
initial registration charge, a recurring monthly charge for access to the
ORBCOMM System and usage charges based on the customer's activity. In charging
for usage, the Company has developed a pricing structure in the United States
that suits the usage patterns for the initial vertical markets addressed by the
existing two-satellite system. Priority and other real time messaging pricing
will be developed as the full deployment of satellites in the ORBCOMM System
occurs. It is likely that multiple pricing alternatives will be offered in the
United States including peak/off-peak, volume discounts, and annual contract
commitment options.
The Company has a standard Service License Agreement for execution by
International Licensees outside the United States. The International Licensees
will be responsible for obtaining all necessary licenses and approvals for use
of the ORBCOMM System in their territory. Certain International Licensees will
pay to ORBCOMM International a fixed fee in exchange for exclusive rights for a
specified service territory. In addition, International Licensees will pay a
monthly Satellite Usage Fee based on the greater of a percentage of gross
operating revenues and a data throughput fee. On the execution of a Service
License Agreement, International Licensees will be required to purchase a
Gateway from ORBCOMM or share a closely located Gateway operated by ORBCOMM USA
or another International Licensee.
Retail pricing in their respective territories will be at the discretion of
the International Licensees, and is expected to vary from country to country to
reflect variations in economic conditions, the availability of substitute
services, local customs, and government policy as required to be competitive
with other services.
38
<PAGE> 45
OPERATING EXPENSES
As discussed above, the Company owns and operates the assets that comprise
the ORBCOMM System. Satellite-based communications systems are characterized by
high up-front capital expenditures and relatively low marginal costs for
providing service. ORBCOMM has been depreciating the assets, recording a
depreciation charge in its statement of income and expenses, beginning in
January 1996. Additionally, ORBCOMM incurs, and reports in its financial
statements, engineering and other operating expenses associated with the actual
operation of the ORBCOMM System.
RESULTS OF OPERATIONS -- ORBCOMM
ORBCOMM commenced commercial intermittent service in the United States on
February 1, 1996 and has generated nominal revenues and negative cash flow to
date. ORBCOMM's activities have focused primarily on the acquisition of
regulatory approvals for operation of the ORBCOMM System, design, construction
and deployment of its initial satellites and associated network systems,
negotiation of domestic reseller agreements, identification of potential
International Licensees in countries outside the United States, identification
and authorization of Subscriber Communicator manufacturers and hiring of
management and other key personnel. ORBCOMM expects to continue to generate
negative cash flow until the system is fully operational, planned for 1998.
Income. In 1995, ORBCOMM received a nonrefundable fee from a potential
International Licensee. The Company recognized this nonrefundable fee ratably
over the term of the relevant agreement. No such fees were received in earlier
periods or in the six months ended June 30, 1996.
In late 1994, the Company received a $5 million secured loan to help
finance a portion of the ORBCOMM System. The Company recognized interest income
on the invested portion of the loan proceeds of approximately $35,000 and
$17,000 for the six-month periods ended June 30, 1995 and 1996, respectively,
and approximately $58,000 for the year ended December 31, 1995 (none for the
year ended December 31, 1994). Interest expense related to the secured loan has
been capitalized as part of the historical cost of the ORBCOMM System.
Expenses. As discussed above, ORBCOMM is in its development stage and does
not anticipate emerging from the development stage until late 1997. During the
construction phase of the ORBCOMM System, ORBCOMM has capitalized all
construction costs, consisting primarily of satellites, launch vehicles and the
U.S. ground segment acquired from Orbital. Research and development expenses and
selling, general and administrative costs have been expensed in the period
incurred.
Once the ORBCOMM System began commercial operations on February 1, 1996,
ORBCOMM incurred approximately $2,275,000 of administrative expenses in the six
months ended June 30, 1996 (none during the six months ended June 30, 1995).
ORBCOMM incurred approximately $9,000 and $50,000 of administrative expenses
during the years ended December 31, 1994 and 1995, respectively (none during
1993).
ORBCOMM incurred approximately $2,085,000 of ORBCOMM System engineering
expenses in the six months ended June 30, 1996 as commercial service in the
United States began (none during the 1995 six-month period). ORBCOMM also
incurred approximately $3,042,000 in ORBCOMM System depreciation expense during
the 1996 six-month period, as the ORBCOMM System became available for service in
early 1996 (none during the 1995 six-month period).
Equity in Earnings (Losses) of Affiliates. ORBCOMM recognized its share of
ORBCOMM USA's and ORBCOMM International's losses, consisting primarily of
marketing expenses, of approximately $1,610,000 in the first half of 1996 (none
in the first half of 1995) and approximately $853,000 for the year ended
December 31, 1995 (none in earlier years). Each of ORBCOMM USA and ORBCOMM
International formally began their marketing efforts in 1995 in anticipation of
commercial service in 1996.
39
<PAGE> 46
RESULTS OF OPERATIONS -- ORBCOMM USA
Income. In 1993, 1994 and 1995, ORBCOMM USA performed marketing activities
for the U.S. market pursuant to a contract with OCC, whereby OCC reimbursed
ORBCOMM USA for all marketing costs incurred. Accordingly, ORBCOMM USA
recognized contract revenues of approximately $749,000, $2,093,000 and
$1,360,000 from June 30, 1993 (date of inception) through December 31, 1993 and
the years ended 1994 and 1995, respectively and $886,000 during the six months
ended June 30, 1995 (none during the six months ended June 30, 1996). During the
first half of 1996, ORBCOMM USA recognized its first revenues relating to the
provision of services through the ORBCOMM System, less than $51,000.
Expenses. ORBCOMM USA incurred approximately $1,241,000 of marketing and
administrative expenses and $48,000 of cost of product sales in the six months
ended June 30, 1996, once the ORBCOMM System began operations. Pursuant to the
contract with OCC discussed above, ORBCOMM USA incurred contract marketing costs
of approximately $749,000, $2,093,000 and $2,231,000 from June 30, 1993 (date of
inception) through December 31, 1993 and the years ended December 31, 1994 and
1995, respectively and $886,000 during the six months ended June 30, 1995.
RESULTS OF OPERATIONS -- ORBCOMM INTERNATIONAL
Expenses. ORBCOMM International incurred approximately $405,000 of
administrative expenses in the six months ended June 30, 1996 (none during the
1995 six-month period or earlier years). International marketing efforts are
expected to increase during 1996 and 1997 in anticipation of the completion of
the ORBCOMM System.
SUPPLEMENTAL DATA
Set forth below is certain supplemental data for the ORBCOMM System
comprising data of ORBCOMM, ORBCOMM USA and ORBCOMM International for the six
months ended June 30, 1996. Such supplemental data should be read in conjunction
with the financial statements of ORBCOMM, ORBCOMM USA and ORBCOMM International
contained elsewhere herein.
SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
(UNAUDITED)
ORBCOMM ORBCOMM ELIMINATION
ORBCOMM USA INTERNATIONAL ENTRIES TOTAL
------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Income(1)................... $ 71,827 $ 50,836 $ -- $(54,615) $ 68,048
Expenses.................... 7,456,747(2) 1,288,953 405,017 54,615 9,096,102
Earnings (loss) before
Interest and Taxes........ (7,384,920)(3) (1,238,117) (405,017) -- (9,028,054)
------------ ----------- --------- -------- ------------
Net Income (loss)........... $ (7,384,920)(3) $(1,238,117) $(405,017) $ -- $ (9,028,054)
============ =========== ========= ======== ============
Cash and Cash Equivalents... 1,038,650 104,536 42,774 1,185,960
Capital Expenditures........ 135,937,681(4) -- -- 135,937,681
Depreciation................ 3,041,850 -- -- 3,041,850
Debt........................ 3,732,389 -- -- 3,732,389
</TABLE>
- ---------------
(1) As development-stage companies, none of ORBCOMM, ORBCOMM USA and ORBCOMM
International had any significant revenues for the six months ended June 30,
1996.
(2) Includes depreciation expenses of $3,041,850.
(3) Excludes equity in losses of affiliates of $(1,610,271).
(4) Represents capital expenditures, principally for the construction of the
space and ground network system elements.
40
<PAGE> 47
LIQUIDITY AND CAPITAL RESOURCES
The development of the Company's business, launch of the initial two
satellites and construction of the network operations center and U.S. Gateway
have resulted in substantial capital expenditures during the past several years.
Capital expenditures by the Company were approximately $11 million and $29
million during the six months ended June 1995 and 1996, respectively, and $44
million, $25 million and $38 million from June 30, 1993 (date of inception)
through December 31, 1993 and the years ended December 31, 1994 and 1995,
respectively. The Company expects that it will continue to have substantial
capital expenditure requirements in the future, including approximately $65
million during the remainder of 1996.
A combination of operating losses and substantial capital expenditures
related to the development of the ORBCOMM System has resulted in negative cash
flow since 1994. Funding of this cash flow deficiency has been accomplished
through capital contributions from OCC and Teleglobe Mobile and the MetLife
Note. ORBCOMM expects to have to continue to fund operating losses as the
Company develops and expands its business. Following August 15, 1998, interest
expense on the Senior Notes will represent a significant cash requirement for
the Company. In addition, in certain circumstances, pursuant to the ORBCOMM
Partnership Agreement, ORBCOMM is required to make cash distributions to its
partners for tax purposes. OCC and Teleglobe Mobile have invested approximately
$75 million and $85 million, respectively, in exchange for their Participation
Percentage in ORBCOMM, ORBCOMM USA and ORBCOMM International.
The total cost of the construction and deployment of the ORBCOMM System is
estimated to be approximately $258 million. Of this amount, approximately $202
million will be used for the satellite constellation, ground spares and launch
services, approximately $30 million will be used for the U.S. ground segment,
approximately $8 million will be used for insurance and approximately $18
million will be used for other costs. As of June 30, 1996, approximately $136
million of this amount had been expended. The Company believes that the net
proceeds of the Old Notes Offering and the capital contributions of the
partners, together with expected cash from operations, will be sufficient to
fund the Company's operations through at least December 31, 1997, when full
deployment of the ORBCOMM System is planned to have occurred. Additional funds
may be necessary in the event of a delay, cost overruns or any shortfall in
estimated levels of estimated cash flow, or to meet unanticipated expenses.
There can be no assurance that additional capital will be available for any of
the foregoing purposes on favorable terms or on a timely basis, if at all.
LOAN AGREEMENT WITH METLIFE CAPITAL CORPORATION
Under the terms of the MetLife Note, MetLife loaned $5 million to the
Company, and in connection therewith the Company granted to MetLife a security
interest in certain equipment of the Company. The MetLife Note is guaranteed by
Orbital. As of June 30, 1996, approximately $3.7 million was outstanding under
the MetLife Note.
41
<PAGE> 48
BUSINESS
The Company is establishing the first commercial LEO satellite-based mobile
data and messaging communications system that will be available on a global
basis. The ORBCOMM System, planned to be fully deployed in late 1997, is
designed to provide reliable, low-cost, two-way global data and messaging
communications through a constellation of 28 LEO satellites and a complement of
associated ground infrastructure situated around the world. The Company believes
that there is significant global demand for its low-cost data and messaging
communications services. Major target markets include worldwide mobile asset
tracking; remote industrial monitoring and control applications; environmental
data collection; and real time person-to-person and machine-to-machine
communications, including two-way Internet email communications and recreational
and business messaging. The Company anticipates that the ORBCOMM System will be
used: (i) as a complement to existing or proposed tower-based services such as
paging and other narrowband PCS services, providing geographic coverage in areas
these systems are unable to reach; and (ii) to enhance data applications
currently being provided through the PSTN and the PSDN. In addition, the Company
expects that the introduction of its low-cost, reliable data and messaging
communications will lead to the development of new applications and services.
The Company currently offers commercial intermittent data communications
services in the United States through its existing network, which consists of
two LEO satellites launched in April 1995 and related U.S. ground
infrastructure. When fully deployed, the ORBCOMM System is designed to provide
data and short, alphanumeric paging-like messaging communications coverage
virtually anywhere on the Earth's surface in a reliable and cost-effective
manner. In contrast to Big LEO systems, which are designed primarily for voice
applications and require satellite communications systems that are estimated to
cost in excess of $2 billion to construct and deploy, the ORBCOMM System, which
is a Little LEO system, is focused on data communications and messaging
applications and will be constructed and deployed for approximately $258 million
(with additional amounts needed to fund initial operation of the ORBCOMM System
and certain debt service obligations). The ORBCOMM System is designed to address
the substantial existing and growing demand for communications services
worldwide, without the high cost and geographic and technical limitations
imposed by other communications systems.
In October 1994, a subsidiary of Orbital became the first company to be
awarded FCC authority to construct, launch and operate a LEO satellite-based
data and messaging communications system in the United States. Today, the
ORBCOMM System is the only commercial Little LEO system that is fully licensed
for all segments of its system in the United States. Certain portions of the
radio spectrum were allocated by the ITU for use by Little LEO satellite
systems, such as the ORBCOMM System, on an international basis in 1992. The
Company intends to enter into agreements with International Licensees, who will
pursue the requisite local regulatory approvals for each foreign country in
which the ORBCOMM System will operate and who will pay fees for access to the
ORBCOMM System in their territory.
In 1995, in addition to the successful launch of the first two ORBCOMM
System satellites, the Company: (i) completed initial development and
construction of the ground infrastructure located in the United States and
associated network control systems; and (ii) tested prototype Subscriber
Communicators. The two ORBCOMM System satellites and four U.S. Earth stations
currently are providing data communications services, focused on monitoring
applications, to the U.S. environmental and oil and gas industries, with
tracking and positioning applications targeted for the near future. As of June
30, 1996, the ORBCOMM System had transmitted in excess of one million messages
and successfully completed extensive internal and third-party testing, including
a rigorous demonstration program conducted by the DoD as part of its Joint
Warrior Interoperability Demonstration '95.
To use the ORBCOMM System, a user creates a text message utilizing a
computer or Subscriber Communicator device, which message is sent to the nearest
ORBCOMM System satellite and delivered to an ORBCOMM Earth station, which
supports communication with the satellites, and then to the Gateway Switching
System, which processes the messages. Within the Gateway, the message is
processed using a combination of ORBCOMM-developed and commercial email
software, and sent on to its ultimate destination. If desired, an
acknowledgement message is returned to the sender. The final delivery may be to
42
<PAGE> 49
another Subscriber Communicator or may make use of public/private X.25 data
networks, the Internet, or text-to-fax conversion.
The Company intends to distribute its services globally in a cost-effective
manner through the use of Resellers in the United States and International
Licensees around the world. The Company is in the process of negotiating and
signing agreements with Resellers, each of whom will be responsible for
marketing to end customers in a specific industry and/or market and generally is
expected to develop software applications to facilitate use of ORBCOMM System
services by such industry or market segment. To date, 22 reseller agreements
have been signed with companies including Arinc, Inc., Boatracs, Inc., Corexco
Consulting Services, Inc., Globitrac, Inc., IWL Communications, Inc., QUALCOMM,
Incorporated and the Stevens Water Monitoring Division of Leupold & Stevens,
Inc. The Company has signed 17 Memoranda of Understanding with potential
International Licensees and is in active negotiations with six other potential
International Licensees; taken together, these 23 potential International
Licensees represent approximately 75 countries around the world. The Company
intends to convert its existing Memoranda of Understanding into Service License
Agreements during the next three to 18 months. In addition, the Company has
signed a Service License Agreement with one International Licensee, ORBCOMM
Canada Inc., which is controlled by Teleglobe, and which has been given the
exclusive right to market services in Canada using the ORBCOMM System.
ORBCOMM is a limited partnership formed in 1993 to develop, construct,
operate and market the ORBCOMM System. The general and limited partnership
interests in ORBCOMM are held by each of OCC, a subsidiary of Orbital, and
Teleglobe Mobile, a Delaware general partnership whose interests are held by
Teleglobe and TRI. OCC and Teleglobe Mobile have invested approximately $160
million in the ORBCOMM project. The Company believes that such equity
investment, together with the proceeds of the Old Notes Offering and cash
expected to be generated from operations, will be sufficient to fund the ORBCOMM
System, including: (i) all capital expenditures necessary to deploy the ORBCOMM
System; and (ii) all required working capital until at least December 31, 1997,
when full deployment of the ORBCOMM System is planned to have occurred. There
can be no assurance, however, that additional capital will not be necessary.
BUSINESS STRATEGY
The principal elements of the Company's business strategy include:
Real Time, Reliable Worldwide Coverage. The fully deployed ORBCOMM System
is designed to provide real time global data and messaging communications
services in a reliable and cost-effective manner. The ORBCOMM System's worldwide
coverage will enable it to provide tracking, monitoring and messaging services,
including Internet email capability, to customers that are currently beyond the
geographic reach of existing terrestrial wireline or wireless systems. The
ORBCOMM System is designed to deliver reliable communications services through
the use of acknowledgment and store-and-forward capabilities. ORBCOMM expects
that, with a planned constellation of 28 satellites, the ORBCOMM System will
provide communications availability generally exceeding 95% of each 24-hour
period in the United States and other temperate zones in the Northern and
Southern Hemispheres and exceeding 75% of each 24-hour period in the equatorial
region.
First-to-Market. The ORBCOMM System began providing commercial
intermittent service in February 1996. Prior to commencing commercial
operations, the space segment, network and management control systems, U.S.
Gateway and prototype Subscriber Communicators were tested extensively to ensure
technical viability. The Company believes that the existence of an in-service,
commercially operational system provides substantial "first-to-market" benefits,
including: (i) reducing technical risk; (ii) increasing the attractiveness of
the ORBCOMM System to potential Resellers, International Licensees and
Subscriber Communicator manufacturers; (iii) facilitating and encouraging the
development of software by Resellers and other application developers for a
variety of market applications because of the ability to test the hardware and
software in an actual operating environment; and (iv) developing a customer base
before other competing Little LEO systems are fully deployed, which the Company
believes will not occur before 2000. There can be
43
<PAGE> 50
no assurance, however, that there will be no delays in the existing schedule
associated with the construction or deployment of the ORBCOMM System.
Global Distribution of Services. The Company believes the ORBCOMM System
can rapidly achieve a global presence in a cost-effective manner by capitalizing
on the significant resources of Resellers and International Licensees worldwide.
The Company plans to provide services in the United States through Resellers,
many of whom have an existing, well-established market presence through their
existing customer bases, market-specific brand name recognition and distribution
networks. Outside the United States, the Company will enter into Service License
Agreements with International Licensees who will be responsible in their
territory for, among other things, procuring and installing the necessary
Gateways, obtaining all regulatory approvals to provide services using the
ORBCOMM System and operating and marketing services using the ORBCOMM System.
The Company intends to select its International Licensees primarily by
evaluating the ability of the International Licensee to distribute and market
successfully the Company's services. Key components of such an evaluation
include the prospective International Licensee's: (i) reputation in the
marketplace; (ii) existing distribution capabilities and infrastructure; (iii)
financial condition and other resources; and (iv) ability to obtain the
requisite local regulatory approvals.
Low-Cost Subscriber Communicators. The Company is committed to promoting
the production of lightweight Subscriber Communicators that have a long battery
life and are widely available at prices attractive to a broad customer base. The
Company has provided extensive design specifications and technical and
engineering support to its various Subscriber Communicator manufacturers. The
Company currently has a development agreement with Panasonic and is in the
process of finalizing manufacturing and sales support agreements with Panasonic.
The Company has also executed Subscriber Communicator Manufacturing Agreements,
which include terms regarding the development, manufacture and sales support for
Subscriber Communicators, with Scientific-Atlanta, Magellan, Torrey Science and
Stellar. Panasonic has received authorization from the Company to manufacture
two basic Subscriber Communicators, one with and one without the ability to
receive positioning signals from the GPS system, both of which are now
commercially available. Torrey Science received authorization from the Company
in August 1996 to manufacture a basic Subscriber Communicator and the Company
expects that Torrey Science will have units commercially available in the first
quarter of 1997. The Company believes that once its other Subscriber
Communicator manufacturers have units that are commercially available and once
the overall production volume for Subscriber Communicators increases, the price
for Subscriber Communicators will decline substantially. Panasonic and Stellar
have informed the Company that, in lots of at least several thousand, the price
for their respective Subscriber Communicators will be approximately $550 per
unit.
Expertise of Strategic Partners. Orbital and Teleglobe, the Company's
partners, have invested approximately $160 million in the ORBCOMM project. The
Company has used and will continue to use its partners' expertise and
capabilities to enhance the ORBCOMM System, including expertise in the design,
construction and deployment of satellites and the operation of international
wireline and wireless telecommunication services.
Orbital, a Delaware corporation headquartered in Dulles, Virginia and with
offices in five countries is the founder of the ORBCOMM project, and through its
subsidiary, OCC, has a 50% Participation Percentage interest in ORBCOMM. Orbital
is a space technology and satellite services company, with annual revenues in
1995 of approximately $364 million, that designs, manufactures, operates and
markets a broad range of space products and services, including launch systems,
satellites, space sensors and electronics, ground systems and software products,
satellite access products and communications and information services. Under the
terms of the Procurement Agreement between Orbital and ORBCOMM, Orbital will,
among other things, construct 34 satellites (including eight ground spares),
launch 26 satellites and, on an optional basis, launch the eight ground spares.
The satellites and launch services are provided on a fixed-priced basis,
although the Procurement Agreement contains certain performance incentives with
respect to the satellites.
Teleglobe, a Canadian corporation with 1995 revenues of approximately C$1.6
billion, provides international telecommunications services to over 240
countries worldwide through a network of submarine cables and satellite Earth
stations. Teleglobe currently has offices in ten countries. Teleglobe is owned
approximately
44
<PAGE> 51
22% by BCE Inc., which is the largest public corporate entity in Canada, and
indirectly approximately 20% by Telesystem Ltd., which has an interest in TIW.
TIW has paging and cellular interests in several countries around the world,
including China, Mexico and India. Teleglobe has substantial experience as an
intercontinental provider of telecommunication services and has played and
continues to play an important advisory role in the ORBCOMM project generally
and in the Company's marketing and distribution strategy in particular.
Teleglobe has formed a partnership, Teleglobe Mobile, with TRI to hold its
interest in the ORBCOMM project. TRI operates the largest and one of the
fastest-growing cellular networks in Malaysia, with over 800,000 subscribers.
TRI also has cellular and paging joint ventures in five countries.
CONSTELLATION DESIGN AND IMPLEMENTATION STRATEGIES
The ORBCOMM System has been designed to provide for the delivery and
receipt of data communications and short, alphanumeric paging-like messages
anywhere in the world on a highly efficient and cost-effective basis. The
Company believes that multiple aspects of the ORBCOMM System design will result
in a low-cost product offering worldwide. The implementation plan for the
ORBCOMM System is intended to reduce the risk of cost overruns, system
performance shortfalls and system deployment delays. Important components of the
ORBCOMM System design and implementation strategies include:
Low-Cost Satellite System. The ORBCOMM System will consist of 28 LEO
satellites. Each satellite is designed specifically for the transmission of
short messages. This design focus eliminates a number of complex and expensive
components such as customized spot beams, on-board switching and high-powered
amplifiers that are required on larger, more complex satellites designed to
carry voice, video and data traffic. The less complex and more compact design of
the ORBCOMM System satellites (approximately 95 pounds) reduces the cost and
time of production and enables the Company to launch multiple satellites using a
single, relatively low-cost launch vehicle. The Company has sought to reduce the
risk of cost overruns by entering into the Procurement Agreement, a firm
fixed-price contract that covers the purchase of satellites, the provision of
launch services and the completion of the satellite control center. The
Procurement Agreement provides for the construction of 34 LEO satellites and the
launch of 26 LEO satellites for a total cost of approximately $163 million. See
"Relationships Among the ORBCOMM Parties -- Procurement Agreement."
Communications Protocol Specifically Designed for Data and Messaging
Communications. The ORBCOMM System uses a packet-switched communications
protocol. This design is well suited to ORBCOMM's goal of economic and efficient
delivery of short messages because it maximizes the amount of network capacity
available, while minimizing the overhead associated with sending each packet or
message, thereby lowering the per-message cost. The Company believes this design
will provide ORBCOMM with a substantial cost advantage versus the communications
protocols to be used by the proposed Big LEO systems such as Iridium and
Globalstar. Unlike the ORBCOMM System, Big LEO systems, which are designed
primarily for two-way voice traffic, are required to establish a
circuit-oriented connection over their network to transmit even short messages,
which significantly increases the per-message transmission cost for short
messages.
Contractual and Other Means to Mitigate Delays and System Failures. The
Company believes that the ORBCOMM System's design will reduce the Company's
exposure to cost overruns and delays associated with the production and
deployment of the ORBCOMM System due to launch or in-orbit satellite failure.
The principal elements that will contribute to this reduced exposure include:
(i) integration of existing technologies into the ORBCOMM System; (ii) use of
launch vehicles that will provide the Company with flexible launch schedules;
(iii) conduct of early development and prototyping; (iv) relatively simple,
lightweight design of the satellites, which will enable new satellites to be
ordered, constructed and launched in a shorter time frame than conventional LEO
and GEO satellites; and (v) procurement of nearly all components of the ORBCOMM
System (other than certain communications software) from a single contractor
(Orbital) that is responsible for end-to-end satellite performance and
integration. The redundant coverage provided by the ORBCOMM System also reduces
the ORBCOMM System's exposure to adverse events, which will enable ORBCOMM to
operate the ORBCOMM System with less than the full complement of satellites, if
necessary. See "Risk Factors -- Technological Risks; -- Limited
Insurance; -- Schedule Delays."
45
<PAGE> 52
In addition, the Company has adopted risk management policies designed to
reduce its exposure to cost overruns and to delays associated with deployment of
the ORBCOMM System, including: (i) establishment of fee holdbacks under the
Procurement Agreement to the extent that certain milestones identified in the
Procurement Agreement are not met by Orbital; and (ii) procurement of satellite
ground spares, which is expected to enable the Company to launch more quickly up
to eight satellites following an in-orbit or launch failure as soon as a launch
vehicle is available.
Although the Company believes it has taken appropriate measures to mitigate
the risks associated with delays or cost overruns in connection with deployment
of the ORBCOMM System, there can be no assurance that such delays or cost
overruns will not occur. See "Risk Factors -- Limited Insurance; -- Schedule
Delays."
Insurance Strategy. The Company's insurance strategy implements a risk
management plan for the protection of the ORBCOMM System. First, to protect
against launch costs that may be incurred as a result of launch vehicle
failures, ORBCOMM intends to obtain launch insurance for each launch. This
insurance will provide ORBCOMM with the funds necessary to procure a replacement
launch vehicle in the event of a launch vehicle failure. Second, ORBCOMM will be
obligated to procure in-orbit satellite insurance against a satellite failure
after placement of such satellites into commercial service. Third, the
Procurement Agreement provides for the construction of eight spare satellites,
which represent self-insurance against the loss of up to eight satellites.
Therefore, until such time as the Company is required to use its ground spare
satellites, ORBCOMM does not intend to obtain insurance to cover the cost of
obtaining replacement satellites in the event of a launch vehicle failure or an
in-orbit failure prior to placement of such satellites into commercial service.
In the event that the Company is required to use its ground spare satellites,
ORBCOMM is obligated under the terms of the Indenture to procure insurance for
subsequent missions covering a loss of satellites as a result of a launch
vehicle failure or an in-orbit failure prior to placement of such satellites
into commercial service. In addition, in the event that: (i) the Company is
required to use its ground spare satellites as a result of an in-orbit failure
of satellites prior to placement of such satellites into commercial operation;
and (ii) there are not sufficient insurance proceeds to cover the cost of a
launch vehicle for such ground spare satellites, the partners of the Company
have agreed, under certain circumstances, to contribute up to $15 million of
equity or subordinated debt financing to the Company, if needed, to fund the
cost of such launch vehicle. The Company does not have in-orbit insurance for
the two satellites currently operational and does not intend to procure launch
or in-orbit insurance for the two satellites to be launched as a secondary
payload on a Taurus launch vehicle.
Early Demonstration of End-to-End Functionality. ORBCOMM has made
significant progress in the development of the ORBCOMM System and currently
offers commercial intermittent service in the United States. After the launch of
the first two satellites, ORBCOMM successfully conducted "beta tests" of the
entire ORBCOMM System and United States ground network with selected major
customers in the second half of 1995, using prototype Subscriber Communicators
to demonstrate the ORBCOMM System's two-way global messaging and positioning
capabilities. ORBCOMM's operation of the two-satellite system during 1995
provided an opportunity to validate the performance of the end-to-end network.
Similarly, ORBCOMM demonstrated its ability to control the satellites and the
ground infrastructure, and to process messages using its computer network. As of
June 30, 1996, the ORBCOMM System had transmitted in excess of one million
messages and had successfully completed extensive internal and third-party
testing, including a rigorous demonstration program conducted by the DoD as part
of its Joint Warrior Interoperability Demonstration '95.
The Company continues to experience, from time to time, certain technical
difficulties with its initial two satellites, including unplanned outages of
certain electronic systems and subsystems resulting in the temporary inability
to process subscriber communications. While the Company believes these technical
difficulties have been addressed as experienced, and that none of these
difficulties has resulted in a significant degradation of satellite performance,
there can be no assurance that performance degradation in these two satellites
will not occur in the future.
The two ORBCOMM System satellites currently operational have provided the
Company with significant information regarding actual satellite performance in a
space environment. As a result of analyzing this
46
<PAGE> 53
information, as well as information obtained prior to launch, ORBCOMM, in
conjunction with Orbital, has undertaken a redesign of certain system elements
of the satellites.
Use of Advantageous Radio Frequencies. The ORBCOMM System has been granted
FCC approval to use radio frequencies in the 148.0-149.9 MHz band, and the
137.0-138.0 MHz and 400.075-400.125 MHz band for its uplink and downlink feeds,
respectively. The VHF frequencies are located just above those used for FM radio
broadcasts and just below those used for VHF marine push-to-talk radios. By
contrast, all of the Big LEOs are currently planned to be licensed in
frequencies above 1 GHz. The Company believes that the use of its allocated
frequencies will provide significant advantages for packet messaging and data
services compared to the use of frequencies above 1 GHz, including: (i) lower
power requirements to achieve acceptable link margins, which enhances battery
life and reduces ground and space segment costs due to the use of less complex
components; and (ii) better signal penetration, which decreases signal
degradation due to atmospheric interference such as rain and blockage by
foliage. The Company also believes that the substantial technical and
manufacturing base that already exists for a wide variety of communication
devices that operate near the frequency ranges used by the ORBCOMM System will
facilitate the development of low-cost Subscriber Communicators for the ORBCOMM
System.
47
<PAGE> 54
PROJECT MILESTONES
The ORBCOMM System is expected to be fully deployed with a 28 satellite
constellation in 1997, although this estimate does not take account of potential
delays. The timeline below sets forth ORBCOMM's actual and planned development
milestones. See "Risk Factors -- Development Stage Company; -- Technological
Risks; -- Schedule Delays; -- Reliance on Single Supplier; and -- Potential
Conflicts of Interest."
ORBCOMM MILESTONES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ACTIVITIES 1992 1993 1994 1995 1996 1997 1998 1999
---------- ---- ---- ---- ---- ---- ---- ---- ----
REGULATORY LICENSING
Initial FCC License
Modification
ITU Spectrum Allocation
In-Country Int'l Regulatory Approvals(1)
SATELLITE CONSTELLATION
Satellite Design -- Initial
Satellite Design -- Advanced
Satellite Production(2)
Satellite Launch:
Initial Two
Full Constellation(3)
GROUND SEGMENT
U.S. Gateway Installation(4)
Int'l Gateway Installation
CONTROL SEGMENT
Network Management System(5)
Space Vehicle Management System(5)
DISTRIBUTION AGREEMENTS
Resellers
International Licensees
SUBSCRIBER COMMUNICATORS
Prototypes(6)
Production
ORBCOMM COMMERCIAL SERVICE
Intermittent Service
Real Time Coverage
</TABLE>
(1) Obtaining the requisite foreign regulatory approvals will primarily be the
responsibility of the International Licensee in each country.
(2) Represents production of the 26 additional satellites and eight ground
spares pursuant to the Procurement Agreement.
(3) Full constellation consists of 28 satellites. An additional eight ground
spare satellites may be deployed as a fourth plane, provided that, subject
to FCC approval, the Company may determine not to so deploy such satellites.
(4) Represents installation of at least one operational radome at each U.S.
Earth station.
(5) Enhanced systems are expected to be completed during the first quarter of
1997.
(6) Assumes ongoing development efforts to access new market applications.
THE ORBCOMM SYSTEM
SERVICES
ORBCOMM System service offerings for mobile data and messaging
communications will fall into two broad categories with variations based on
market requirements: tracking and monitoring; and message and high-priority
communications.
Tracking and Monitoring. The Company believes that tracking and monitoring
users will include a broad group of industries that require a means of regularly
collecting data from, or in some cases controlling
48
<PAGE> 55
equipment in, multiple remote locations. Major target markets include: (i)
worldwide mobile asset tracking; (ii) industrial monitoring and control
applications; and (iii) environmental data collection. Many of these users
manage numerous, widely dispersed sites in remote areas out of reach of the PSTN
or terrestrial-based wireless systems, and often accomplish data collection and
equipment control functions manually with on-site personnel. These methods can
be expensive, inaccurate or difficult to perform. The Company believes that
significant demand exists for a low-cost means of remotely performing these
tasks.
Message and Priority Communications. The Company believes that message
communications users will include a broad range of commercial and consumer users
who require a means of communicating with locations such as their office,
dispatch center or home or who require the ability to send priority messages or
positioning information. Examples include professionals who work away from their
office, fleet operators who require reliable messaging between a central office
and mobile assets, and individuals who desire a means of communicating short
messages or positioning information from an automobile, boat or other remote
locations. These users currently rely on pagers, cellular phones, fleet dispatch
systems and public pay phones, all of which can be unavailable, inconvenient or
expensive in certain geographic locations. In remote geographic regions outside
the United States, these PSTN and terrestrial-based wireless systems are not
always available or cost-effective. As a satellite-based system with coverage
available virtually anywhere on the Earth's surface, the Company can offer
messaging services through the ORBCOMM System.
CURRENT ADDRESSABLE MARKETS
The Company has identified a number of industries and industry segments in
the United States where there currently exists a demand for mobile data and
messaging communications services for tracking and monitoring, which the Company
views as the initial primary target applications for its services. These
existing tracking and monitoring applications include: (i) tracking and
monitoring of transportation assets and cargo; (ii) monitoring of assets in the
energy industry; (iii) environmental monitoring; and (iv) certain governmental
applications. The Company believes that certain portions of these industries or
industry segments possess characteristics or requirements that are particularly
well-suited to the services offered by Little LEO systems. The Company refers to
these portions as "addressable markets." The Company's description of potential
markets for its data and messaging communications service offerings and
estimates of the Company's addressable markets represent only the Company's
estimates as of the date hereof with respect to such markets. See "Risk
Factors -- Market Estimates."
Transportation Assets and Cargo. Transportation companies require a
cost-effective means of regularly and reliably monitoring the location and the
status of cargo globally to reduce cargo losses, improve service, and better use
transportation assets. Small ORBCOMM Subscriber Communicators could be installed
on trailers and programmed to monitor and transmit, on command or at regular
intervals, information regarding trailer status and location, and could be
specially designated for priority reporting and response. The transportation
assets and cargo market can be separated into four transportation categories:
trailers; long-haul trucking; containers; and rail cars.
Based on industry data such as published in The Structure of the U.S.
Trucking Industry, The Outlook for Truck Trailers and 1994 Private Fleet
Directory, the Company believes the overall trailer segment, which includes full
truckload, less-than-full truckload and private trucking, aggregates
approximately 2.3 million trailers. The Company believes that the addressable
market for full truckloads comprises non-refrigerated trailers belonging to
large trucking fleets that need to improve trailer utilization. The addressable
market for less-than-full truckload comprises non-refrigerated trailers that
carry high-value goods and travel longer, less-than-full truckload routes
(greater than 400 miles) between regional centers. The addressable market for
private fleet trucks are those used in "just-in-time" manufacturing and
distribution systems and which, therefore, typically require high levels of
efficiency due to competition from for-hire companies. The Company expects the
addressable market for refrigerated trailers to comprise those trailers for
which cargo monitoring and trailer utilization are required. Trailers (both
refrigerated and non-refrigerated) are currently being tracked by geostationary
satellite-based systems (such as those offered by QUALCOMM and AMSC) that offer
seamless coverage, but depend on larger power sources that require the trailer
to be attached to the main engine of the tractor. As a result, when the trailer
is detached from the tractor, it can no longer be tracked. A
49
<PAGE> 56
low-power cellular system (such as the system offered by Highwaymaster) can be
used to track untethered trailers; however, the geographic coverage is limited
and the Company believes that the cost of cellular roaming may make this service
cost-prohibitive. Private trucking fleets typically use systems internal to
their companies where each trailer's number is manually recorded as trailers
enter and leave a point of distribution.
Based on industry data published in 1994 Private Fleet Directory, Fleet
Owner Magazine and Report: Structure of the U.S. Trucking Industry, the Company
believes that the U.S. long-haul trucking industry comprises approximately
435,000 trucks. The Company's addressable market is characterized by smaller
fleets (typically less than 50 trucks) that need mobile communications to
compete with larger fleets but have been unable to afford the current service
offerings where equipment costs are approximately $4,000 per unit. A low-cost
alternative for these smaller fleets has been paging; however, paging currently
offers only a one-way short data link to the vehicle. The Company believes that
the addressable market for the owner-operated transportation vehicle sub-segment
comprises those vehicles contracted to larger, long-haul carriers. While these
larger carriers resist installing $4,000 mobile communications units on vehicles
they do not own, many are still requiring owner-operators to equip their
vehicles with mobile communications.
Based on data contained in Intermodal Marine Container Report, the Company
estimates the industry segment representing containers (intermodal) that are
either refrigerated or designed to hold high-value, non-perishable cargo
comprises approximately 1.9 million containers. The Company expects that its
addressable market in this industry segment will comprise those containers
carrying the most valuable items subject to theft (e.g. electronics and
cigarettes). Currently, intermodal container transportation systems use manual
systems to record containers as they enter and leave yards. Unlike the ORBCOMM
System, these passive systems record where a trailer has been, but not where it
is, its status or the condition of its contents.
Based on published data from Outlook for Freight Cars, the Company
estimates there are approximately 150,000 rail cars in the United States. The
Company believes that the addressable market for rail transportation comprises
those rail cars used to transport high-value cargo (e.g., automobiles,
refrigerated goods and paper rolls) or hazardous cargo comprising bulk
materials. The American Association of Railroads has mandated the use of
automatic equipment identifiers ("AEI") on rail cars. AEI systems consist of a
radio tag mounted on the rail car and a reader that records the identity of the
car as it passes by. AEIs therefore share the same limitations as bar code
systems because they only record where the trailer has been, not its current
location, status or the condition of its contents.
Energy. The Company believes that the ORBCOMM System can provide an
effective means of monitoring various assets used in the energy industry.
According to recent statistical abstracts of the United States, there are over
170,000 miles of oil pipelines and 250,000 miles of natural gas pipelines in the
United States, much of which is located in remote areas inaccessible to existing
communication networks. Pipeline operators take active measures to monitor lines
and limit pipeline corrosion to comply with laws by installing cathodic
protection systems that include a device called a rectifier. Protection systems
also are required by federal regulations on storage tanks, utility systems and
injection wells. The majority of protection system records are now compiled from
data collected by personnel who travel to the site and record the readings.
Conventional industry practice is to install one rectifier per mile of pipeline
with generally one transceiver (subscriber communication device) per rectifier.
However, several pipelines can be laid along one right-of-way, with a common
rectifier system, meaning that multiple rectifiers can feed into one transceiver
unit. The Company believes that the addressable market comprises the aggregate
number of rectifiers currently deployed on U.S. pipelines.
The Company expects that another LEO satellite system can support the
collection of data from remote sites, with service and equipment costs
comparable to those of the ORBCOMM System; however, this system only supports
one-way service. Terrestrial wireless systems offer similar services at
comparable service costs to the ORBCOMM System, but geographic coverage is
limited. For very remote and hard-to-read meters, manual systems are typically
used, but they require that personnel travel to the site to read the meter on
the transceiver. The Company believes that pipeline operators would benefit
significantly from the ORBCOMM System. Subscriber Communicators powered by
batteries, solar cells or power sources already installed along the pipeline,
could be programmed to transmit required data at regular intervals to allow for
monitoring the
50
<PAGE> 57
status of pipelines in remote locations. In addition to recording data,
Subscriber Communicators could be commanded to shut pipeline valves in the event
of a leak or other emergency.
According to recent statistical abstracts of the United States, there are
approximately 853,000 wells producing natural gas and crude oil, and
approximately 164 million gas and electric utility meters in the United States.
The Company believes that its addressable market will be those production wells
and utility meters located in remote geographic locations. Private radio systems
based on VHF radio frequency, multiple-address radio and microwave are being
used to collect data in moderately remote areas. These systems have been
installed primarily for other communications purposes and so the incremental
cost of monitoring wells is low. However, private radio systems are not
cost-effective in locations where monitoring cannot be combined with other
communications functions.
Environmental Monitoring. Many industrial companies and government
agencies have a need to monitor meteorological, hydrological and environmental
data such as rainfall, water levels and water quality at remote sites. The U.S.
Environmental Protection Agency ("EPA") is responsible for establishing and
monitoring national air quality standards, water quality activities, solid and
hazardous waste disposal and control of toxic substances. The EPA has
established standards for air and water quality that require pollution abatement
procedures, which procedures rely heavily on the automated logging and
collection of data from remote sites. The Company believes that there are
approximately 250,000 sites in the U.S. that require water quality monitoring
devices to measure bacteria, dissolved oxygen, phosphorus, lead and cadmium. In
addition to pollutants, water monitoring devices are used to measure flow rate,
temperature and water level. The Company believes there are approximately
125,000 sites dedicated to the collection of data on air pollution,
concentrations of carbon monoxide, ozone and sulfur dioxide, as well as
meteorological data on wind speed and barometric pressure. The Company believes
that the addressable market comprises those sites that are located in highly
remote areas not served by terrestrial systems, which can use Subscriber
Communicators to transmit small amounts of data relatively infrequently and on
an exception basis.
The retrieval of data from remote environmental monitoring sites is
presently conducted using three methods: site visits; PSTN service; or
terrestrial wireless systems such as cellular telephone and specialized mobile
radio. The Company believes that ORBCOMM offers an attractive alternative to the
existing methods. Site visits are costly, time consuming and result in
significant data latency. Terrestrial wireless systems are limited in coverage,
particularly in remote areas where much of the environmental monitoring takes
place.
Marine. The Company has identified two marine industry segments, Fisheries
and Barges and Workboats, for which the total market is estimated at 246,000
vessels. Fisheries Product News and the National Fisheries Service count 200,000
fishing vessels in the U.S. commercial fleet. The Company's addressable market
is expected to be those fishing vessels that operate primarily in the Gulf of
Alaska, the Northwest United States and the Northwestern Atlantic. These vessels
usually remain at sea for extended periods and operate on extremely tight
margins with operating costs that are carefully controlled. As a result, they
need low-cost communications systems to meet safety and regulatory requirements
and to exchange commercial and operational information with their offices, fuel
providers, provisioners and packing houses.
The American Waterways Council estimates that there are 46,000 barges and
workboats that operate in U.S. rivers and on coastal waters. The Company expects
that its addressable market will comprise barges that operate without
independent sources of power and carry grain, coal and other commodities. They
traverse U.S. waterways in groups of barges that are "fleeted" together and
pushed by towboats and require energy-efficient monitoring and communications
devices to transmit position reports, cargo status reports and security
information. Tugs, towboats and supply/service boats also need low-cost two-way
communications to send operational and service-related data to their land-based
headquarters and receive dispatch instructions in return.
For long-haul communications, commercial fishing vessels use either HF
radio or one of the Inmarsat services. HF radio is considered unreliable, not
cost-effective and difficult to use, while Inmarsat requires a considerable
upfront investment of capital. The Company expects that some commercial fishing
vessels may acquire service from AMSC. Currently, there is no technology that
provides for the tracking of barges. Since barges have no independent power
source, only a system that is both ubiquitous and energy efficient is feasible.
51
<PAGE> 58
Most barge tracking is presently conducted using paper records that are usually
several days old. Workboats frequently use cellular telephones, particularly in
the Gulf of Mexico. Given the high cost of cellular roaming and the potential
for unauthorized use, the ORBCOMM System may provide a more efficient,
cost-effective tracking service.
U.S. Government Applications. The Company believes U.S. Government
applications represent a major target market for its services. Pressures to
contain Federal spending and specific acts of Congress have resulted in a major
change in the procurement practices in the DoD and civil agencies, causing them,
where possible, to purchase satellite-based services from commercial providers.
The Company believes that use of LEO systems like the ORBCOMM System will
provide Government users with low-cost solutions, low probability of intercept
and detection, and worldwide availability. The Company expects to compete to
provide LEO service to the U.S. Government, including in connection with certain
programs already announced by the U.S. Government.
The DoD is developing the Global Transportation Network ("GTN") to track
personnel, aircraft and weapon systems anywhere in the world. Effective military
logistics requires location identification and the ability to communicate
tasking instructions. Control is required at all locations from rear depots to
front-line combat elements, with integrated communications providing the
essential link. The GTN is a $230 million program with an annual operating
budget of $45 to $50 million. GTN is being developed because no global system
currently exists to satisfy the requirements for monitoring status. Lacking a
technology that provides cost-effective tracking and monitoring on a global
basis, the U.S. military has been relying on manual record keeping, which has
recently been supplemented by distributed database systems communicating over
DoD-owned and/or leased lines. Asset tracking is currently performed at the
endpoints of the distribution chain. For this reason, a misdirected shipment can
only be relocated by tracing forward from its most recent known location, and
this can take weeks to accomplish. The Company believes the ORBCOMM System will
provide data on demand or on a scheduled basis for use by the government.
The Defense Messaging System ("DMS") is a $1.5 billion project with an
annual operating budget of $45 million to provide messaging for the DoD, NATO
and certain civilian agencies. The Company believes that Little LEO systems
would complement existing and planned terrestrial wireless and wireline services
by providing service in geographic locations where such services are not
available or are not cost-effective. Today, numerous independent email systems
provide messaging throughout the military, with Autodin currently processing 35
million messages per month. Autodin messages are sent between fixed terminals in
locations throughout the world. The Company believes that in the DMS
implementation, the ORBCOMM System could offer users the ability to send and
receive messages regardless of their physical location.
The Company believes that there are additional DoD programs that may use
the services of Little LEO systems including the Global Command and Control
System, budgeted for $500 million; the Air Mobility Command and Control
Information Processing System, budgeted for $210 million; the Combat Search and
Rescue program to locate downed pilots, budgeted for $220 million; the Mobile
Satellite Service program, budgeted for $87 million; the Joint Surveillance
System budgeted for $85 million; and the Commercial Satellite Communications
Initiative, budgeted for $1.6 billion.
There are also a number of civil government applications suitable for
Little LEO systems. The Post-FTS 2000 is a program to provide long distance
domestic and international wireless Internet access, data and email to U.S.
government civilian agencies. It is a ten-year contract providing an estimated
$300 to $400 million in revenues to service providers. The U.S. Departments of
State, Justice and Transportation are also developing wireless email and
messaging programs. The existing FTS2000 provides domestic long distance calling
service to the federal government only. The new contract for service includes
wireless, mobile and international services.
The Company believes that these new programs have requirements currently
unfulfilled by existing systems. Each program promotes the vision of extending
communications down to individual soldiers and system operators. Currently,
there is no dedicated DoD system available using inexpensive, small, lightweight
user terminals. The Company believes that Little LEO systems like the ORBCOMM
System can provide such service on a global basis.
52
<PAGE> 59
Foreign Government Applications. Use of Little LEO systems such as the
ORBCOMM System is expected to provide foreign governments with low-cost
applications, low probability of intercept and detection and worldwide
availability. Potential defense applications include transmission of
GPS-determined position data for maneuvering units and downed pilots and
transmission of air defense, fire support data, asset tracking and tactical
messaging. Potential civil government applications include wide-area clandestine
communications, monitoring and control of natural resources and search and
rescue functions. For foreign governments, the Company anticipates that the
ORBCOMM System could improve coverage and reliability and reduce the cost of
such applications.
FUTURE APPLICATIONS
In addition to the markets and applications (such as those described above)
that have already displayed a demand for mobile data and messaging
communications services, the Company believes that with the full deployment of
the constellation, the ORBCOMM System's combination of capabilities will
stimulate new demand, especially among potential messaging users. The explosive
growth of communication services is being fueled in part by the need for both
consumer and business users to improve their productivity by being in constant
contact with information sources. The growth is particularly evident in the
wireless segment of the industry. Terrestrial cellular systems only began
operation in the United States in 1982 and by the end of 1995 there were more
than 33 million subscribers in the United States. According to Malarkey-Taylor
Associates, Inc./Economic and Management Consultants International, Inc., there
will be approximately 334 million cellular/PCS subscribers globally by 2001. The
paging industry, which began in the 1950s, also continues to grow at least 20%
per annum and currently there are more than 34 million one-way paging
subscribers in the United States alone. Additionally, the Internet is growing at
20% per month and there are expected to be over 300 million Internet users by
2000. This need is also being fueled by an increasingly mobile society that
desires to be reachable anywhere, anytime and the growth of a global
marketplace.
The Company expects that in the United States, the ORBCOMM System will
complement existing and planned terrestrial wireless communications systems, by
providing coverage in geographic areas where such services are not offered or by
enhancing data applications currently being provided through the PSTN or the
PSDN. Internationally, the Company believes that the ORBCOMM System can offer
services in developing countries or remote regions where basic telephone service
or data and messaging services are not available. As a satellite-based system
with coverage of virtually all of the Earth's surface, the Company can
efficiently and cost-effectively offer communications services in these
geographic areas through the ORBCOMM System.
The ORBCOMM System's combination of low-cost Subscriber Communicators and
seamless coverage is expected to provide a range of new personally portable
services and gap-filler capabilities such as: (i) stand-alone messaging; and
(ii) hybrid messaging.
Stand-Alone Messaging. In certain communications applications, the major
requirements are low-cost handsets and ubiquitous coverage. The handsets must
also be easy to use, provide long battery life, and be readily carried in a
purse, briefcase or suit pocket. Typically, use will be infrequent and the
length of the message short. Potential user requirements include: (i) persons
who want the standby ability to notify someone at the office or at home; and
(ii) pleasure boaters, other recreational users, and motorists who may find the
system useful for priority communications and for convenience.
Based on data published by the National Marine Manufacturers Association,
the Company believes that approximately 77 million Americans participate in
boating activities and that its addressable market comprises those owners who
enjoy traveling a considerable distance outside the range of terrestrial
communications systems. Their boats are generally designed to provide overnight
accommodations for extended periods and are usually 26 feet or longer. There are
approximately two million households with powerboats and 900,000 with sailboats
in this size category. The primary market requirements are concern with safety
and the availability of a low-cost, lightweight, personally portable unit.
Recreational boaters typically use VHF radio and/or cellular telephone
where tower-based systems are available. Some individuals rely on HF radio and a
very small number employ Inmarsat services. Due to the
53
<PAGE> 60
significant geographic coverage and expense limitations of these alternatives,
however, there are few viable communications alternatives available to
outdoorsmen.
The Company estimates there are approximately 22 million American
households whose members frequently engage in one or more of the following
"back-country" activities: hunting; hiking; overnight camping; and backpacking.
The Company believes that a portion of these households form an addressable
market for the ORBCOMM System due to the frequency of their activities and the
likelihood that they will travel outside the range of terrestrial
communications.
Hybrid Messaging. The advent of corporate email systems and small,
lightweight personal computers is creating a large body of users who want the
convenience and flexibility to communicate information without being bound by
wireline or the limits of wireless systems. The ORBCOMM System, due to its
low-cost Subscriber Communicators and global availability, could serve as a
gap-filler for end-users, and appeal to terrestrial wireless system operators
currently offering such services in metropolitan areas. The ORBCOMM System could
provide extended coverage with minimal investment in new infrastructure and
could expand vertical market opportunities for terrestrial operators.
A recent industry report indicated that the volume of messages carried over
the Internet is currently 300 billion per year, of which 70% are messages of
1,000 characters or less. It is estimated that 40% of U.S. territory will remain
uncovered by terrestrial communications due to sparse population density. The
Company therefore believes there is a potential niche market for email and
personal messaging in addition to messaging used primarily for business or
industrial reasons. The Company believes that companies that currently provide
terrestrial wireless communications services may use the ORBCOMM System as a
service area gap-filler and extend their networks to remote areas.
MARKETING
Domestic. The exclusive right to market the ORBCOMM System in the United
States is held by ORBCOMM USA. See "Relationships Among the ORBCOMM Parties."
ORBCOMM USA has developed a comprehensive marketing plan that includes
distribution, applications development, customer service and pricing strategies.
The Company's overall goal is to penetrate rapidly specifically targeted markets
to promote efficient use of system capacity. Currently, while offering
commercial intermittent service, ORBCOMM USA is seeking to build an initial base
of subscribers in the United States, and expand on its agreements with key
channels of distribution. During the fully operational stage, the Company
expects that ORBCOMM USA's sales and marketing staff will primarily support
indirect channels of distribution.
ORBCOMM USA is in the process of negotiating and signing agreements with
Resellers who purchase ORBCOMM System services directly from the Company and
resell these services to end-users in a specific industry and/or market as part
of a package that may include other products or services. ORBCOMM USA's
relationship with a Reseller is governed by a reseller agreement that details
each party's rights and responsibilities with respect to developing and
maintaining customer relationships, as well as the cost of service to the
Reseller. In soliciting customers, the Reseller "adds value" to the basic
service offering by bundling related applications software, hardware or product
packaging for its respective industry or market segment. Existing mobile data
carriers are expected to offer ORBCOMM System services by taking advantage of
the ORBCOMM System's "gap-filler" properties as well as its geolocation and
acknowledgment features. Such additional ORBCOMM partners are likely to come
from such areas as paging, PCS, mobile data, cellular, and intelligent
transportation systems.
In the United States, service pricing is based on many variables, including
the availability and cost of substitute services, the cost of providing service
and the nature of the user application. Pricing generally incorporates an
initial registration charge, a recurring monthly charge for access to the
ORBCOMM System and usage charges based on end-user activity. In charging for
usage, the Company has developed a pricing structure in the United States that
suits the usage patterns for the initial vertical markets addressed by the
existing two satellite system. Prices for priority and other real time messaging
will be developed as the full deployment of satellites in the ORBCOMM System
occurs. It is likely that multiple pricing alternatives will
54
<PAGE> 61
be offered in the United States including peak/off-peak, volume discounts, and
annual contract commitment options.
To date, ORBCOMM USA has signed 22 reseller agreements with the following
companies:
<TABLE>
<CAPTION>
SERVICES
RESELLER(1) INDUSTRIES PROVIDED
----------------------------------------------- ----------------- -----------
<S> <C> <C>
Advanced Research Corporation.................. T TR
Arinc, Inc. ................................... M, T, R, C, E, G ME, MO, TR
Boatracs, Inc. ................................ M ME, MO, TR
Caribbean Satellite Services, Inc. ............ M MO, TR
Corexco Consulting Services, Inc. ............. OG ME, MO
Electronic Marine Services, Inc. .............. M ME
Geotechnology Development, Inc. ............... T, C MO, TR
GlobalKey, Inc. ............................... G ME
Globitrac, Inc. ............................... I, A, OT MO, TR
IWL Communications, Inc. ...................... OG ME, MO
Innovative Computing Corporation............... T ME, MO, TR
Intrex Data Communications Corp. .............. OG, I MO, TR
Leupold & Stevens, Inc., Stevens Water
Monitoring Division.......................... E, OD ME, MO, TR
LoadLink, International........................ T, R ME, MO, TR
MCQ Associates, Inc. .......................... G ME, MO, TR
Metocean Data Systems, Inc. ................... E, G, OT ME, MO, TR
National Systems & Research Co., Inc. ......... G ME, MO, TR
QUALCOMM, Incorporated ........................ T MO, TR
Smartboat, Inc. ............................... M ME, TR
The Sutron Corporation......................... E MO
Transportation Communication Services, Inc. ... T, C ME, MO, TR
Winnet, Inc. .................................. T, C ME, MO, TR
</TABLE>
- ---------------
(1) Reseller agreements generally have a term of one year, although the Company
generally expects these agreements to be renewed on substantially the same
terms as currently exist.
<TABLE>
<CAPTION>
Key -- INDUSTRIES SERVICES PROVIDED
------------------------------------------------ ---------------------
<S> <C> <C> <C>
A = Agriculture OG = Oil & Gas ME = Messaging
C = Containers OD = Outdoor MO = Monitoring
E = Environment R = Rail TR = Tracking
G = Government T = Trucking
I = Industrial OT = Other
M = Marine
</TABLE>
International. The Company holds the exclusive right to market the ORBCOMM
System outside the United States, and has licensed this right to ORBCOMM
International. See "Relationships Among the ORBCOMM Parties." Provision of
communication services using the ORBCOMM System outside the United States is
expected to be achieved through International Licensees authorized by ORBCOMM
International. ORBCOMM International is in the process of negotiating and
signing agreements with International Licensees within various countries or
regions of planned service outside of the United States.
The Company has a standard Service License Agreement for International
Licensees, although there may be variations in the terms of specific agreements.
The Service License Agreement authorizes, among other things, the exclusive
access by the International Licensee to the ORBCOMM System satellites in a
designated geographic area and permits the limited use of certain ORBCOMM
proprietary technologies and intellectual property. While the Agreement contains
specific obligations on both parties, it also contains express provisions that
are intended to disclaim all system performance warranties and includes broad
limitation of liability clauses. The Agreement will have a ten-year term,
although it may be terminated earlier under certain conditions including in the
event of a default.
55
<PAGE> 62
International Licensees will be responsible for obtaining all necessary
licenses and approvals for the use of the ORBCOMM System and the construction
and operation of the Gateways in the designated territories. Accordingly, in
selecting authorized International Licensees for a particular country, ORBCOMM
International considers such factors as an International Licensee's: (i)
reputation in the marketplace; (ii) existing distribution capabilities and
infrastructure; (iii) financial condition and other resources; and (iv) ability
to obtain the requisite local regulatory approvals. International Licensees will
pay fees for access to the ORBCOMM System in their territory, including a
monthly Satellite Usage Fee. The Satellite Usage Fee is calculated as the
greater of a percentage of gross operating revenues and a data throughput fee,
which percentage and dollar amount may be increased by the Company in accordance
with the terms of the Agreement.
In conjunction with the execution of a Service License Agreement, an
International Licensee will be required to purchase from ORBCOMM an ORBCOMM
Gateway, which will include a specific number of Earth stations. In certain
defined circumstances, an International Licensee may be permitted by the Company
to share a Gateway with another International Licensee in an adjacent territory,
thereby reducing the initial out-of-pocket start-up costs for an ORBCOMM System
franchise. For example, ORBCOMM has executed a Ground Segment Facilities Use
Agreement with ORBCOMM Canada Inc., pursuant to which ORBCOMM Canada is
authorized for a fee to access and use the U.S. Gateway on a shared basis with
ORBCOMM USA.
Retail pricing in international markets will be at the discretion of the
International Licensees, and is expected to vary from country to country to
reflect variations in economic conditions, the availability of substitute
services, local customs, and government policy as required to be competitive
with other services.
As of June 30, 1996, ORBCOMM International has signed 17 Memoranda of
Understanding with potential International Licensees and is in active
negotiations with six other potential International Licensees; taken together,
these 23 potential International Licensees represent approximately 75 countries
around the world. The Company intends to convert its existing Memoranda of
Understanding into Service License Agreements during the next three to 18
months, although there can be no assurance the Company will be successful in
each case. In addition, ORBCOMM International has signed a Service License
Agreement with one International Licensee, ORBCOMM Canada Inc., which is
controlled by Teleglobe and which has been given the exclusive right to market
services using the ORBCOMM System in Canada.
SYSTEM ARCHITECTURE
The ORBCOMM System consists of four operational segments: (i) a space
segment consisting of a constellation of 28 LEO satellites; (ii) a ground
segment consisting of Gateways, the major elements of which include Earth
stations sending and receiving signals and a message switching system that
processes the message traffic; (iii) a control segment to monitor and manage the
flow of information through the system; and (iv) a subscriber segment consisting
of communicators used by subscribers to transmit and receive messages to and
from nearby satellites.
Overview. To use the ORBCOMM System, a user creates a text message using a
computer or Subscriber Communicator device, which message is sent to the nearest
ORBCOMM System satellite and delivered to an ORBCOMM Earth station, which
supports communication with the satellites, and then to the Gateway Switching
System, which processes the messages. Within the Gateway, the message is
processed using a combination of ORBCOMM-developed and commercial email
software, and sent on to its ultimate destination. If desired, an
acknowledgement message is returned to the sender. The final delivery may be to
another Subscriber Communicator, or may make use of public/private X.25 data
networks, the Internet, or even text-to-fax conversion.
To control costs and design and implementation risks, the ORBCOMM System
architecture, where possible, makes use of existing, mature technologies and
conforms to internationally accepted standards. The ORBCOMM System network
architecture comprises a multi-nodal packet network using X.400 messaging and
Time Division Multiple Access (TDMA) as the enabling technologies.
56
<PAGE> 63
As shown below, the ORBCOMM System is divided into four operational
segments: the space segment; the ground segment; the control segment; and the
subscriber segment.
CHART INSERTED HERE
Space Segment. The Space Segment will consist of a constellation of 28
satellites comprising three planes of eight satellites and two planes of two
satellites in highly inclined orbits (of which one plane of two satellites has
been launched), all at approximately 775 kilometers above the Earth. The two
in-orbit satellites are in a 70(++) inclined plane at an altitude of
approximately 740 kilometers. Weighing approximately 95 pounds, the MicroStar
satellites are produced by Orbital and generally will be deployed in groups of
eight using Orbital's Pegasus XL launch vehicle. Two satellites are to be placed
in a high-inclination orbit using an Orbital Taurus launch vehicle. The design
of the remaining 26 satellites (as well as the eight ground spares) is expected
to be identical.
The satellites, each of which is a self-contained node of the ORBCOMM
System, are equipped with a VHF communications infrastructure capable of
operation in the 137.0-150.05 MHz and the 400.075-400.125 MHz bands. The use of
the spectrum is managed by an on-board computer that employs an
ORBCOMM-developed Dynamic Channel Activity Assignment System ("DCAAS"). The
DCAAS continuously scans the authorized spectrum, identifies frequencies in use
and assigns channels to minimize the possibility of interference. DCAAS is
expected to change the frequency of the uplink random access channels every five
to 15 seconds. The ORBCOMM System satellites can also transmit a UHF beacon that
provides Subscriber Communicator manufacturers with the ability to supply
enhanced, low-cost, Doppler positioning.
Under the terms of the Procurement Agreement, the Company is purchasing an
additional eight satellites that may be used as ground spares and launched in
the event of the loss of satellites as a result of a launch failure or in-orbit
satellite failure. In the event such satellites are not needed for such purpose,
ORBCOMM currently intends to launch these satellites as an additional plane of
eight, as authorized by the FCC License. This would increase global coverage and
provide additional system redundancy. In addition, the Company has an option to
procure a second generation satellite system that would replace the system it is
now deploying at the end of the system's expected life. The option, currently
priced at $166.1 million (subject to adjustment for inflation and excluding
taxes, if any, and the cost of launch and satellite insurance) can be exercised
by the Company at any time.
57
<PAGE> 64
The Procurement Agreement requires Orbital to demonstrate compliance with
the detailed technical satellite performance requirements defined in the ORBCOMM
System Specifications, which specifications describe the end-to-end satellite
performance. Except for the communication software, which is the responsibility
of ORBCOMM, Orbital is responsible for the performance of the satellites, the
U.S. Earth stations and the satellite management functionality of the Network
Operations Center ("NOC"). Orbital must comply with a verification and test
plan, which defines the detailed verification tests and acceptance criteria for
each of the ORBCOMM System elements.
The Procurement Agreement with Orbital provides for the launch of 24
satellites on the Pegasus XL. Orbital's Pegasus XL vehicle is launched from
beneath Orbital's leased, modified Lockheed L-1011 and is capable of deploying
satellites weighing up to 1,000 pounds into low-Earth orbit. Through June 30,
1996, Orbital has conducted a total of eight standard Pegasus missions, all of
which were fully or partially successful. Whether a mission is fully or
partially successful depends on the particular mission requirements designated
by the customer. Prior to its successful flights in March, July and August 1996,
the modified Pegasus XL, an enhanced version of the standard Pegasus, had two
unsuccessful flights, one occurring in June 1994 and the other in June 1995. The
first Pegasus XL failure was caused by inaccurate aerodynamic modeling of the
vehicle. The second Pegasus XL failure resulted from human assembly error
involving the improper installation of a small component that prevented the
Stage 1/Stage 2 interstage from properly separating from Stage 2. After the
Pegasus XL failure in June 1995, Orbital led a comprehensive internal review and
commissioned an independent assessment of the Pegasus XL's design, manufacturing
and assembly methods and launch procedures. Orbital also conducted extensive
engineering analyses and subsystem testing to characterize flight margins and to
implement appropriate design changes. All analyses and tests were conducted with
broad customer input from NASA, the U.S. Air Force, the Ballistic Missile
Defense Organization and the Aerospace Corporation. These reviews, carried out
by members of the aerospace industry and government experts, recommended 88
engineering and procedural changes to enhance product robustness, all of which
were implemented by Orbital. Pegasus XL returned to flight on March 8, 1996,
successfully launching a satellite for the U.S. Air Force to its intended orbit
and had successful flights in July and August 1996, in each case delivering a
NASA satellite to its designated orbit.
In addition, the Company expects to launch two additional satellites as a
secondary payload on Orbital's Taurus launch vehicle. Taurus is a four-stage,
ground-launched derivative of Pegasus that can carry up to 3,000 pounds to
low-Earth orbit. In March 1994, Orbital successfully launched the first Taurus
vehicle, deploying two satellites for the Defense Advanced Research Projects
Agency into their target orbits.
The ORBCOMM network is unique in that both the Ground Segment and the
Subscriber Segment (described below) communicate with the satellite in the same
band, thus eliminating the design complexity, as well as the associated mass,
power and cost, of supporting multiple radio payloads on a single satellite. The
satellite also contains an intelligent packet-routing capability, including a
limited store-and-forward capability.
Ground Segment. The Ground Segment consists of Gateways strategically
located throughout the world. The role of the Gateway is to provide access to
the Space Segment and interface to public and private data networks. The major
elements of a Gateway include:
- Earth stations, each of which is composed of two radomes, with enclosed
VHF tracking antennae, one of which is redundant, associated pedestal,
controller, and radio equipment;
- Gateway Message Switching System, which processes the message traffic and
provides the interconnection to the terrestrial networks; and
- Gateway Management System, which manages the Gateway elements.
To provide services using the ORBCOMM System in a particular geographic
region, an appropriately located Gateway is required. Substantially all elements
of the U.S. Gateway have been constructed, including four Earth stations located
in New York, Arizona, Georgia and Washington. ORBCOMM expects to enter into
agreements with International Licensees for the construction of Gateways outside
the United States. The cost and implementation of these Gateways is expected to
be borne by the International Licensees.
Each Earth station comprises two radomes set on top of a sandwich-walled
cinderblock support structure. The radome, which weighs approximately 3,300
pounds, is approximately 28 feet in diameter. The total height of the structure,
measured from the top of the radome to the foot of the base, is approximately 33
feet. Each
58
<PAGE> 65
Earth station is unmanned, and contains a freestanding shelter and an optional
fuel tank and power generator. The Gateway satellite links have been designed to
make use of single uplink and downlink channels for all ORBCOMM System
satellites by using a TDMA protocol. This protocol will permit several Gateways
to communicate simultaneously with a single satellite. The TDMA protocol has
several advantages, including the ability to provide a virtually seamless
handover of a satellite from Earth station to Earth station under the
centralized control of the NOC.
Control Segment. The Control Segment monitors and manages all network
elements to ensure continuous, consistent operations in the provision of quality
service. The Control Segment is housed at the NOC, with a back-up NOC planned to
be constructed in the third quarter of 1997.
The Control Segment systems include a network management system that
presents the status of all network elements and a space vehicle management
system. Through the U.S. Gateway, managed from the NOC, ORBCOMM has access to
the Space Segment for command and control purposes, although, consistent with
the rules and regulations of the FCC, OCC maintains ultimate control over the
ORBCOMM System.
Subscriber Segment. The Subscriber Segment consists of various models of
Subscriber Communicators that are generally designed to support specific
application needs of users. The Subscriber Communicator models will include: (i)
vehicular-powered Subscriber Communicators that could be used in asset tracking,
cargo monitoring, or vehicular operation monitoring; (ii) externally powered
Subscriber Communicators for fixed applications such as pipeline monitoring,
remote device control, or environmental monitoring; and (iii) self-contained,
battery- and/or solar-powered Subscriber Communicators that would support
applications where commercial or other external power is not available,
including personal messaging applications.
Subscriber Communicators targeted for industrial or telemetric applications
are designed to interface with sensors or control devices through an
industry-standard serial interface using a proprietary communications protocol,
developed to take advantage of the packet nature of the ORBCOMM System.
Subscriber Communicators targeted for personal use will incorporate interfaces
such as integrated keyboards or touch-sensitive screens. Additionally, while the
ORBCOMM System satellites are designed to support Doppler position determination
in the Subscriber Communicators, certain Subscriber Communicator models will
also be equipped with GPS receivers, permitting more rapid and more accurate
location determination.
To ensure the availability of Subscriber Communicators having different
functional capabilities in sufficient quantities to meet demand, the Company has
provided extensive design specifications and technical and engineering support
to various Subscriber Communicator manufacturers. The Company currently has a
development and initial supply agreement with Panasonic, which has received
authorization from the Company for a basic Subscriber Communicator and has units
that are now commercially available. The Company is in the process of finalizing
a manufacturing and a sales support agreement with Panasonic and has executed
Subscriber Communicator Manufacturing Agreements, which include terms regarding
the development, manufacture and sales support for Subscriber Communicators,
with Scientific-Atlanta, Magellan, Torrey Science and Stellar. Panasonic and
Stellar have informed the Company that, in lots of at least several thousand,
the price for their respective Subscriber Communicators will be approximately
$550 per unit.
COMPETITION
Competition in the communications industry is intense, fueled by rapid and
continuous technological advances and alliances between industry participants
seeking to use such advances on an international scale to capture significant
market share. At this time, the ORBCOMM System is the only commercial Little LEO
system to be licensed fully for all segments of its system within the United
States. ORBCOMM inaugurated commercial service on February 1, 1996, becoming the
first commercial Little LEO mobile satellite service provider. The Company
believes that commencement of commercial service provides it with a substantial
head start in developing markets, distribution systems, applications and
customers globally. The Company expects that potential competitors will include
other Little LEO systems, such as Starsys, and Big LEO systems, such as the
Iridium and Globalstar systems.
Starsys is licensed to construct and operate a multiple-satellite
constellation that, if deployed, could compete directly with the ORBCOMM System.
Starsys employs code division multiple access ("CDMA") modulation (spread
spectrum) that must operate in spectrum that is allocated on both a "primary"
and
59
<PAGE> 66
"secondary" basis to Little LEO services. As a result, Starsys will operate at
low power levels to avoid interference to other services. The low power levels
result in a maximum transmission rate of 600 bps from Subscriber Communicators
compared with 2,400 bps for the ORBCOMM System. In addition, the U.S. Government
has imposed a channel occupancy limit on Starsys of 25% of that permitted for
the ORBCOMM System to prevent interference to existing U.S. Government systems.
The Company believes that no operational Starsys satellites will be launched
until 1997 at the earliest, and that completion of the network will not be
accomplished before 2000.
One other entity has been licensed by the FCC in the first processing round
to provide Little LEO satellite services in the United States. Volunteers in
Technical Assistance ("VITA"), a not-for-profit organization, has been licensed
for one of the two satellites for which it applied. VITA will use a small amount
of uplink and downlink spectrum to transmit health, research and scientific data
on a delayed basis between developing countries and the United States. VITA's
first satellite was destroyed in 1995 as a result of a launch vehicle failure.
VITA has requested that the FCC authorize it to launch a replacement satellite.
It is expected that the FCC will authorize VITA to launch a replacement
satellite and will grant VITA's second satellite application in its second
processing round for Little LEO applications. See "Regulation -- United States
FCC Regulation."
The Company does not expect that any of the other proposed Little LEO
systems currently participating in the second licensing round before the FCC
will be in a position to offer competing data and messaging communications
services before the year 2000. Even if the FCC were to license one or more of
these other applicants in the near future, the Company holds a substantial
advantage over these potential competitors by virtue of its having already
obtained FCC licensing for all elements of its system in the United States, by
achieving, in large part, international coordination of its designated
frequencies through the ITU, and having already designed, constructed and
deployed a fully functional, end-to-end system. Over the course of the next
several years, the Company is expected to obtain further advantages over these
potential competitors by launching the remaining satellites in the ORBCOMM
System, by signing agreements with additional Subscriber Communicator
manufacturers, by signing reseller and Service License Agreements with
additional marketing entities and by expanding its marketing activities
generally as the ORBCOMM System matures.
Plans for Little LEO systems have been announced in Russia, France, Tonga,
Brazil, Uganda, Australia and Korea. However, with the sole exception of the
French candidate system, the ORBCOMM System and those of the other United States
first round licensees are expected to occupy all but a small portion of the
currently allocated spectrum and are protected from harmful interference from
all other systems.
The Big LEO systems, which will operate LEO mobile satellite systems using
radio frequencies above 1 GHz, are not expected to be ready for real time,
uninterrupted service before 1998. In addition, all the Big LEO systems are
designed primarily to provide two-way voice services which require larger, more
complex satellites than the ORBCOMM System satellites, and larger constellations
to provide coverage. As a result, the cost of the Big LEO systems is
significantly greater than those of the ORBCOMM System. Based on filings with
the FCC, Iridium anticipates an initial service date in 1998 for a proposed
66-satellite constellation to provide voice and other communications services at
usage charges of approximately $3.00 per minute plus tail charges (land-line
extension charges). The total system cost is expected to be approximately $4.7
billion. The Globalstar system is expected to cost approximately $2 billion and
consists of a constellation of 48 satellites with usage charges of approximately
$0.55 per minute. The initial service date for the Globalstar system is
anticipated to be in 1998. Another satellite system designed to provide
primarily voice communications is the Odyssey system, a project in which
Teleglobe has an interest. Odyssey is a medium-Earth orbit system, which will be
composed of 12 satellites operating at an altitude of 10,355 kilometers above
the Earth. Odyssey proposes to begin operations and to become fully operational
by 2001. The total system cost is expected to be approximately $2.5 billion.
Satellite-based communications systems are characterized by high up-front
costs and relatively low marginal costs of providing service. A number of Big
LEO and Little LEO systems are presently being proposed, and while the
proponents of these systems foresee substantial demand for the services they
will provide, the actual level of demand will not become known until such
systems are constructed, launched and begin operations. In addition, the ORBCOMM
System will compete with several existing and planned GEO
60
<PAGE> 67
systems such as the AMSC system. Big LEO and GEO systems are designed primarily
to provide two-way voice services, which require larger, more complex satellites
and require a circuit-oriented connection over their network to transmit even
short messages, which significantly increases their per-message cost for such
short messages. However, these systems could seek to offer services similar to
those offered by the ORBCOMM System. In such case, price competition could be
intense.
The ORBCOMM System is not intended to compete with existing and planned
terrestrial messaging and data systems. Rather, the Company believes that the
ORBCOMM System will complement these systems, which provide low-cost services
primarily in metropolitan areas where subscriber densities justify construction
of radio towers. Such systems generally do not have sufficient coverage outside
metropolitan areas, making them less attractive to vertical markets such as
field service operations and trucking, where assets spend large portions of
their operating time outside terrestrial system coverage areas. The ORBCOMM
System presents an attractive complement to tower-based services because it can
provide geographic gap-filler service at affordable costs without the need for
additional infrastructure investment.
It is expected that as terrestrial communications services expand to
regions currently underserved or not served by wireline or cellular services,
demand for ORBCOMM System service in these regions may be reduced. ORBCOMM may
also face competition in the future from companies using new technologies and
new satellite systems. A number of these new technologies, even if they are not
ultimately successful, could have an adverse effect on ORBCOMM as a result of
their initial marketing efforts. ORBCOMM's business would be adversely affected
if competitors begin operations or existing or new communications service
providers penetrate ORBCOMM's target markets before completion of the ORBCOMM
System. Additionally, as with any satellite-based system, the ORBCOMM System
will function best when there is an unobstructed line-of-sight between the user
and one or more of the ORBCOMM System satellites overhead, and services will not
be available inside buildings or other similar structures. There can be no
assurance that these characteristics will not adversely affect subscriber demand
for the ORBCOMM System.
EMPLOYEES
As of July 31, 1996, ORBCOMM had 72 full-time employees, none of whom is
subject to any collective bargaining agreement. The Company's management
considers its relations with employees to be good.
PROPERTIES
The Company currently leases approximately 23,000 square feet of office
space in Dulles, Virginia from Orbital. See "Relationships Among the ORBCOMM
Parties -- Administrative Services Agreement." The Company currently operates
four Earth stations. The Company owns the properties on which the St. Johns,
Arizona and Arcade, New York Earth stations are located and leases, subject to
long-term lease agreements, the properties on which the Ocilla, Georgia and East
Wenatchee, Washington Earth stations are located.
LEGAL PROCEEDINGS
The Issuers are not a party to any pending legal proceedings material to
their financial condition or results of operations. For a discussion of
regulatory issues affecting the Company, see "Regulation."
61
<PAGE> 68
REGULATION
UNITED STATES FCC REGULATION
REGULATION OF NVNG SYSTEMS
All commercial non-voice, non-geosynchronous ("NVNG") satellite systems, or
Little LEO systems such as the ORBCOMM System, in the United States are subject
to the regulatory authority of the FCC, which is the U.S. agency with
jurisdiction over commercial uses of the radio spectrum. Little LEOs must obtain
an authorization from the FCC to construct and launch their satellites and to
operate their satellites to provide services in assigned spectrum segments.
In January 1993, the FCC allocated spectrum for NVNG mobile-satellite
services ("MSS") and issued a Notice of Proposed Rulemaking to govern the NVNG
application process. On October 21, 1993, the FCC formally adopted its rules
pertaining to NVNG MSS systems. These rules included provisions regarding
financial qualifications, system size, intersystem coordination and reporting
requirements. These rules were applied to the three applications in the initial
NVNG processing round. Each of these three applications (including OCC's) was
approved by the FCC; however, the ORBCOMM System is the only commercial Little
LEO System to be fully licensed for all segments of its system, including four
Earth stations and its Subscriber Communicators, within the United States.
On November 16, 1994, the FCC closed the application filing period for a
second processing round for NVNG applications, and the FCC has received
applications from eight Little LEO systems (including OCC). The FCC has
indicated that there is insufficient spectrum available to grant each of the
pending applications, and therefore has suggested that its rules for processing
NVNG applications may need to be modified. On May 3, 1996, the FCC issued a
letter to all second round Little LEO system applicants indicating that by late
spring or early summer of 1996 it would issue an order applying its existing
NVNG rules to all second round applications, pending the issuance of a Notice of
Proposed Rulemaking and the formulation of a strategy that would allow it to
license applicants in the second round. See "-- Second Processing Round."
REGULATORY HISTORY OF THE ORBCOMM SYSTEM
On February 28, 1990, nearly two years before the ITU allocated spectrum to
NVNG systems, OCC filed an application with the FCC for a Little LEO system. See
"International Regulation -- ITU Spectrum Allocations." Starsys filed a Little
LEO system application with the FCC several months later, whereupon the FCC
established a cut-off date for the filing of applications to be considered
concurrently with these proposals. A third applicant, VITA, also filed a Little
LEO system application in this initial processing round.
On March 13, 1992 and May 28, 1993, the FCC awarded OCC experimental
licenses to develop and test a limited Little LEO service. These licenses, plus
other licenses previously granted to OCC, permitted the launch of two
satellites, the construction of two ground stations and the development and
production of 1,000 customer terminals and the marketing of revenue-producing
services.
On October 20, 1994, OCC was granted authority by the FCC to construct,
launch and operate an additional 34 satellites located 775 kilometers above
Earth, in four inclined orbital and two near-polar planes, for the purpose of
providing two-way data and message communications and position determination
services in certain specified segments of the radio frequency spectrum (the "FCC
License"). The FCC License grants OCC the authority to operate in certain
segments of the radio frequency spectrum for its uplink and downlink functions.
See "International Regulation -- ITU Spectrum Allocation." The frequency bands
in which the ORBCOMM System is authorized to operate are as follows:
<TABLE>
<S> <C>
Uplink: 148.0 - 149.9 MHz
Downlink: 137.0 - 138.0 MHz and 400.075 - 400.125 MHz
</TABLE>
The FCC License is for private carriage and extends ten years from the
operational date of the first ORBCOMM satellite, FM1, which was April 3, 1995.
The milestone requirements of the FCC License mandate that OCC launch its first
two satellites by December 1998 and its remaining 34 authorized satellites
62
<PAGE> 69
by December 2000. OCC has already met the first milestone with the launch of its
first two satellites, FM1 and FM2, in April 1995. OCC has set an aggressive
launch schedule for 26 satellites that, if successful, will result in OCC
reaching the second milestone by the end of 1997, subject to receipt of FCC
approval by such date in the event ORBCOMM determines not to deploy the eight
ground spares as a fourth plane. In addition, OCC is required, three years prior
to the expiration of the FCC license, to apply for a license renewal. Although
the FCC has indicated that it is inclined to grant license renewals to existing
NVNG licensees, it is not certain that OCC's license would be renewed should it
apply. See "Risk Factors -- Regulatory Risks -- Licensing Risks -- Domestic."
At the time the FCC closed the first round of processing for NVNG
applications, ORBCOMM's application was mutually exclusive with Starsys. In an
effort to resolve this mutual exclusivity, the three first round applicants met
and negotiated a Joint Sharing Agreement, executed on August 7, 1992. Using this
Joint Sharing Agreement as a guide, the three first round applicants, the FCC,
existing users of the same frequency bands and adjacent bands and other
interested parties met as a Negotiated Rulemaking Committee to address and
resolve operational and sharing concerns and to propose technical rules to
resolve them. The final rules, based on the proposals of this committee, were
adopted by the FCC and codified in its October 1993 NVNG order. OCC, as well as
the other first round applicants, was permitted to modify its license
application in response to the October 1993 NVNG order. See "-- Regulation of
NVNG Systems."
Under the terms of a coordination agreement between Starsys and OCC, which
was incorporated into the terms of its FCC License, OCC is required to shut down
its left-hand circular polarization ("LHCP") satellite-to-subscriber downlink
channels under certain circumstances when operation of such channels would
interfere with the Starsys system. To further lessen the possibility of
co-polarization interference, OCC also agreed to modify its frequency plan to
locate its LHCP channels in the lower portion of the 137.0-138.0 MHz band. The
FCC imposed these restrictions on OCC's domestic operations but reserved the
right to consider extending these restrictions to OCC's international operations
if notified of actual sharing difficulties between the ORBCOMM System and
Starsys.
The FCC License also provides that the ORBCOMM System is permitted to
operate throughout the 148.0-149.9 MHz band until such time as Starsys is
prepared to launch its first satellite. Once Starsys so notifies the FCC, or
earlier if the FCC requires, OCC has agreed to limit its operations to the upper
half of the 148.0-149.9 MHz band, permitting Starsys to operate its spread
spectrum system in the lower half of the band.
In 1995, the FCC granted OCC licenses to operate four Earth stations in the
continental United States and granted OCC a blanket license to deploy up to
200,000 Subscriber Communicators. Thus, the ORBCOMM System is the only
commercial Little LEO system to be licensed fully for all segments of its system
within the United States.
REQUEST FOR MODIFICATION OF FCC LICENSE
On October 20, 1995, OCC submitted to the FCC the Modification Request,
proposing to reduce each of the ORBCOMM System satellites' subscriber downlinks
operating in the 137-138 MHz band from two to one, while changing the downlink
data rate to a selectable rate of either 4.8 or 9.6 kbps, which would reduce
ORBCOMM's overall bandwidth requirements by 40 kHz. OCC also proposed to
continue to operate at 4.8 kbps in high-inclination planes, and at 56 kbps in
the gateway downlink on all satellites. Although several of the other second
round applicants have filed comments with the FCC opposing the Modification
Request, the Modification Request has several advantages for OCC's opponents, as
well as OCC. The Modification Request would eliminate the need for OCC to shut
down its LHCP when in view of a Starsys Earth station and thus obviate many of
the restrictions imposed on the ORBCOMM System under the terms of the FCC
License. The Modification Request also would free a certain portion of the
allocated spectrum for use by other Little LEO applicants. The Modification
Request would facilitate coordination of the ORBCOMM System with Russian
meteorological satellites currently operating in this bandwidth and could
facilitate OCC's coordination efforts with the proposed French S/80-1 satellite
system. See "-- International Regulation -- ITU Coordination." The Modification
Request has now completed the public comment cycle and OCC recently reached an
agreement with Starsys and NOAA with respect to technical matters raised by the
63
<PAGE> 70
Modification Request. While OCC believes that the Modification Request will be
granted within the next several months, should the FCC fail to grant the
Modification Request, it could have a material adverse effect on the ORBCOMM
System.
SECOND PROCESSING ROUND
On November 16, 1994, the FCC closed the application filing period for
applications from other proposed NVNG satellite systems. Currently, there are
eight NVNG applicants in the second processing round (including OCC), each of
which proposes to operate in all or part of the same frequencies as the ORBCOMM
System in the United States.
In its own second round application, OCC seeks authorization to construct
12 more satellites to improve its high-latitude coverage over Alaska, Canada and
Europe as well as to provide additional capacity and greater in-orbit
redundancy. This proposal would require the FCC to allocate an additional 90 kHz
of spectrum in the 137-138 MHz downlink to OCC. OCC also has requested use of an
additional 50 kHz in the 149.9-150.05 MHz band for a worldwide gateway uplink.
This spectrum, while registered at the ITU, has not yet been allocated for use
by Little LEO systems, and is currently occupied by U.S. and Russian military
satellite downlinks. OCC anticipates that once this bandwidth is freed by the
United States in 1997, it will be made available by the FCC for use by Little
LEO systems, including the ORBCOMM System, subject to coordination with Russia.
Although the FCC has closed the second processing round for NVNG systems,
it has not yet licensed any of the second round applicants. Prior to the World
Radiocommunication Conference scheduled for November 1995 ("WRC-95"), the FCC
noted that there was insufficient spectrum available to license all of the
second round NVNG applicants, and declined to issue any additional Little LEO
system licenses pending its request for additional spectrum for the Little LEOs
at WRC-95. Significant additional spectrum was not allocated for use by NVNG
services at WRC-95. The FCC has since issued a letter to all second round
applicants indicating that it will issue a Notice of Proposed Rulemaking
intended to establish rules that will allow it to complete the second round of
processing for NVNG applications. See "-- Regulation of NVNG Systems." The FCC
anticipates that it will issue a final order on licensing rules before the end
of 1996 and that it will proceed to licensing immediately thereafter. It is not
clear whether the FCC will in fact grant any of the second round Little LEO
applications or whether it will only grant selected applications. It is
unlikely, however, that the FCC will grant all of the eight pending second round
applications.
INTERNATIONAL REGULATION
The ORBCOMM System operates in frequencies which were allocated on an
international basis for use by Little LEO systems at the World Administrative
Radio Conference held in 1992 ("WARC-92"). The United States, on behalf of
various Little LEO service providers, including OCC, pursued international
allocations of additional frequencies for use of Little LEOs at WRC-95 with
limited success, as described above. The United States likely will present a
request for additional frequencies for use by the Little LEOs at WRC-97. See
"-- ITU Spectrum Allocations." In addition to cooperating with these efforts by
the United States to secure additional spectrum for Little LEO systems, OCC is
required to and has in fact, through the FCC, engaged in international
coordination procedures with other countries with respect to other satellite
systems under the aegis of the ITU. OCC also was required, through the FCC and
the U.S. Department of State, to engage in economic and/or technical
coordination with two international satellite systems, Intelsat and Inmarsat.
These coordinations have been completed successfully. Finally, the ORBCOMM
System must receive operational authority from each of the foreign countries in
which it proposes to provide service. It will be the responsibility of the
International Licensee in each country to obtain such authority.
ITU SPECTRUM ALLOCATIONS
The ORBCOMM System operates both in the United States and internationally
using frequencies allocated for Little LEO systems in the International Table of
Frequency Allocations (the "International Table"). The International Table
identifies radio frequency segments that have been designated for specific
64
<PAGE> 71
radio services by the member nations of the ITU. The International Table is
revised periodically at WRCs. Between WRCs, the member nations of the ITU, in
connection with private industry, prepare and propose recommendations for
international allocations to be considered at the next WRC. Preparatory analyses
and recommendations are considered in appropriate technical study groups for
specific topics.
Little LEO systems require use of radio spectrum on a global basis to reach
their full commercial potential. At WARC-92, with the sponsorship of the U.S.
government and a number of other key administrations, major portions of the 137
to 150 MHz band and a narrow portion of the spectrum band at 400 MHz were
allocated on a global basis to Little LEO systems. The specific frequency
allocations for uplink and downlink operations included the following:
<TABLE>
<S> <C>
Uplink: 148.0 - 149.9 MHz (1.9 MHz on a primary basis)
Downlink: 137.0 - 138.0 (675 kHz on a primary basis; 325 kHz on a
secondary basis)
400.15 - 401.00 MHz (850 kHz on a primary basis)
</TABLE>
In addition, 3 MHz of uplink and 3 MHz of downlink frequencies were
allocated on a secondary basis. The band 400.075 - 400.125 MHz licensed for use
by the ORBCOMM System already was allocated previously on a global basis to Time
and Frequency Standard service and, therefore, was not subject to consideration
at WARC-92. The Company's planned use of this bandwidth complies with the
regulations governing its use.
A designation of "primary" places the Little LEO systems on an equal
footing with existing users of these frequencies, subject to the provision that
they not interfere with those services or constrain their growth and, with
respect to certain countries and certain frequency bands, that the Little LEO
systems not claim protection from those other services. A "secondary"
designation means that the other users of the same frequencies have priority
over the Little LEO systems and are not required to accommodate or avoid
interference with them. The procedures for "coordinating" Little LEO services
with other registered users of the band were also established at WARC-92.
At WRC-95, the U.S. government and other administrations sought an
additional allocation of 6.65 MHz of spectrum for Little LEO systems. This
proposal was largely unsuccessful due to the late identification of candidate
bands. Consideration of additional bandwidth allocations is currently scheduled
to be on the agenda for the next WRC scheduled for November 1997.
ITU COORDINATION
The United States, on behalf of OCC, is required to coordinate the
frequencies used by the ORBCOMM System through the ITU. ITU frequency
coordination is a necessary prerequisite to obtaining interference protection
from other NVNG satellite systems. There is no penalty for launching a satellite
system prior to completion of the ITU coordination process, although protection
from interference through this process is only afforded as of the date of
successful completion of the process and notification of the satellite by the
ITU.
The United States through the FCC, on behalf of OCC, notified the ITU that
the ORBCOMM System was placed in service on April 3, 1995 and that it has
operated without complaints of interference since that time. The FCC also
informed the ITU that OCC has successfully completed its coordination with all
other administrations except Russia and France. The Company believes that the
Modification Request would facilitate its coordination efforts with Russia and
could facilitate its coordination efforts with France. OCC expects that it will
successfully complete the ITU coordination process with Russia this year and
with France shortly thereafter, at which time the ORBCOMM System will be
registered with the ITU and accorded protection from interference from any other
subsequently developed system.
ITU coordination is also required for the uplink ground segment of the
ORBCOMM System, but is the responsibility of individual administrations.
Depending on the location of particular ground stations, the applicable
coordination distance specified in the ITU procedures may extend across
international boundaries and require coordination by more than one government
authority. For example, two of the four U.S. Earth
65
<PAGE> 72
stations have a coordination distance that extends into Canada, and thus require
coordination with Canada prior to ITU notification or registration.
At WRC-95, France proposed a reduction in the threshold for coordination
with terrestrial services, which would require additional coordination of mobile
satellite systems. This proposed change was not adopted at WRC-95, but there can
be no assurance that it will not be proposed and adopted at the next WRC
scheduled for 1997, or that, if adopted, additional coordination requirements
would not be imposed on the ORBCOMM System, to the extent that OCC may not have
completed the ITU coordination process.
COORDINATION WITH INTELSAT AND INMARSAT
Pursuant to the Intelsat treaty, international satellite operators are
required to demonstrate that they will not cause economic or technical harm to
Intelsat. OCC was notified in March 1995 that this coordination with Intelsat
has been completed successfully.
The Inmarsat treaty similarly requires both technical and economic harm
coordination. OCC was notified in October 1995 that it had successfully
completed both technical and economic coordination with Inmarsat.
REGULATION OF SERVICE PROVIDERS
Primary responsibility for obtaining local regulatory approval to offer
ORBCOMM System services in countries outside the United States will reside with
the various International Licensees. In all but one case, South Korea, the
proposed International Licensees are private companies, reflecting the
expectation that the ORBCOMM System will be licensed as a value-added service
rather than as a regulated basic service. The Company's proposed International
Licensees have had discussions with regulators in the major target countries and
have advised the Company that such discussions indicate that favorable
regulatory treatment can be anticipated.
The process for obtaining operating approval in foreign countries generally
conforms to the following process. The International Licensee requests operating
authority from the appropriate national regulatory body, which has the sole
authority to grant an operating license. Obtaining such local regulatory
approvals normally requires, among other things, that the International Licensee
demonstrate the absence of interference to other authorized uses of the spectrum
in each country. In some countries, this process may take longer due to heavier
shared use of the applicable frequencies and, in certain other countries, may
require reassignment of some existing users. The national regulatory authority
will be required to associate with the ORBCOMM ITU submission. The national
regulatory authority also will be required to submit so-called Appendix 3
information to the ITU in order to coordinate and protect ORBCOMM's Earth
stations in the territory or region from interference by other ground systems.
ORBCOMM International has to date executed one Service License Agreement
with ORBCOMM Canada Inc., to provide service in Canada. The International
Licensees or proposed International Licensees in Canada, Venezuela, Argentina,
Chile, Japan and Morocco are in the process of seeking authority to operate. The
Company has been advised by its proposed International Licensees that
experimental or preliminary operating authority for the ORBCOMM System has been
granted in Canada, Japan, Argentina, Italy, Venezuela and Colombia.
The Company provides technical and regulatory assistance to its proposed
International Licensees in pursuing operating authority. The assistance provided
by the Company includes actual in-country demonstrations that the ORBCOMM System
can share use of the allocated spectrum with existing users while causing no
harmful interference or constraining operations and growth of those systems.
While International Licensees have been selected, in part, based upon their
perceived qualifications to obtain the requisite foreign regulatory
authorizations, there can be no assurance that they will be successful in doing
so, and if they are not successful, service on the ORBCOMM System will not be
available in such countries. In addition, the continued operations of the
International Licensees may be subject to other regulatory requirements and
changes in each foreign jurisdiction.
66
<PAGE> 73
MANAGEMENT
The ORBCOMM Partnership Agreement provides that the management of the
Company is the exclusive responsibility of the General Partners. Officers of the
Company are nominated by the President of the Company and elected by the General
Partners and exercise such authority as they are granted by the General
Partners. See "The Partnership Agreements."
EXECUTIVE OFFICERS
The following table sets forth the executive officers of ORBCOMM and the
directors and executive officers of Capital as of the date of this Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- --------------------------------------------------------
<S> <C> <C>
Alan L. Parker.............. 57 President and Chief Executive Officer of ORBCOMM;
President and Director of Capital
W. Bartlett Snell........... 44 Senior Vice President, Finance and Administration and
Chief Financial Officer of ORBCOMM; Vice President,
Treasurer and Director of Capital
Robert J. Pizzimenti........ 47 Executive Vice President, Marketing and Business
Development
Paul J. Locke............... 55 Acting Senior Vice President, Engineering and Operations
Mary Ellen Seravalli........ 37 Vice President and General Counsel of ORBCOMM; Vice
President and Secretary of Capital
</TABLE>
Alan L. Parker has been the President of ORBCOMM since its inception on
June 30, 1993 and Chief Executive Officer since February 1996. Mr. Parker has
been President and Director of Capital since July 1996. Mr. Parker was
previously, and continues to be, the President of OCC. Mr. Parker was a member
of the U.S. delegation to WARC-92 and the 1993 and 1995 WRCs. Mr. Parker's
experience includes 25 years with Ford Aerospace and Ford Motor Company. Mr.
Parker served as Chairman and CEO of Ford Aerospace Satellite Services
Corporation from 1982 to 1986 and was Vice President of Marketing and Business
Planning of Ford Aerospace Corporation from 1976 to 1986. Prior to 1976, Mr.
Parker held several marketing and product planning positions at Ford, including
Car Product Development, Ford of Europe and Corporate Product Planning and
Research.
W. Bartlett Snell has been the Senior Vice President, Finance and
Administration and the Chief Financial Officer at ORBCOMM since February 1996.
Mr. Snell has been Vice President, Treasurer and Director of Capital since July
1996. From 1993 to 1996, Mr. Snell was President and Chief Executive Officer of
PowerSource Solutions, Inc., a company specializing in assisting organizations
undertaking strategic corporate change. From 1992 to 1993, Mr. Snell was Senior
Vice President and General Manager of People Karch International, an
international provider of work-site health promotion services, health and
fitness software and corporate child care programs. Prior to 1992, Mr. Snell
worked for IBM Corporation. Mr. Snell is a member of both the Northern Virginia
Business RoundTable and the Northern Virginia Technology Council.
Robert J. Pizzimenti has been the Executive Vice President for Marketing
and Business Development at ORBCOMM since April 1994. Prior to April 1994, Mr.
Pizzimenti was Vice President of Marketing for Iridium, Inc. Mr. Pizzimenti has
over 20 years of experience in wireless communications and international
business development. During the 1980s, Mr. Pizzimenti served as Ericsson Radio
Systems' North American Marketing Manager, and as President of Ericsson Paging
Systems, North America. Mr. Pizzimenti also has served as Vice President of
Marketing for Metro One, the non-wireline cellular system serving New York and
New Jersey. Mr. Pizzimenti has participated in a variety of industry
associations and committees, including the Telocator POCSAG Coordination
Initiative.
Paul J. Locke has been Acting Senior Vice President, Engineering and
Operations at ORBCOMM since August 1996, and has been Senior Director Space
Segment Engineering at ORBCOMM since June 1992. From April 1991 to June 1992,
Mr. Locke was a regulatory and satellite system engineering consultant for a
67
<PAGE> 74
number of satellite-based projects. Mr. Locke participated in the first FCC
Negotiated Rule Making for Little LEOs and has participated in a variety of
preparatory meetings for WRC '95.
Mary Ellen Seravalli has been the Vice President and General Counsel at
ORBCOMM since January 1996. Ms. Seravalli has been Vice President and Secretary
of Capital since July 1996. From 1991 to 1995, Ms. Seravalli was Vice President
and Assistant General Counsel of Orbital. Prior to 1991, Ms. Seravalli was an
associate in the law firm of Jones, Day, Reavis & Pogue, where she worked on
mergers and acquisitions, with an emphasis on the telecommunications industry,
and where she gained significant experience representing both lenders and
borrowers in connection with the establishment of various types of credit
facilities.
PARTNER REPRESENTATION
Pursuant to the Partnership Agreements of ORBCOMM, ORBCOMM USA and ORBCOMM
International, each General Partner is represented at the meetings of the
General Partners by up to three authorized representatives. Each General Partner
may by notice to the other change its designated authorized representatives. Set
forth below are each of the General Partners' current representatives.
OCC:
David W. Thompson, 42, is a director of OCC. Mr. Thompson also is a
co-founder of Orbital and has been its Chairman, President and Chief Executive
Officer since 1982. Prior to that, Mr. Thompson was Special Assistant to the
President of Hughes Aircraft Company's Missile Systems Group and was a NASA
project manager and engineer on advanced rocket engines at Marshall Space Flight
Center and on the Viking Mars landing missions at the Jet Propulsion Laboratory.
Bruce W. Ferguson, 41, is the Chairman and is a director of OCC. Mr.
Ferguson also is a co-founder of Orbital and has been Executive Vice President
and General Manager, Communications and Information Services Group since 1993.
Mr. Ferguson was Executive Vice President and Chief Operating Officer of Orbital
from 1989 to 1993, Senior Vice President, Finance and Administration and General
Counsel from 1985 to 1989 and Vice President, Finance and General Counsel from
1982 to 1985. Before co-founding Orbital, Mr. Ferguson was an attorney in the
corporate and securities department of the law firm of Kirkland & Ellis. Mr.
Ferguson is a Director of Superconducting Core Technologies, Inc.
Jeffrey V. Pirone, 36, is the Vice President and Chief Financial Officer of
OCC. Mr. Pirone also is the Senior Vice President and Chief Financial Officer of
Orbital. Mr. Pirone came to Orbital in 1991, and prior to that was a Senior
Manager at KPMG Peat Marwick LLP.
TELEGLOBE MOBILE:
Guthrie J. Stewart, 41, is Executive Vice President, Canadian Market and
Network Activities of Teleglobe and Chief Executive Officer of Teleglobe's
Enterprises and World Mobility Divisions. From 1987 until he joined Teleglobe in
1992, Mr. Stewart was Vice President, General Counsel and Corporate Secretary of
BCE Mobile Communications Inc., a company co-founded in 1987 by BCE Inc. and
Teleglobe's current Chairman and Chief Executive Officer, Charles Sirois. Prior
to that, Mr. Stewart practiced law for several years in the Toronto office of
Osler, Hoskins & Harcourt. Mr. Stewart sits on the Board of several Teleglobe
subsidiaries.
Marc J.E. Leroux, 45, is Vice President, Technology of Teleglobe and
President and Chief Operating Officer of Teleglobe's World Mobility Division.
Prior to joining Teleglobe in 1992, Mr. Leroux directed a wide range of research
and development projects at Bell-Northern Research, a subsidiary of Northern
Telecom.
Jean-Paul Tardif, 36, is Director, Financial Planning and Projects at
Teleglobe. From 1990 until he joined Teleglobe in early 1996, Mr. Tardif held
the position of Director, Planning and Special Projects Group at Telesystem
Ltd., a private holding company of which Charles Sirois is the founder and
principal shareholder, and the position of Treasurer at Telesystem International
Wireless Services Ltd., a paging and cellular operator with businesses in
several countries around the world. Prior to that, Mr. Tardif was a
68
<PAGE> 75
management consultant specialized in financial analysis and business valuation
with Raymond, Chabot, Martin, Pare, a Quebec-based accounting firm.
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company during
1995 to its chief executive officer and the Company's four most highly
compensated executive officers other than the chief executive officer in all
capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND ---------------------
PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- ------------------------------------------------------------------- ---- --------- --------
<S> <C> <C> <C>
Alan L. Parker..................................................... 1995 167,846 44,250
W. Bartlett Snell(1)............................................... -- --
Robert J. Pizzimenti............................................... 1995 152,408 20,500
Paul A. Locke(1)................................................... -- --
Mary Ellen Seravalli(1)............................................ -- --
</TABLE>
- ------------------
(1) No compensation is reported for persons not serving as executive officers of
ORBCOMM at the end of 1995.
69
<PAGE> 76
RELATIONSHIPS AMONG THE ORBCOMM PARTIES
STRUCTURE
ORBCOMM is a Delaware limited partnership formed in 1993 to develop,
construct, operate and market the ORBCOMM System. The general and limited
partnership interests in ORBCOMM are held by OCC, a Delaware corporation and
subsidiary of Orbital, a Delaware corporation, and Teleglobe Mobile, a Delaware
general partnership that is controlled by Teleglobe, a Canadian corporation.
ORBCOMM holds general and limited partnership interests with a 98% Participation
Percentage in each of ORBCOMM USA, a Delaware limited partnership, and ORBCOMM
International, a Delaware limited partnership. OCC holds general and limited
partnership interests in ORBCOMM USA with a 2% Participation Percentage and, by
virtue of its control of one-half of the Participation Percentage held by
ORBCOMM, controls the operational and financial affairs of ORBCOMM USA. See "The
Partnership Agreements." Teleglobe Mobile holds general and limited partnership
interests in ORBCOMM International with a 2% Participation Percentage and, by
virtue of its control of one-half of the Participation Percentage held by
ORBCOMM, controls the operational and financial affairs of ORBCOMM
International. See "The Partnership Agreements." ORBCOMM, Orbital, OCC,
Teleglobe and Teleglobe Mobile are sometimes referred to herein as the "ORBCOMM
Parties."
Capital, a Delaware corporation formed in July 1996, is acting as co-Issuer
for the Senior Notes. Capital is a wholly owned subsidiary of ORBCOMM, has
nominal assets and will not conduct any operations. Certain institutional
investors that might otherwise be limited in their ability to invest in
securities issued by partnerships by reason of the investment laws of their
states of organization or their charter documents, may be able to invest in the
Senior Notes because Capital is a co-issuer.
70
<PAGE> 77
The following is a chart of the ownership and structure of the ORBCOMM
Parties:
ORBCOMM SYSTEM STRUCTURE
ORBCOMM FLOWCHART
- ---------------
(1) Represents current ownership by Orbital in OCC, with the remaining interests
acquired pursuant to the exercise of stock options. Upon exercise of all
currently outstanding options, Orbital would hold an 87% interest in OCC on
a fully diluted basis.
(2) Represents general and limited partnership interests in ORBCOMM.
(3) Each of OCC and Teleglobe Mobile, as general partners of ORBCOMM, is
entitled to exercise directly its proportionate share of ORBCOMM's voting
rights in ORBCOMM USA and ORBCOMM International, respectively.
(4) Each of OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM International is a
Guarantor of the Notes.
(5) OCC holds the FCC License.
71
<PAGE> 78
The ORBCOMM Parties have entered into a series of agreements or
arrangements for the development, construction, operation and marketing of the
ORBCOMM System. The following paragraphs are a summary of the material
provisions of certain of these agreements and are qualified in their entirety by
reference to the actual agreements, copies of which are available from ORBCOMM.
MASTER AGREEMENT
As of June 30, 1993, Orbital, OCC, Teleglobe and Teleglobe Mobile entered
into the Master Agreement that sets forth the principles upon which the parties
have agreed to develop, construct and operate the ORBCOMM System. The Master
Agreement subsequently has been amended and restated and currently provides for
the following:
Covenants Relating to OCC. Orbital and OCC have agreed: (i) to preserve
OCC's corporate existence; (ii) to use all commercially reasonable efforts to
obtain and maintain all material U.S. operating licenses and permits necessary
for the construction, operation and marketing of the ORBCOMM System; (iii) so
long as OCC holds any FCC authorizations, that OCC will (a) remain a subsidiary
of Orbital, other than as a result of options granted under the Orbital
Communications Corporation 1992 Stock Option Plan; (b) carry on no business
other than the construction, operation and marketing of the ORBCOMM System or
business that is in furtherance, or in connection with the expansion of the
ORBCOMM System; (c) remain the sole holder of all FCC authorizations required
for the construction, launch and operation of the ORBCOMM System (other than FCC
authorization for individual user transceivers and FCC authorizations held by
ORBCOMM and ORBCOMM USA); (d) subject to certain exceptions in accordance with
the Definitive Agreements, not grant, create, assume, incur or suffer to exist
any lien affecting OCC or any of its property, rights, revenues or assets; (e)
subject to certain exceptions in accordance with the Definitive Agreements, not
sell, transfer, convey, lease or otherwise dispose of any assets; (f) not
consolidate, merge or amalgamate with any other person; (g) subject to certain
exceptions in accordance with the Definitive Agreements, not create, amend or
repeal any by-laws or modify the OCC certificate of incorporation; (h) subject
to certain exceptions in accordance with the Definitive Agreements, not make any
loans or give any financial guarantees for the obligations of any other party;
and (i) not make any assignment for the benefit of creditors or subject OCC to
any bankruptcy or insolvency law or take steps to wind up or terminate OCC's
corporate existence or engage in any financial restructuring. Additionally,
Orbital has agreed, as long as OCC holds the FCC License, not to dispose of any
debt interest in OCC.
Guarantees. Orbital has unconditionally and absolutely guaranteed the full
and punctual payment of all of OCC's payment obligations under the Definitive
Agreements to which OCC is a party. Teleglobe has unconditionally and absolutely
guaranteed the full and punctual payment of all of Teleglobe Mobile's payment
obligations under the Definitive Agreements to which Teleglobe Mobile is a
party.
Change of Control. In the event of a Change in Control of Orbital or
Teleglobe (a "Change of Control Party"), Teleglobe Mobile or OCC, as the case
may be (the "Non-Change of Control Party"), has the option: (i) for a period of
180 days from the Change of Control to require the Change of Control Party to
purchase the Non-Change of Control Party's interest in each of ORBCOMM, ORBCOMM
USA and ORBCOMM International at an aggregate price equal to the greater of (a)
the Non-Change of Control Party's aggregate Unrecouped Capital Preferences in
such partnerships and (b) the Non-Change of Control Party's direct Participation
Percentage in each such partnership multiplied by the fair market value (as
defined) of each such partnership; or (ii) to cause the general partners of
ORBCOMM to adopt a resolution providing that, in the event there is a deadlock
on a matter requiring the approval of a Majority in Interest of the partners,
the President of ORBCOMM shall be entitled to decide on such matter by way of
casting a vote or otherwise, as deemed appropriate by the Non-Change of Control
Party, notwithstanding any contrary provision set forth in the ORBCOMM
Partnership Agreement. Subject to the receipt of all necessary government
approvals, upon a Change of Control of Orbital, Orbital agrees to cause OCC to
transfer to ORBCOMM USA all FCC licenses then held by OCC relating to the
construction, launch or operation of the ORBCOMM System.
In the event that OCC should become a common carrier or a CMRS
provider -- either by virtue of a change in the ORBCOMM System's regulatory
classification by the FCC from private-carrier to common-
72
<PAGE> 79
carrier or CMRS status, or by virtue of a change in its service offerings that
would convert OCC from a private carrier to a common carrier or a CMRS
provider -- ORBCOMM USA might be precluded from acquiring the FCC licenses from
OCC, due to the extent of alien ownership in ORBCOMM USA as a result of
Teleglobe Mobile's indirect interest in ORBCOMM USA.
SYSTEM CONSTRUCTION AGREEMENT
Under the terms of the System Construction Agreement, ORBCOMM has agreed to
develop, construct, deploy, manage and operate, subject to OCC's ultimate
control, the ORBCOMM System satellites and the System Assets, in consideration
for which OCC is obligated to remit to ORBCOMM, on a quarterly basis, OCC's
allocated portion of the System Charge, provided, however, that, if the Output
Capacity Charge for any quarter is less than 1.15% of Total Aggregate Revenues,
then OCC shall not be required to pay any portion of the System Charge for such
calendar quarter. For a description of the System Charge, see "The Partnership
Agreements -- System Charge." For a description of the Output Capacity Charge,
see "-- System Charge Agreement."
OCC has granted to ORBCOMM under the System Construction Agreement the
right to market, sell, lease and franchise all output capacity outside the
United States.
ORBCOMM has agreed to indemnify OCC from and against any claim with respect
to an infringement or other violation of any copyright, trademark or patent or
other validly registered enforceable intellectual property right of any third
party for any items constructed by ORBCOMM pursuant to the authority granted in
the System Construction Agreement, but only to the same extent as the
indemnification received by ORBCOMM from Orbital pursuant to the Procurement
Agreement.
PROCUREMENT AGREEMENT
ORBCOMM and Orbital have entered into the Procurement Agreement pursuant to
which Orbital has undertaken the overall design, development, construction,
integration, test and operation of the ORBCOMM System. Orbital will develop,
construct and deliver to ORBCOMM 34 satellites and complete the construction and
design of the Satellite Control Center and of the four Earth stations comprising
the U.S. ground segment of the ORBCOMM System. Orbital will also provide to
ORBCOMM launch services for 24 satellites using three Pegasus XL launch
vehicles. Orbital will also provide in-orbit check-out support for up to 120
days after each of the three satellite launches.
ORBCOMM has agreed to pay Orbital approximately $163 million for the work
specified in the Procurement Agreement plus certain incentive fees. Upon
execution of the Procurement Agreement, ORBCOMM paid to Orbital approximately
$17.2 million representing reimbursement for costs incurred through the date
thereof. Following execution of the Procurement Agreement, Orbital invoices
ORBCOMM monthly for a maximum of 90% of its costs incurred during such month.
The remaining ten percent of costs incurred in any month, as well as the
remaining balance of the fixed-price contract amount, may be invoiced only upon
completion of certain specified project milestones.
Optional Work. The Procurement Agreement provides for additional work and
services to be performed at the option of ORBCOMM, including: (i) launch
services for an additional plane of eight satellites using one additional
Pegasus XL launch vehicle, and in-orbit check-out support for up to 120 days
after such optional launch; (ii) a replacement constellation of 32 satellites
(including launch services using four Pegasus XL launch vehicles) in accordance
with the specifications contained in the Procurement Agreement at a cost of
$166.1 million (subject to adjustment for inflation and excluding taxes, if any,
and the cost of launch and satellite insurance); and (iii) a one-time option to
request Orbital to provide a standard Taurus launch vehicle rather than a
Pegasus XL launch vehicle for any launch procured pursuant to the Procurement
Agreement; this option may be exercised by ORBCOMM on or prior to September 12,
1998 at a price to be negotiated, but which will not exceed $21 million.
Regulatory Matters. Under the terms of the Procurement Agreement, Orbital
is required to use all commercially reasonable efforts directly or through OCC:
(i) to obtain and maintain the required
73
<PAGE> 80
U.S. regulatory authority needed to construct, launch and operate the satellites
and operate the ORBCOMM System; (ii) obtain and maintain FCC regulatory
authority for the operation of Subscriber Communicators for use in connection
with the ORBCOMM System; and (iii) to take reasonable actions in any regulatory
proceedings to defend any claims against any regulatory authority granted to
Orbital or OCC in connection with the ORBCOMM System or to oppose any
application by competing systems that use frequencies below 1 GHz. ORBCOMM has
agreed to pay or reimburse Orbital or OCC for all out-of-pocket expenses and
internal costs incurred in connection with Orbital's or OCC's efforts.
Delivery; Title and Risk of Loss. Under the Procurement Agreement,
delivery of the launch vehicle and satellites occurs on separation of the launch
vehicle from Orbital's L-1011 aircraft. At such time, title to and risk of loss
or damage passes to ORBCOMM and ORBCOMM's sole remedy for launch failure,
defects or failures to conform to applicable specifications is limited to: (i)
non-payment to Orbital of the specified milestone payment and any satellite
performance incentive payment; and (ii) termination of the Procurement
Agreement.
Delivery of the remaining Earth station and Satellite Control Center
efforts set forth in the Procurement Agreement occurs in accordance with the
terms of the Procurement Agreement. Title to, and risk of loss of or damage,
passes to ORBCOMM on successful completion of the acceptance test procedures for
such work as set forth in the Procurement Agreement.
Incentive Payments. In addition to the above prices for work and service,
Orbital is entitled to receive under the Procurement Agreement certain
performance incentive payments. Payments are to be made on a per-plane basis
with the incentive to be earned monthly for each complete month that there are a
specified minimum number of working satellites in the plane. The minimum number
of working satellites in a plane is seven during the first 30 months of the
on-orbit performance incentive period and six during the second 30 months of the
on-orbit performance period.
SYSTEM CHARGE AGREEMENT
OCC and ORBCOMM USA have entered into the System Charge Agreement for the
purpose of providing for the use by ORBCOMM USA of all of the output capacity of
the ORBCOMM System within the United States and for the exclusive use by ORBCOMM
USA of certain System Assets located within the United States. The term of the
System Charge Agreement commenced on June 30, 1993 and continues until June 30,
2013.
Exclusive Use of U.S. System Capacity. OCC has granted to ORBCOMM USA the
exclusive right in the United States to market, sell, lease and franchise all
ORBCOMM System output capacity and exclusive use of the System Assets located in
the United States. ORBCOMM USA is permitted to grant ORBCOMM International use
of the U.S. Gateway for the limited purpose of operating the ORBCOMM System in
Canada, Mexico and any other country proximate to the United States.
Notwithstanding these provisions of the System Charge Agreement, OCC has
retained all rights in and to, and ORBCOMM USA has been granted no rights to,
the ORBCOMM System.
Output Capacity Charge. In consideration of the grant by OCC to ORBCOMM
USA of the exclusive right to market, sell, lease and franchise all ORBCOMM
System output capacity in the United States, ORBCOMM USA agrees: (i) within 30
days of the end of each calendar quarter, to notify OCC of the total aggregate
revenues invoiced by it during such calendar quarter; and (ii) to remit to OCC
23% of the total aggregate revenues invoiced by it during each calendar quarter.
ORBCOMM USA retains sole discretion to set the fees to be paid by its
subscribers, Resellers and licensees for use of the ORBCOMM System.
Indemnification. OCC and ORBCOMM USA agree to indemnify, defend and hold
harmless each other and their respective successors and assigns against any
liability, damage, loss or expense incurred by or imposed upon them in
connection with any claims, suits, actions, demands or judgments arising out of
any breach of the party's obligations under the System Charge Agreement. In
addition, OCC agrees to indemnify and hold harmless ORBCOMM USA and its
respective successors and assigns from and against any claim with respect to an
infringement or other violation of any copyright, trademark or patent or other
validly
74
<PAGE> 81
registered enforceable intellectual property right of any third party for any
items OCC has authorized ORBCOMM USA to use under the System Charge Agreement
(but only to the same extent as the indemnification received by OCC from
ORBCOMM, if any, under the terms of the System Construction Agreement).
INTERNATIONAL SYSTEM CHARGE AGREEMENT
ORBCOMM, ORBCOMM International and Teleglobe Mobile have entered into the
International System Charge Agreement for the purpose of: (i) providing for the
use by Teleglobe Mobile of all of the ORBCOMM System output capacity and
exclusive use of the System Assets located in all areas of the world outside of
the United States (the "Non-U.S. Area"); and (ii) providing the means by which
Teleglobe Mobile will grant to ORBCOMM International an exclusive right in the
Non-U.S. Area to market, sell, lease and franchise all ORBCOMM System output
capacity. The term of the International System Charge Agreement commenced on
June 30, 1993 and continues until the earlier of June 30, 2013 and the date on
which Teleglobe Mobile ceases to be a general and limited partner of ORBCOMM.
Exclusive Use of System Capacity Outside the United States. ORBCOMM has
granted to Teleglobe Mobile the exclusive right in the Non-U.S. Area to market,
sell, lease and franchise all ORBCOMM System output capacity and exclusive use
of the System Assets located in the Non-U.S. Area. Teleglobe Mobile, in turn,
has granted to ORBCOMM International the exclusive right in the Non-U.S. Area to
market, sell, lease and franchise all ORBCOMM System output capacity and
exclusive use of the System Assets located in the Non-U.S. Area. OCC ultimately
has retained all rights in and to, and neither Teleglobe Mobile nor ORBCOMM
International has been granted rights to, the ORBCOMM System.
System Charge. In consideration of the grant to Teleglobe Mobile of the
exclusive right to market, sell, lease and franchise all ORBCOMM System output
capacity in the Non-U.S. Area, Teleglobe Mobile agrees to remit to ORBCOMM
Teleglobe Mobile's allocated portion of the System Charge for that calendar
quarter calculated in accordance with the ORBCOMM Partnership Agreement. If the
International Output Capacity Charge for such calendar quarter is less than
1.15% of Total Aggregate Revenues, then Teleglobe Mobile is not required to pay
any portion of the System Charge for such calendar quarter.
International Output Capacity Charge. In consideration of the grant by
Teleglobe Mobile to ORBCOMM International of the exclusive right to market,
sell, lease and franchise all ORBCOMM System output capacity in the Non-U.S.
Area, ORBCOMM International agrees: (i) within 30 days of the end of each
calendar quarter, to notify ORBCOMM of the total aggregate revenues invoiced by
it during such calendar quarter; and (ii) to remit to Teleglobe Mobile 23% of
the total aggregate revenues invoiced by it during each calendar quarter.
ORBCOMM International retains sole discretion to set the fees to be paid by its
subscribers, Resellers and International Licensees for use of the ORBCOMM
System.
Indemnification. With regard to patent infringement claims, ORBCOMM agrees
to defend, indemnify and hold harmless Teleglobe Mobile and ORBCOMM
International and their respective successors and assigns from and against any
claim with respect to an infringement or other violation of any copyright,
trademark or patent or other validly registered enforceable intellectual
property right of any third party for any items ORBCOMM has authorized Teleglobe
Mobile and ORBCOMM International to use under the International System Charge
Agreement but only to the same extent as the indemnification received by ORBCOMM
from Orbital, if any, under the Procurement Agreement.
PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT
ORBCOMM, Orbital, OCC, Teleglobe, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International have entered into the Proprietary Information and Non-Competition
Agreement to protect any confidential and proprietary information that may be
disclosed to one another in connection with the development, construction,
operation and marketing of the ORBCOMM System. Orbital and Teleglobe entered
into the agreement for the additional purpose of prohibiting direct competition
between the two entities in the provision of certain LEO satellite services
during the term of the agreement and for a period of one year thereafter.
75
<PAGE> 82
Orbital and Teleglobe agree that for the duration of the agreement and for
one year thereafter, they will not, directly or indirectly or in any capacity,
except in connection with the fulfillment of their respective obligations under
any of the Definitive Agreements: (i) carry on, engage, participate, invest or
have an equity or any financial interest in the marketing, construction,
development or management of any business or enterprise that competes with
Orbital or Teleglobe or their respective affiliates in offering commercial, LEO
non-voice satellite communications services operating in the 137-150 MHz band or
such other frequency allocated to the Little LEO mobile satellite service below
1 GHz, provided, however, OCC and Orbital are permitted to: (a) sell satellites,
launch vehicles, launch services and communications services to non-commercial
entities without limitation; and (b) provide all other entities up to two
satellites every two years and launch vehicles or launch services for up to two
satellites every two years; (ii) assist in or influence the hiring by any person
who competes with Orbital or Teleglobe or their respective affiliates of any
salesman, distributor, or employee of Orbital or Teleglobe or their respective
affiliates, or otherwise cause any person having a business relationship with
Orbital or Teleglobe or their respective affiliates to sever such relationship;
or (iii) employ any person to work on or represent the ORBCOMM System who will
also work on or represent another mobile communications system, without first
notifying the President of ORBCOMM.
Neither of Orbital or Teleglobe will be in default of its obligations under
this portion of the Proprietary Information and Non-Competition Agreement by
virtue of holding for portfolio purposes as a passive investor no more than 5%
of the issued and outstanding public equity securities of a corporation.
Indemnification. Orbital and Teleglobe agree to indemnify and save
harmless one another and their respective affiliates (an "Indemnified Party")
from and against any claims, demands, actions, causes of action, judgments,
damages, losses, liabilities, costs or expenses that may be made against any of
them as a result of, arising out of or relating to any violation, contravention
or breach of the Proprietary Information and Non-Competition Agreement by a
party who is not an Indemnified Party.
Termination. The Proprietary Information and Non-Competition Agreement
shall terminate upon the earlier of OCC or Teleglobe Mobile ceasing to be both a
general and a limited partner of ORBCOMM.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of the Administrative Services Agreement, Orbital has
agreed to provide to the Company, ORBCOMM USA and ORBCOMM International defined
office space for a total price of $15,200 per month. Orbital also has agreed to
provide ORBCOMM with certain occupancy services for a fixed monthly price of
$50,000. The services includes security and facilities support, MIS, telephone
switchboard and communication services and other support services. Orbital
provides various administrative services to ORBCOMM for a fixed monthly fee of
$15,000, including accounting support, payroll processing, miscellaneous
purchasing services and personnel services. Orbital also extends to ORBCOMM
employees (to the extent possible) participation in various benefit and
insurance plans. Orbital also has agreed to provide to ORBCOMM executive
management services payable on a time and materials basis, limited to $9,000 per
month.
The Administrative Services Agreement continues in effect so long as any
category of services are being provided by Orbital, provided that ORBCOMM has
the right to terminate all or part of the services being provided upon 90 days
prior notice to Orbital, subject, in a case of a termination of services within
a specific category of services, to an agreement on the price to perform the
remaining services. The prices for the services are fixed through the end of
1996. The parties will negotiate the prices for such services and office space
for subsequent years, provided that prices for 1997 will not be more than 10%
higher than the prices in effect in 1996.
76
<PAGE> 83
THE PARTNERSHIP AGREEMENTS
The following paragraphs are a summary of certain provisions of the
Partnership Agreements of each of ORBCOMM, ORBCOMM USA and ORBCOMM International
and such summary is qualified in its entirety by reference to such Partnership
Agreements. Each of the Partnership Agreements are substantially identical.
Unless otherwise described herein, references to the "Partnership" constitute
references to ORBCOMM, ORBCOMM USA and ORBCOMM International, collectively, and
references to the "Partnership Agreement" constitute references to the
Partnership Agreements of ORBCOMM, ORBCOMM USA and ORBCOMM International,
collectively.
Organization and Duration. The Partnership will dissolve on December 31,
2013, unless sooner dissolved on the written consent of all of the General
Partners or upon removal, withdrawal, resignation, liquidation or bankruptcy of
the last remaining General Partner (unless a new General Partner is appointed
within 90 days with the unanimous consent of the remaining partners).
General Partners; Management. OCC and Teleglobe Mobile are the general
partners of ORBCOMM. ORBCOMM and OCC are the general partners of ORBCOMM USA and
ORBCOMM and Teleglobe Mobile are the general partners of ORBCOMM International.
The management of the Partnership is the exclusive responsibility of the General
Partners and, except as provided by law or except as specified in the
Partnership Agreement and summarized below, the act of the General Partners
holding a majority of the Participation Percentages of the Partnership (a
"Majority in Interest") is the act of the Partnership.
The Partnership Agreement provides for meetings of the General Partners to
be called by any General Partner. It is the current practice of the Partnerships
to hold regular meetings of the General Partners on at least a quarterly basis.
Each General Partner is represented at the meetings by up to three authorized
representatives, although one representative of each general partner is entitled
to vote such General Partner's Participation Percentage.
The Partnership Agreement provides for the election of officers to provide
for the day-to-day operation of the Partnership. Officers are nominated by the
President of the Partnership and elected by the General Partners. Officers
exercise the authority granted to such officers by the General Partners. Under
the terms of the ORBCOMM Partnership Agreement, the General Partners are
required to appoint one or more officers to have authority to act for the
Partnership with respect to the Procurement Agreement. For a description of the
Procurement Agreement, see "Relationships Among the ORBCOMM
Parties -- Procurement Agreement." Officers are subject to removal for any
reason by approval of the General Partners. For a description of the current
officers of the Partnership, see "Management."
Certain Actions. Under the Partnership Agreement, the approval of at least
86% of the Participation Percentages held by the General Partners is required
to: (i) transfer all or substantially all the assets of the Partnership; (ii)
merge or consolidate the Partnership with any other person; (iii) permit the
entry by the Partnership into any additional lines of business; (iv) admit any
new Partner to the Partnership; (v) subject to certain exceptions in furtherance
of the business of the Partnership, cause the Partnership to borrow any amount
on a recourse basis or any amount in excess of $5 million on a non-recourse
basis; (vi) subject to certain exceptions set forth in the Partnership
Agreement, enter into any transaction with an affiliate of a General Partner
(excluding the Definitive Agreements); (vii) select or remove the independent
certified public accountant for the Partnership or adopt, or modify in any
material respect, any significant accounting policy or tax policy; (viii) make
on behalf of the Partnership an assignment for the benefit of creditors, decide
on behalf of the Partnership to subject the Partnership to any proceedings under
any bankruptcy or insolvency law, decide to avail the Partnership of the benefit
of any other legislation for the benefit of debtors, or take steps to wind up or
terminate the existence of the Partnership; (ix) delegate any of the powers of
the Partnership; (x) determine the value of the Partnership for purposes of the
Master Agreement; and (xi) amend any provision of the Partnership Agreement. No
amendment to the Partnership Agreement may: (i) decrease the capital account or
increase the amount required to be contributed by a Partner without the consent
of such Partner; or (ii) amend the provisions of, or adopt any provisions
inconsistent with, Sections 6.2, 6.3 and 6.4 of the Partnership Agreement, which
provisions regard super-majority approval
77
<PAGE> 84
requirements for certain actions of the Company, enforcement of the Definitive
Agreements and meetings of the General Partners, respectively.
The Partnership Agreement also provides that: (i) any action of the
Partnership with respect to the enforcement by it of its rights under any
Definitive Agreement or other contract or agreement to which any General Partner
or any affiliate thereof is a party with respect to a breach, default or dispute
by such General Partner or affiliate, requires the approval of General Partners
having a majority of the Participation Percentages held by the General Partners
other than such General Partner; and (ii) subject to the limitations set forth
in (i) above, in the event that a Majority in Interest of the General Partners,
each acting in the best interests of the Partnership, shall be unable to agree
on exercising or enforcing the rights of the Partnership under the Procurement
Agreement including, without limitation, the rights to exercise the options
thereunder, to stop work, to request changes and to send notices to preserve or
exercise any such rights, then the President of the Partnership shall decide on
the appropriate action with respect to such rights, and the Partnership shall
then act upon such decision. The ORBCOMM Partnership Agreement also provides
that so long as ORBCOMM holds voting rights in either of ORBCOMM USA or ORBCOMM
International, each General Partner shall be entitled to exercise directly a
fraction of ORBCOMM's rights determined by dividing such General Partner's
Participation Percentage by the total Participation Percentages held by all
General Partners.
Capital Contributions. Pursuant to the terms of the ORBCOMM Partnership
Agreement, OCC is obligated to contribute up to approximately $75 million, and
Teleglobe Mobile is obligated to contribute up to approximately $85 million, of
capital to ORBCOMM, all of which was contributed prior to the consummation of
the Old Notes Offering.
Under the terms of the ORBCOMM USA Partnership Agreement, OCC and the
Company together were obligated to contribute nominal capital to ORBCOMM USA in
the amount of $10,000. Under the terms of the ORBCOMM International Partnership
Agreement, Teleglobe Mobile and the Company together were obligated to
contribute nominal capital to ORBCOMM International in the amount of $10,000.
Pursuant to a resolution adopted by the General Partners of ORBCOMM on September
12, 1995, ORBCOMM agreed that until December 31, 1996, ORBCOMM would provide
interest-free loans to each of ORBCOMM USA and ORBCOMM International in an
amount equal to their monthly net cash requirements so long as such cash
requirements are generally in accordance with a budget approved by ORBCOMM or
the executive management of ORBCOMM.
System Charge. The ORBCOMM Partnership Agreement provides for the
remittance of the System Charge by OCC and Teleglobe to ORBCOMM each calendar
quarter. OCC's allocated portion of the System Charge for a calendar quarter is
equal to the Output Capacity Charge for such calendar quarter minus 1.15% of the
Total Aggregate Revenues. Teleglobe Mobile's allocated portion of the System
Charge for a calendar quarter is equal to the International Output Capacity
Charge for such calendar quarter minus 1.15% of the Total Aggregate Revenues.
Indemnification. The Partnership has agreed to indemnify its General
Partners and all of their respective officers, directors, partners, employees,
and agents (each an "Indemnitee") from and against any and all claims or
liabilities arising out of or in connection with any action taken or omitted by
the General Partners or the officers of the Partnership pursuant to authority
granted by the Partnership Agreement so long as such Indemnitee's conduct did
not constitute gross negligence, willful or wanton misconduct or bad faith. The
Partnership Agreement further provides that the General Partners and all of
their respective officers, directors, partners, employees and agents (each a
"General Partner Person") will not be liable to the Partnership or the limited
partners for any act or omission by such General Partner Person, except as such
act or omission results from gross negligence, willful or wanton misconduct or
bad faith.
Liquidation and Distribution of Proceeds. Upon the dissolution of the
Partnership, the General Partners, or, in the case of the removal, withdrawal,
resignation, liquidation or bankruptcy of the last remaining General Partner,
one of the limited partners elected by a majority vote of the limited partners,
shall act as liquidator to wind up the Partnership. The liquidator shall have
full power and authority to sell, assign and encumber any or all of the
Partnership's assets and to wind up and liquidate the affairs of the Partnership
in an orderly and business-like manner. All proceeds from liquidation shall be
distributed in the following
78
<PAGE> 85
order of priority: (i) to the payment of the debts and liabilities of the
Partnership and expenses of liquidation; (ii) to the setting up of such reserves
as the liquidator may reasonably deem necessary for any contingent liability of
the Partnership; and (iii) the balance to the Partners in the proportions of
their positive capital account balances, if any (determined after taking into
account all allocations of Net Income and Net Loss for the year of liquidation).
Allocations and Distributions. Allocations of Net Income and Net Loss of
the Partners shall generally be allocated to the capital accounts of Partners in
proportion to their Participation Percentage. Except as set forth below, or in
the case of liquidating distributions, the amount and timing of distributions by
the Partnership are determined in the discretion of the General Partners. All
distributions will be made to Partners first to return to the Partners their
Capital Preference and, thereafter, to the Partners in proportion to their
Participation Percentages. The Partnership Agreement provides for a minimum
distribution each year in an amount sufficient to ensure that each Partner shall
have received at least an amount equal to the product of: (i) 40% multiplied by
(ii) the lesser of (a) such Partner's distributive share of the Partnership's
taxable income for the preceding year, and (b) the excess, if any, of cumulative
Net Income over cumulative Net Loss allocated to such Partner since the
inception of the Partnership.
79
<PAGE> 86
DESCRIPTION OF SENIOR NOTES
GENERAL
The Old Notes were, and the Exchange Notes will be, issued pursuant to the
Indenture among the Company, Capital, the Guarantors and Marine Midland Bank, as
trustee (the "Trustee"). The terms of the Exchange Notes are identical in all
material respects to the Old Notes, except that the Exchange Notes have been
registered under the Securities Act, and therefore will not bear legends
restricting their transfer. The Senior Notes are secured pursuant to a Pledge
Agreement (the "Pledge Agreement") between the Issuers and the Trustee as
Collateral Agent (the "Collateral Agent"). Upon the issuance of the Exchange
Notes, the Indenture will be subject to and governed by the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
The terms of the Exchange Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act as an
effect on the date of the Indenture. The Exchange Notes are subject to all such
terms, and Holders of Exchange Notes are referred to the Indenture and the Trust
Indenture Act for a statement thereof. The following summary of certain
provisions of the Indenture and the Pledge Agreement do not purport to be
complete and are qualified in their entirety by reference to all the provisions
of the Indenture and the Pledge Agreement, including the definitions in each of
such instruments and agreements of certain terms used below.
The Senior Notes are the joint and several obligations of the Issuers. The
Senior Notes are senior obligations of the Issuers, rank senior in right and
priority of payment to all subordinated indebtedness of the Issuers and rank
pari passu in right and priority of payment with all other indebtedness of the
Issuers that is not expressly so subordinated, including indebtedness under the
MetLife Note (which aggregated approximately $3.8 million as of June 30, 1996),
except to the extent of the collateral securing such MetLife Note. The Senior
Notes are secured to the extent set forth below under "-- Security." The Issuers
have no indebtedness that is expressly subordinated in right and priority of
payment to the Senior Notes.
The obligations of the Issuers under the Senior Notes are jointly and
severally guaranteed by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International (collectively, the "Guarantors"). See "-- Guarantees." The
guarantee of each of the Guarantors rank senior in right and priority of payment
to all subordinated indebtedness of such Guarantor and rank pari passu in right
and priority of payment with all other indebtedness of such Guarantor that is
not expressly so subordinated to such guarantee, except to the extent of any
collateral securing such other indebtedness. The guarantees by the Guarantors
are non-recourse to the shareholders and/or partners of such Guarantors
(including Orbital, Teleglobe and TRI) and no shareholder or partner of such
Guarantors will have any liability for any claim under the Senior Notes. The
only assets of Teleglobe Mobile are such entity's investments in the Company and
ORBCOMM International; the only significant assets of OCC are such entity's
investments in the Company and ORBCOMM USA and the FCC License.
As of the date of the Indenture, the Company has no Subsidiaries other than
Capital, which is a wholly owned Subsidiary of the Company, has nominal assets
and does not conduct any operations. Under certain circumstances, the Credit
Parties will be able to designate future Subsidiaries that they create or
acquire as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to the restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are limited in an aggregate principal amount to $170
million. The Senior Notes will mature on August 15, 2004. Interest on the Senior
Notes will accrue at the rate of 14% per annum (the "Fixed Interest") and will
be payable semi-annually in arrears on February 15 and August 15 of each year,
commencing on February 15, 1997, to Holders of record on the immediately
preceding February 1 and August 1. Fixed Interest on the Senior Notes will
accrue from the most recent date to which interest has been paid or, if no Fixed
Interest has been paid, from August 7, 1996 (the "Issue Date"). Fixed Interest
on the Senior Notes will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
80
<PAGE> 87
In addition, the Senior Notes bear Revenue Participation Interest,
calculated as described below, from the Issue Date to the date of payment of the
Senior Notes. Installments of accrued or deferred Revenue Participation Interest
accrued through the Accrual Period (as defined herein) last ended will become
due and payable semi-annually on each February 15 and August 15 after the Issue
Date, commencing on February 15, 1997, to the Holders of record at the close of
business on the preceding February 1 or August 1. Additionally, all installments
of accrued or deferred Revenue Participation Interest will become due and
payable (and may not be further deferred) with respect to any principal amount
of the Senior Notes that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of the Senior Notes.
The Issuers, at their option, may defer payment of all or a portion of
Revenue Participation Interest then otherwise due if, and only to the extent
that, (a) the payment of such portion of Revenue Participation Interest will
cause the Credit Parties' Fixed Charge Coverage Ratio for the four consecutive
fiscal quarters last completed prior to such interest payment date to be less
than 2.0:1 on a pro forma basis after giving effect to the assumed payment of
such Revenue Participation Interest (but may not defer such portion which, if
paid, will not cause such Credit Parties' Fixed Charge Coverage Ratio to be less
than 2.0:1); provided, however, that for purposes of calculating such Credit
Parties' Fixed Charge Coverage Ratio for any period, the amount representing
Revenue Participation Interest that has been deferred or will be deferred for
such period shall not be included in the calculation of Credit Parties' Fixed
Charges for such period and (b) the principal of the Senior Notes corresponding
to such Revenue Participation Interest has not then matured and become due and
payable (at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise). Revenue Participation Interest that is deferred shall
become due and payable on the earlier of (i) the next succeeding interest
payment date on which such Revenue Participation Interest is not permitted to be
deferred, and (ii) upon the maturity of the corresponding principal of the
Senior Notes (whether at stated maturity, upon acceleration, upon maturity of
repurchase obligation or otherwise). No interest will accrue on any Revenue
Participation Interest deferred and which has not yet become due and payable. To
the extent permitted by law, interest will accrue on overdue Fixed Interest or
Revenue Participation Interest at the same rate as the Fixed Interest plus one
percent (1%) per annum.
Each installment of Revenue Participation Interest will be calculated to
accrue (an "Accrual Period") from, but not including, the most recent date
through which Revenue Participation Interest has been paid or provided for or
through which Revenue Participation Interest has been calculated and deferred
(or from and including the Issue Date if no installment of Revenue Participation
Interest has been paid, provided for or deferred) to, and including, either (a)
the last day of the next Semi-annual Period if the corresponding principal of
the Senior Notes has not become due and payable (or December 31, 1996 if no
installment of Revenue Participation Interest has been paid, provided for or
deferred) or (b) the date of payment if the corresponding principal of the
Senior Notes has become due and payable (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise). With respect
to each Accrual Period, Revenue Participation Interest will accrue daily on the
principal of each Senior Note outstanding during such period as follows: (i) for
each day during each month that ends during such Accrual Period and which month
ends at least 25 days prior to the date of payment, an amount equal to 1/30th of
the Monthly Revenue Participation Interest on the Senior Note for such month
until all of such Monthly Revenue Participation Interest on the Note shall be
accrued (and all of such month's Monthly Revenue Participation Interest on the
Senior Note shall be accrued by the last day of such month) and (ii) for any day
in any remaining period, 1/30th of the prior month's Monthly Revenue
Participation Interest on the Senior Notes.
Any reference in this Prospectus to "accrued and unpaid interest" on the
Senior Notes includes the amount of Fixed Interest, unpaid Revenue Participation
Interest and Liquidated Damages, if any, due and payable thereon.
Principal of, premium (if any), interest and Liquidated Damages (if any)
on, the Senior Notes will be payable at the office or agency of the Issuers
maintained for such purpose or, at the option of the Issuers, payment of
interest and Liquidated Damages (if any) may be made by check mailed to the
Holders of the Senior Notes at their respective addresses set forth in the
register of Holders of the Senior Notes; provided that if the Holder of any
Senior Notes has given wire transfer instructions to the Company, the Issuers
will be
81
<PAGE> 88
required to make all payments with respect to such Senior Notes by wire transfer
of immediately available funds to the account specified by such Holder. Until
otherwise designated by the Issuers, the Issuers' office or agency will be the
office of the Trustee maintained for such purpose. The Exchange Notes will be
issued in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
The Senior Notes will not be redeemable prior to August 15, 2001.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Issuers, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any) thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on August 15 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------------------- ----------
<S> <C>
2001............................................................. 115.00%
2002............................................................. 107.50%
2003 and thereafter.............................................. 100.00%
</TABLE>
Notwithstanding the foregoing, prior to August 15, 1999, the Issuers may
redeem outstanding Senior Notes with the net proceeds of one or more sales of
Capital Stock (other than Disqualified Stock) of OCC, Teleglobe Mobile or the
Company to one or more Persons at a redemption price equal to 115% of the
principal amount thereof, plus accrued and unpaid interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any) thereon to the
redemption date; provided, however, that: (i) not less than $127.5 million
aggregate principal amount of Senior Notes remain outstanding immediately after
any such redemption; and (ii) such redemption shall occur within 30 days after
the date of closing of such sale of Capital Stock.
MANDATORY REDEMPTION
The Issuers will not be required to make mandatory redemption or sinking
fund payments with respect to the Senior Notes. However, as described below, the
Issuers may be obligated, under certain circumstances, to make an offer to
purchase: (i) all outstanding Senior Notes at a redemption price of 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages (if any) to the date of purchase, upon a Change of Control; and (ii)
outstanding Senior Notes with a portion of the Net Proceeds of Asset Sales at a
redemption price of 100% of the principal amount thereof, plus accrued and
unpaid interest (including Revenue Participation Interest, if any) and
Liquidated Damages (if any) to the date of purchase. See "-- Repurchase at the
Option of Holders -- Change of Control" and "-- Limitation on Sales of Assets
and Subsidiary Interests."
SECURITY
The Indenture provided that upon the closing of the Old Notes Offering, the
Company purchase and pledge to the Collateral Agent for the benefit of the
Holders of the Senior Notes the Pledged Securities in such amount as will be
sufficient upon receipt of scheduled interest and principal payments of such
securities, in the opinion of a nationally recognized firm of independent
certified public accountants selected by the Company, to provide for payment in
full of the first four scheduled interest payments due on the Senior Notes. The
Company used approximately $44.8 million of the net proceeds of the Old Notes
Offering to acquire the Pledged Securities. The Pledged Securities are pledged
by the Company to the Collateral Agent for the benefit of the Holders of Senior
Notes pursuant to the Pledge Agreement and will be held by the Collateral Agent
in the Pledge Account. Pursuant to the Pledge Agreement, immediately prior to an
interest payment date on the Senior Notes, the Company may either deposit with
the Collateral Agent from funds otherwise available to the Company cash
sufficient to pay the interest scheduled to be paid on such date or the Company
may direct the Collateral Agent to release from the Pledge Account proceeds
sufficient to pay interest then
82
<PAGE> 89
due. In the event that the Company exercises the former option, the Company may
thereafter direct the Collateral Agent to release to the Company from the Pledge
Account proceeds or Pledged Securities in like amount.
Interest earned on the Pledged Securities will be added to the Pledge
Account. In the event that the funds or Pledged Securities held in the Pledge
Account exceed the amount sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants selected by the Company, to
provide for payment in full of the first four scheduled interest payments due on
the Senior Notes (or, in the event an interest payment or payments have been
made, an amount sufficient to provide for payment in full of any interest
payments remaining, up to and including the fourth scheduled interest payment)
the Collateral Agent will be permitted to release to the Company at the
Company's request any such excess amount. The Senior Notes are secured by a
first priority security interest in the Pledged Securities and in the Pledge
Account and, accordingly, the Pledged Securities and the Pledge Account also
secure repayment of the principal amount of the Senior Notes to the extent of
such security.
Under the terms of the Pledge Agreement, assuming that the Company makes
the first four scheduled interest payments on the Senior Notes in a timely
manner, all the Pledged Securities will be released from the Pledge Account.
GUARANTEES
The obligations of the Issuers under the Senior Notes are guaranteed,
jointly and severally, by OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International and such other persons that become Subsidiary Guarantors after the
Issue Date (as described below) and each of their respective successors. The
guarantee issued by each Guarantor ranks senior in right and priority of payment
to all other indebtedness of such Guarantor that is expressly subordinated to
the guarantee of the Senior Notes and ranks pari passu in right and priority of
payment with all other indebtedness of such Guarantor that is not expressly so
subordinated to such guarantee, except to the extent of any collateral securing
such other indebtedness.
The Indenture contains provisions the intent of which is to provide that
the obligations of each Subsidiary Guarantor will be limited to the maximum
amount that will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from, rights to receive contribution from, or payments made by or on
behalf of any other Subsidiary Guarantor in respect of the obligations of such
other Subsidiary Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, result in the obligations of such Subsidiary
Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under any applicable federal, state or foreign law. Each
Subsidiary Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to contribution from each other Subsidiary Guarantor so long
as the exercise of such right does not impair the rights of the Holders of the
Senior Notes under the Guarantees. See "Risk Factors -- Fraudulent Conveyance
Considerations -- Subsidiary Guarantees."
The Indenture provides that in the event of: (i) a sale or other
disposition of all or substantially all of the assets of any Subsidiary
Guarantor or the sale of a Subsidiary Guarantor, by way of merger, consolidation
or otherwise; (ii) a Subsidiary Guarantor becoming an Unrestricted Subsidiary
pursuant to the terms of the Indenture; or (iii) a sale or other disposition of
all of the Capital Stock of any Subsidiary Guarantor, then such Subsidiary
Guarantor or the corporation acquiring the property, as applicable, shall be
released and relieved of any obligations under its guarantee, provided that the
Company complies with the provisions of the covenant entitled "Limitation on
Sales of Assets and Subsidiary Interests."
The Indenture provides that in the event: (i) the Credit Parties or any
other Guarantor shall transfer or cause to be transferred, in one transaction or
a series of related transactions, any assets, businesses, divisions or other
property having a book value determined in accordance with GAAP or a Fair Market
Value which, when aggregated with all Investments described in clause (vi) of
the definition of "Permitted Investment," would be in excess of the greater of
(x) $5 million or (y) 5% of the System Consolidated Net Worth as of the date of
transfer to any Subsidiary that is not a Subsidiary Guarantor; (ii) the Credit
Parties or any other Guarantor shall acquire another Subsidiary with assets
having either a book value determined in accordance
83
<PAGE> 90
with GAAP or a Fair Market Value which, when aggregated with all Investments
described in clause (vi) of the definition of "Permitted Investment," would be
in excess of the greater of (x) $5 million or (y) 5% of the System Consolidated
Net Worth as of the date on which any such acquisition is consummated; or (iii)
at any time after the Issue Date, Restricted Subsidiaries of the Credit Parties
and any Guarantors which are not Subsidiary Guarantors shall, in the aggregate,
hold, own or otherwise control assets, businesses, divisions or property having
either a book value determined in accordance with GAAP or a Fair Market Value
which, when aggregated with all Investments described in clause (vi) of the
definition of "Permitted Investment," would be in excess of the greater of (x)
$5 million or (y) 5% of the System Consolidated Net Worth as of any date, then,
in each such case, the Credit Parties or the Guarantor shall cause such
Restricted Subsidiary or any number of Restricted Subsidiaries, as the case may
be, to execute a supplemental indenture for purposes of guaranteeing the
Issuers' obligations under the Indenture and the Senior Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Senior Notes has
the right to require the Issuers to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Senior Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest (including Revenue Participation Interest, if any) and Liquidated
Damages (if any) thereon to the date of purchase (the "Change of Control
Payment"). Within ten days following any Change of Control, the Issuers will
mail a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Senior Notes
pursuant to the procedures required by the Indenture and described in such
notice. The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Senior Notes as a result of a Change of Control.
On the Change of Control Payment date, the Issuers will, to the extent
lawful:
(i) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Senior Notes or portions thereof so
tendered; and
(iii) deliver or cause to be delivered to the Trustee the Senior Notes
so accepted together with an Officers' Certificate stating the aggregate
principal amount of Senior Notes or portions thereof being purchased by the
Issuers.
The Paying Agent will promptly mail to each Holder of Senior Notes so
tendered the Change of Control Payment for such Senior Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Senior Note equal in principal amount to any unpurchased
portion of the Senior Note surrendered; provided that each such new Note will be
in a principal amount of $1,000 or an integral multiple thereof. The Issuers
will publicly announce the results of the Change of Control Offer on or as soon
as practicable after the Change of Control Payment date.
The Issuers will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the time and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Senior Notes validly tendered and not withdrawn under such Change
of Control Offer.
Subject to the limitations discussed below, the Issuers could in the future
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Issuers' capital structure or credit ratings.
Due to the highly leveraged structure of the Issuers, the Issuers may not have
sufficient funds to be able to repurchase all of the Senior Notes tendered in a
84
<PAGE> 91
Change of Control Offer. The failure of the Issuers to purchase any Senior Notes
tendered in a Change of Control Offer will constitute an Event of Default under
the Indenture. See "-- Events of Default and Remedies."
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of any of the Credit Parties' assets. Although there is a developing body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a Holder of Senior Notes to require the Issuers to repurchase such
Notes as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of the Issuers to another Person may be uncertain.
Limitation on Sales of Assets and Subsidiary Interests
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, engage in an Asset Sale unless:
(i) the Credit Party or such Restricted Subsidiary, as the case may
be, engaging in such Asset Sale receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets sold or
otherwise disposed of; and
(ii) the aggregate Fair Market Value of all non-Cash Consideration
received therefor by such Credit Party or Restricted Subsidiary, as the
case may be, when aggregated with the Fair Market Value of all other
non-Cash Consideration received by the Credit Parties and their Restricted
Subsidiaries from all other Asset Sales since the Issue Date that has not
yet been converted into cash or Cash Equivalents (in either case, in U.S.
dollars or freely convertible into U.S. dollars), does not exceed the sum
of (without duplication) 5% of the aggregate Consolidated Tangible Net
Assets of all of the Credit Parties at the time of such Asset Sale;
provided, however, that any notes or similar obligations received by any of
the Credit Parties or such Restricted Subsidiaries from such transferees
that are immediately converted by the Credit Parties or such Restricted
Subsidiaries into cash, shall be deemed to be cash (to the extent of the
net cash received) for purposes of this clause (ii).
Within 270 days after the receipt of any Net Proceeds, the Issuers may
apply such Net Proceeds to: (i) repay, and thereby permanently reduce the
commitments or amounts available to be reborrowed under the Bank Credit Facility
pursuant to clause (vii) of the covenant entitled "Incurrence of Indebtedness or
Issuance of Restricted Subsidiary Disqualified Stock" or to repay the Senior
Notes or the MetLife Note; or (ii) an investment in Related Assets or a Related
Business. Pending the final application of any such Net Proceeds, the Issuers
may temporarily invest such Net Proceeds in any manner that is not prohibited by
the Indenture. Any Net Proceeds that are not applied or invested as provided in
the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate cumulative amount of Excess Proceeds exceeds $5
million, the Issuers will be required to make an offer to all Holders of Senior
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Senior
Notes that may be purchased out of the Excess Proceeds (and not solely the
amount in excess of $5 million), at an offer price in cash in an amount equal to
100% of the principal amount thereof, plus accrued and unpaid interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any) thereon to the date of purchase, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Senior Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuers may use any remaining Excess Proceeds for general business purposes. If
the aggregate amount of Senior Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee will select the Senior Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be reset at zero. The Asset Sale Offer shall
remain open for a period of 20 business days or such longer period as may be
required by law.
The foregoing provisions do not apply to the sale, lease, conveyance or
other disposition of all or substantially all of the assets of either of the
Issuers, OCC or Teleglobe Mobile, which is governed by the provisions of the
Indenture described below in "-- Merger, Consolidation or Sale of Assets."
85
<PAGE> 92
SELECTION AND NOTICE OF SENIOR NOTES FOR REDEMPTION OR REPURCHASE
If less than all of the Senior Notes are to be redeemed or repurchased
pursuant to any purchase offer required under the Indenture at any time,
selection of Senior Notes for redemption or repurchase will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Senior Notes are listed or, if the Senior Notes
are not so listed, on a pro rata basis, selected by lot or by such method as the
Trustee shall deem fair and appropriate; provided that no Senior Note with a
principal amount of $1,000 or less shall be redeemed or repurchased in part.
Notices of redemption or repurchase shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption or repurchase date to
each Holder of Senior Notes to be redeemed or repurchased at its registered
address. If any Senior Note is to be redeemed or repurchased in part only, the
notice that relates to such Senior Note shall state the portion of the principal
amount thereof to be redeemed or repurchased. A new Senior Note in principal
amount equal to the unredeemed or unrepurchased portion will be issued in the
name of the Holder thereof upon cancellation of the original Senior Note. On and
after the redemption or repurchase date, interest will cease to accrue on the
Senior Notes or portions thereof called for redemption or repurchase.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Equity Interests of any Credit Party (including, without limitation,
any payment in connection with any merger or consolidation involving the
Credit Parties or any of their Restricted Subsidiaries), other than
dividends or distributions payable (a) in Equity Interests (other than
Disqualified Stock) of the Credit Parties or any of their Restricted
Subsidiaries or (b) to any Credit Party or to any Restricted Subsidiary of
a Credit Party;
(ii) purchase, redeem, defease, retire or otherwise acquire or return
for value any Equity Interests of any Credit Party, other than any such
Equity Interests owned by a Credit Party or any Wholly Owned Restricted
Subsidiary of a Credit Party;
(iii) make any principal payment on (including at maturity) or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated (whether pursuant to its terms, by
operation of law, structurally or otherwise) to the Senior Notes; or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Issuers would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the immediately preceding fiscal quarter,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Indebtedness to Cash Flow Ratio test set forth in the first
paragraph of the covenant entitled "Incurrence of Indebtedness or Issuance
of Restricted Subsidiary Disqualified Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Credit Parties and their Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (iii) through (v) of the next succeeding paragraph), is less
than the sum of:
(1) the sum of (without duplication) 50% of the Consolidated Net
Income of each of the Credit Parties after elimination of any intercompany
items and in each case for the period (taken as one
86
<PAGE> 93
accounting period) from the beginning of the first fiscal quarter
commencing after the Issue Date to the end of the Company's most recently
ended fiscal quarter for which financial statements are available at the
time of such Restricted Payment (or, if such aggregate Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus
(2) 100% of the aggregate net cash proceeds received by the Credit
Parties from the issue or sale since the Issue Date of Equity Interests of
any Credit Party or of debt securities of any Credit Party that have been
converted into such Equity Interests (other than (A) Equity Interests (or
convertible debt securities) sold to a Subsidiary of any Credit Party, (B)
Disqualified Stock or debt securities that have been converted into
Disqualified Stock, (C) Disqualified Capital Contributions and (D) equity
capital contributions described in clause (vii) of the definition of
"Permitted Investment"), plus
(3) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or otherwise liquidated or repaid for cash,
the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
The foregoing provisions do not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of any Credit Party in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary
of any Credit Party) of other Equity Interests of any Credit Party (other
than any Disqualified Stock and Disqualified Capital Contributions);
provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement or other acquisition shall
be excluded from clause (2) of the preceding paragraph;
(iii) the repayment, defeasance, redemption or repurchase of
Intercompany Indebtedness (as defined in clause (v) of the covenant
entitled "Incurrence of Indebtedness or Issuance of Restricted Subsidiary
Disqualified Stock") or Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness or the substantially
concurrent sale (other than to a Subsidiary of any Credit Party) of Equity
Interests of any Credit Party (other than Disqualified Stock and
Disqualified Capital Contributions); provided that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (2) of the
preceding paragraph;
(iv) the payment of cash dividends on preferred partnership interests
of any Credit Party that is a partnership if, at the time such preferred
partnership interests were issued, such Credit Party delivered to the
Trustee an Officers' Certificate certifying that (a) the aggregate
liquidation preference of the preferred partnership interest so issued does
not exceed the aggregate amount of Indebtedness that the Company is then
permitted to incur pursuant to clauses (vii) and (x) of the exceptions to
the covenant entitled "Incurrence of Indebtedness or Issuance of Restricted
Subsidiary Disqualified Stock" and (b) the Company is electing to reduce
permanently the amount of Indebtedness that any Person is permitted to
incur pursuant to such clauses (vii) and (x) by the amount of such
aggregate liquidation preference;
(v) the purchase, redemption or retirement by OCC of shares of its
common stock held by an employee or former employee of one of the Credit
Parties or their Subsidiaries or Orbital issued under the OCC Stock Option
Plan pursuant to the terms of such OCC Stock Option Plan; provided that (1)
the aggregate number of shares of common stock purchased, redeemed or
retired from and after the Issue Date does not exceed 900,000 shares, and
(2) the amount of any such payments in any fiscal year does not exceed
$1,000,000; and provided, further, that the limitations set forth in
clauses (1) and (2) of the foregoing proviso do not apply to the purchase,
redemption or retirement of shares of common stock with funds or other
property (including common stock of Orbital) contributed by partners of
OCC, Teleglobe Mobile or the Company (other than Disqualified Capital
Contributions) or amounts paid by any of the
87
<PAGE> 94
Credit Parties for which any of the Credit Parties receives concurrent
reimbursement from any other Person (other than the Credit Parties or their
Subsidiaries);
(vi) payments and/or distributions (1) by OCC to its shareholders
pursuant to the Tax Sharing Agreement and (2) by Teleglobe Mobile to its
partners to the extent necessary to pay income tax liabilities of such
partners (determined on a hypothetical basis using the highest marginal
income tax rate applicable to such partners at the time of such payment)
arising from income of Teleglobe Mobile allocable to such partners and
attributable to Teleglobe Mobile's investment in the Company, but only to
the extent Teleglobe Mobile is not subject to income tax on such income;
and
(vii) distributions made to Orbital and Teleglobe of unused portions
of any amount drawn under the Partners' Insurance Contingent Commitment (as
described under "-- Maintenance of Insurance") and Partners' Contingent
Commitment (as described under "-- Partners' Contingent Commitment").
A Credit Party may designate any Restricted Subsidiary of such Credit Party
to be an Unrestricted Subsidiary if such designation would not cause a Default
and, at the time of and after giving effect to such designation, the Issuers
could incur $1.00 of additional Indebtedness under the applicable provisions of
the first paragraph of the covenant entitled "Incurrence of Indebtedness or
Issuance of Restricted Subsidiary Disqualified Stock"; provided that in no event
shall all or any portion of the material assets or properties (other than cash)
owned by the Credit Parties on the Issue Date be transferred to or held by an
Unrestricted Subsidiary of any of the Credit Parties; and provided, further,
that such ability to incur $1.00 of additional Indebtedness shall not be
required in the case of any newly created Unrestricted Subsidiary funded solely
with an Investment described in clause (vii) of the definition of "Permitted
Investment." For purposes of making such determination, all outstanding
Investments by the Credit Parties and their Restricted Subsidiaries (except to
the extent repaid in cash and except for Investments described in clause (vii)
of the definition of "Permitted Investment") in the Subsidiary so designated
will be deemed to be Restricted Payments at the time of such designation and
will reduce the amount available for Restricted Payments under the first
paragraph of this covenant. All such outstanding Investments will be deemed to
constitute Investments in an amount equal to the greatest of:
(i) the net book value of such Investments at the time of such
designation;
(ii) the Fair Market Value of such Investments at the time of such
designation; and
(iii) the original Fair Market Value of such Investments at the time
they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments, if not made in cash, shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) proposed
to be transferred by the Credit Party or such Restricted Subsidiary, as the case
may be, pursuant to the Restricted Payment. Not later than the date of making
any Restricted Payment, the Issuers shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
which calculations may be based upon the latest available financial statements
of the Company, ORBCOMM USA and ORBCOMM International.
Incurrence of Indebtedness or Issuance of Restricted Subsidiary Disqualified
Stock
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) or any Disqualified Stock of any
Restricted Subsidiary; provided, however, that the Issuers, ORBCOMM USA or
ORBCOMM International or any of their Restricted Subsidiaries may incur
Indebtedness (including Acquired Debt) if, after giving pro forma effect to the
incurrence of such Indebtedness and the use of proceeds thereof, the aggregate
Indebtedness to Cash Flow Ratio of the Credit Parties does not exceed 4.0 to 1.
For purposes of the foregoing, the total amount of funds available under any
88
<PAGE> 95
Bank Credit Facility will be deemed to have been incurred at the time that the
Company entered into the instruments or agreements providing therefor.
The foregoing provisions do not apply to:
(i) the incurrence by the Issuers of Indebtedness represented by the
Notes and the Indenture or the incurrence by the Guarantors of Indebtedness
represented by the Guarantees;
(ii) Existing Indebtedness;
(iii) Indebtedness under (A) Hedging Obligations, provided that (1)
the notional principal amount of any interest rate protection agreement
does not significantly exceed the principal amount of the Indebtedness to
which such interest rate protection agreement relates and (2) any
agreements related to fluctuations in currency rates do not increase the
outstanding Indebtedness other than as result of fluctuations in foreign
currency exchange rates, and (B) performance, surety and workers'
compensation bonds or other obligations of a like nature incurred in the
ordinary course of business;
(iv) the incurrence by any Unrestricted Subsidiary of any of the
Credit Parties of Non-Recourse Debt; provided that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary;
(v) Indebtedness of any of the Credit Parties or any of their
Restricted Subsidiaries owed to and held by any of the Credit Parties or
any of their Wholly Owned Restricted Subsidiaries or a Guarantor's
obligations under a guarantee thereof, as the case may be (the Indebtedness
incurred pursuant to this clause (v) being hereafter referred to as
"Intercompany Indebtedness"); provided that an incurrence of Indebtedness
shall be deemed to have occurred upon (i) any sale or other disposition of
Intercompany Indebtedness to a Person other than any of the Credit Parties
or any of their Restricted Subsidiaries, (ii) any sale or other disposition
of Equity Interests of any of the Credit Parties' Restricted Subsidiaries
which holds Intercompany Indebtedness such that such Restricted Subsidiary
ceases to be a Restricted Subsidiary after such sale or other disposition
or (iii) designation of a Restricted Subsidiary as an Unrestricted
Subsidiary;
(vi) Non-Recourse Debt to finance purchase money obligations;
(vii) the incurrence by any of the Issuers, ORBCOMM USA or ORBCOMM
International or any of their Restricted Subsidiaries (or by OCC or
Teleglobe Mobile as a guarantor of such Indebtedness) of Indebtedness under
a Bank Credit Facility, provided that the aggregate principal amount at any
time outstanding under this clause (vii) does not exceed $35 million, less
the aggregate liquidation preference of any preferred partnership interests
issued in reliance on clause (iv) of the exceptions to the covenant
entitled "Restricted Payments" and less the aggregate principal amount of
Indebtedness under this clause (vii) which is refinanced under clause
(viii) below;
(viii) Indebtedness of any of the Issuers, ORBCOMM USA or ORBCOMM
International or any of their Restricted Subsidiaries ("Permitted
Refinancing Indebtedness") incurred to refinance, replace or refund
Indebtedness ("Refinanced Indebtedness") incurred pursuant to the
Indebtedness to Cash Flow Ratio test set forth in the first paragraph of
this covenant or pursuant to clauses (i), (ii), (vii) or (x) of this
covenant; provided that:
(a) the aggregate principal amount of such Permitted Refinancing
Indebtedness does not exceed the aggregate principal amount of the
Refinanced Indebtedness (including accrued and unpaid interest thereon);
(b) such Permitted Refinancing Indebtedness shall have a final
maturity equal to or later than, and a Weighted Average Life to Maturity
equal to or greater than, the final maturity and Weighted Average Life
to Maturity of the Refinanced Indebtedness, respectively;
(c) such Permitted Refinancing Indebtedness shall rank no higher
relative to the Senior Notes than the Refinanced Indebtedness and in no
event may any Indebtedness of any of the Issuers,
89
<PAGE> 96
ORBCOMM USA or ORBCOMM International or any of their Restricted
Subsidiaries be refinanced with Indebtedness of any Restricted
Subsidiary under this clause (viii) (except to the extent that any such
Restricted Subsidiary was, prior to such refinancing, a guarantor of
such Refinanced Indebtedness); and
(d) in no event shall any Permitted Refinancing Indebtedness
refinance, replace or refund the MetLife Note unless the Liens securing
such MetLife Note are released in full;
(ix) the incurrence by any of the Issuers, ORBCOMM USA or ORBCOMM
International or any of their Restricted Subsidiaries of Capital Lease
Obligations in an aggregate amount for all such Persons not to exceed $5
million at any one time outstanding;
(x) the incurrence by any of the Issuers, ORBCOMM USA or ORBCOMM
International or any of their Restricted Subsidiaries of Indebtedness to
finance the acquisition, construction or development, either alone or
together with third Persons, of domestic and/or international gateways,
related ground systems and associated costs and expenses in an aggregate
amount not to exceed $10 million at any one time outstanding for all such
Persons less the aggregate liquidation preference of any preferred
partnership interests issued in reliance on clause (iv) of the exceptions
to the covenant entitled "Restricted Payments" and less the aggregate
principal amount of Indebtedness under this clause (x) which is refinanced
under clause (viii) above;
(xi) the incurrence by OCC and/or Teleglobe Mobile of Indebtedness in
an aggregate amount (for OCC and Teleglobe Mobile, taken together as a
whole) at any one time outstanding not to exceed $10 million; provided that
such Indebtedness could then otherwise have been incurred by the Issuers,
ORBCOMM USA or ORBCOMM International under the Indebtedness to Cash Flow
Ratio test set forth under the first paragraph of this covenant; and
(xii) the incurrence of Indebtedness under the Partners' Contingent
Commitment pursuant to the "Maintenance of Insurance Covenant."
Liens
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions to any Credit Party
or any of their Restricted Subsidiaries on its Capital Stock or with
respect to any other interest or participation in, or measured by, its
profits;
(ii) pay any Indebtedness owed to any Credit Party or any of their
Restricted Subsidiaries;
(iii) make loans or advances to any Credit Party or any of their
Restricted Subsidiaries; or
(iv) transfer any of its properties or assets to any Credit Party or
any of their Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(a) the Indenture, the Pledge Agreement, the Notes and the
Guarantees;
(b) Existing Indebtedness;
90
<PAGE> 97
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock of a
Person acquired by any of the Credit Parties or any of their Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired;
(e) customary non-assignment provisions in leases or other
agreements entered into in the ordinary course of business;
(f) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iv) above on the property so acquired;
(g) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in
the agreements governing the Refinanced Indebtedness;
(h) any instrument governing Indebtedness of a Subsidiary
Guarantor, provided such Indebtedness is incurred in accordance with the
Indenture; or
(i) in the case of clauses (a), (b), (d), (e), (f), (g) and (h)
above, any amendments, modifications, restatements, renewals, increases,
supplements, modifications, restatements or refinancings thereof,
provided that such amendments, modifications, restatements or
refinancings are not materially more restrictive with respect to such
dividend and other payment restrictions than those contained in such
instruments as in effect on the date of their incurrence.
Merger, Consolidation or Sale of Assets
The Indenture provides that neither the Credit Parties nor any Guarantor
(to the extent not permitted by the sale provisions under "-- Guarantees" above)
may consolidate or merge with or into (whether or not any such Credit Party or
such Guarantor, as the case may be, is the surviving Person), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
(other than any consolidation or merger of a Credit Party or a Guarantor with or
into, or the sale, assignment, transfer, lease, conveyance or disposal by a
Credit Party or a Guarantor to, any other Credit Party or Guarantor) unless:
(i) the Credit Party or such Guarantor, as the case may be, is the
surviving Person or the Person formed by or surviving any such
consolidation or merger (if other than the Credit Party or such Guarantor,
as the case may be) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Credit Party or such Guarantor, as the case may
be) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Credit Party or such Guarantor, as the case may be,
under the Notes, the Indenture, the Pledge Agreement and the Guarantees
pursuant to a supplemental indenture in form reasonably satisfactory to the
Trustee;
(iii) immediately after such transaction, no Default or Event of
Default exists;
(iv) the Credit Party or such Guarantor, as the case may be, or the
Person formed by or surviving any such consolidation or merger (if other
than the Credit Party or such Guarantor, as the case may be) or to which
such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of such
Credit Party or such Guarantor immediately preceding the transaction; and
91
<PAGE> 98
(v) the Issuers will, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the
beginning of the immediately preceding fiscal quarter, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Indebtedness to Cash Flow Ratio test set forth in the first paragraph of
the covenant entitled "Incurrence of Indebtedness or Issuance of Restricted
Subsidiary Disqualified Stock."
Transactions with Affiliates
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, sell, lease transfer or
otherwise dispose of any of their properties or assets to, or purchase any
property or assets from, or enter into or make any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Credit Party or such Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Credit Party or such
Restricted Subsidiary with an unrelated Person;
(ii) such Credit Party delivers to the Trustee:
(a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $1 million, an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i)
above; and
(b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5 million, an opinion as to the fairness of
such Affiliate Transaction to the Credit Party or Restricted Subsidiary
involved in such Affiliate Transaction from a financial point of view
issued by an Independent Financial Advisor or, with respect to
communications-related matters, a recognized expert in the
communications industry;
provided that the following are deemed not to be Affiliate Transactions:
(1) any employment agreement, stock option or stock purchase
agreement (including the OCC Stock Option Plan) entered into by any
Credit Party or any of their Restricted Subsidiaries with any of their
respective employees in the ordinary course of business;
(2) transactions between or among the Credit Parties and/or their
Wholly Owned Restricted Subsidiaries;
(3) Restricted Payments permitted by clauses (i), (ii), (iv), (v),
(vi) and (vii) of the second paragraph of the covenant entitled
"Restricted Payments" and Permitted Investments of a type referred to in
clauses (i), (iii), (vi) and (vii) of the definition of Permitted
Investments;
(4) the sale of common Equity Interests (other than Disqualified
Stock) of any Credit Party for cash to an Affiliate of any of the Credit
Parties;
(5) transactions pursuant to agreements entered into with resellers
of the Company's products and services, manufacturers of Subscriber
Communicators and International Licensees on terms substantially the
same as the Company's standard agreements entered into with such parties
in the ordinary course of business, and transactions pursuant to a
Service License Agreement for Malaysia or a region including Malaysia
with TRI or any Person in which TRI holds an interest, provided that
such agreement is approved by the unanimous consent of the partners of
the Company;
(6) transactions pursuant to the Procurement Agreement, the
Administrative Services Agreement, the Canada Service License Agreement,
the Teleglobe Administrative Services Agreement, the Gateway Maintenance
Contract and the Magellan Agreement, in each case as in effect on the
Issue Date, including the exercise of any option specified in Sections
2.2, 2.6, 2.8, 2.9 or 2.10 of the Procurement Agreement (including
entering into time and materials agreements thereunder pursuant to the
terms of the Procurement Agreement) and amendments, supplements or other
modifications to the Procurement Agreement required to effectuate the
exercise of such options;
92
<PAGE> 99
(7) amendments, supplements or other modifications effecting design
or other technical specifications changes to the Procurement Agreement
that do not involve the payment of cash by any of the Credit Parties or
any of their Restricted Subsidiaries in connection therewith; provided
that any such amendment, supplement or modification shall have been
approved by the unanimous consent of all the General Partners of the
Company;
(8) the sale of securities (other than common Equity Interests) of
any of the Credit Parties for cash to an Affiliate of any of the Credit
Parties; provided that:
(A) an amount of such securities at least equal to the amount
sold to such Affiliate have been or are being sold substantially
simultaneously to Persons that are not Affiliates of any of the
Credit Parties;
(B) the price per security paid by such Affiliate is no less
than the price paid by such non-Affiliates; and
(C) none of the Credit Parties shall have entered into any other
arrangement with such non-Affiliates to induce such non-Affiliates to
purchase such securities; and
(9) the procurement of a launch vehicle from an Affiliate of the
Company, if required to launch the "ground spare" or replacement
satellites, provided such procurement is on terms substantially similar
to those contained in the Procurement Agreement.
Maintenance of Insurance
The Indenture provides that the Issuers shall maintain in full force and
effect:
(i) on or prior to the date on which at least 26 satellites have been
launched and tested and, together with the related ground systems, are
reasonably believed by the Company to be ready for commercial operation as
part of the ORBCOMM System, at the time of the launch of each such
satellite, launch insurance in an amount sufficient to provide for the
procurement of a launch vehicle in the event of a launch failure;
(ii) at all times following the date a satellite has been successfully
launched and deployed and is placed in commercial service, in-orbit
insurance with respect to such satellite representing the value of such
failed satellite (taking into account the foregone useful life of such
satellite) and the pro rata cost of a launch vehicle, payable in the event
that such satellite ceases to be used for commercial revenue producing
service (provided that such insurance may contain customary provisions for
deductible payments and minimum thresholds for satellite failure); and
(iii) in the event (a) the Company is required to use four or more of
the Company's "ground spare" satellites available under the Procurement
Agreement, or (b) the Company loses four or more satellites within any
plane of eight satellites, or six or more satellites within any two planes
of eight satellites, as a result of a launch failure or in-orbit failure
prior to the placement of satellites into commercial service, for the time
periods specified in clause (i) above, insurance sufficient to provide for
the construction and launch of replacement satellites of equivalent
capacity and functionality payable in the event of a loss of four or more
satellites within any plane of eight satellites, or six or more satellites
within any two planes of eight satellites, as a result of a launch failure
or in-orbit failure prior to placement of such satellites into commercial
service.
Notwithstanding the foregoing, the Company is not obligated to obtain
launch or in-orbit insurance with respect to the two satellites currently
operational and the two satellites currently planned to be launched on a
secondary basis on a Taurus launch vehicle and launch insurance with respect to
other launches of up to an aggregate of three additional satellites on a
secondary basis.
93
<PAGE> 100
The obligation of the Issuers to maintain insurance pursuant to this
covenant may be satisfied by any combination of:
(i) insurance commitments obtained from any recognized insurance
provider;
(ii) insurance commitments obtained from any entity other than an
entity referred to in clause (i) if the General Partners of the Company
determine in good faith (evidenced by a unanimous resolution of the General
Partners of the Company and set forth in an Officers' Certificate delivered
to the Trustee) that such entity is creditworthy and otherwise capable of
bearing the financial risk of providing such insurance and making payments
in respect of any claims on a timely basis; and
(iii) unrestricted cash segregated and maintained by the Company in a
segregated account established with an Eligible Institution (the "Insurance
Account") solely for disbursement in accordance with the terms of this
covenant ("Cash Insurance"), and to be held in trust for the sole and
express benefit of the Holders of the Senior Notes.
Within 30 days following any date on which the Issuers are required to
obtain insurance pursuant to the Indenture, the Company will deliver to the
Trustee an insurance certificate certifying the amount of insurance then
carried, and in full force and effect, and an Officers' Certificate stating that
such insurance, together with any other insurance or Cash Insurance maintained
by the Issuers, complies with the Indenture. In addition, the Issuers will cause
to be delivered to the Trustee no less than once each year an insurance
certificate setting forth the amount of insurance then carried, which insurance
certificate shall entitle the Trustee to:
(i) notice of any claim under any such insurance policy; and
(ii) at least 30 days' notice from the provider of such insurance
prior to the cancellation of any such insurance.
In the event that the Issuers maintain any Cash Insurance in satisfaction
of any part of their obligation to maintain insurance pursuant to this covenant,
the Issuers shall deliver, in lieu of any insurance certificate otherwise
required by this covenant, an Officers' Certificate to the Trustee certifying
the amount of such Cash Insurance.
In the event that the Issuers receive any proceeds of any insurance that
they are required to maintain pursuant to this covenant, the Issuers shall
promptly deposit such proceeds into an escrow account established with an
Eligible Institution for such purpose. If the Issuers maintain any Cash
Insurance in satisfaction of any part of their obligation to maintain insurance
pursuant to this covenant, the Issuers shall transfer the cash maintained in the
Insurance Account to such escrow account upon the occurrence of the event (e.g.,
a launch failure) that would have entitled the Issuers to the payment of
insurance had the Issuers purchased insurance from a recognized insurance
provider. The Company may use monies on deposit in such escrow account for the
design, development, construction, procurement, launch and insurance of
replacement satellites if: (i) the Company delivers to the Trustee a certificate
of the Company's President certifying that such replacement satellites are of
comparable or superior technological capability as compared with the satellites
being replaced, (ii) within 30 days following the receipt of such insurance
proceeds, the Company delivers to the Trustee an Officers' Certificate
certifying that (A) such replacement satellites are scheduled to be launched
within 18 months following delivery from the escrow account of such insurance
proceeds; and (B) the Company will have sufficient funds to service the
Company's projected debt service requirements until the scheduled launch of such
replacement satellite and to develop, construct, launch and insure such
replacement satellite.
In the event (an "Insurance Contingency Event") that (i) four or more
satellites within any plane of eight satellites, or six or more satellites
within any two planes of satellites, suffer an in-orbit failure prior to such
satellites being placed in commercial service, and, as a result thereof, the
Company is required to launch its ground spare satellites and (ii) there are not
sufficient insurance proceeds to procure a launch vehicle for the launch of such
ground spare satellites (the amount of any such insufficiency being referred to
as the "Launch Deficiency Amount"), then the Company shall be required to
draw-down on the Partners' Insurance Contingent Commitment (as defined below)
prior to any further borrowings under the Bank Credit Facility if, but only to
the extent that, the Company's existing levels of cash and cash equivalents are
less than
94
<PAGE> 101
$15 million at any time after the Insurance Contingency Event through the date
the Company has 26 satellites in commercial operation (the "Full Deployment
Date"). "Partners' Insurance Contingent Commitment" shall mean a commitment by
Orbital and Teleglobe to provide in the aggregate up to the lesser of (x) $15
million less any amounts drawn under the Partners' Contingent Commitment or (y)
the Launch Deficiency Amount in capital contributions or debt financing
expressly subordinated to the Senior Notes (at then prevailing interest rates,
which subordinated debt financing shall not mature or be subject to acceleration
prior to maturity of the Senior Notes and which shall not provide for cash
interest payments prior to maturity of the Notes) from and after an Insurance
Contingency Event through the Full Deployment Date. The Company shall have the
Partners' Insurance Contingent Commitment in full force and effect from the
Issue Date through the Full Deployment Date. Notwithstanding the restrictions
contained in the covenant entitled "Restricted Payments," following the Full
Deployment Date, Teleglobe and Orbital are permitted to receive a distribution
equal to the unused portions of any amounts drawn under the Partners' Insurance
Contingent Commitment.
Repayment of Existing Indebtedness
The Indenture provides that the Company establish a segregated account with
a recognized financial institution and deposit into such account from the
proceeds of the Old Notes Offering an amount sufficient to pay in full when due
all remaining scheduled interest and principal payments on the MetLife Note.
Interest earned on such account shall be payable to the Company. In the event
the funds held in such segregated account exceed the amount sufficient to
provide for payment in full of the principal of and interest on the MetLife
Note, the Company is permitted to receive from such segregated account any such
excess amount. At all times that the Company is complying with the terms of this
covenant, amounts outstanding under the MetLife Note shall not constitute
"Indebtedness" under the Indenture and amounts held in such segregated account
shall not constitute assets of any Credit Party under the Indenture.
Business Activities
The Indenture provides that the Credit Parties will not, and will not
permit any of their Restricted Subsidiaries to, engage in any business other
than that which is related to the design, development, procurement,
installation, operation or marketing of communications systems and businesses.
The Indenture will also provide that Capital shall not own any operating assets
or other property or conduct any business other than to serve as an Issuer and
obligor with respect to the Senior Notes.
Partners' Contingent Commitment
In the event (a "Contingency Event") that (i) at least 20 satellites have
not been placed in commercial service by December 31, 1998 and (ii) the
Company's existing levels of cash and cash equivalents are less than $25 million
(the amount of any such shortfall at any time prior to the Initial Deployment
Date (as defined below) being referred to as the "Deficiency Amount"), then the
Company shall be required to draw-down on the Partners' Contingent Commitment
(as defined below) from time to time after the Contingency Event through the
date the Company has 20 satellites in commercial operation (the "Initial
Deployment Date"). "Partners' Contingent Commitment" shall mean a commitment by
Orbital and Teleglobe to provide in the aggregate to the Company up to the
lesser of (x) $30 million less amounts drawn under the Partners' Insurance
Contingent Commitment, (y) the Deficiency Amount or (z) the amount required to
complete deployment of such 20 satellites, in capital contributions or debt
financing expressly subordinated to the Notes (at then prevailing interest
rates, which subordinated debt financing shall not mature or be subject to
acceleration prior to maturity of the Senior Notes and which shall not provide
for cash interest payments prior to maturity of the Senior Notes) from and after
a Contingency Event through the Initial Deployment Date, and the Partners'
Contingent Commitment shall thereafter expire. The Company shall have the
Partners' Contingent Commitment in full force and effect from the Issue Date
through the Initial Deployment Date. Notwithstanding the restrictions contained
in the covenant entitled "Restricted Payments," following the Initial Deployment
Date, Teleglobe and Orbital are permitted to receive a distribution equal to the
unused portion of any amounts drawn under the Partners' Contingent Commitment.
95
<PAGE> 102
Contingency Fund
The Indenture provides that the Company establish a segregated account with
a recognized financial institution and shall deposit $13 million into such
account from the proceeds of the Old Notes Offering (the "Contingency Fund").
The Company has agreed that it will not expend monies in the Contingency Fund
unless and until it has already expended all of the remaining proceeds of the
Offering, and will only expend monies in the Contingency Fund to fund
development and deployment of the ORBCOMM System and related operating expenses.
Amounts in such segregated account comprising the Contingency Fund may be
invested by the Company in cash or Cash Equivalents in accordance with the terms
of the Indenture.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding, the
Issuers will furnish to the Holders of Senior Notes:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Issuers were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of
operations of the Issuers and their Restricted Subsidiaries and, with
respect to the annual information only, a report thereon by the Issuers'
independent certified public accountants; and
(ii) all information that would be required to be filed with the
Commission on Form 8-K if the Issuers were required to file such reports.
In addition, together with the information provided in clauses (i) and (ii)
above, the Issuers have agreed to provide supplemental financial information to
the extent permitted by the Commission in the Management's Discussion and
Analysis of Financial Condition and Results of Operations section of such
reports or other section of such reports as appropriate consisting of revenue
(allocated between domestic and international operations), expense, earnings
before interest and taxes, net income, capital expenditures, cash, debt,
depreciation and amortization and subscriber data for the Company, ORBCOMM USA
and ORBCOMM International and reflecting elimination of intercompany
transactions. In the event the Commission does not permit such supplemental
financial information to be included in such reports, then the Issuers will
supply such information supplementally to the registered Holders, unless
providing such information supplementally would, in the reasonable judgment of
counsel to the Company, violate applicable law.
The Indenture also provides that the Issuers will furnish to the Holders of
Senior Notes all information that OCC, Teleglobe Mobile, ORBCOMM USA and ORBCOMM
International would be required to file with the Commission if the Issuers were
required to file the public reports described above.
In addition, whether or not required by the rules and regulations of the
Commission, but only if then permitted by the Commission, the Issuers and, to
the extent set forth in the preceding paragraph, OCC, Teleglobe Mobile, ORBCOMM
USA and ORBCOMM International have agreed to file a copy of all such information
and reports with the Commission for public availability and make such
information available to securities analysts and prospective investors upon
request. In addition, for so long as any Senior Notes remain outstanding, the
Issuers will furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event
of Default:
(i) default for 30 days in the payment when due of interest (including
Revenue Participation Interest, if any) on, or Liquidated Damages (if any)
with respect to, the Senior Notes;
(ii) default in payment when due (whether at maturity, upon redemption
or repurchase, or otherwise) of the principal of or premium (if any) on the
Senior Notes;
96
<PAGE> 103
(iii) default in the payment of principal and interest (including
Revenue Participation Interest, if any) or Liquidated Damages (if any) on
Senior Notes required to be purchased pursuant to the provisions described
under the captions "-- Repurchase at the Option of Holders -- Change of
Control," "-- Repurchase at the Option of Holders -- Limitations on Sales
of Assets and Subsidiary Interests," or failure by the Credit Parties to
comply with the provisions described under "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets;"
(iv) failure by the Credit Parties or any of their Restricted
Subsidiaries for 30 days after notice to comply with any of their other
covenants in the Indenture or the Senior Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Credit Parties or any of their
Restricted Subsidiaries (or the payment of which is guaranteed by the
Credit Parties or any of their Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default:
(a) is caused by a failure to pay principal of, or premium, if any,
or interest on, such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration (which acceleration has not been
rescinded) of such Indebtedness prior to its express maturity, and, in
each case described in clauses (a) and (b) of this paragraph, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated,
aggregates $5 million or more;
(vi) failure by the Credit Parties or any of their Restricted
Subsidiaries to pay final judgments (other than any judgments as to which a
reputable insurance company has accepted full liability and whose bond,
premium or similar charge therefor is not in excess of $5 million)
aggregating in excess of $5 million, which judgments are not paid,
discharged or stayed within 60 days after their entry;
(vii) breach by the Issuers of any representation or warranty set
forth in the Pledge Agreement, or default by the Issuers in the performance
of any covenant set forth in the Pledge Agreement, or repudiation by the
Issuers of any of their obligations under the Pledge Agreement or the
unenforceability of the Pledge Agreement against the Issuers for any reason
which in any one case or in the aggregate results in a material impairment
of the rights intended to be afforded thereby;
(viii) termination or loss, for any reason, of the FCC License;
(ix) certain events of bankruptcy or insolvency with respect to the
Credit Parties or any of their Restricted Subsidiaries; and
(x) any Guarantee of the Senior Notes shall be held in a judicial
proceeding to be unenforceable or invalid or shall cease for any reason to
be in full force and effect, or any Guarantor, or any person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its
Guarantee of any Notes.
If any Event of Default occurs and is continuing with respect to the Senior
Notes, the Trustee or the Holders of at least 25% of the aggregate principal
amount of the then outstanding Senior Notes may declare all the Senior Notes to
be due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Issuers, any Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Senior Notes will become due and payable without further action
or notice. Holders of the Senior Notes may not enforce the Indenture or the
Senior Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Senior Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Senior Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
97
<PAGE> 104
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding payment of the premium that the Issuers would have had
to pay if the Issuers then had elected to redeem the Senior Notes pursuant to
the optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable upon the acceleration of the
Senior Notes. If an Event of Default occurs prior to August 15, 2001 by reason
of any such willful action (or inaction), by or on behalf of the Issuers with
the intention of avoiding the prohibition on redemption of the Senior Notes
prior to August 15, 2001, then the premium specified in the Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the Senior Notes.
The Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Senior Notes waive any existing Default or Event of Default and its
consequences under the Indenture, except a continuing Default or Event of
Default in the payment of interest (including Revenue Participation Interest, if
any) on, or the principal of, the Senior Notes.
The Credit Parties are required to deliver to the Trustee quarterly a
statement regarding compliance with the Indenture, and the Credit Parties are
required, upon becoming aware of any Default or Event of Default, to deliver to
the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, PARTNERS, OFFICERS, EMPLOYEES, INCORPORATORS
AND STOCKHOLDERS
No director, general or limited partner of any Credit Party, authorized
representative of a general partner of any Credit Party, or officer, employee,
incorporator or stockholder of any Credit Party, as such, shall have any
liability for any obligations of the Credit Parties under the Senior Notes, the
Indenture or the Pledge Agreement or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of Senior Notes,
by accepting a Senior Note, waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Senior Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of
their obligations discharged with respect to the outstanding Senior Notes
("Legal Defeasance") except for:
(i) the rights of Holders of outstanding Senior Notes to receive
payments in respect of the principal of, and premium (if any), interest and
Liquidated Damages (if any) on, such Senior Notes when such payments are
due from the trust referred to below;
(ii) the Issuers' obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office
or agency for payment and money for security payments held in trust;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Issuers' obligations in connection therewith; and
(iv) the Legal Defeasance provisions of the Indenture.
In addition, the Issuers may, at their option and at any time, elect to
have the obligations of the Issuers released with respect to certain covenants
that are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Senior Notes. In the event Covenant Defeasance
occurs, certain events (other than non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "-- Events of Default"
will no longer constitute an Event of Default with respect to the Senior Notes.
98
<PAGE> 105
In order to exercise either Legal Defeasance or Covenant Defeasance with
respect to the Senior Notes:
(i) the Issuers must irrevocably deposit with the Trustee, in trust
for the benefit of the Holders of the Senior Notes, cash in U.S. dollars,
non-callable Government Securities or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants, to pay the principal of,
and premium (if any), interest (including Revenue Participation Interest)
and Liquidated Damages (if any) on, the outstanding Senior Notes on the
stated maturity or on the applicable redemption date, as the case may be,
and the Company must specify whether the Senior Notes are being defeased to
maturity or to a particular redemption date;
(ii) in the case of Legal Defeasance, the Issuers shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that:
(A) the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling, or
(B) since the date of the Indenture, there has been a change in the
applicable federal income tax law,
in either case to the effect, and based thereon such opinion of counsel
shall confirm, that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Senior Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute default under any material agreement
or instrument (other than the Indenture) to which the Issuers or any of
their Restricted Subsidiaries is a party or by which the Issuers or any of
their Restricted Subsidiaries is bound;
(vi) the Issuers shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(vii) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the
intent of preferring the Holders of Senior Notes over the other creditors
of the Issuers with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuers or others; and
(viii) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer
99
<PAGE> 106
documents and the Issuers may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Issuers are not required to
transfer or exchange any Senior Notes selected for redemption. Also, the Issuers
are not required to transfer or exchange any Senior Notes for a period of 15
days before a selection of Senior Notes to be redeemed.
The registered Holder of a Senior Note will be treated as the owner of such
Senior Note for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture, the
Senior Notes and the Pledge Agreement may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Senior Notes), and any
existing default or compliance with any provision of the Indenture, the Senior
Notes or the Pledge Agreement may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Notes (including
consents obtained in connection with a tender offer or exchange offer for Senior
Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Note held by a non-consenting Holder):
(i) reduce the principal amount of Senior Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Senior Note or alter the provisions with respect to the redemption of the
Senior Notes (other than provisions relating to the covenants described
above under the caption "-- Repurchase at the Option of Holders");
(iii) reduce the rate of or change the time for payment of interest
(including Revenue Participation Interest, if any) on any Senior Note;
(iv) waive a Default or Event of Default in the payment of principal
of, premium (if any), interest or Liquidated Damages (if any) on, the
Senior Notes (except a rescission of acceleration of the Senior Notes by
the Holders of at least a majority in aggregate principal amount of the
Senior Notes and a waiver of the payment default that resulted from such
acceleration);
(v) make any Senior Note payable in money other than that stated in
the Senior Notes;
(vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Senior Notes to
receive payments of principal of, premium (if any), interest (including
Revenue Participation Interest, if any) or Liquidated Damages on, the
Senior Notes;
(vii) waive a redemption payment with respect to any Senior Note
(other than a payment required by one of the covenants described above
under the caption "-- Repurchase at the Option of Holders"); or
(viii) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any Holder of Senior
Notes, the Credit Parties and the Trustee may amend or supplement the Indenture,
the Senior Notes or the Pledge Agreement to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes, to provide for the assumption of the Credit
Parties' obligations to Holders of Senior Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of Senior Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuers, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
100
<PAGE> 107
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if the Trustee acquires any conflicting interest,
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Senior Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Senior Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or
into or becoming a Restricted Subsidiary of such specified Person; and
(ii) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Administrative Services Agreement" means the Administrative Services
Agreement dated as of September 12, 1995 between Orbital and the Company.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities (or the equivalent)
of a Person shall be deemed to be control.
"Asset Sale" means:
(i) the sale, lease, conveyance or other disposition of any assets,
other than the sale or other disposition by a Credit Party of an Equity
Interest in any other Credit Party (including, without limitation, by way
of a sale and leaseback) (provided that the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Credit
Parties and their Restricted Subsidiaries taken as a whole will be governed
by the provisions of the Indenture described above under the caption
"-- Repurchase at the Option of Holders -- Change of Control" and/or the
provisions described above under the caption "-- Certain
Covenants -- Merger, Consolidation or Sale of Assets" and not by the
provisions of the Asset Sale covenant); and
(ii) except to the extent excluded by clause (i) above, the issuance
by any of the Credit Parties' Restricted Subsidiaries of Equity Interests
or the sale by the Credit Parties or any of their Restricted Subsidiaries
of Equity Interests of any of their Subsidiaries,
in the case of either clause (i) or (ii) above, whether in a single transaction
or a series of related transactions: (a) that have a Fair Market Value in excess
of $5 million; or (b) for net proceeds in excess of $5 million.
Notwithstanding the foregoing: (i) sales of territory and ORBCOMM System
rights to resellers, grants of licenses and other associated rights to use the
ORBCOMM System to international licensees and sales of
101
<PAGE> 108
services, products or inventory in the ordinary course of business; (ii) a
transfer of assets by any of the Credit Parties to any other Credit Party or to
a Restricted Subsidiary of any of the Credit Parties or by a Restricted
Subsidiary to any of the Credit Parties or to a Restricted Subsidiary of any of
the Credit Parties; (iii) an issuance of Equity Interests by a Restricted
Subsidiary of any of the Credit Parties to any of the Credit Parties or to a
Wholly Owned Restricted Subsidiary of any Credit Party; and (iv) a Restricted
Payment that is permitted by the covenant entitled "Restricted Payments" will be
deemed not to be Asset Sales.
"Bank Credit Facility" means one or more credit facilities (whether a term
or a revolving facility) of the type customarily entered into with commercial
banks, between the Company and any of the other Credit Parties, on the one hand,
and any commercial banks, financial institutions or other lenders, on the other
hand, which Bank Credit Facilities are by their terms designated as a "Bank
Credit Facility" for purposes of the Indenture.
"Canada Service License Agreement" means the Service License Agreement
dated as of December 19, 1995 between ORBCOMM International and ORBCOMM Canada
Inc.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate stock;
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(iii) in the case of a partnership, partnership interests (whether
general or limited); and
(iv) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Consideration" means any consideration received from an Asset Sale in
the form of cash or Cash Equivalents, in either case in U.S. dollars or freely
convertible into U.S. dollars.
"Cash Equivalents" means:
(i) United States dollars;
(ii) Government Securities;
(iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Eligible Institution;
(iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any Eligible Institution;
(v) commercial paper having the highest rating obtainable from Moody's
or S&P and in each case maturing within six months after the date of
acquisition; and
(vi) mutual funds or other pooled investment vehicles investing solely
in investment of the types described in (i) through (v) above.
"Change of Control" means:
(i) the sale, lease, transfer, conveyance or other disposition, in one
transaction or a series of related transactions, directly or indirectly,
including through a liquidation or dissolution, of all or substantially all
of the assets of the Credit Parties and their Restricted Subsidiaries
(other than any such transfer to any other Credit Party or any Wholly Owned
Restricted Subsidiary of a Credit Party);
102
<PAGE> 109
(ii) the adoption of a plan relating to the liquidation or dissolution
of any of the Credit Parties (other than any such liquidation or
dissolution to or for the benefit of any other Credit Party or any Wholly
Owned Restricted Subsidiary of a Credit Party);
(iii) at any time prior to the date on which at least 20 satellites
have been launched and tested and, together with the related ground
systems, are reasonably believed by the Company to be ready for commercial
operation as part of the ORBCOMM System, such time as Orbital ceases,
directly or indirectly, including by way of a consolidation or merger,
either (a) to be the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of (1) at least 70% of the total Voting Equity Interests of
OCC or (2) at least 50% of the total Voting Equity Interests of the Company
or (b) to be the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of (1) at least 70% of the total Equity Interests of OCC or
(2) at least 50% of the total Equity Interests of the Company; provided,
however, that in the event Orbital beneficially owns more than 50% of the
total Voting Equity Interests of OCC, then Orbital shall be deemed to
beneficially own 100% of OCC's interest in the Company; and provided,
further, that notwithstanding the foregoing provisions of this clause
(iii), it shall not constitute a Change of Control in the event OCC sells,
transfers, conveys or otherwise disposes of Equity Interests in the Company
to a Strategic Investor, or the Company issues Equity Interests to a
Strategic Investor, in each case such that, following such sale or
issuance, OCC owns not less than 35% of the fully diluted Equity Interests
of the Company (provided that prior to any such sale or issuance the
partners shall amend the Company's limited partnership agreement so that
all actions taken by or on behalf of the Company that require the approval
of OCC pursuant to the terms of the Company's limited partnership agreement
as in effect on the Issue Date shall continue to require the approval of
OCC following such sale or issuance);
(iv) at any time after the date on which at least 20 satellites have
been launched and tested and, together with the related ground systems, are
reasonably believed by the Company to be ready for commercial operation as
part of the ORBCOMM System, such time as Orbital and Teleglobe,
collectively, cease, directly or indirectly, including by way of a
consolidation or merger, either (a) to be the "beneficial owners" (as
defined in Rule 13d-3 under the Exchange Act) of at least 40% of the total
Voting Equity Interests of the Company or (b) to be the "beneficial owners"
(as defined in Rule 13d-3 under the Exchange Act) of at least 40% of the
total Equity Interests of the Company; provided, however, that in the event
Orbital or Teleglobe, as the case may be, beneficially owns more than 50%
of the total Voting Equity Interests of OCC or Teleglobe Mobile,
respectively, then Orbital or Teleglobe, as the case may be, shall be
deemed to beneficially own 100% of OCC's or Teleglobe Mobile's,
respectively, interest in the Company; or
(v) at any time prior to the date on which at least 20 satellites have
been launched and tested and, together with the related ground systems, are
reasonably believed by the Company to be ready for commercial operation as
part of the ORBCOMM System, the admission of any Person as a general
partner of the Company after which OCC and Teleglobe Mobile do not,
collectively, retain the exclusive power to take all of the actions which
they are entitled to take under the limited partnership agreement of the
Company as in effect on the Issue Date by vote of a Majority-in-Interest or
a Super-Majority in Interest (as such terms are defined in the Company's
limited partnership agreement as in effect on the Issue Date);
provided, however, that for purposes of all of the foregoing calculations, all
options to acquire common stock of OCC under the OCC Stock Option Plan and
shares of common stock issued upon exercise thereof shall be deemed to be held
by OCC as treasury shares.
"Collateral Agent" means the collateral agent under the Pledge Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period, plus, to the extent
deducted or otherwise excluded in computing such Consolidated Net Income:
(i) an amount equal to any extraordinary loss plus any net loss
realized in connection with a sale of assets;
103
<PAGE> 110
(ii) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period;
(iii) Consolidated Interest Expense less consolidated interest income
of such Person and its Restricted Subsidiaries for such period; and
(iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash charges (excluding any
such non-cash charge to the extent that it represents an accrual of or
reserve for cash charges in any future period or amortization of a prepaid
cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period;
in each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash charges of, a
Restricted Subsidiary that is not a Subsidiary Guarantor of any such Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent (and in the same proportion) that the Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and only if a corresponding amount would be permitted at the date of
determination to be distributed by dividend to such Person by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, whether paid or accrued and whether or not capitalized (including,
without limitation, Revenue Participation Interest on the Senior Notes,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financing, and net payments (if any) pursuant to Hedging
Obligations).
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(i) the Net Income of any Person that is not a Subsidiary Guarantor or
that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary
thereof;
(ii) the Net Income of any Restricted Subsidiary that is not a
Subsidiary Guarantor shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by such Restricted
Subsidiary of such Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary or its
stockholders;
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(iv) the cumulative effect of a change in accounting principles shall
be excluded; and
(v) the Net Income of any Unrestricted Subsidiary shall be included
only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Restricted Subsidiary thereof.
104
<PAGE> 111
"Consolidated Net Worth" means, with respect to any Person as of any date:
(i) the consolidated equity of the equity holders of such Person and
its consolidated Restricted Subsidiaries as of such date; plus
(ii) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred Equity Interests
(other than Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and paid only
out of net earnings in respect of the year of such declaration and payment,
but only to the extent of any cash received by such Person upon issuance of
such preferred stock; minus
(iii) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going-concern
business made within 12 months after the acquisition of such business)
subsequent to the date of the Indenture in the book value of any asset
owned by such Person or a consolidated Subsidiary of such Person; minus
(iv) all investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Restricted Subsidiaries; minus
(v) all unamortized debt discount and expense and unamortized deferred
charges as of such date.
"Consolidated Tangible Net Assets" means, with respect to any Person, the
Consolidated Net Worth of such Person less goodwill and any other intangible
assets shown on the consolidated balance sheet of such Person and its Restricted
Subsidiaries.
"Credit Parties" means, collectively, the Issuers and any Guarantor other
than any Subsidiary Guarantor established after the Issue Date, and any of their
respective successors.
"Credit Parties' Fixed Charge Coverage Ratio" means, for any period, the
ratio of (A) the sum of (without duplication) (1) Consolidated Cash Flow of the
Company (excluding the Consolidated Cash Flow of ORBCOMM USA and ORBCOMM
International), plus (2) Consolidated Cash Flow of ORBCOMM USA, plus (3)
Consolidated Cash Flow of ORBCOMM International to (B) the Credit Parties' Fixed
Charges for such period.
"Credit Parties' Fixed Charges" means, for any period, the sum of (i) the
sum of (without duplication) Consolidated Interest Expense of each of the Credit
Parties for such period, plus (ii) the sum of (without duplication) Consolidated
Interest Expense of each of the Credit Parties that was capitalized during such
period, plus (iii) to the extent not included above, any Consolidated Interest
Expense on Indebtedness of another Person that is Guaranteed by any of the
Credit Parties or secured by a Lien on assets of any of the Credit Parties
(whether or not such Guarantee or Lien is called upon).
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Capital Contribution" means, with respect to any of the
Credit Parties, any contribution to the equity capital of such Person which: (i)
when added to all prior contributions to any of the Credit Parties, results in
total contributed capital equal to or less than $160 million, without
duplication; or (ii) in the case of the Company, comprises proceeds of any
transaction other than (x) a contribution to the equity capital of OCC and/or
Teleglobe Mobile or (y) a contribution to the equity capital of the Company from
a party other than OCC and Teleglobe Mobile.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
that, by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable), or upon the happening of any event: (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise; or (ii) is redeemable or is convertible or exchangeable for
Indebtedness at the option of the Holder thereof, in whole or in part, on or
prior to the date on which the Senior Notes are repaid, redeemed or retired in
full.
105
<PAGE> 112
"Eligible Institution" means a domestic commercial banking institution that
has combined capital and surplus of not less than $500 million or its equivalent
in foreign currency, whose debt is rated "A" or higher according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company in existence on
the Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that the Fair Market Value of
any such asset or assets shall be determined by the General Partners of the
Company, acting in good faith and by unanimous resolution, and which
determination shall be evidenced by an Officers' Certificate delivered to the
Trustee.
"FCC License" means the FCC authorization granted to OCC on October 20,
1994 to construct, launch and operate 36 satellites for the purpose of providing
two-way data and messaging communications and position determination services in
the United States.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession and which are in effect on the Issue Date.
"Gateway Maintenance Contract" means the Gateway Maintenance Contract
between the Company and Orbital entered into on August 1, 1996.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" or "guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantor" means each of ORBCOMM USA, ORBCOMM International, OCC and
Teleglobe Mobile, and any other entity that executes a Guarantee of the
obligations of the Issuers under the Senior Notes and the Indenture in
accordance with the provisions of the Indenture, and their respective successors
and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under: (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements; (ii) foreign currency hedge
obligations; and (iii) other agreements or arrangements designed to protect such
Person against fluctuations in interest and foreign currency rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable to the
extent that any such accrued expense or trade payable is not more than 90 days
overdue or is otherwise being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with
106
<PAGE> 113
GAAP, as well as all indebtedness of others secured by a Lien on any asset of
such Person (whether or not such indebtedness is assumed by such Person and, in
the event such indebtedness is not assumed by, and is otherwise non-recourse to,
such Person, the amount of such indebtedness shall be deemed to equal the
greater of book value or Fair Market Value) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person;
provided that amounts outstanding under the MetLife Note shall not constitute
"Indebtedness"; and provided, further, that "Indebtedness" shall be calculated
without duplication and after elimination of Intercompany Indebtedness (as
defined in clause (v) of the covenant entitled "Incurrence of Indebtedness or
Issuance of Restricted Subsidiary Disqualified Stock").
"Indebtedness to Cash Flow Ratio" means, with respect to any Person as of
any date of determination, the ratio of:
(i) total Indebtedness of such Person and its Restricted Subsidiaries
as of such date to;
(ii) four times Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for the most recently ended fiscal quarter for
which financial statements of such Person are available (the "Measurement
Period");
provided, however, that: (a) in making such computation, the total Indebtedness
of such Person and its Restricted Subsidiaries shall include the total amount of
funds outstanding and available under any credit facilities; (b) in the event
such Person or any of its Restricted Subsidiaries consummates a material
acquisition or sale of assets subsequent to the commencement of the Measurement
Period, then the Indebtedness to Cash Flow Ratio shall be calculated giving pro
forma effect to such material acquisition or sale of assets as if the same had
occurred at the beginning of the Measurement Period; and (c) in making such
calculation for the Credit Parties, total Indebtedness shall include total
Indebtedness of the Credit Parties and their respective Restricted Subsidiaries
and Consolidated Cash Flow shall include only the sum of (without duplication)
(1) Consolidated Cash Flow of the Company (excluding the Consolidated Cash Flow
of ORBCOMM USA and ORBCOMM International), plus (2) Consolidated Cash Flow of
ORBCOMM USA, plus (3) Consolidated Cash Flow of ORBCOMM International.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the good
faith judgment of the General Partners of the Company (evidenced by a unanimous
resolution of the General Partners of the Company as set forth in an Officers'
Certificate delivered to the Trustee), qualified to perform the task for which
it has been engaged and is disinterested and independent with respect to the
Credit Parties and their Affiliates.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans, Guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common Equity
Interests (other than Disqualified Stock) of any Credit Party shall not be
deemed to be an Investment.
"Joint Venture" means a Person in a Related Business in which any Credit
Party holds 50% or less of the Voting Equity Interests.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Magellan Agreement" means the Subscriber Communicator Manufacturing
Agreement between the Company and Magellan Corporation entered into on July 31,
1996.
107
<PAGE> 114
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(iii) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation (other than an Affiliate of any of
the Credit Parties) with a rating, at the time as of which any investment
therein is made, of "A-1" (or higher) according to S&P or "P-1" (or higher)
according to Moody's;
(iv) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the types
described in clauses (i) through (iv) above.
"MetLife Note" means the Loan and Security Agreement dated December 22,
1994 between the Company and MetLife, which loan is guaranteed by Orbital.
"Monthly Revenue Participation Interest" means, with respect to any month
and any Senior Note, the product of 5.0% of System Revenue for such month times
a fraction, the numerator of which is the principal amount outstanding on such
Senior Note and the denominator of which is $170,000,000.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any Person, the net income (or loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however;
(i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with:
(a) any sale of assets (including, without limitation, dispositions
pursuant to sale and leaseback transactions); or
(b) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries; and
(ii) any extraordinary or nonrecurring gain (but not loss), together
with any related provision for taxes on such extraordinary or nonrecurring
gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by any of the
Credit Parties or any of their Restricted Subsidiaries in respect of any Asset
Sale (including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements and provided that any such amount
not so required to be paid for taxes shall be deemed to constitute Net Proceeds
at the time such amount is not retained for such purpose), amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets (including Equity Interests) that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such asset or asset
(including Equity Interests) established in accordance with GAAP (provided that
the amount of any such reserve shall be deemed to constitute Net Proceeds at the
time such reserve shall have been released or is not otherwise required to be
retained for such purpose).
108
<PAGE> 115
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither any of the Credit Parties nor any of their
Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness);
(b) is directly or indirectly liable (as a guarantor or otherwise);
or
(c) constitutes the lender;
(ii) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of any of the Credit Parties or any of their
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of any of the Credit
Parties or any of their Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OCC Stock Option Plan" means the Orbital Communications Corporation 1992
Stock Option Plan, as may be amended from time to time.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer or President and the chief financial and
accounting officer of such Person.
"ORBCOMM System" means ORBCOMM's global digital satellite communications
system of LEO satellites and certain terrestrial facilities intended to provide
two-way data and messaging communications services throughout the world.
"Permitted Investment" means:
(i) any Investment in any Credit Party or in any Wholly Owned
Restricted Subsidiary of any Credit Party;
(ii) any Investments in cash or Cash Equivalents;
(iii) Investments by any of the Credit Parties or any of their
Restricted Subsidiaries in a Person if, as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of any Credit
Party; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, any Credit Party or any Restricted Subsidiary of any
Credit Party;
(iv) any Investment made as a result of the receipt of non-Cash
Consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase
at the Option of Holders -- Limitation on Sales of Assets and Subsidiary
Interests;"
(v) any Investment made with Excess Proceeds remaining after the
consummation of an Asset Sale Offer as described above under the caption
"Repurchase at the Option of Holders -- Limitation on Sales of Assets and
Subsidiary Interests;"
(vi) Investments in any Joint Venture; provided that at the time any
such Investment is made, such Investment will not cause the sum of (a) the
aggregate amount of Investments at any one time outstanding under this
clause (vi) and (b) the book value or Fair Market Value of all assets,
businesses, divisions or other property of all Subsidiaries that are not
Subsidiary Guarantors to exceed the greater of (x) $5 million or (y) 5% of
the System Consolidated Net Worth;
109
<PAGE> 116
(vii) any Investment made by the Credit Parties or any of their
Restricted Subsidiaries in any Unrestricted Subsidiary using the proceeds
of a substantially concurrent contribution to the equity capital (other
than a Disqualified Capital Contribution) of the Company, OCC and/or
Teleglobe Mobile; and
(viii) any Investment made by the Credit Parties or any of their
Restricted Subsidiaries in a Related Business; provided that at the time
any such Investment is made, such Investment will not cause the aggregate
amount of Investments at any one time outstanding under this clause (viii)
to exceed $5 million.
"Permitted Liens" means:
(i) Liens securing the Senior Notes;
(ii) Liens in favor of the Credit Parties;
(iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with any of the Credit Parties or any of
their Restricted Subsidiaries; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or
consolidated with such Credit Party or its Restricted Subsidiary;
(iv) Liens on property existing at the time of acquisition thereof by
any of the Credit Parties or any of their Restricted Subsidiaries, provided
that such Liens were in existence prior to the contemplation of such
acquisition;
(v) Liens to secure the performance of statutory obligations, surety,
appeal or performance bonds or other obligations of a like nature or
mechanics' or purchase money Liens incurred in the ordinary course of
business;
(vi) Liens existing on the Issue Date;
(vii) Liens on inventory, accounts receivable or domestic and/or
international gateways and related ground systems securing Indebtedness
incurred under clause (vii) or (x) of the covenant entitled "Incurrence of
Indebtedness or Issuance of Restricted Subsidiary Disqualified Stock", or
securing Permitted Refinancing Indebtedness incurred pursuant to the
Indenture to refinance Indebtedness incurred under clause (vii) or (x) of
the covenant entitled "Incurrence of Indebtedness or Issuance of Restricted
Subsidiary Disqualified Stock";
(viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; and
(ix) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Pledge Account" means the account established with the Collateral Agent
pursuant to the terms of the Pledge Agreement for the deposit of the Pledged
Securities.
"Pledge Agreement" means the Pledge Agreement dated as of the date of the
Indenture by and between the Issuers and the Collateral Agent governing the
Pledge Account.
"Pledged Securities" means the U.S. government securities purchased by the
Issuers with a portion of the net proceeds from the Offering to be deposited in
the Pledge Account and pledged as security for the Senior Notes.
"Procurement Agreement" means the ORBCOMM System Procurement Agreement
dated as of September 12, 1995, as the same may be amended, supplemented or
otherwise modified from time to time.
110
<PAGE> 117
"Related Assets" means all assets used in connection with the design,
development, procurement, installation, operation or marketing of
satellite-based messaging and data communications systems and any activities or
assets ancillary thereto.
"Related Business" means any business relating to the design, procurement,
installation and operation of satellite-based mobile messaging and data
communications systems.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Revenue Participation Interest" means, as of any payment date, Revenue
Participation Interest on the Notes accrued through the Accrual Period last
ended (including any Accrual Period that ends on such payment date) and any
Revenue Participation Interest previously accrued and the payment of which has
been permitted to be deferred.
"Semi-annual Period " means each period that begins on January 1 and ends
on the next succeeding June 30 or each period that begins on July 1 and ends on
the next succeeding December 31.
"S&P" means Standard & Poor's Ratings Group.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Strategic Investor" shall mean for purposes of clause (iii) of the
definition of "Change of Control" a Person (x) having a total market
capitalization of at least $750 million and (y) having a long-term debt rating
assigned by either of Moody's or S&P of investment grade.
"Subsidiary" means, with respect to any Person:
(i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of such Person (or a combination thereof); and
(ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any Guarantee of the Issuers' obligations
under the Indenture and the Senior Notes given by a Subsidiary Guarantor.
"Subsidiary Guarantor" means ORBCOMM USA, ORBCOMM International and any
Restricted Subsidiary of a Credit Party that has issued a Guarantee of the
Issuers' obligations under the Indenture and the Senior Notes.
"System Consolidated Net Worth" means the sum of (without duplication) the
Consolidated Net Worth of each of the Credit Parties and reflecting the
elimination of intercompany transactions.
"System Revenue" means, for any period, the sum of (without duplication)
the gross revenue of each of the Credit Parties and their Restricted
Subsidiaries for such period and reflecting the elimination of intercompany
transactions.
"Tax Sharing Agreement" means the Tax Sharing Agreement between Orbital and
OCC entered into on August 1, 1996.
111
<PAGE> 118
"Teleglobe Administrative Services Agreement" means the Administrative
Services Agreement between the Company and Teleglobe to be entered into prior to
the Issue Date.
"Unrestricted Subsidiary" of a Person means any Subsidiary of such Person
that is designated by such Person as an Unrestricted Subsidiary, but only if and
for so long as such Subsidiary:
(i) has no Indebtedness other than Non-Recourse Debt;
(ii) is not party to any agreement, contract, arrangement or
understanding with any of the Credit Parties or any Restricted Subsidiary
of any of the Credit Parties unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to such Credit
Party or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of any of the Credit Parties;
(iii) is a Person with respect to which neither any Credit Party nor
any of their Restricted Subsidiaries has any direct or indirect obligation:
(1) to subscribe for additional Equity Interests; or
(2) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results;
(iv) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of any of the Credit Parties or any of
their Restricted Subsidiaries (other than Subsidiary Guarantees under the
Indenture); and
(v) in the case of a corporate entity or limited liability company,
has at least one director on its board of directors and at least one
executive officer, in each case who is not a director or executive officer
of any of the Credit Parties or any their Restricted Subsidiaries.
"Voting Equity Interests" means the Equity Interest in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect or appoint the board of directors, executive committee
or other governing body of such corporation or Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by multiplying: (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(ii) the then outstanding principal of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person and one or more other Wholly Owned Restricted
Subsidiaries of such Person; provided, however, that with respect to any Credit
Party, the term "Wholly Owned Restricted Subsidiary" shall mean any Restricted
Subsidiary of such Credit Party all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned, directly or indirectly, by all of the Credit Parties,
considered as one enterprise.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Exchange Notes to be issued
as set forth herein will initially be issued in the form of one Global Note (the
"Global Note"). The Global Note will be deposited on the date of the closing of
the exchange of the Exchange Notes offered hereby (the "Closing Date") with, or
on behalf of, the Depositary and registered in the name of Cede & Co., as
nominee of the Depositary (such nominee being referred to herein as the "Global
Note Holder").
112
<PAGE> 119
Exchange Notes that are issued as described below under "-- Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Issuers expect that pursuant to procedures established by the
Depositary: (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Exchange Agent with portions of the
principal amount of the Global Note; and (ii) ownership of the Exchange Notes
evidenced by the Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants. The laws
of some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer Exchange
Notes evidenced by the Global Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Senior
Notes, the Global Note Holder will be considered the sole Holder under the
Indenture of any Senior Notes evidenced by the Global Note. Beneficial owners of
Senior Notes evidenced by the Global Note will not be considered the owners or
Holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, and premium, interest on, any
Senior Notes registered in the name of the Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of the Global
Note Holder in its capacity as the registered Holder under the Indenture. Under
the terms of the Indenture, the Issuers and the Trustee may treat the persons in
whose names Senior Notes, including the Global Note, are registered as the
owners thereof for the purpose of receiving such payments. Consequently, neither
the Issuers nor the Trustee has or will have any responsibility or liability for
the payment of such amounts to beneficial owners of Senior Notes. The Issuers
believe, however, that it is currently the policy of the Depositary to credit
immediately the accounts of the relevant Participants with such payments, in
amounts proportionate to their respective holdings of beneficial interests in
the relevant security as shown on the records of the Depositary. Payments by the
Depositary's Participants and the Depositary's Indirect Participants to the
beneficial owners of Senior Notes will be governed by standing instructions and
customary practice and will be the responsibility of the Depositary's
Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Senior Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Senior Notes would be subject
to the legend requirements described herein under "Notice to
113
<PAGE> 120
Investors." In addition, if: (i) the Issuers notify the Trustee in writing that
the Depositary is no longer willing or able to act as a depositary and the
Issuers are unable to locate a qualified successor within 90 days; or (ii) the
Issuers, at their option, notify the Trustee in writing that they elect to cause
the issuance of Senior Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its Global Note,
Senior Notes in such form will be issued to each person that the Global Note
Holder and the Depositary identify as being the beneficial owner of the related
Senior Notes.
Neither the Issuers nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Senior Notes and the Issuers and the Trustee may conclusively rely on, and will
be protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Senior Notes
represented by the Global Note be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
Certificated Securities, the Issuers will make all payments of principal,
premium, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof or,
if no such account is specified, by mailing a check to each such Holder's
registered address. Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearing-house or next-day funds. In
contrast, the Notes represented by the Global Note are expected to be eligible
to trade in the PORTAL Market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to be settled in
immediately available funds. The Issuers expect that secondary trading in the
Certificated Securities also will be settled in immediately available funds.
114
<PAGE> 121
PLAN OF DISTRIBUTION
Each broker-dealer that participates in the Exchange Offer (a
"Participating Broker-Dealer") and receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with the resale of Exchange Notes
received in exchange for Old Notes where such Old Notes were acquired as a
result of market-making activities or other trading activities. The Issuers have
agreed that for a period of 180 days after the Expiration Date, they will make
this Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1996, all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
The Issuers will not receive any proceeds from any sale of Exchange Notes
by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any Participating Broker-Dealer and/or the purchasers of any
such Exchange Notes. Any Participating Broker-Dealer that resells Exchange Notes
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such sale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
The Issuers have agreed in the Registration Rights Agreement to indemnify
each Participating Broker-Dealer reselling Exchange Notes pursuant to this
Prospectus, and their officers, directors and controlling persons, against
certain liabilities in connection with the offer and sale of the Exchange Notes,
including liabilities under the Securities Act, or to contribute to payments
that such Participating Broker-Dealers may be required to make in respect
thereof. The Issuers have agreed to pay all of the expenses incurred in this
Exchange Offer, other than commissions or concessions of any participating
Brokers-Dealers.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Latham & Watkins, counsel to the Company, has advised the Company that the
following discussion expresses its opinion as to the material federal income tax
consequences expected to result to holders whose Old Notes are exchanged for
Exchange Notes in the Exchange Offer. The signed opinion of Latham & Watkins is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. Such opinion is based upon current provisions of the Internal Revenue
Code of 1986, as amended, applicable Treasury Regulations, judicial authority
and administrative rulings and practice. There can be no assurance that the
Internal Revenue Service (the "Service") will not take a contrary view, and no
ruling from the Service has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain Holders (including insurance companies,
tax-exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States)
may be subject to special rules not discussed below. EACH HOLDER OF OLD NOTES
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES
OF EXCHANG-
115
<PAGE> 122
ING OLD NOTES FOR EXCHANGE NOTES, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The exchange of Old Notes for Exchange Notes should be treated as a
"non-event" for federal income tax purposes because the Notes should not be
considered to differ materially in kind or extent from the Old Notes. As a
result, no material federal income tax consequences should result to holders
exchanging Old Notes for Exchange Notes.
LEGAL MATTERS
The legality of the Exchange Notes offered hereby will be passed upon for
the Issuers by Latham & Watkins, Washington, D.C.
EXPERTS
The financial statements of ORBCOMM Global, L.P., ORBCOMM USA, L.P. and
ORBCOMM International Partners, L.P. (development stage enterprises) as of
December 31, 1995 and 1994, and for the years then ended and for the period from
June 30, 1993 (date of inception) to December 31, 1993 and for the period from
June 30, 1993 (date of inception) through December 31, 1995 and the financial
statements of OCC as of December 31, 1995 and 1994, and for each of the years in
the three year period ended December 31, 1995, have been included herein and in
the Registration Statement in reliance upon the reports by KPMG Peat Marwick
LLP, independent certified public accountants, appearing elsewhere herein and in
the Registration Statement, and upon the authority of said firm in accounting
and auditing. The financial statements of Teleglobe Mobile Partners as of
December 31, 1995 and 1994, and for each of the years in the three year period
ended December 31, 1995 have been included herein and in the Registration
Statement in reliance upon the reports by Grant Thornton General Partnership
Chartered Accountants appearing elsewhere herein and in the Registration
Statement, and upon authority of said firm in accounting and auditing.
116
<PAGE> 123
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ORBCOMM Global, L.P.
Independent Auditors' Report....................................................... F-3
Statements of Assets, Liabilities and Partners' Capital, as of December 31, 1994
and 1995 and June 30, 1996 (unaudited).......................................... F-4
Statements of Income and Expenses for the period June 30, 1993 (date of inception)
through December 31, 1993, Years Ended December 31, 1994 and 1995, Total
Accumulated During Development Stage through December 31, 1995, the Six Months
Ended June 30, 1995 and 1996 (unaudited) and Total Accumulated During
Development Stage through June 30, 1996 (unaudited)............................. F-5
Statements of Cash Flows for the period June 30, 1993 (date of inception) through
December 31, 1993, Years Ended December 31, 1994 and 1995, Total Cash Flows
During Development Stage through December 31, 1995, the Six Months Ended June
30, 1995 and 1996 (unaudited) and Total Cash Flows During Development Stage
through June 30, 1996 (unaudited)............................................... F-6
Statements of Partners' Capital for the period June 30, 1993 (date of inception) to
December 31, 1993, the Years Ended December 31, 1994 and 1995 and the Six Months
Ended June 30, 1996 (unaudited)................................................. F-7
Notes to Financial Statements...................................................... F-8
ORBCOMM USA, L.P.
Independent Auditors' Report....................................................... F-12
Statements of Assets, Liabilities and Partners' Capital, as of December 31, 1994
and 1995 and June 30, 1996 (unaudited).......................................... F-13
Statements of Income and Expenses for the period June 30, 1993 (date of inception)
through December 31, 1993, Years Ended December 31, 1994 and 1995, Total
Accumulated During Development Stage through December 31, 1995, the Six Months
Ended June 30, 1995 and 1996 (unaudited) and Total Accumulated During
Development Stage through June 30, 1996 (unaudited)............................. F-14
Statements of Cash Flows for the period June 30, 1993 (date of inception) through
December 31, 1993, Years Ended December 31, 1994 and 1995, Total Cash Flows
During Development Stage through December 31, 1995, the Six Months Ended June
30, 1995 and 1996 (unaudited) and Total Cash Flows During Development Stage
through June 30, 1996 (unaudited)............................................... F-15
Statements of Partners' Capital for the period June 30, 1993 (date of inception) to
December 31, 1993, Years Ended December 31, 1994 and 1995 and the Six Months
Ended June 30, 1996 (unaudited)................................................. F-16
Notes to Financial Statements...................................................... F-17
ORBCOMM International Partners, L.P.
Independent Auditors' Report....................................................... F-20
Statements of Assets, Liabilities and Partners' Capital, as of December 31, 1994
and 1995 and June 30, 1996 (unaudited).......................................... F-21
Statements of Income and Expenses for the period June 30, 1993 (date of inception)
through December 31, 1993, Years Ended December 31, 1994 and 1995, Total
Accumulated During Development Stage through December 31, 1995, the Six Months
Ended June 30, 1995 and 1996 (unaudited) and Total Accumulated During
Development Stage through June 30, 1996 (unaudited)............................. F-22
Statements of Cash Flows for the period June 30, 1993 (date of inception) through
December 31, 1993, Years Ended December 31, 1994 and 1995, Total Cash Flows
During Development Stage through December 31, 1995, the Six Months Ended June
30, 1995 and 1996 (unaudited) and Total Cash Flows During Development Stage
through June 30, 1996 (unaudited)............................................... F-23
</TABLE>
F-1
<PAGE> 124
<TABLE>
<S> <C>
Statements of Partners' Capital for the period June 30, 1993 (date of inception) to
December 31, 1993, Years Ended December 31, 1994 and 1995 and the Six Months
Ended June 30, 1996 (unaudited)................................................. F-24
Notes to Financial Statements...................................................... F-25
Orbital Communications Corporation
Independent Auditors' Report....................................................... F-28
Consolidated Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996
(unaudited)..................................................................... F-29
Consolidated Statements of Operations for the Years Ended December 31, 1993, 1994
and 1995, and the Six Months Ended June 30, 1995 and 1996 (unaudited)........... F-30
Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 1993, 1994 and 1995, and the Six Months Ended June 30, 1996
(unaudited)..................................................................... F-31
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994
and 1995, and the Six Months Ended June 30, 1995 and 1996 (unaudited)........... F-32
Notes to Consolidated Financial Statements......................................... F-33
Teleglobe Mobile Partners
Auditors' Report................................................................... F-39
Consolidated Balance Sheet as of December 31, 1994 and 1995 and June 30, 1996
(unaudited)..................................................................... F-40
Consolidated Income for the period July 21, 1993 (date of inception) through
December 31, 1993, Years Ended December 31, 1994 and 1995, Total Accumulated
During Development Stage through December 31, 1995, the Six Months Ended June
30, 1995 and 1996 (unaudited) and Total Accumulated During Development Stage
through June 30, 1996 (unaudited)............................................... F-41
Consolidated Partners' Capital for the period July 21, 1993 (date of inception) to
December 31, 1993, Years Ended December 31, 1994 and 1995 and the Six Months
Ended June 30, 1996 (unaudited)................................................. F-42
Changes in Financial Position for the period July 21, 1993 (date of inception)
through December 31, 1993, Years Ended December 31, 1994 and 1995, Total Changes
During Development Stage through December 31, 1995, the Six Months Ended June
30, 1995 and 1996 (unaudited) and Total Changes During Development Stage through
June 30, 1996 (unaudited)....................................................... F-43
Notes to Consolidated Financial Statements......................................... F-44
</TABLE>
F-2
<PAGE> 125
INDEPENDENT AUDITORS' REPORT
The Partners
ORBCOMM Global, L.P.:
We have audited the accompanying statements of assets, liabilities and
partners' capital of ORBCOMM Global, L.P. (the "Company") (a development stage
enterprise) as of December 31, 1995 and 1994, and the related statements of
income and expenses, partners' capital, and cash flows for each of the years
then ended and for the period from June 30, 1993 (date of inception) to December
31, 1993 and for the period from June 30, 1993 (date of inception) through
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company (a development
stage enterprise) as of December 31, 1995 and 1994, and the results of its
income and expenses, partners' capital and cash flows for each of the years then
ended and for the period from June 30, 1993 (date of inception) through December
31, 1993 and for the period from June 30, 1993 (date of inception) through
December 31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
January 26, 1996
F-3
<PAGE> 126
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- JUNE 30,
1994 1995 1996
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents...................... $ 5,000,000 $ 1,784,950 $ 1,038,650
Receivable -- Orbital Communications
Corporation.................................. 0 0 112,374
Receivable -- Other............................ 0 0 3,409
Inventory...................................... 0 446,684 883,761
----------- ------------ ------------
Total Current Assets...................... 5,000,000 2,231,634 2,038,194
MOBILE COMMUNICATIONS SATELLITE SYSTEM, less
accumulated depreciation of $3,041,850 at June 30,
1996 and none as of December 31, 1995 and 1994.... 68,646,861 106,989,940 132,895,831
INVESTMENTS IN AND ADVANCES TO
AFFILIATES........................................ 0 (191,916) (107,699)
----------- ------------ ------------
TOTAL ASSETS.............................. 73,646,861 109,029,658 134,826,326
=========== ============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Current Portion of Long-Term Debt.............. 825,572 904,811 947,237
Accounts Payable............................... 2,270,775 4,037,675 5,872,343
Accrued Expenses............................... 7,866,668 6,116,314 6,515,545
Deferred Revenue............................... 0 100,000 100,000
----------- ------------ ------------
Total Current Liabilities................. 10,963,015 11,158,800 13,435,125
Long-Term Debt (Note 3)........................ 4,174,428 3,269,619 2,785,152
----------- ------------ ------------
Total Liabilities......................... 15,137,443 14,428,419 16,220,277
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partners:
Teleglobe Mobile Partners................. 9,753,730 8,767,008 4,269,413
Orbital Communications Corporation........ 9,753,730 8,767,008 4,269,412
----------- ------------ ------------
Total General Partners' Capital........... 19,507,460 17,534,016 8,538,825
Limited Partners:
Teleglobe Mobile Partners................. 0 24,750,000 49,179,767
Orbital Communications Corporation........ 39,001,958 52,317,223 60,887,457
----------- ------------ ------------
Total Limited Partners' Capital........... 39,001,958 77,067,223 110,067,224
----------- ------------ ------------
Total Partners' Capital................... 58,509,418 94,601,239 118,606,049
----------- ------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL... $73,646,861 $109,029,658 $134,826,326
=========== ============ ============
</TABLE>
(See accompanying notes to the financial statements)
F-4
<PAGE> 127
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF INCOME AND EXPENSES
<TABLE>
<CAPTION>
TOTAL TOTAL
ACCUMULATED ACCUMULATED
JUNE 30, 1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ----------------------------- DECEMBER 31, --------------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
-------------- ------------ -------------- ------------ ------------ ------------ --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Product
Sales........ $0 $ 0 $ 0 $ 0 $ 0 $ 54,615 $ 54,615
Distribution
Fees......... 0 0 900,000 900,000 600,000 0 $ 900,000
Interest
Income....... 0 0 58,415 58,415 34,915 17,212 75,627
-- ------- --------- ---------- -------- ----------- -----------
Total
Income..... 0 0 958,415 958,415 634,915 71,827 1,030,242
EXPENSES:
Cost of
Product
Sales........ 0 0 0 0 0 54,615 54,615
Engineering
Expenses..... 0 0 0 0 0 2,084,820 2,084,820
Administrative
Expenses..... 0 9,062 49,943 59,005 0 2,275,462 2,334,467
Depreciation...... 0 0 0 0 0 3,041,850 3,041,850
Equity in Earnings
(Losses) of
Affiliates........ 0 0 (853,270) (853,270) 0 (1,610,271) (2,463,541)
-- ------- --------- ---------- -------- ----------- -----------
EXCESS
(DEFICIENCY) OF
INCOME OVER
EXPENSES.......... $0 $(9,062) $ 55,202 $ 46,140 $634,915 $(8,995,191) $ 8,949,051)
== ======= ========= ========= ======== =========== ===========
</TABLE>
(See accompanying notes to the financial statements)
F-5
<PAGE> 128
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TOTAL TOTAL
CASH FLOWS CASH FLOWS
JUNE 30, 1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ------------------------------ DECEMBER 31, ---------------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------- ------------- ------------- ------------- ------------ ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Excess
(deficiency)
of income over
expenses............ $ 0 $ (9,062) $ 55,202 $ 46,140 $ 634,915 $ (8,995,191) $ (8,949,051)
ADJUSTMENTS
TO RECONCILE
EXCESS (DEFICIENCY)
OF INCOME OVER
EXPENSES TO NET
CASH PROVIDED BY
(USED IN)
OPERATING
ACTIVITIES:
Depreciation...... 0 0 0 0 0 3,041,850 3,041,850
Equity in
losses of
affiliate....... 0 0 853,270 853,270 0 1,610,271 2,463,541
(Increase) in
receivable --
Orbital
Communication
Corporation..... 0 0 0 0 0 (112,374) (112,374)
(Increase) in
receivable --
Other........... 0 0 0 0 0 (3,409) (3,409)
(Increase) in
inventory....... 0 0 (446,684) (446,684) 0 (437,077) (883,761)
Increase in
accounts
payabl.......... 0 2,270,775 1,766,900 4,037,675 409,650 1,834,668 5,872,343
Increase in
deferred
revenue......... 0 0 100,000 100,000 400,000 0 100,000
Increase (decrease)
in accrued
expenses........ 0 7,866,668 (1,750,354) 6,116,314 338,147 399,231 6,515,545
(Increase)
decrease in
prepaid contract
costs........... (3,740,802) 3,740,802 0 0 0 0 0
------------ ------------ ------------ ------------- ------------ ----------- -------------
NET CASH
PROVIDED
BY (USED
IN) OPERATING
ACTIVITIES... (3,740,802) 13,869,183 578,334 10,706,715 1,782,712 (2,662,031) 8,044,684
------------ ------------ ------------ ------------- ------------ ------------ -------------
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Capital
expenditures...... (43,924,717) (24,722,144) (38,343,079) (106,989,940) (11,006,197) (28,947,741) (135,937,681)
Decrease in
amount due from
affiliates....... 0 0 (661,354) (661,354) 0 (1,694,488) (2,355,842)
------------ ------------ ------------ ------------- ------------ ------------ -------------
NET CASH
PROVIDED
BY (USED IN)
INVESTING
ACTIVITIES... (43,924,717) (24,722,144) (39,004,433) (107,651,294) (11,006,197) (30,642,229) (138,293,523)
------------ ------------ ------------ ------------- ------------ ------------ -------------
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Proceeds from
issuance of
long-term
debt.............. 0 5,000,000 0 5,000,000 0 0 5,000,000
Repayment of
long-term
debt............. 0 0 (825,570) (825,570) (335,340) (442,041) (1,267,611)
Partners'
contributions..... 48,148,997 10,852,961 38,065,265 97,067,223 4,584,886 33,000,001 130,067,224
Financing fees
paid............ (483,478) 0 (2,028,646) (2,512,124) 0 0 (2,512,124)
------------ ------------ ------------ ------------- ------------ ------------ -------------
NET CASH
PROVIDED BY
(USED IN)
FINANCING
ACTIVITIES... 47,665,519 15,852,961 35,211,049 98,729,529 4,249,546 32,557,960 131,287,489
------------ ------------ ------------ ------------- ------------ ------------ -------------
NET INCREASE
(DECREASE)
IN CASH AND
CASH EQUIVALENTS.... 0 5,000,000 (3,215,050) 1,784,950 (4,973,939) (746,300) 1,038,650
CASH AND CASH
EQUIVALENTS
Beginning of
period........... 0 0 5,000,000 0 5,000,000 1,784,950 0
------------ ------------ ------------ ------------- ------------ ------------ -------------
CASH AND CASH
EQUIVALENTS
End of
period........... $ 0 $ 5,000,000 $ 1,784,950 $ 1,784,950 $ 26,061 $ 1,038,650 $ 1,038,650
============ ============ ============ ============= ============ ============ =============
SUPPLEMENTAL CASH
FLOW DISCLOSURE:
Interest
paid............. $ 0 $ 0 $ 425,765 $ 425,765 $ 222,338 $ 183,626 $ 609,391
============ ============ ============ ============= ============ ============ =============
</TABLE>
(See accompanying notes to the financial statements)
F-6
<PAGE> 129
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
----------------------------- -----------------------------
TELEGLOBE ORBITAL TELEGLOBE ORBITAL
MOBILE COMMUNICATIONS MOBILE COMMUNICATIONS
PARTNERS CORPORATION PARTNERS CORPORATION TOTAL
----------- -------------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Capital contributions..... $10,000,000 $ 10,000,000 $ 0 $ 28,148,997 $ 48,148,997
Excess (deficiency) of
income over expenses.... 0 0 0 0 0
Financing fees............ (241,739) (241,739) 0 0 (483,478)
----------- ------------ ----------- ------------- ------------
PARTNERS' CAPITAL,
DECEMBER 31, 1993....... 9,758,261 9,758,261 0 28,148,997 47,665,519
Capital contributions..... 0 0 0 10,852,961 10,852,961
Excess (deficiency) of
income over expenses.... (4,531) (4,531) 0 0 (9,062)
----------- ------------ ----------- ------------- ------------
PARTNERS' CAPITAL,
DECEMBER 31, 1994....... 9,753,730 9,753,730 0 39,001,958 58,509,418
Capital contributions..... 0 0 24,750,000 13,315,265 38,065,265
Excess (deficiency) of
income over expenses.... 27,601 27,601 0 0 55,202
Financing fees............ (1,014,323) (1,014,323) 0 0 (2,028,646)
----------- ------------ ----------- ------------- ------------
PARTNERS' CAPITAL,
DECEMBER 31, 1995....... 8,767,008 8,767,008 24,750,000 52,317,223 94,601,239
Capital contributions..... 0 0 24,429,767 8,570,234 33,000,001
Excess (deficiency) of
income over expenses.... (4,497,595) (4,497,596) 0 0 (8,995,191)
----------- ------------ ----------- ------------ ------------
PARTNERS' CAPITAL, JUNE
30, 1996 (UNAUDITED).... $ 4,269,413 $ 4,269,412 $49,179,767 $ 60,887,457 $118,606,049
=========== ============ =========== ============ ============
</TABLE>
(See accompanying notes to the financial statements)
F-7
<PAGE> 130
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(1) THE ORBCOMM SYSTEM
Organization
In 1993, Orbital Communications Corporation ("OCC"), a majority owned
subsidiary of Orbital Sciences Corporation ("Orbital"), and Teleglobe Mobile
Partners ("Teleglobe Mobile"), a partnership established by affiliates of
Teleglobe Inc. ("Teleglobe"), formed ORBCOMM Global, L.P. ("ORBCOMM" or "the
Company"), a Delaware limited partnership.
Pursuant to the terms of the Agreement of Limited Partnership of the
Company, action by the Company generally requires the approval of General
Partners holding a majority of the Participation Percentages held by the General
Partners. OCC and Teleglobe Mobile each holds 50% of the Participation
Percentages in the Company, with the result that the approval of both OCC and
Teleglobe Mobile is generally necessary for the Company to act.
The Company is a 98% noncontrolling General Partner in ORBCOMM USA, L.P.
("ORBCOMM USA") and ORBCOMM International Partners, L.P. ("ORBCOMM
International"), two partnerships formed to market the ORBCOMM System services
in the United States and internationally, respectively.
The ORBCOMM System Description
The Company was created for the design, development, construction,
integration, testing and operation of the ORBCOMM System. The Company intends to
construct and implement the initial 28-satellite ORBCOMM System in two phases:
the ORBCOMM Phase 1A System, consisting of the worldwide network operations
center (including the satellite management system), the U.S. Gateway control
center, four U.S. Earth stations and two satellites; and the ORBCOMM Phase 1B
System consisting of the ORBCOMM Phase 1A System, three additional planes each
consisting of eight satellites and one plane consisting of two high-inclination
satellites.
Orbital is the primary supplier of the communications satellites, launch
vehicles and U.S. ground systems and successfully launched the Phase 1A
satellites in April 1995. The Phase 1A System began commercial intermittent
service in 1996.
The System Charge
OCC is obligated to pay to the Company a System Charge in consideration of
the construction and financing of the ORBCOMM System Assets by the Company.
Teleglobe Mobile is obligated to pay to the Company a System Charge in
consideration of the Company's grant to Teleglobe Mobile of the right to market,
sell, lease and franchise all ORBCOMM System output capacity outside the United
States.
Regulatory Status
Construction and operation of communications satellites in the United
States requires licenses from the Federal Communications Commission ("FCC"). OCC
has been granted full operational authority for the ORBCOMM System by the FCC.
Similar licenses are required from foreign regulatory authorities to permit
ORBCOMM System services to be offered outside the United States. Primary
responsibility for obtaining licenses outside the United States will reside with
the various International Licensees.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company is in its development stage, devoting substantially all of its
efforts to establishing a new communications business. The Company's planned
principal operations are expected to commence in 1998.
F-8
<PAGE> 131
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The accompanying financial statements have been prepared on the accrual basis of
accounting in conformity with generally accepted accounting principles in the
United States.
In the opinion of management, the accompanying unaudited interim financial
information reflects all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation thereof. Operating results for the six-month
periods ended June 30, 1996 and 1995 are not necessarily indicative of the
results expected for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Depreciation and Recoverability of Long-Lived Assets
Depreciation is provided over an asset's estimated economic useful life
using the straight-line method as follows:
<TABLE>
<S> <C>
Space Segment Assets: lesser of five years or estimated life of the satellite
Ground Segment Assets: 10 years
Furniture and Equipment: 3 to 10 years
</TABLE>
The Company anticipates depreciating the ORBCOMM System over the estimated
economic useful lives of the various ORBCOMM System components once the ORBCOMM
System is placed in service. The Phase 1A System, which includes the worldwide
network operations center (including the satellite management system), the U.S.
Gateway control center, four U.S. Earth stations and two satellites, was placed
in service at the beginning of 1996, at which time the Company began
depreciating those assets. The Company anticipates that the ORBCOMM Phase 1B
System will become fully operational in 1998.
The Company's policy is to review its long-lived assets, including its
satellite systems, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company recognizes an impairment loss when the sum of the expected future cash
flows is less than the carrying amount of the asset. Given the inherent
technical and commercial risks within the space communications industry, it is
reasonably possible that the Company's current estimate that it will recover the
carrying amount of its long-lived assets from future operations may change.
Investments in Affiliates
Pursuant to the terms of ORBCOMM USA's and ORBCOMM International's
partnership agreements, OCC controls the operational and financial affairs of
ORBCOMM USA and Teleglobe Mobile controls the operational and financial affairs
of ORBCOMM International. The Company, however, significantly influences both
marketing partnerships. Accordingly, the Company is accounting for its
investments in ORBCOMM USA and ORBCOMM International using the equity method.
F-9
<PAGE> 132
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Pursuant to the equity method of accounting, the Company's carrying amount
of an investment is initially recorded at cost and is increased to reflect its
share of the affiliate's income, and is reduced to reflect its share of the
affiliate's losses. The Company's investment is also increased to reflect
contributions to, and reduced to reflect distributions from, such affiliates.
Income Taxes
As a partnership, Federal and state income taxes are the direct
responsibility of each partner. Accordingly, no income taxes have been recorded
in the accompanying financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Inventory
Inventory is stated at lower of cost, determined on the specific
identification basis, or market and generally represents amounts paid to
subcontractors for subscriber communicators.
Fair Value of Financial Instruments
The carrying value of the Company's cash and cash equivalents, receivables,
and accounts payables approximates fair value since all such instruments are
short-term in nature. Fair value for the Company's secured note payable is
determined based on current rates offered for debt of similar remaining
maturities. At June 30, 1995 (unaudited) and 1996 (unaudited), and December 31,
1994 and 1995, the fair value for the secured note payable approximated carrying
value.
Mobile Communications Satellite System Under Construction
During the construction of the ORBCOMM System, the Company is capitalizing
substantially all such construction costs. Additionally, interest costs of
$222,338, $183,626 and $425,765 has been capitalized as a part of the historical
cost of the ORBCOMM System at June 30, 1995 (unaudited) and 1996 (unaudited) and
December 31, 1995, respectively (none in 1994).
Revenue Recognition
The Company provides subscriber communicator hardware to ORBCOMM USA and
ORBCOMM International at cost. Revenue is recognized when products are shipped
or when clients have accepted the products or services, depending on contractual
terms. Contract revenues and receivables are recognized and accrued as contract
costs are incurred. Related contract expenses incurred in providing U.S.
Marketing Services are recognized on the accrual basis of accounting.
The Company generally recognizes fees from international service license
agreements ratably over the term of the agreement, or when the Company's
obligations under the agreement are substantially complete.
(3) LONG-TERM DEBT
The Company has a $5,000,000 secured note outstanding with a financial
institution, which bears interest at 9.2% per annum and is due in monthly
principal and interest installments of $104,278 through
F-10
<PAGE> 133
ORBCOMM GLOBAL, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) LONG-TERM DEBT -- (CONTINUED)
December 1999. The note is secured by equipment located at certain of the U.S.
Earth stations, network operations center and satellite control center, and is
guaranteed by Orbital.
(4) RELATED PARTY TRANSACTIONS
The Company paid Orbital approximately $15,800,000, $25,000,000,
$48,000,000, $11,000,000, and $38,000,000 for the period ended June 30, 1995
(unaudited) and 1996 (unaudited) and the period June 30, 1993 (date of
inception) through December 31, 1993, and the years ended December 31, 1994 and
1995, respectively, for work performed pursuant to the ORBCOMM System Design,
Development, and Operations Agreement (for the ORBCOMM Phase 1A System) and the
ORBCOMM System Procurement Agreement (for the ORBCOMM Phase 1B System) and the
Administrative Services Agreement (for provision of ongoing support to the
Company).
At June 30, 1996 (unaudited), the Company has a receivable of approximately
$112,000 for a bonus payment to the Company's employees paid on behalf of OCC
for employees previously employed by OCC (none for the periods ended December
31, 1995 and 1994).
(5) SUBSEQUENT EVENTS
In August 1996, ORBCOMM and ORBCOMM Global Capital Corp. (the "Issuers")
issued $170,000,000 of Senior Notes due in 2004 with Revenue Participation
Interest (the "Notes"). Revenue Participation Interest represents an aggregate
amount equal to 5.0% of the ORBCOMM System revenue and is payable on the Notes
on each interest payment date subject to certain covenant restrictions. Interest
on the Notes will accrue at a rate of 14% per annum and will be payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1997. The obligations of the Issuers under the Notes will be
jointly and severally guaranteed by OCC, Teleglobe Mobile, ORBCOMM USA and
ORBCOMM International. Upon closing, the Company used a portion of the net
proceeds from the sale of the Notes to purchase a portfolio of United States
government securities to provide for payment in full of interest on the Notes
through August 15, 1998 (estimated at approximately $44.8 million).
F-11
<PAGE> 134
INDEPENDENT AUDITORS' REPORT
The Partners
ORBCOMM USA, L.P.:
We have audited the accompanying statements of assets, liabilities and
partners' capital of ORBCOMM USA, L.P. ("ORBCOMM USA") (a development stage
enterprise) as of December 31, 1995 and 1994, and the related statements of
income and expenses, partners' capital, and cash flows for each of the years
then ended and for the period from June 30, 1993 (date of inception) to December
31, 1993 and for the period from June 30, 1993 (date of inception) through
December 31, 1995. These financial statements are the responsibility of ORBCOMM
USA's management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ORBCOMM USA (a development
stage enterprise) as of December 31, 1995 and 1994, and the results of its
income and expenses, partners' capital and cash flows for each of the years then
ended and for the period from June 30, 1993 (date of inception) to December 31,
1993 and for the period June 30, 1993 (date of inception) through December 31,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
January 26, 1996
F-12
<PAGE> 135
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents............................. $10,000 $ 10,000 $ 104,536
Receivable -- Orbital Communications Corporation...... 0 0 9,427
Receivable -- Trade................................... 0 0 49,199
------- --------- ----------
TOTAL ASSETS..................................... 10,000 10,000 163,162
======= ========= ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts Payable...................................... 0 177,100 27,418
Other Current Liabilities............................. 0 32,230 132,233
------- --------- ----------
Total Current Liabilities........................ 0 209,330 159,651
Amount Due to ORBCOMM Global, L.P.......................... 0 661,354 2,102,312
------- --------- ----------
Total Liabilities................................ 0 870,684 2,261,963
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General Partners:
Teleglobe Mobile Partners........................ 1,500 0 0
Orbital Communications Corporation............... 8,500 (17,214) (41,976)
ORBCOMM Global, L.P.............................. 0 (843,470) (2,056,825)
------- --------- ----------
Total General Partners' Capital............. 10,000 (860,684) (2,098,801)
------- --------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL.......... $10,000 $ 10,000 $ 163,162
======= ========= ==========
</TABLE>
(See accompanying notes to the financial statements)
F-13
<PAGE> 136
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF INCOME AND EXPENSES
<TABLE>
<CAPTION>
TOTAL TOTAL
JUNE 30, ACCUMULATED ACCUMULATED
1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ---------------------------- DECEMBER 31, ---------------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------ ------------ ------------ ------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Product
Sales........ $ 0 $ 0 $ 0 $ 0 $ 0 $ 49,140 $ 49,140
Contract
Revenues..... 749,262 2,093,289 1,360,328 4,202,879 885,801 0 4,202,879
Service
Revenues..... 0 0 0 0 0 1,696 1,696
-------- ----------- ----------- ---------- ---------- ------------ -----------
TOTAL
INCOME... 749,262 2,093,289 1,360,328 4,202,879 885,801 50,836 4,253,715
EXPENSES:
Cost of product
sales........ 0 0 0 0 0 47,895 47,895
Administrative
Expenses..... 749,262 2,093,289 2,231,012 5,073,563 885,801 1,241,058 6,314,621
-------- ----------- ----------- ---------- ---------- ------------ -----------
TOTAL
EXPENSES... 749,262 2,093,289 2,231,012 5,073,563 885,801 1,288,953 6,362,516
-------- ----------- ----------- ---------- ---------- ------------ -----------
EXCESS (DEFICIENCY)
OF INCOME OVER
EXPENSES......... $ 0 $ 0 $ (870,684) $ (870,684) $ 0 $ (1,238,117) $(2,108,801)
======== =========== =========== ========== ========== ============ ===========
</TABLE>
(See accompanying notes to the financial statements)
F-14
<PAGE> 137
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TOTAL TOTAL
CASH FLOWS CASH FLOWS
JUNE 30, 1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED MARCH 31, THROUGH
DECEMBER 31, ---------------------- DECEMBER 31, ----------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------ ------ -------- ------------ ------ --------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Excess (deficiency)
of income over
expenses................ $ 0 $ 0 $(870,684) $(870,684) $ 0 $(1,238,117) $(2,108,801)
ADJUSTMENTS TO RECONCILE
EXCESS (DEFICIENCY)
OF INCOME OVER EXPENSES
TO NET CASH PROVIDED
BY (USED IN) OPERATING
ACTIVITIES:
(Increase) in
receivable --
Orbital
Communications
Corporation......... 0 0 0 0 0 (9,427) (9,427)
(Increase)in
receivable --
Trade................ 0 0 0 0 0 (49,199) (49,199)
Increase (decrease)
in accounts
payable............. 0 0 177,100 177,100 0 (149,682) 27,418
Increase in other
current
liabilities......... 0 0 32,230 32,230 0 100,003 132,233
------- ------- --------- --------- ------- ----------- -----------
NET CASH USED
IN OPERATING
ACTIVITIES...... 0 0 (661,354) (661,354) 0 (1,346,422) (2,007,776)
------- ------- --------- --------- ------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Partners'
Contribution.......... 10,000 0 0 10,000 0 0 10,000
Increase in amount due
to ORBCOMM Global
L.P.................. 0 0 661,354 661,354 0 1,440,958 2,102,312
------- ------- --------- --------- ------- ----------- -----------
NET CASH PROVIDED
BY FINANCING
ACTIVITIES...... 10,000 0 661,354 671,354 0 1,440,958 2,112,312
------- ------- --------- --------- ------- ----------- -----------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS............. 10,000 0 0 10,000 0 94,536 104,536
CASH AND CASH EQUIVALENTS
Beginning of period.... 0 10,000 10,000 0 10,000 10,000 0
------- ------- --------- --------- ------- ----------- -----------
CASH AND CASH EQUIVALENTS
End of period......... $10,000 $10,000 $ 10,000 $ 10,000 $10,000 $ 104,536 $ 104,536
======= ======= ========= ========= ======= =========== ===========
</TABLE>
(See accompanying notes to the financial statements)
F-15
<PAGE> 138
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL PARTNERS
-------------------------------------------
TELEGLOBE ORBITAL ORBCOMM
MOBILE COMMUNICATIONS GLOBAL
PARTNERS CORPORATION L.P. TOTAL
--------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Capital contributions....................... $ 1,500 $ 8,500 $ 0 $ 10,000
Excess (deficiency) of income over
expenses.................................. 0 0 0 0
------- --------- ----------- -----------
PARTNERS' CAPITAL, DECEMBER 31, 1993........ 1,500 8,500 0 10,000
Capital contributions....................... 0 0 0 0
Excess (deficiency) of income over
expenses.................................. 0 0 0 0
------- --------- ----------- -----------
PARTNERS' CAPITAL, DECEMBER 31, 1994........ 1,500 8,500 0 10,000
Capital transfer............................ (1,500) (8,300) 9,800 0
Excess (deficiency) of income over
expenses.................................. 0 (17,414) (853,270) (870,684)
------- --------- ----------- -----------
PARTNERS' CAPITAL, DECEMBER 31, 1995........ 0 (17,214) (843,470) (860,684)
Excess (deficiency) of income over
expenses.................................. 0 (24,762) (1,213,355) (1,238,117)
------- --------- ----------- -----------
PARTNERS' CAPITAL, JUNE 30, 1996
(UNAUDITED)............................... $ 0 $ (41,976) $(2,056,825) $(2,098,801)
======= ========= =========== ===========
</TABLE>
(See accompanying notes to the financial statements)
F-16
<PAGE> 139
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(1) THE ORBCOMM SYSTEM
Organization
In 1993, Orbital Communications Corporation ("OCC"), a majority owned
subsidiary of Orbital Sciences Corporation ("Orbital"), and Teleglobe Mobile
Partners ("Teleglobe Mobile"), a partnership established by affiliates of
Teleglobe Inc. ("Teleglobe"), formed ORBCOMM Global, L.P. ("ORBCOMM"), a
Delaware limited partnership.
OCC and Teleglobe Mobile also formed two marketing partnerships, ORBCOMM
USA, L.P. ("ORBCOMM USA") and ORBCOMM International Partners, L.P. ("ORBCOMM
International"), to market the ORBCOMM System services in the United States and
internationally, respectively. In 1995, ORBCOMM became a 98% General Partner in
ORBCOMM USA, reducing OCC's General Partner interest to 2% and eliminating
Teleglobe Mobile's interest entirely.
Pursuant to the terms of the Agreement of Limited Partnership of ORBCOMM
USA between OCC and ORBCOMM, action by ORBCOMM USA generally requires the
approval of General Partners holding a majority of the participating interests
held by the General Partners, with OCC and Teleglobe Mobile each voting their
direct and indirect Participation Percentages as a whole. OCC and Teleglobe
Mobile each currently holds 51% and 49%, respectively, of the direct and
indirect participating interests in ORBCOMM USA.
The ORBCOMM System Description
ORBCOMM was created for the design, development, construction, integration,
testing and operation of a global digital satellite communications system of
low-Earth orbiting mobile satellites and certain terrestrial facilities intended
to provide two-way data and messaging communications services throughout the
world ("the ORBCOMM System"). ORBCOMM intends to construct and implement the
initial 28-satellite ORBCOMM System in two phases: the ORBCOMM Phase 1A System,
consisting of the worldwide network operations center (including the satellite
management system), the U.S. Gateway control center, four U.S. Earth stations
and two satellites ("the ORBCOMM Phase 1A System"); and the ORBCOMM Phase 1B
System, consisting of the ORBCOMM Phase 1A System, three additional planes each
consisting of eight additional satellites and one plane consisting of two
high-inclination satellites ("the ORBCOMM Phase 1B System").
Orbital is the primary supplier of the communications satellites, launch
vehicles and U.S. ground systems and successfully launched the satellites of the
ORBCOMM Phase 1A in April 1995. The ORBCOMM Phase 1A System began commercial
intermittent service in 1996.
The Output Capacity Charge and the U.S. Marketing Services
Pursuant to the terms of the System Charge Agreement between OCC and
ORBCOMM USA, OCC has granted to ORBCOMM USA the exclusive right in the United
States to market, sell, lease and franchise all ORBCOMM System output capacity
and exclusive use of the ORBCOMM System assets located in the United States for
a period of 20 years. In consideration of this grant, ORBCOMM USA has agreed to
pay to OCC an output capacity charge.
Additionally, pursuant to the terms of the System Charge Agreement, through
September 12, 1995, ORBCOMM USA furnished all management, labor, facilities and
materials necessary to perform, on a best efforts basis, certain marketing
services in the United States (the "U.S. Marketing Services"), on a cost-
reimbursable basis. The U.S. Marketing Services portion of the Marketing
Agreement expired on September 12, 1995.
F-17
<PAGE> 140
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(1) THE ORBCOMM SYSTEM -- (CONTINUED)
Regulatory Status
Construction and operation of communications satellites in the United
States requires licenses from the Federal Communications Commission ("FCC"). OCC
has been granted full operational authority for the ORBCOMM System by the FCC.
Similar licenses are required from foreign regulatory authorities to permit
ORBCOMM System services to be offered outside the United States. Primary
responsibility for obtaining licenses outside the United States will reside with
the various International Licensees.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
ORBCOMM USA is in its development stage, devoting substantially all of its
efforts to establishing commercial and governmental markets in the United States
for the ORBCOMM System. ORBCOMM USA's planned principal operations are expected
to commence in 1998. The accompanying financial statements of ORBCOMM USA have
been prepared on the accrual basis of accounting in conformity with generally
accepted accounting principles in the United States.
In the opinion of management, the accompanying unaudited interim financial
information reflects all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation thereof. Operating results for the six-month
periods ended June 30, 1996 and 1995 are not necessarily indicative of the
results expected for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Income Taxes
As a partnership, Federal and state income taxes are the direct
responsibility of each partner. Accordingly, no income taxes have been recorded
in the accompanying financial statements.
Cash and Cash Equivalents
ORBCOMM USA considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Revenue Recognition
ORBCOMM USA provides subscriber communicator hardware to commercial
companies. Revenue is recognized when products are shipped or when clients have
accepted the products or services, depending on contractual terms. Contract
revenues and receivables are recognized and accrued as contract costs are
incurred. Related contract expenses incurred in providing U.S. Marketing
Services are recognized on the accrual basis of accounting.
F-18
<PAGE> 141
ORBCOMM USA, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) RELATED PARTY TRANSACTIONS
Payments to ORBCOMM USA for U.S. Marketing Services are based on ORBCOMM
USA's monthly costs incurred. For the periods June 30, 1995 (unaudited) and 1996
(unaudited) and for the period June 30, 1993 (date of inception) through
December 31, 1993, and the years ended December 31, 1994, and 1995, ORBCOMM USA
received approximately $886,000, $0, $749,000, $2,093,000, and $1,360,000,
respectively, from OCC as reimbursement of costs for U.S. Marketing Services.
At June 30, 1996 (unaudited), ORBCOMM USA has a receivable of approximately
$9,400, for bonus payments to ORBCOMM USA employees paid on behalf of OCC for
employees previously employed by OCC (none for the periods ended December 31,
1995 and 1994).
At June 30, 1996 (unaudited) and December 31, 1995 and 1994, ORBCOMM USA
has a payable of approximately $2,102,000, $661,000, and $0, respectively, to
ORBCOMM for amounts advanced to support ORBCOMM USA establish commercial and
government markets. ORBCOMM USA is currently in development stage and obtains
funds to support operations through advances from ORBCOMM.
(4) SUBSEQUENT EVENTS
In August 1996, ORBCOMM and ORBCOMM Global Capital Corp. (the "Issuers")
issued $170,000,000 of Senior Notes due in 2004 with Revenue Participation
Interest (the "Notes"). Revenue Participation Interest represents an aggregate
amount equal to 5.0% of the ORBCOMM System revenue and is payable on the Notes
on each interest payment date subject to certain covenant restrictions. Interest
on the Notes will accrue at a rate of 14% per annum and will be payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1997. The obligations of the Issuers under the Notes will be
jointly and severally guaranteed by OCC, Teleglobe Mobile, ORBCOMM USA and
ORBCOMM International. Upon closing, the Company used a portion of the net
proceeds from the sale of the Notes to purchase a portfolio of United States
government securities to provide for payment in full of interest on the Notes
through August 15, 1998 (estimated at approximately $44.8 million).
F-19
<PAGE> 142
INDEPENDENT AUDITORS' REPORT
The Partners
ORBCOMM International Partners, L.P.:
We have audited the accompanying statements of assets, liabilities and
partners' capital of ORBCOMM International Partners, L.P. ("ORBCOMM
International") (a development stage enterprise) as of December 31, 1995 and
1994, and the related statements of income and expenses, partners' capital, and
cash flows for each of the years then ended and for the period from June 30,
1993 (date of inception) to December 31, 1993 and for the period from June 30,
1993 (date of inception) through December 31, 1995. These financial statements
are the responsibility of ORBCOMM International's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ORBCOMM International (a
development stage enterprise) as of December 31, 1995 and 1994, and the results
of its income and expenses, partners' capital and cash flows for each of the
years then ended and for the period from June 30, 1993 (date of inception) to
December 31, 1993 and for the period June 30, 1993 (date of inception) through
December 31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
May 29, 1996
F-20
<PAGE> 143
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents................................. $10,000 $10,000 $ 42,774
Receivable --
Orbital Communications Corporation................... 0 0 6,613
------- ------- --------
TOTAL ASSETS......................................... 10,000 10,000 49,387
======= ======= ========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts Payable.......................................... 0 0 6,171
Other Current Liabilities................................. 0 0 184,703
------- ------- --------
Total Current Liabilities............................ 0 0 190,874
Amount Due to ORBCOMM Global, L.P......................... 0 0 253,530
------- ------- --------
Total Liabilities.................................... 0 0 444,404
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
GENERAL PARTNERS:
Teleglobe Mobile Partners............................ 1,500 200 (7,900)
Orbital Communications Corporation................... 8,500 0 0
ORBCOMM Global, L.P.................................. 0 9,800 (387,117)
------- ------- --------
Total Partners' Capital.............................. 10,000 10,000 (395,017)
------- ------- --------
TOTAL LIABILITIES AND PARTNERS' CAPITAL.............. $10,000 $10,000 $ 49,387
======= ======= ========
</TABLE>
(See accompanying notes to the financial statements)
F-21
<PAGE> 144
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF INCOME AND EXPENSES
<TABLE>
<CAPTION>
TOTAL
ACCUMULATED TOTAL
DURING ACCUMULATED
JUNE 30, 1993 DEVELOPMENT DURING
(DATE OF STAGE DEVELOPMENT
INCEPTION) YEAR ENDED THROUGH SIX MONTHS STAGE
THROUGH DECEMBER 31, DECEMBER ENDED JUNE 30, THROUGH
DECEMBER 31, ------------------ 31, -------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------- ------- ------- ----------- ------- --------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Administrative Expenses............. 0 0 0 0 0 405,017 405,017
------- ------- ------- ------- ------- --------- ---------
EXCESS (DEFICIENCY) OF INCOME OVER
EXPENSES.......................... $ 0 $ 0 $ 0 $ 0 $ 0 $(405,017) $(405,017)
======= ======= ======= ======= ======= ========= =========
</TABLE>
(See accompanying notes to the financial statements)
F-22
<PAGE> 145
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TOTAL TOTAL
CASH FLOWS CASH FLOWS
JUNE 30, 1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ------------------ DECEMBER 31, -------------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------- ------- ------- ------------ ------- --------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Excess (deficiency) of income over
expenses......................... $ 0 $ 0 $ 0 $ 0 $ 0 $(405,017) $(405,017)
ADJUSTMENTS TO RECONCILE EXCESS
(DEFICIENCY) OF INCOME OVER
EXPENSES TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
(Increase) in receivable --
Orbital Communications
Corporation.............. 0 0 0 0 0 (6,613) (6,613)
Increase in accounts payable... 0 0 0 0 0 6,171 6,171
Increase in other current
liabilities.................. 0 0 0 0 0 184,703 184,703
------- ------- ------- -------- ------- --------- ---------
NET CASH USED IN OPERATING
ACTIVITIES............... 0 0 0 0 0 (220,756) (220,756)
------- ------- ------- -------- ------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Partners' Contribution......... 10,000 0 0 10,000 0 0 10,000
Increase in amount due to
ORBCOMM Global, L.P. ........ 0 0 0 0 0 253,530 253,530
------- ------- ------- -------- ------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES..... 10,000 0 0 10,000 0 253,530 263,530
------- ------- ------- -------- ------- --------- ---------
NET INCREASE IN CASH AND CASH
EQUIVALENTS...................... 10,000 0 0 10,000 0 32,774 42,774
CASH AND CASH EQUIVALENTS
Beginning of period............ 0 10,000 10,000 0 10,000 10,000 0
------- ------- ------- -------- ------- --------- ---------
CASH AND CASH EQUIVALENTS
End of period.................. $10,000 $10,000 $10,000 $ 10,000 $10,000 $ 42,774 $ 42,774
======= ======= ======= ======== ======= ========= =========
</TABLE>
(See accompanying notes to the financial statements)
F-23
<PAGE> 146
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL PARTNERS
----------------------------------------
TELEGLOBE ORBITAL ORBCOMM
MOBILE COMMUNICATIONS GLOBAL
PARTNERS CORPORATION L.P. TOTAL
--------- -------------- --------- ---------
<S> <C> <C> <C> <C>
Capital contributions.......................... $ 1,500 $ 8,500 $ 0 $ 10,000
Excess (deficiency) of income over expenses.... 0 0 0 0
-------- -------- --------- ---------
PARTNERS' CAPITAL, DECEMBER 31, 1993........... 1,500 8,500 0 10,000
Capital contributions.......................... 0 0 0 0
Excess (deficiency) of income over expenses.... 0 0 0 0
-------- -------- --------- ---------
PARTNERS' CAPITAL, DECEMBER 31, 1994........... 1,500 8,500 0 10,000
Capital transfer............................... (1,300) (8,500) 9,800 0
Excess (deficiency) of income over expenses.... 0 0 0 0
-------- -------- --------- ---------
PARTNERS' CAPITAL, DECEMBER 31, 1995........... 200 0 9,800 10,000
Excess (deficiency) of income over expenses.... (8,100) 0 (396,917) (405,017)
-------- -------- --------- ---------
PARTNERS' CAPITAL, JUNE 30, 1996
(UNAUDITED).................................. $(7,900) $ 0 $(387,117) $(395,017)
======= ========= ========= =========
</TABLE>
(See accompanying notes to the financial statements)
F-24
<PAGE> 147
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(1) THE ORBCOMM SYSTEM
Organization
In 1993, Orbital Communications Corporation ("OCC"), a majority owned
subsidiary of Orbital Sciences Corporation ("Orbital"), and Teleglobe Mobile
Partners ("Teleglobe Mobile"), a partnership established by affiliates of
Teleglobe Inc. ("Teleglobe"), formed ORBCOMM Global, L.P. ("ORBCOMM"), a
Delaware limited partnership.
OCC and Teleglobe Mobile also formed two marketing partnerships, ORBCOMM
USA, L.P. ("ORBCOMM USA") and ORBCOMM International Partners, L.P. ("ORBCOMM
International"), to market the ORBCOMM System services in the United States and
internationally, respectively. In 1995, ORBCOMM became a 98% General Partner in
ORBCOMM International, reducing Teleglobe Mobile's General Partner interest to
2% and eliminating OCC's interest entirely.
Pursuant to the terms of the Agreement of Limited Partnership of ORBCOMM
International between Teleglobe Mobile and ORBCOMM, action by ORBCOMM
International generally requires the approval of General Partners holding a
majority of the participating interests held by the General Partners, with OCC
and Teleglobe Mobile each voting their direct and indirect participating
interests as a whole. OCC and Teleglobe Mobile each currently holds 49% and 51%,
respectively, of the direct and indirect Participation Percentages in ORBCOMM
International.
The ORBCOMM System Description
ORBCOMM was created for the design, development, construction, integration,
testing and operation of a global digital satellite communications system of
low-Earth orbiting mobile satellites and certain terrestrial facilities intended
to provide two-way data and messaging communications services throughout the
world ("the ORBCOMM System"). ORBCOMM intends to construct and implement the
initial 28-satellite ORBCOMM System in two phases: the ORBCOMM Phase 1A System,
consisting of the worldwide network operations center (including the satellite
management system), the U.S. Gateway control center, four U.S. Earth stations
and two satellites ("the ORBCOMM Phase 1A System"); and the ORBCOMM Phase 1B
System, consisting of the ORBCOMM Phase 1A System, three additional planes each
consisting of eight additional satellites and one plane consisting of two
high-inclination satellites ("the ORBCOMM Phase 1B System").
Orbital is the primary supplier of the communications satellites, launch
vehicles and U.S. ground systems and successfully launched the satellites of the
ORBCOMM Phase 1A in April 1995. The ORBCOMM Phase 1A System began commercial
intermittent service in 1996.
The Output Capacity Charge
Pursuant to the terms of the International System Charge Agreement (the
"International System Charge Agreement") among ORBCOMM, Teleglobe Mobile and
ORBCOMM International, ORBCOMM has granted to Teleglobe Mobile, which in turn
has granted to ORBCOMM International, the exclusive right outside the United
States to market, sell, lease and franchise all ORBCOMM System output capacity
and the exclusive use of the ORBCOMM System assets located outside the United
States for a period of 20 years. In consideration of this grant, ORBCOMM
International has agreed to pay to Teleglobe Mobile an output capacity charge.
F-25
<PAGE> 148
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(1) THE ORBCOMM SYSTEM -- (CONTINUED)
Regulatory Status
Construction and operation of communications satellites in the United
States requires licenses from the Federal Communications Commission ("FCC"). OCC
has been granted full operational authority for the ORBCOMM System by the FCC.
Similar licenses are required from foreign regulatory authorities to permit
ORBCOMM System services to be offered outside the United States. Primary
responsibility for obtaining licenses outside the United States will reside with
the various International Licensees.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
ORBCOMM International is in its development stage, devoting substantially
all of its efforts to establishing commercial and governmental markets, through
international licensees, for the ORBCOMM System internationally. ORBCOMM
International's planned principal operations are expected to commence in 1998.
The accompanying financial statements of ORBCOMM International have been
prepared on the accrual basis of accounting in conformity with generally
accepted accounting principles in the United States.
In the opinion of management, the accompanying unaudited interim financial
information reflects all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation thereof. Operating results for the six-month
periods ended June 30, 1996 and 1995 are not necessarily indicative of the
results expected for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Income Taxes
As a partnership, Federal and state income taxes are the direct
responsibility of each partner. Accordingly, no income taxes have been recorded
in the accompanying financial statements.
Cash and Cash Equivalents
ORBCOMM International considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents.
Related Party Transactions
At June 30, 1996 (unaudited), ORBCOMM International has a receivable of
approximately $6,600, for bonus payments to ORBCOMM International employees paid
on behalf of OCC for employees previously employed by OCC (none for the periods
ended December 31, 1995 and 1994).
F-26
<PAGE> 149
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
At June 30, 1996 (unaudited), ORBCOMM International has a payable of
approximately $253,500, to ORBCOMM for amounts advanced to support ORBCOMM
International establish commercial and government markets (none for the periods
ended December 31, 1995 and 1994). ORBCOMM International is currently in
development stage and obtains funds to support operations through advances from
ORBCOMM.
(3) SUBSEQUENT EVENTS
In August 1996, ORBCOMM and ORBCOMM Global Capital Corp. (the "Issuers")
issued $170,000,000 of Senior Notes due in 2004 with Revenue Participation
Interest (the "Notes"). Revenue Participation Interest represents an aggregate
amount equal to 5.0% of the ORBCOMM System revenue and is payable on the Notes
on each interest payment date subject to certain covenant restrictions. Interest
on the Notes will accrue at a rate of 14% per annum and will be payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1997. The obligations of the Issuers under the Notes will be
jointly and severally guaranteed by OCC, Teleglobe Mobile, ORBCOMM USA and
ORBCOMM International. Upon closing, the Company used a portion of the net
proceeds from the sale of the Notes to purchase a portfolio of United States
government securities to provide for payment in full of interest on the Notes
through August 15, 1998 (estimated at approximately $44.8 million).
F-27
<PAGE> 150
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Orbital Communications Corporation:
We have audited the accompanying consolidated balance sheets of Orbital
Communications Corporation and subsidiary as of December 31, 1995 and 1994, and
the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Orbital
Communications Corporation and subsidiary as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Washington, DC
July 5, 1996
F-28
<PAGE> 151
ORBITAL COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents........................ $ -- $ -- $ 316,856
Contract Receivables............................. 11,892,278 900,296 51,782
Other Current Assets............................. 19,342 927 927
----------- ----------- -----------
Total Current Assets........................ 11,911,620 901,223 369,565
INVESTMENTS IN AFFILIATES............................. 49,204,239 62,977,126 67,763,481
DEPOSITS, LICENSES AND OTHER ASSETS
FCC and Other License Costs...................... 1,308,643 -- --
Deposits and Other Assets........................ 66,352 -- --
----------- ----------- -----------
Total Deposits, Licenses and Other Assets... 1,374,995 -- --
----------- ----------- -----------
TOTAL ASSETS................................ $62,490,854 $63,878,349 $68,133,046
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable................................. $ 15,654 $ 3,592 $ 32,987
Accrued Contract Expenses........................ 493,089 -- --
Other Current Liabilities........................ 539,738 685,131 818,416
----------- ----------- -----------
Total Current Liabilities................... 1,048,481 688,723 851,403
LONG TERM LIABILITIES
Due to Orbital Sciences Corporation.............. 61,386,256 62,857,673 70,290,402
Due to Affiliates................................ -- 661,354 2,219,912
----------- ----------- -----------
Total Liabilities........................... 62,434,737 64,207,750 73,361,717
NON-CONTROLLING INTEREST IN NET ASSETS OF ORBCOMM USA,
L.P................................................. -- (421,735) (1,028,412)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock, par value $.01; 8,000,000 shares
authorized, 4,654,186, 4,660,110 and 4,707,515
shares outstanding, after deducting 3,012
shares held in treasury........................ 46,542 46,601 47,075
Additional Paid-In Capital....................... 9,575 35,561 145,405
Retained Earnings (Deficit)...................... -- 10,172 (4,392,739)
----------- ----------- -----------
Total Stockholders' Equity (Deficit)........ 56,117 92,334 (4,200,259)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)........................................... $62,490,854 $63,878,349 $68,133,046
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-29
<PAGE> 152
ORBITAL COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues......................... $43,924,715 $24,700,170 $15,652,114 $11,409,766 $ 38,323
Direct Expenses.................. 40,259,868 19,230,148 10,851,433 8,106,056 27,495
----------- ----------- ----------- ----------- -----------
Gross Profit (Loss)......... 3,664,847 5,470,022 4,800,681 3,303,710 10,828
General and Administrative
Expenses....................... 2,288,546 5,470,022 5,671,366 3,303,710 1,236,536
----------- ----------- ----------- ----------- -----------
Operating Income (Loss)..... 1,376,301 -- (870,685) -- (1,225,708)
Equity in Earnings (Losses) of
Affiliates..................... -- -- 454,222 317,458 (3,783,880)
Non-controlling Interest in Net
Loss of ORBCOMM USA, L.P. ..... -- -- 426,635 -- 606,677
----------- ----------- ----------- ----------- -----------
Income (Loss) Before
Provision for Income
Taxes..................... 1,376,301 -- 10,172 317,458 (4,402,911)
Provision for Income Taxes....... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Income (Loss)........... $ 1,376,301 $ -- $ 10,172 $ 317,458 $(4,402,911)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-30
<PAGE> 153
ORBITAL COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
------------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992.............. 4,650,000 $46,500 $ 999 $(1,376,301) $(1,328,802)
Net Income......................... -- -- -- 1,376,301 1,376,301
--------- ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1993.............. 4,650,000 46,500 999 -- 47,499
Shares Issued to Employees......... 4,186 42 8,576 -- 8,618
Net Income......................... -- -- -- -- --
--------- ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1994.............. 4,654,186 46,542 9,575 -- 56,117
Shares Issued to Employees......... 8,936 89 37,635 -- 37,724
Treasury Stock Purchased........... (3,012) (30) (11,649) -- (11,679)
Net Income......................... -- -- -- 10,172 10,172
--------- ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1995.............. 4,660,110 46,601 35,561 10,172 92,334
Shares Issued to Employees......... 47,405 474 109,844 -- 110,318
Net Loss........................... -- -- -- (4,402,911) (4,402,911)
--------- ------- ---------- ----------- -----------
BALANCE, JUNE 30, 1996 (UNAUDITED)...... 4,707,515 $47,075 $ 145,405 $(4,392,739) $(4,200,259)
======== ======= ======== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-31
<PAGE> 154
ORBITAL COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------ -------------------------
1993 1994 1995 1995 1996
------------ ------------ ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)....................... $ 1,376,301 $ -- $ 10,172 $ 317,458 $(4,402,911)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Depreciation................... 52,521 -- -- -- --
Equity in (earnings) losses of
affiliates................... -- -- (454,222) (317,458) 3,783,880
Non-controlling interest in net
loss of ORBCOMM USA, L.P. ... -- -- (426,635) -- (606,677)
CHANGES IN ASSETS AND LIABILITIES:
Decrease (increase) in current
assets....................... (237,848) (10,765,532) 11,010,397 2,698,932 848,512
Increase (decrease) in current
liabilities.................. 3,258,239 (4,027,316) (354,858) (48,310) 162,680
Decrease (increase) in
deposits, licenses, and
other........................ (811,829) (36,419) 1,374,995 1,349,641 --
------------ ------------ ------------ ----------- -----------
NET CASH PROVIDED BY (USED
IN) OPERATING
ACTIVITIES............... 3,637,384 (14,829,267) 11,159,849 4,000,263 (214,516)
------------ ------------ ------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................ (2,671,630) -- -- -- --
Proceeds from sale of assets........ 9,587,193 -- -- -- --
Investments in affiliates........... (38,426,279) (10,777,960) (13,318,665) (6,999,068) (8,570,233)
------------ ------------ ------------ ----------- -----------
NET CASH USED IN INVESTING
ACTIVITIES............... (31,510,716) (10,777,960) (13,318,665) (6,999,068) (8,570,233)
------------ ------------ ------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock
to employees...................... -- 8,618 37,724 7,164 110,318
Purchases of treasury stock......... -- -- (11,679) -- --
Net borrowings from Affiliates...... -- -- 661,354 -- 1,558,558
Net borrowings from (repayments to)
Orbital Sciences Corporation...... 27,873,332 25,598,609 1,471,417 3,057,198 7,432,729
------------ ------------ ------------ ----------- -----------
NET CASH PROVIDED BY (USED
IN) FINANCING
ACTIVITIES............... 27,873,332 25,607,227 2,158,816 3,064,362 9,101,605
------------ ------------ ------------ ----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS........................... -- -- -- 65,557 316,856
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................ -- -- -- -- --
------------ ------------ ------------ ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD......................... $ -- $ -- $ -- $ 65,557 $ 316,856
============= ============= ============= ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-32
<PAGE> 155
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) THE ORBCOMM SYSTEM
Organization
In 1990, Orbital Sciences Corporation ("Orbital") formed Orbital
Communications Corporation ("OCC") to develop and operate the first
satellite-based global two-way data and messaging communications system. In
1993, OCC formed ORBCOMM Global, L.P. ("ORBCOMM") with Teleglobe Mobile Partners
("Teleglobe Mobile"), an affiliate of Teleglobe Inc.
OCC and Teleglobe Mobile are each 50% general partners in ORBCOMM.
Additionally, OCC is a 2% general partner in ORBCOMM USA, L.P. ("ORBCOMM USA"),
and Teleglobe Mobile is a 2% general partner in ORBCOMM International Partners,
L.P. ("ORBCOMM International"), two partnerships formed to market the ORBCOMM
System. ORBCOMM is a 98% non-controlling general partner in each of the two
marketing partnerships. Directly and indirectly, OCC currently holds 51% and 49%
of ORBCOMM USA and ORBCOMM International, respectively.
OCC, a Delaware corporation, is a majority owned subsidiary of Orbital and
is included in Orbital's Consolidated Financial Statements. From inception
through December 1995, OCC was an operating company with employees working under
contract to ORBCOMM. At the beginning of 1996, all OCC employees transferred to
ORBCOMM, ORBCOMM USA or ORBCOMM International. Currently, OCC operates as a
holding company.
The ORBCOMM System Description
ORBCOMM was formed for the design, development, construction, integration,
test and operation of the ORBCOMM low-Earth orbit satellite communications
system (the "ORBCOMM System"). ORBCOMM intends to construct and implement the
initial 28-satellite ORBCOMM System in two phases: the ORBCOMM Phase 1A System,
consisting of the worldwide network operations center (including the satellite
management system), the United States gateway control center, four United States
gateway Earth stations and two satellites; and the ORBCOMM Phase 1B System
consisting of the ORBCOMM Phase 1A System, three additional planes each
consisting of eight satellites and one plane consisting of two high-inclination
satellites.
ORBCOMM USA, a subsidiary of OCC, has been granted the exclusive right to
market, sell, lease and franchise the ORBCOMM System output capacity in the
United States and the exclusive use of the ORBCOMM System Assets in the United
States.
System Charge
OCC is obligated to pay ORBCOMM a System Charge in consideration of the
construction and financing of the ORBCOMM System Assets by ORBCOMM. Through June
30, 1996, no such charges have been incurred.
Regulatory Status
Construction and operation of communications satellites in the United
States requires licenses from the Federal Communications Commission ("FCC"). OCC
has been granted full operational authority for the ORBCOMM System by the FCC.
Similar licenses are required from foreign regulatory authorities to permit
F-33
<PAGE> 156
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(1) THE ORBCOMM SYSTEM -- (CONTINUED)
ORBCOMM System services to be offered outside the United States. Primary
responsibility for obtaining licenses outside the United States will reside with
the various International Licensees.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of OCC and the
partnership in which OCC directly or indirectly controls the general partner
interests. All material transactions and accounts among consolidated entities
have been eliminated in consolidation.
Revenue Recognition
OCC recognizes revenues on long-term contracts using the percentage of
completion method of accounting. Accordingly, revenues on long-term fixed-price
contracts are recognized based on costs incurred in relation to total estimated
costs, or based on specific delivery terms and conditions. Anticipated contract
losses are recognized as they become known.
OCC currently has no long-term contracts, but was the primary supplier of
the ORBCOMM Phase 1A System through completion of the system in April 1995.
Presentation of Interim Financial Information (Unaudited)
In the opinion of management, the accompanying unaudited interim
consolidated financial information reflects all adjustments, consisting of
normal recurring accruals, necessary for a fair presentation thereof. Operating
results for the six-month periods ended June 30, 1996 and 1995 are not
necessarily indicative of the results expected for the full year.
Income Taxes
OCC is included in Orbital's consolidated Federal income tax returns. OCC
determines its provision for income taxes as if it were filing on a separate
return basis.
OCC recognizes income taxes using the asset and liability method. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
F-34
<PAGE> 157
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Cash and Cash Equivalents
OCC considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Investments in Affiliates
OCC uses the equity method of accounting for its investments in and
earnings of affiliates in which OCC has the ability to significantly influence,
but not control, such affiliate's operations. In accordance with the equity
method of accounting, OCC's carrying amount of an investment in an affiliate is
initially recorded at cost and is increased to reflect its share of the
affiliate's income and is reduced to reflect its share of the affiliate's
losses. OCC's investment is also increased to reflect contributions to, and
decreased to reflect distributions received from, the affiliate. Any difference
between the amount of OCC's investment and the amount of the underlying equity
in each affiliate's net assets is amortized over a period of twenty years.
Fair Value of Financial Instruments
The carrying value of OCC's cash and cash equivalents, receivables, and
accounts payable approximates fair value since all such instruments are
short-term in nature.
(3) RECEIVABLES
The components of receivables are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1995
----------- --------
<S> <C> <C>
Billed and billable.......................................... $ 2,277,290 $900,296
Recoverable costs and accrued profit not billed.............. 9,614,988 --
----------- --------
$11,892,278 $900,296
=========== ========
</TABLE>
(4) INVESTMENTS IN AFFILIATES
ORBCOMM Partnerships. OCC's and Teleglobe Mobile's total capital
commitments to ORBCOMM are approximately $75,000,000 and $85,000,000,
respectively, of which approximately $71,000,000 and $59,000,000, respectively,
had been contributed through June 30, 1996 (unaudited). Capital contributions by
OCC and Teleglobe Mobile through December 31, 1995 were approximately
$62,000,000 and $35,000,000, respectively.
Pursuant to the terms of the relevant partnership agreements, (i) OCC and
Teleglobe Mobile share equal responsibility for the operational and financial
affairs of ORBCOMM; (ii) OCC controls the operational and financial affairs of
ORBCOMM USA; and (iii) Teleglobe Mobile controls the operational and financial
affairs of ORBCOMM International. Since OCC is unable to control, but is able to
exercise significant influence over, ORBCOMM's and ORBCOMM International's
operating and financial policies, OCC is accounting for its investment in
ORBCOMM and ORBCOMM International using the equity method of accounting. Since
OCC is able to control the operational and financial affairs of ORBCOMM USA, the
Company consolidates the accounts of ORBCOMM USA.
At June 30, 1996 (unaudited), ORBCOMM had total assets, total liabilities
and total partners' capital of approximately $134,826,000, $16,220,000 and
$118,606,000, respectively. At December 31, 1995, ORBCOMM had total assets,
total liabilities and total partners' capital of approximately $109,030,000,
$14,428,000 and $94,602,000, respectively. ORBCOMM collected a non-refundable
fee in the amount of
F-35
<PAGE> 158
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) INVESTMENT IN AFFILIATES -- (CONTINUED)
approximately $900,000 from a potential international licensee in 1995 (none in
prior years) and net income (loss) of approximately $55,000, ($9,000), and $0
for the years ended December 31, 1995, 1994, and 1993, respectively.
Based on its current assessment of the overall business prospects of the
ORBCOMM partnerships and the ORBCOMM System, OCC currently believes its
investment of approximately $67,763,000 in ORBCOMM is fully recoverable. If, in
the future, implementation of the ORBCOMM System is significantly delayed,
significantly restricted or abandoned, OCC may be required to write-off part or
all of its investment.
(5) RELATED PARTY TRANSACTIONS
OCC was the prime contractor of the ORBCOMM Phase 1A System communications
satellites, launch vehicles and ground systems to ORBCOMM, and successfully
launched the ORBCOMM Phase 1A System satellites in April 1995. During the fiscal
years 1995, 1994, and 1993, OCC recorded contract revenues on sales to ORBCOMM
of approximately $15,652,000, $24,700,000 and $43,925,000, respectively.
Pursuant to the ORBCOMM Phase 1A System contract with ORBCOMM, OCC
subcontracted with Orbital to procure a majority of the communications
satellites, launch vehicles, and ground systems. During the fiscal years 1995,
1994, and 1993, OCC purchased hardware and services totaling approximately
$4,477,000, $14,660,000 and $32,902,000, respectively, from Orbital.
Pursuant to the ORBCOMM System Procurement Agreement (for the ORBCOMM Phase
1B System), ORBCOMM contracted with Orbital to procure additional communications
satellites and launch services. During the first six months of 1996, and during
fiscal year 1995, ORBCOMM purchased hardware and services totaling approximately
$28,031,000 (unaudited) and $23,672,000, respectively, from Orbital.
OCC procured U.S. Marketing Services from ORBCOMM USA on a cost
reimbursable basis. During the first six months of 1995 (unaudited) and the
fiscal years 1995, 1994, and 1993, OCC purchased marketing services totaling
approximately $886,000, $1,360,000, $2,093,000 and $749,000, respectively. OCC
ceased procuring U.S. Marketing Services from ORBCOMM USA at the end of
September 1995.
OCC obtains virtually all of its funding for operations and for its capital
investments in ORBCOMM from Orbital via a non-interest bearing intercompany
borrowing agreement. As of June 30, 1996 (unaudited) and December 31, 1995 and
1994, OCC owed Orbital $70,290,402, $62,858,000, and $61,386,000, respectively,
none of which is currently payable.
ORBCOMM USA currently obtains all of its funding from ORBCOMM via a
non-interest bearing intercompany borrowing agreement. As of June 30, 1996
(unaudited) and December 31, 1995 and 1994, ORBCOMM USA owed ORBCOMM $2,102,000,
$661,000, and $0, respectively, none of which is currently due.
As of June 30, 1996 (unaudited), OCC owes $112,000 and $6,600 to ORBCOMM
and ORBCOMM International, respectively, for employee bonus payments paid on
behalf of OCC for employees previously employed by OCC (none for the years ended
December 31, 1995 and 1994).
(6) INCOME TAXES
OCC had no current or deferred provision for income taxes for the years
ended December 31, 1995, 1994, and 1993. The primary difference between pre-tax
financial statement income and taxable income in 1993 relates to the utilization
of net operating losses generated in 1992. There are no significant differences
between pre-tax financial statement income and taxable income in 1995 and 1994.
F-36
<PAGE> 159
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(6) INCOME TAXES -- (CONTINUED)
The differences between the actual taxes and taxes computed at the U.S.
Federal income tax rate of 34% are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1994 1995
----- ----- ----
<S> <C> <C> <C>
U.S. Federal statutory rate..................................... 34.0% -- 34%
Utilization of net operating loss carryforward.................. (34.1) -- (34)
Other, net...................................................... 0.1 -- --
----- ---- --
Effective Rate............................................. -- -- --
===== ==== ==
</TABLE>
The tax effects of significant temporary differences at December 31, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
-------- --------
<S> <C> <C>
Deferred Tax Assets:
Accrued expenses and other................................. $ 62,000 $ 78,000
Valuation allowance............................................. (62,000) (78,000)
-------- --------
$ -- $ --
======== ========
</TABLE>
(7) STOCK OPTION PLAN
OCC adopted a stock option plan in 1992 (the "ORBCOMM Plan"). The ORBCOMM
Plan provides for grants of incentive and non-qualified stock options to
purchase OCC common stock to officers and employees of OCC, ORBCOMM, ORBCOMM
USA, ORBCOMM International, and Orbital. Under the terms of the ORBCOMM Plan,
incentive stock options may not be granted at less than 100% of the fair market
value at the date of grant and non-qualified options may not be granted at less
than 85% of the fair market value of OCC common stock at the date of grant as
determined by a committee consisting of two OCC Board members and two members
appointed by Teleglobe Mobile. The options vest at a rate set forth by the Board
of Directors in each individual option agreement, generally in one-fourth
increments over a four-year period. Certain provisions of the ORBCOMM Plan and
the Restated Agreement of Limited Partnership of ORBCOMM Global, L.P. ("Limited
Partnership Agreement") may require OCC to repurchase the common stock acquired
pursuant to the options beginning in 1995 if a public market for OCC common
stock has not been established. Pursuant to the terms of the Limited Partnership
Agreement, ORBCOMM is required to reimburse OCC for the costs of repurchasing
the common stock from employees of ORBCOMM,
F-37
<PAGE> 160
ORBITAL COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) STOCK OPTION PLAN -- (CONTINUED)
ORBCOMM USA, and ORBCOMM International. The following table summarizes the
option activity under the ORBCOMM Plan for the last three years:
<TABLE>
<CAPTION>
OUTSTANDING
NUMBER OF OPTION PRICE AND
SHARES PER SHARE EXERCISABLE
--------- ------------- -----------
<S> <C> <C> <C>
OUTSTANDING, DECEMBER 31, 1992.................. 413,650 $1.50 - $12.50
Grants..................................... 99,500 $5.25 - $12.50
Exercised.................................. --
Canceled or Expired........................ (16,876) $1.50 - $ 4.00
--------- ---------------
OUTSTANDING, DECEMBER 31, 1993.................. 496,274 $1.50 - $12.50 184,966
Grants..................................... 118,650 $13.00 - $14.00
Exercised.................................. (4,186) $1.50 - $ 4.00
Canceled or Expired........................ (11,664) $1.50 - $13.00
--------- ---------------
OUTSTANDING, DECEMBER 31, 1994.................. 599,074 $1.50 - $14.00 298,657
Grants..................................... -- --
Exercised.................................. (8,936) $1.50 - $13.00
Canceled or Expired........................ (44,238) $1.50 - $13.00
--------- ---------------
OUTSTANDING, DECEMBER 31, 1995.................. 545,900 $1.50 - $14.00 411,086
Grants..................................... 62,000 $17.00
Exercised.................................. (47,405) $1.50 - $12.50
Canceled or Expired........................ (20,750) $1.50 - $13.00
--------- ---------------
OUTSTANDING, JUNE 30, 1996...................... 539,745 $1.50 - $17.00 383,655
======== ==============
</TABLE>
OCC recorded compensation expense related to the ORBCOMM Plan of
approximately $32,000, $47,000, and $50,000 for the years ended December 31,
1995, 1994, and 1993, respectively. In 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"), which is effective for OCC's year
ending December 31, 1996. SFAS 123 recommends, but does not require, the
adoption of fair value accounting for stock-based compensation, including common
stock options issued to employees. OCC does not currently intend to adopt fair
value accounting for stock-based compensation issued to employees as recommended
by SFAS 123.
(8) SUBSEQUENT EVENTS
In August 1996, ORBCOMM and ORBCOMM Global Capital Corp. (the "Issuers")
issued $170,000,000 of Senior Notes due in 2004 with Revenue Participation
Interest (the "Notes"). Revenue Participation Interest represents an aggregate
amount equal to 5.0% of the ORBCOMM System revenue and is payable on the Notes
on each interest payment date subject to certain covenant restrictions. Interest
on the Notes will accrue at a rate of 14% per annum and will be payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
on February 15, 1997. The obligations of the Issuers under the Notes will be
jointly and severally guaranteed by OCC, Teleglobe Mobile, ORBCOMM USA and
ORBCOMM International. Upon closing, the Company used a portion of the net
proceeds from the sale of the Notes to purchase a portfolio of United States
government securities to provide for payment in full of interest on the Notes
through August 15, 1998 (estimated at approximately $44.8 million).
F-38
<PAGE> 161
AUDITORS' REPORT
To the Partners of
Teleglobe Mobile Partners
We have audited the consolidated balance sheet of Teleglobe Mobile Partners
(a development stage enterprise) as at December 31, 1995 and 1994 and the
consolidated statements of income, partners' capital and changes in financial
position for the years then ended and for the period from July 21, 1993 (date of
inception) through December 31, 1993. These consolidated financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on the financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Partnership as at December
31, 1995 and 1994 and the results of its operations and the changes in its
financial position for the years then ended and for the period from July 21,
1993 (date of inception) through December 31, 1993 in accordance with generally
accepted accounting principles in the United States of America.
Grant Thornton
General Partnership
Chartered Accountants
Montreal, Canada
June 25, 1996
F-39
<PAGE> 162
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and short-term deposits................................... $ 0 $34,168 $30,185
Accrued interest receivable.................................... 0 0 101
Joint venture investment (Note 3).............................. 10,003 33,512 53,643
------- ------- -------
10,003 67,680 83,929
======= ======= =======
LIABILITIES
Due to affiliates, without interest and repayment terms........ 938 271 624
Minority interest.............................................. 0 5 0
Other liabilities.............................................. 0 0 191
------- ------- -------
938 276 815
------- ------- -------
PARTNERS' CAPITAL
Teleglobe Mobile, L.P.......................................... 8,974 46,711 57,598
TR (U.S.A.) Ltd................................................ 0 20,221 24,934
Teleglobe Mobile Investment Inc................................ 91 472 582
------- ------- -------
9,065 67,404 83,114
------- ------- -------
$10,003 $67,680 $83,929
======= ======= =======
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements)
F-40
<PAGE> 163
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED INCOME
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
TOTAL TOTAL
JULY 21, ACCUMULATED ACCUMULATED
1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, --------------- DECEMBER 31, ---------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------ ----- ------ ------------ ----- ------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Interest income............... $ 0 $ 0 $1,253 $1,253 $ 0 $ 803 $ 2,056
Share in net loss of a joint
venture..................... 0 0 (219) (219) 0 (4,299) (4,518)
------ ----- ------ ------ ----- ------- --------
0 0 1,034 1,034 0 (3,496) (2,462)
EXPENSES
Operating expenses............ 485 453 743 1,681 150 799 2,480
------ ----- ------ ------ ----- ------- --------
Income (loss) before minority
interest.................... (485) (453) 291 (647) (150) (4,295) (4,942)
Minority interest............. 0 0 0 0 0 (5) (5)
------ ----- ------ ------ ----- ------- --------
NET INCOME (LOSS)............. $ (485) $(453) $ 291 $ (647) $(150) $(4,290) $ (4,937)
====== ===== ====== ====== ===== ======= ========
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements)
F-41
<PAGE> 164
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED PARTNERS' CAPITAL
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
GENERAL PARTNERS
----------------------------------------------------
TELEGLOBE TELEGLOBE MOBILE
MOBILE, L.P. INVESTMENT INC. TR (U.S.A.) LTD. TOTAL
------------ ---------------- ---------------- -------
<S> <C> <C> <C> <C>
Initial capital contributions..... $ 9,903 $100 $ 0 $10,003
Net loss.......................... (480) (5) 0 (485)
------- ---- -------- -------
PARTNERS' CAPITAL, DECEMBER 31,
1993............................ 9,423 95 0 9,518
Net loss.......................... (449) (4) 0 (453)
------- ---- -------- -------
PARTNERS' CAPITAL, DECEMBER 31,
1994............................ 8,974 91 0 9,065
Capital contributions............. 27,719 281 31,062 59,062
Excess of contributions from new
Partner to the existing
Partners........................ 10,587 106 (10,693) 0
Net income........................ 134 1 156 291
Share of financing fees of a joint
venture......................... (703) (7) (304) (1,014)
------- ---- -------- -------
PARTNERS' CAPITAL, DECEMBER 31,
1995............................ 46,711 472 20,221 67,404
Capital contributions
(unaudited)..................... 10,890 110 9,000 20,000
Excess of contributions from new
Partner to the existing Partners
(unaudited)..................... 2,970 30 (3,000) 0
Net loss (unaudited).............. (2,973) (30) (1,287) (4,290)
------- ---- -------- -------
PARTNERS' CAPITAL, JUNE 30, 1996
(UNAUDITED)..................... $57,598 $582 $ 24,934 $83,114
======= ==== ======== =======
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements)
F-42
<PAGE> 165
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
CHANGES IN FINANCIAL POSITION
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
TOTAL TOTAL
JULY 21, CHANGES CHANGES
1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ----------------- DECEMBER 31, ---------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------ ----- -------- ------------ ----- ------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............ $ (485) $(453) $ 291 $ (647) $(150) $(4,290) $ (4,937)
Non-cash items
Share in net loss of a
joint venture.......... 0 0 219 219 0 4,299 4,518
Minority interest........ 0 0 0 0 0 (5) (5)
Changes in non-cash operating
balances
Accrued interest
receivable............. 0 0 0 0 0 (101) (101)
Other liabilities........ 0 0 0 0 0 191 191
-------- ----- -------- -------- ----- ------- ---------
Cash provided by (applied to)
operating activities....... (485) (453) 510 (428) (150) 94 (334)
-------- ----- -------- -------- ----- ------- ---------
INVESTING ACTIVITIES
Net increase in a joint
venture investment and cash
applied to investing
activities................. (10,003) 0 (23,728) (33,731) 0 (24,430) (58,161)
-------- ----- -------- -------- ----- ------- ---------
FINANCING ACTIVITIES
Due to affiliates............ 485 453 (667) 271 150 353 624
Share of financing fees of a
joint venture.............. 0 0 (1,014) (1,014) 0 0 (1,014)
Partners' contributions...... 10,003 0 59,062 69,065 0 20,000 89,065
Minority interest............ 0 0 5 5 0 0 5
-------- ----- -------- -------- ----- ------- ---------
Cash provided by financing
activities................. 10,488 453 57,386 68,327 150 20,353 88,680
-------- ----- -------- -------- ----- ------- ---------
INCREASE (DECREASE) IN
CASH....................... 0 0 34,168 34,168 0 (3,983) 30,185
Cash, beginning of the
period..................... 0 0 0 0 0 34,168 0
-------- ----- -------- -------- ----- ------- ---------
CASH, END OF THE PERIOD...... $ 0 $ 0 $ 34,168 $ 34,168 $ 0 $30,185 $ 30,185
======== ===== ======== ======== ===== ======= =========
Cash represents cash and short-term deposits
</TABLE>
(The accompanying notes are an integral part of the consolidated financial
statements)
F-43
<PAGE> 166
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS)
(1) GOVERNING STATUTES AND NATURE OF OPERATIONS
Teleglobe Mobile Partners, a Delaware general partnership (the
"Partnership") was originally formed July 21, 1993, in accordance with the
provisions of the Delaware Uniform Partnership Law for purposes of being a
general and a limited partner in ORBCOMM Global, L.P. ("ORBCOMM Global" formerly
known as ORBCOMM Development Partners, L.P.), a Delaware limited partnership
providing international wireless data communications services. As well the
Partnership carries on marketing activities through its subsidiary, ORBCOMM
International Partners, L.P. ("ORBCOMM International"). As of June 29, 1994, the
original Partnership was amended and restated by admitting a new partner to the
Partnership. The Partnership's term commenced on June 29, 1994 and shall
terminate on December 31, 2015.
(2) SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Partnership holds a 50% participating interest in ORBCOMM Global, which
in turn holds a 98% non-controlling interest in ORBCOMM USA, L.P. and ORBCOMM
International, two other partnerships formed to market the ORBCOMM system.
The Partnership also directly holds a 2% participating interest in ORBCOMM
International bringing its direct and indirect participation to 51%. Teleglobe
Mobile Partners controls the operations and financial affairs of ORBCOMM
International.
The Partnership is in its development stage, devoting substantially all of
its efforts to establishing a new communications business through ORBCOMM
Global. Operations are expected to commence fully in 1997. The consolidated
financial statements of the Partnership are prepared on the accrual basis of
accounting, in conformity with generally accepted accounting principles in the
United States of America and, where applicable, are in general conformity with
practices prevailing in the telecommunications industry. They include the
accounts of the Partnership and its subsidiary, ORBCOMM International.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Joint venture investment
The investment in ORBCOMM Global is accounted for using the equity method.
Income taxes
As a partnership, Federal and State income taxes are the direct
responsibility of each partner. Accordingly, no income taxes have been recorded
in the consolidated financial statements.
F-44
<PAGE> 167
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
(3) JOINT VENTURE INVESTMENT
The table below summarizes the information concerning the assets,
liabilities and income of ORBCOMM Global.
<TABLE>
<CAPTION>
TOTAL TOTAL
JULY 21, ACCUMULATED ACCUMULATED
1993 DURING DURING
(DATE OF DEVELOPMENT DEVELOPMENT
INCEPTION) YEAR ENDED STAGE SIX MONTHS STAGE
THROUGH DECEMBER 31, THROUGH ENDED JUNE 30, THROUGH
DECEMBER 31, ------------- DECEMBER 31, --------------- JUNE 30,
1993 1994 1995 1995 1995 1996 1996
------------ ---- ---- ------------ ---- ------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
- - Income statement data
Income.................. 0 0 958 958 635 72 1,030
Net income (loss)....... 0 (9) 55 46 635 (8,995) (8,949)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1994 1995 1996
------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
- - Balance sheet data
Total assets............................................ $73,647 $109,029 $134,826
Total liabilities....................................... 15,137 14,428 16,221
Partners' capital
General partners
Teleglobe Mobile Partners..................... 9,754 8,767 4,269
Orbital Communications Corporation............ 9,754 8,767 4,269
Limited partners
Teleglobe Mobile Partners..................... 0 24,750 49,180
Orbital Communications Corporation............ 39,002 52,317 60,887
</TABLE>
(4) COMMITMENTS
Teleglobe Mobile Partners is committed to invest $85,000 in the ORBCOMM
project. As at June 30, 1996 and 1995 and as at December 31, 1995, 1994 and
1993, cumulative amounts of $59,183, $10,003, $34,753, $10,003 and $10,003
respectively were already invested.
Teleglobe Mobile Partners is obligated to pay to ORBCOMM Global a System
Charge in consideration of ORBCOMM Global's grant to the Partnership of the
right to market, sell, lease and franchise all ORBCOMM System Output Capacity
outside the United States. Teleglobe Mobile Partners in turn has granted to
ORBCOMM International, these same privileges and the exclusive use of the
ORBCOMM System Assets located outside the United States for a period of 20
years. In consideration for this grant, the subsidiary has agreed to pay to the
Partnership an Output Capacity Charge.
(5) SUBSEQUENT EVENTS
In August 1996, ORBCOMM Global and ORBCOMM Global Capital Corp., a wholly
owned subsidiary of ORBCOMM Global, (the "Issuers") issued $170,000 of Senior
Notes due in 2004 with Revenue Participation Interest (the "Notes"). Revenue
Participation Interest represents an aggregate amount equal to
F-45
<PAGE> 168
TELEGLOBE MOBILE PARTNERS
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
(5) SUBSEQUENT EVENTS -- (CONTINUED)
5.0% of the ORBCOMM System revenue and is payable on the Notes on each interest
payment date subject to certain covenant restrictions. Interest on the Notes
will accrue at a rate of 14% per annum and will be payable semi-annually in
arrears on February 15 and August 15 of each year, commencing on February 15,
1997. The obligations of the Issuers under the Notes will be jointly and
severally guaranteed by Teleglobe Mobile Partners, Orbital Communications
Corporation, a majority owned subsidiary of Orbital Sciences Corporation,
ORBCOMM USA, L.P., and ORBCOMM International.
F-46
<PAGE> 169
GLOSSARY OF TERMS
ADMINISTRATIVE SERVICES AGREEMENT -- dated as of September 12, 1995 between
Orbital and ORBCOMM pursuant to which Orbital provides ORBCOMM with office
space, certain occupancy services and certain administrative and management
services as specified therein.
AMERICAN MOBILE SATELLITE CORPORATION (AMSC) -- the only company in the
United States authorized to provide mobile satellite services using GEO
satellites.
BPS -- bits per second. The rate at which digital data are transmitted over
a communications path.
BAND -- a range of frequencies in the radio spectrum.
BANDWIDTH -- the range of frequencies, expressed in Hertz (Hz), that can
pass over a given transmission channel. The bandwidth determines the rate at
which information can be transmitted through the circuit. The greater the
bandwidth, the more information can be sent through the circuit in a given
amount of time at a given accuracy level.
BIG LEOS -- networks of LEO satellites operating above 1 GHz, such as the
Iridium or Globalstar systems, which are designed to provide voice and data
services to portable or fixed receivers globally.
CAPITAL PREFERENCE -- for each partner of ORBCOMM, ORBCOMM USA or ORBCOMM
International, as the context requires, the sum of the amounts actually
contributed by such partner to such partnership in cash or immediately available
funds since the date of inception thereof through a relevant date, plus, with
respect to the partners of ORBCOMM, the amount of any Unrecouped Capital
Preference in ORBCOMM USA or ORBCOMM International contributed by such partner.
CODE DIVISION MULTIPLE ACCESS (CDMA) -- a transmission system that
superimposes audio or data information onto a specified coded address waveform.
CDMA allows a large number of wireless users simultaneously to access a single
radio frequency band without interference. As each wireless communicator gains
access, a gateway assigns it a unique sequence of frequency shifts that serves
as a code to distinguish that particular transmission from others on the air.
DEFINITIVE AGREEMENTS -- the Master Agreement, the ORBCOMM Partnership
Agreement, the ORBCOMM USA Partnership Agreement, the ORBCOMM International
Partnership Agreement, the System Construction Agreement, the System Charge
Agreement, the International System Charge Agreement, the Procurement Agreement
and the Proprietary Information and Non-Competition Agreement.
DYNAMIC CHANNEL ACTIVITY ASSIGNMENT SYSTEM (DCAAS) -- an interference
avoidance technique system developed by OCC and enhanced by ORBCOMM to avoid
interfering with other users in the band in which the ORBCOMM System is designed
to operate.
EARTH STATION -- the antennae, receivers, transmitters and other equipment
needed on the ground to transmit and receive and process satellite
communications signals.
EXCHANGE NOTES -- The registered 14% Series B Senior Notes due 2004, with
Revenue Participation Interest.
EXCHANGE AGENT -- Marine Midland Bank.
FCC LICENSE -- the FCC authorization granted to OCC on October 20, 1994 to
construct, launch and operate 36 satellites for the purpose of providing two-way
data and messaging communications and position determination services in the
United States.
FEDERAL COMMUNICATIONS COMMISSION (FCC) -- a U.S. independent regulatory
agency established by the Communications Act of 1934, charged with regulating
all electronic interstate communications, including telephone, cable television,
broadcasting and LEO systems. The FCC also is responsible for assigning the
radio frequencies used by all non-federal users of the spectrum.
FREQUENCY -- an expression of how frequently a periodic (repetitious) wave
form or signal regenerates itself at a given amplitude.
G-1
<PAGE> 170
GATEWAY -- the facilities consisting of Earth stations, computers,
displays, control consoles, communications equipment and other hardware that
transport and control the flow of data and messaging communications and other
information for the ORBCOMM System.
GEOSYNCHRONOUS ORBIT OR GEOSTATIONARY ORBIT (GEO) -- an orbit directly over
the equator, approximately 22,300 nautical miles above the Earth.
GEOSYNCHRONOUS OR GEOSTATIONARY SATELLITE (GEO SATELLITE) -- a satellite
using a geosynchronous orbit. When positioned in this orbit above the equator, a
satellite appears to hover over the same spot on the Earth because it is moving
at a rate that matches the speed of the Earth's rotation on its axis.
GIGAHERTZ (GHZ) -- a measure of radio frequency equal to one billion cycles
per second.
GLOBALSTAR, L.P. -- a partnership formed by, among others, Loral
Corporation and QUALCOMM, Incorporated, that intends to provide mobile
communications services using LEO satellites.
GLOBAL POSITIONING SYSTEM (GPS) -- a network of satellites that provides
precise location determination to receivers. Portable or vehicle-mounted GPS
devices receive signals from the satellites and calculate the user's position to
within 100 yards for civilian purposes and more precisely for the military.
GROUND SEGMENT FACILITIES USE AGREEMENT -- dated as of December 19, 1995
between ORBCOMM International and ORBCOMM Canada pursuant to which ORBCOMM
Canada is authorized for a fee to access and use the U.S. Gateway on a shared
basis with ORBCOMM USA.
HF -- High frequency. The portion of the electromagnetic spectrum between 3
and 30 MHz.
INMARSAT -- International Maritime Satellite Organization, a body that
handles international maritime satellite telephone traffic via satellites. The
Inmarsat system was originally established to provide communications to ships,
but now also provides land mobile communication.
INTELSAT -- International Telecommunications Satellite Organization, formed
in 1964 with the purpose of creating a worldwide communications satellite
system.
INTERFERENCE -- the effect of unwanted energy due to one or a combination
of emissions, radiations or inductions on the quality of reception in a
radiocommunication system.
INTERNATIONAL LICENSEES -- third-party entities that will execute Service
License Agreements under which, among other things, they will generally be
obligated to procure and install a Gateway in their territory, and will be
obligated to obtain the necessary regulatory approvals to provide services using
the ORBCOMM System in their territory.
INTERNATIONAL OUTPUT CAPACITY CHARGE -- a quarterly fee paid by ORBCOMM
International to Teleglobe Mobile in exchange for the exclusive right to market,
sell, lease and franchise all ORBCOMM System output capacity outside the United
States and for exclusive use of the System Assets outside the United States.
INTERNATIONAL SYSTEM CHARGE AGREEMENT -- restated as of September 12, 1995
among ORBCOMM Global, Teleglobe Mobile and ORBCOMM International setting forth
each of their respective responsibilities regarding use of the ORBCOMM System
and granting to Teleglobe Mobile, which has passed along to ORBCOMM
International, the exclusive right in the Non-U.S. Area to market, sell, lease
and franchise all ORBCOMM System output capacity and the exclusive use of the
System Assets outside the United States.
INTERNATIONAL TABLE OF FREQUENCY ALLOCATIONS -- identifies radio frequency
segments that have been designated for specific radio services by the member
nations of the ITU.
INTERNATIONAL TELECOMMUNICATIONS UNION (ITU) -- the telecommunications
agency of the United Nations, established to provide standardized communications
procedures and practices including frequency allocation and radio regulations on
a worldwide basis.
INTERNET -- refers to a large collection of interconnected computer
networks that use a common transmission protocol allowing users to communicate
across networks.
G-2
<PAGE> 171
IRIDIUM SYSTEM -- a LEO satellite-based telecommunications system proposed
by a consortium headed by Motorola, Inc. to provide mobile satellite services
using radio frequencies above 1 GHz.
ISSUERS -- The Company and/or Capital.
JOINT SHARING AGREEMENT -- dated August 7, 1992 by and among OCC, Starsys
and VITA to resolve issues relating to the mutual exclusivity of their Little
LEO systems.
KBYTE -- a measure for volume of data equal to one-thousand eight-bit
alphanumeric characters or numbers.
KBPS -- thousands of bits per second. The rate at which digital data are
transmitted over a communications path.
KILOHERTZ (KHZ) -- a measure of radio frequency equal to one thousand
cycles per second.
LEO SATELLITE -- a low-Earth orbit satellite located approximately 800
kilometers above the Earth. Because a LEO satellite orbits close to the Earth, a
LEO satellite uses less power than satellites operating at a higher orbit.
LEO SYSTEM -- a constellation of many satellites in low-Earth orbit. LEO
systems may be of two types: Little LEOs and Big LEOs.
LEFT-HAND CIRCULAR POLARIZATION (LHCP) -- an elliptically or
circularly-polarized wave, in which the electric field vector, observed in the
fixed plane, normal to the direction of propagation, while looking in the
direction of propagation, rotates with time in a left-hand or counter clockwise
direction.
LITTLE LEOS -- networks of LEO satellites operating below 1 GHz, such as
the ORBCOMM System, providing non-voice services and designed to provide global
data and messaging services.
MAGELLAN -- Magellan Corporation, a subsidiary of Orbital. Magellan is the
world's largest producer of hand-held satellite GPS navigators and is a
potential manufacturer of ORBCOMM Subscriber Communicators.
MASTER AGREEMENT -- restated as of September 12, 1995 between Orbital,
ORBCOMM, Teleglobe Mobile and Teleglobe.
MEGAHERTZ (MHZ) -- a measure of radio frequency equal to one million cycles
per second.
METLIFE NOTE -- the Loan and Security Agreement dated December 22, 1994
between the Company and MetLife.
MICROSTAR(TM) -- a satellite designed and manufactured by Orbital for use
in the ORBCOMM System and for a variety of small space science and satellite
imagery projects.
MOBILE SATELLITE SERVICE (MSS) -- a generic term meaning an ITU-defined
service in which satellites are used to deliver communications services (voice
or data, one- or two-way) to mobile users such as cars, trucks, ships and
planes.
MODIFICATION REQUEST -- request for modification of the FCC License filed
by OCC on October 20, 1995.
MONTHLY CASH REQUIREMENT -- the total cash amounts that the Company
anticipates it will be obligated to pay for the next succeeding month, net of
any anticipated cash receipts of the Company for such succeeding month.
NET INCOME -- an amount equal to the Company's, ORBCOMM USA's or ORBCOMM
International's, as the context requires, taxable income for a relevant period,
adjusted as provided in the relevant partnership agreement.
NET LOSS -- an amount equal to the Company's, ORBCOMM USA's or ORBCOMM
International's, as the context requires, taxable loss for a relevant period,
adjusted as provided in the relevant partnership agreement.
G-3
<PAGE> 172
NETWORK OPERATIONS CENTER (NOC) -- the facility that houses the control
segments of the ORBCOMM System. ORBCOMM's NOC is located at Orbital's Dulles,
Virginia headquarters. Messages are routed from a U.S. Earth station to the U.S.
Gateway located in the NOC, where the message is processed and directed to its
destination.
NON-VOICE, NON-GEOSTATIONARY (NVNG) -- LEO satellites operating below 1
GHz, such as the ORBCOMM System, providing non-voice services and designed to
provide global data and messaging communications services.
OCC -- Orbital Communications Corporation, a Delaware corporation and a
majority owned subsidiary of Orbital and a 50% general and limited partner of
ORBCOMM.
OLD NOTES -- the unregistered 14% Senior Notes due 2004, with Revenue
Participation Interest, issued by ORBCOMM and Capital in the Old Notes Offering.
OLD NOTES OFFERING -- the offering of the unregistered 14% Senior Notes due
2004, with Revenue Participation Interest, issued by ORBCOMM and Capital and
consummated on August 7, 1996.
ORBCOMM CANADA INC. -- a Canadian corporation holding exclusive rights to
market services using the ORBCOMM System in Canada.
ORBCOMM GLOBAL CAPITAL CORP. (CAPITAL) -- a Delaware corporation and,
together with ORBCOMM, an Issuer of the Notes.
ORBCOMM -- ORBCOMM Global, L.P., a Delaware limited partnership owned by
OCC and Teleglobe Mobile that is engaged in the development, construction,
operation and marketing of the ORBCOMM System. ORBCOMM, together with Capital,
is an Issuer of the Notes.
ORBCOMM INTERNATIONAL -- ORBCOMM International Partners, L.P., a Delaware
limited partnership owned by ORBCOMM and Teleglobe Mobile that markets the
ORBCOMM System outside the United States.
ORBCOMM INTERNATIONAL PARTNERSHIP AGREEMENT -- the limited partnership
agreement of ORBCOMM International restated as of September 12, 1995, by and
between ORBCOMM and Teleglobe Mobile, as such partnership agreement may be
amended from time to time.
ORBCOMM PARTNERSHIP AGREEMENT -- the limited partnership agreement of
ORBCOMM restated as of September 12, 1995, by and between OCC and Teleglobe
Mobile, as such partnership agreement may be amended from time to time.
ORBCOMM SYSTEM -- a global digital satellite communications system of up to
28 LEO satellites and certain terrestrial facilities intended to provide two-way
data and messaging communications services throughout the world.
ORBCOMM USA -- ORBCOMM USA, L.P., a Delaware limited partnership owned by
OCC and ORBCOMM that markets the ORBCOMM System in the United States.
ORBCOMM USA PARTNERSHIP AGREEMENT -- the limited partnership agreement of
ORBCOMM USA restated as of September 12, 1995, by and between OCC and ORBCOMM,
as such partnership agreement may be amended from time to time.
ORBITAL PLANE -- the plane defined by the flight path of a satellite.
ORBITAL SCIENCES CORPORATION (ORBITAL) -- a Delaware corporation and parent
of OCC. Orbital is a publicly traded space and information systems company
providing space-related technologies, products, systems and services.
OUTPUT CAPACITY CHARGE -- a quarterly fee paid by ORBCOMM USA to OCC in
exchange for the exclusive right to market, sell, lease and franchise all
ORBCOMM System output capacity in the United States and for exclusive use of the
System Assets in the United States.
G-4
<PAGE> 173
PAGING -- a service designed to deliver a message to a person whose
location is unknown, which messages may be received via an alphanumeric display
or small speaker.
PARTICIPATION PERCENTAGE -- represents the portion of a partner's interest
in the Company, ORBCOMM USA or ORBCOMM International as the context requires.
PEGASUS -- Orbital's air-launched space booster vehicle used to launch
small satellites into low-Earth orbit. Both Pegasus and Taurus are used by
governmental, commercial and university customers to launch communications,
remote sensing and scientific research satellites or payloads.
PERSONAL COMMUNICATIONS SERVICES (PCS) -- terrestrial wireless
telecommunications services similar to cellular telephone service but operating
in a different set of frequencies.
PROCUREMENT AGREEMENT -- dated as of September 12, 1995 between ORBCOMM and
Orbital pursuant to which ORBCOMM is procuring, among other things, 34
satellites, launch services for 26 satellites and completion of certain
satellite control elements on a fixed-price basis.
PROPRIETARY INFORMATION -- includes written or oral information of any kind
disclosed to a party by another party and designated as proprietary information
and clearly identified as such. Proprietary information does not include
information: (i) that becomes publicly available through no wrongful act of the
party receiving the information; (ii) is known by the party receiving the
information without any proprietary restrictions at the time of receipt; (iii)
is independently developed by another party who did not directly or indirectly
have access to the Proprietary Information; (iv) is obligated to be produced
under court order or demand; or (v) is required to be disclosed pursuant to
applicable law, rule or regulation.
PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT -- restated as of
September 12, 1995 among Orbital, OCC, Teleglobe, Teleglobe Mobile, ORBCOMM,
ORBCOMM USA and ORBCOMM International regarding the protection of Proprietary
Information that may be disclosed in connection with the ORBCOMM System and
containing certain non-competition provisions.
RADIO FREQUENCY -- a frequency that is higher than the audio frequencies
but below the infrared frequencies, usually above 20 kHz.
RESELLERS -- entities marketing and selling ORBCOMM System services on a
value-added basis in a territory or to a particular market segment.
SATELLITE -- a spacecraft that is in orbit around a planet (usually the
Earth) intended for observation, research or communications in space.
SATELLITE CONTROL CENTER -- the facilities that process and display the
telemetry data for the ORBCOMM System satellites, monitor the operational status
of such satellites and control the operation of the satellites power subsystems,
altitude control subsystems and all other subsystems.
SATELLITE USAGE FEE -- a fee paid by an International Licensee for use of
the satellites in the ORBCOMM System as described in the Service License
Agreement.
SERVICE LICENSE AGREEMENT -- an agreement to be entered into between
ORBCOMM International and an International Licensee authorizing the
International Licensee to access the satellites in the ORBCOMM System to offer
on an exclusive basis communication services using the ORBCOMM System in the
territory specified therein.
SPECTRUM -- consists of all the radio frequencies that are used for radio
communications.
STARSYS -- Starsys Global Positioning, Inc., a subsidiary of GE American
Communications Corporation. Starsys intends to operate a competing Little LEO
system.
SUBSCRIBER COMMUNICATOR -- the equipment used by a Subscriber to access the
ORBCOMM System that has been type approved by or on behalf of ORBCOMM.
SYSTEM AGREEMENT -- the ORBCOMM System Design, Development, Construction,
Integration, Test and Operations Agreement dated as of June 30, 1993 between OCC
and the Company.
G-5
<PAGE> 174
SYSTEM ASSETS -- the tangible property (including software) to be delivered
to ORBCOMM pursuant to the System Agreement and the Procurement Agreement.
SYSTEM CHARGE -- OCC's quarterly fee remitted to ORBCOMM by OCC in
consideration of the construction and financing of the System Assets and
Teleglobe Mobile's quarterly fee remitted to ORBCOMM in consideration of the
grant of the exclusive right to market, sell, lease and franchise all ORBCOMM
System output capacity outside the United States and for exclusive use of the
ORBCOMM System Assets outside the United States.
SYSTEM CHARGE AGREEMENT -- restated as of September 12, 1995, by and
between OCC and ORBCOMM USA setting forth OCC's and ORBCOMM USA's
responsibilities regarding the use of the ORBCOMM System and granting to ORBCOMM
USA the exclusive right in the United States to market, sell, lease and
franchise all ORBCOMM System output capacity and exclusive use of certain System
Assets located in the United States.
SYSTEM CONSTRUCTION AGREEMENT -- restated as of September 12, 1995 between
OCC and ORBCOMM pursuant to which ORBCOMM is developing and constructing the
System Assets comprising the ORBCOMM System.
TAURUS -- Orbital's ground-launched space booster vehicle, derived from the
Pegasus launch vehicle, used to launch satellites into low-Earth orbit. Taurus
has been used or selected for use by governmental and commercial customers to
launch communications and remote sensing satellites.
TECHNOLOGY RESOURCES INDUSTRIES BHD. (TRI) -- a Malaysian holding company
that controls the largest cellular operator in Malaysia.
TELEGLOBE -- Teleglobe Inc., a Canadian corporation that provides
intercontinental telecommunications services to over 240 countries worldwide
through a network of submarine cables and satellite Earth stations.
TELEGLOBE MOBILE -- Teleglobe Mobile Partners, a Delaware general
partnership owned by Teleglobe and TRI and a 50% general and limited partner of
ORBCOMM.
TIME DIVISION MULTIPLE ACCESS (TDMA) -- a digital method of multiplexing
that combines a number of signals through a common point by organizing them
sequentially and transmitting each in bursts at different instants of time.
Communicating devices at different geographical locations share a multipoint or
broadcast channel by means of a technique that allocates different time slots to
different users.
TOTAL AGGREGATE REVENUES -- the total aggregate revenues invoiced by
ORBCOMM USA and ORBCOMM International to its subscribers, Resellers and
International Licensees in connection with the operation, marketing and use of
the ORBCOMM System during a calendar quarter (excluding revenues invoiced by
ORBCOMM USA and ORBCOMM International in connection with the sale of network
control centers, Gateway Earth stations and Subscriber Communicators).
TRANSIT BAND -- that portion of the radio spectrum between 149.9-150.05 MHz
and 399.9-400.050 MHz allocated for radio-navigation satellite service downlink
transmissions. The Transit Band currently is occupied by the U.S. Navy Transit
System and a similar Russian system.
UHF -- Ultra high frequency. The portion of the electromagnetic spectrum
with frequencies between 300 MHz and 3 GHz.
UNRECOUPED CAPITAL PREFERENCE -- the amount, if any, by which a partner's
Capital Preference in ORBCOMM, ORBCOMM USA or ORBCOMM International, as the
context requires, exceeds cumulative distributions by such partnership to such
partner pursuant to the relevant partnership agreement since the inception of
such partnership (but excluding deemed distributions).
U.S. EARTH STATION -- any or one of the four Earth stations constructed
pursuant to the System Agreement or the Procurement Agreement in St. Johns,
Arizona; Ocilla, Georgia; Arcade, New York and East Wenatchee, Washington.
G-6
<PAGE> 175
VHF -- Very high frequency. The portion of the electromagnetic spectrum
with frequencies between 30 and 300 MHz.
VOLUNTEERS IN TECHNICAL ASSISTANCE (VITA) -- an international
not-for-profit organization licensed by the FCC to provide Little LEO satellite
services including educational, health, environmental, disaster relief, and
fundamental technical assistance communications services for the benefit of
recipients in developing countries.
WIRELESS -- operating with electromagnetic waves and not with conducting
wire or fiber optic cable.
WIRELINE -- communications systems that use terrestrial fixed facilities
(e.g., copper wires, fiber optic cable or microwave) for transmission of voice,
data and video.
WORLD ADMINISTRATIVE RADIO CONFERENCE (WARC) -- an ITU conference for
adopting international allocations for radio frequencies and satellite orbit
locations, which has been succeeded by the World Radiocommunication Conference.
WORLD RADIOCOMMUNICATION CONFERENCE (WRC) -- the successor to the World
Administrative Radio Conference.
G-7
<PAGE> 176
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY
OFFER TO BUY, ANY OR THE SENIOR NOTES OFFERED HEREBY, TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OR THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUERS SINCE SUCH
DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 16
The Exchange Offer.................... 26
Use of Proceeds....................... 35
Capitalization........................ 35
Selected Financial Data............... 36
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 37
Business.............................. 42
Regulation............................ 62
Management............................ 67
Relationships Among the ORBCOMM
Parties............................. 70
The Partnership Agreements............ 77
Description of Senior Notes........... 80
Plan of Distribution.................. 115
Certain Federal Income Tax
Considerations...................... 115
Legal Matters......................... 116
Experts............................... 116
Index to Financial Statements......... F-1
Glossary of Terms..................... G-1
Form of Letter to be Delivered by
Accredited Investors................ A-1
</TABLE>
UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE
NOTES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO
DELIVER A PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOGO
$170,000,000
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
14% SERIES B SENIOR NOTES
DUE 2004, WITH
REVENUE PARTICIPATION INTEREST
------------------------
PROSPECTUS
------------------------
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 177
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Capital is a Delaware corporation and its Certificate of Incorporation and
Bylaws provide for indemnification of its officers and directors to the fullest
extent permitted by law. Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL") permits a corporation in its certificate of incorporation to
eliminate the liability of a corporation's directors to a corporation or its
stockholders, except for liabilities related to breach of duty of loyalty,
actions not in good faith and certain other liabilities.
Section 145 of the DGCL provides for indemnification by a Delaware
corporation of its directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in right
of the corporation, by reason of the fact that they were directors, officers,
employees or agents, against liabilities and expenses incurred in such action,
suit or proceeding.
The ORBCOMM Global Partnership Agreement generally provides that the
General Partners and any of their officers, employees, partners or agents will
not be liable to ORBCOMM Global or to any limited partner for any act or
omission by such party pursuant to authority granted under the Partnership
Agreement except if such action or omission results from gross negligence,
willful misconduct or bad faith. The Partnership Agreement also provides for
indemnification of any General Partner and any of their officers, employees,
partners or agents from and against any and all claims or liabilities of any
nature whatsoever arising out of or in connection with any action taken or
omitted by such party pursuant to authority granted by the Partnership
Agreement, except where attributable to gross negligence, willful or wanton
misconduct or bad faith.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
2 Purchase Agreement, dated as of August 2, 1996, by and among the Company, ORBCOMM
Global Capital Corp., ORBCOMM USA, L.P., ORBCOMM International Partners, L.P.,
Orbital Communications Corporation, Teleglobe Mobile Partners, Bear Stearns & Co.
Inc.,
J.P. Morgan Securities Inc. and RBC Dominion Securities Company.
3 Organizational Documents
3.1* Certificate of Limited Partnership of the Company.
3.2 Restated Agreement of Limited Partnership of the Company.
3.3* Certificate of Limited Partnership of ORBCOMM USA, L.P.
3.4 Restated Agreement of Limited Partnership of ORBCOMM USA, L.P.
3.5* Certificate of Limited Partnership of ORBCOMM International Partners, L.P.
3.6 Restated Agreement of Limited Partnership of ORBCOMM International Partners, L.P.
4 Indenture, dated as of August 7, 1996, by and among the Company, ORBCOMM Global
Capital Corp., ORBCOMM USA, L.P., ORBCOMM International Partners, L.P., Orbital
Communications Corporation, Teleglobe Mobile Partners and Marine Midland Bank.
5* Opinion of Latham & Watkins regarding the validity of the Exchange Notes, including
consent.
8* Opinion of Latham & Watkins regarding certain federal income tax matters, including
consent.
10 Material Contracts
10.1 Registration Rights Agreement, dated as of August 7, 1996, by and among the Company,
ORBCOMM Global Capital Corp., ORBCOMM USA, L.P., ORBCOMM International Partners,
L.P., Orbital Communications Corporation, Teleglobe Mobile Partners, Bear, Stearns &
Co. Inc., J.P. Morgan Securities Inc. and RBC Dominion Securities Corporation.
10.2 Pledge Agreement, dated as of August 7, 1996, by and among the Company, ORBCOMM
Global Capital Corp. and Marine Midland Bank as Collateral Agent.
10.3 International System Charge Agreement, restated as of September 12, 1995, by and
among the Company, Teleglobe Mobile Partners and ORBCOMM International Partners,
L.P.
</TABLE>
II-1
<PAGE> 178
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
10.4 Master Agreement, restated as of September 12, 1995, by and among the Company,
Orbital Sciences Corporation, Teleglobe Inc. and Teleglobe Mobile Partners.
10.5* Procurement Agreement, dated as of September 12, 1995, by and between the Company
and Orbital Sciences Corporation.
10.6 Proprietary Information and Non-Competition Agreement, restated as of September 12,
1995, by and among the Company, Orbital Sciences Corporation, Orbital Communications
Corporation, Teleglobe Inc., Teleglobe Mobile Partners, ORBCOMM USA, L.P. and
ORBCOMM International Partners, L.P.
10.7 System Charge Agreement, restated as of September 12, 1995, by and between Orbital
Communications Corporation and ORBCOMM USA, L.P.
10.8 System Construction Agreement, restated as of September 12, 1995, by and between the
Company and Orbital Communications Corporation.
10.9 Amendment No. 1 to System Construction Agreement, dated as of July 1, 1996, by and
between the Company and Orbital Communications Corporation.
12 Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Company.
23 Consents of Experts
23.1 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM Global, L.P.
23.2 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM USA, L.P.
23.3 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM International
Partners, L.P.
23.4 Consent of KPMG Peat Marwick LLP, independent auditors, to Orbital Communications
Corporation
23.5 Consent of Grant Thornton General Partnership Chartered Accountants
23.6* Consent of Latham & Watkins (included in the opinion filed as Exhibit to the
Registration Statement)
24 Powers of Attorney of the Company, ORBCOMM USA, ORBCOMM International, OCC,
Teleglobe Mobile, and ORBCOMM Global Capital Corp. (included on pages II-4 to II-9
of the Registration Statement).
25 Statement of Eligibility and Qualifications on Form T-1 of Marine Midland Bank, as
Trustee, under the Indenture (No. ).
27 Financial Data Schedule
99 Other Exhibits
99.1 Form of Letter of Transmittal with respect to the Exchange Offer
99.2* Form of Notice of Guaranteed Delivery with respect to the Exchange Offer
</TABLE>
- ---------------
* To be filed by amendment
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933, and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment
II-2
<PAGE> 179
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 180
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DULLES,
COMMONWEALTH OF VIRGINIA, ON AUGUST 30, 1996.
ORBCOMM GLOBAL, L.P.
By: ORBITAL COMMUNICATIONS
CORPORATION, a general partner
By: /s/ ALAN L. PARKER
----------------------------------
ALAN L. PARKER
PRESIDENT OF ORBITAL COMMUNICATIONS
CORPORATION
By: TELEGLOBE MOBILE PARTNERS,
a general partner
By: TELEGLOBE MOBILE
INVESTMENT INC.,
its managing partner
By: /s/ GUTHRIE J. STEWART
-------------------------------
GUTHRIE J. STEWART
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
OF TELEGLOBE MOBILE INVESTMENT
INC.
POWER OF ATTORNEY
Each person whose signature appears below appoints Alan L. Parker as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------ ------- ------
<S> <C> <C>
/s/ ALAN L. PARKER President and Chief Executive August 30, 1996
- ---------------------------------------- Officer
ALAN L. PARKER of ORBCOMM Global, L.P.
(Principal Executive Officer)
/s/ W. BARTLETT SNELL Senior Vice President, Finance and August 30, 1996
- ---------------------------------------- Administration and Chief Financial
W. BARTLETT SNELL Officer of ORBCOMM Global, L.P.
(Principal Financial Officer)
/s/ DENIS PRONE Vice President, Controller and August 30, 1996
- ---------------------------------------- Financial Planning
DENIS PRONE (Principal Accounting Officer)
/s/ DAVID W. THOMPSON Director, Orbital August 30, 1996
- ---------------------------------------- Communications Corporation
DAVID W. THOMPSON
/s/ BRUCE FERGUSON Director, Orbital August 30, 1996
- ---------------------------------------- Communications Corporation
BRUCE FERGUSON
/s/ CLAUDE SEGUIN Director, Teleglobe August 30, 1996
- ---------------------------------------- Mobile Investment Inc.
CLAUDE SEGUIN
/s/ GUTHRIE J. STEWART Director, Teleglobe August 30, 1996
- ---------------------------------------- Mobile Investment Inc.
GUTHRIE J. STEWART Director, Teleglobe
- ---------------------------------------- August 30, 1996
WAN AISHAH WAN HAMID Mobile Investment Inc.
</TABLE>
II-4
<PAGE> 181
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DULLES,
COMMONWEALTH OF VIRGINIA, ON AUGUST 30, 1996.
ORBCOMM USA, L.P.
By: ORBITAL COMMUNICATIONS
CORPORATION, its general partner
By: /s/ ALAN L. PARKER
---------------------------------
ALAN L. PARKER
PRESIDENT
POWER OF ATTORNEY
Each person whose signature appears below appoints Alan L. Parker as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------- --------- ------
<S> <C> <C>
/s/ ALAN L. PARKER President, ORBCOMM USA, L.P. August 30, 1996
- ----------------------------------------- (Principal Executive Officer)
ALAN L. PARKER
/s/ W. BARTLETT SNELL Vice President and Treasurer, August 30, 1996
- ----------------------------------------- ORBCOMM USA, L.P.
W. BARTLETT SNELL (Principal Financial Officer)
/s/ DENIS PRONE Assistant Treasurer and Controller August 30, 1996
- ----------------------------------------- ORBCOMM USA, L.P.
DENIS PRONE (Principal Accounting Officer)
/s/ DAVID W. THOMPSON Director, Orbital August 30, 1996
- ----------------------------------------- Communications Corporation
DAVID W. THOMPSON
/s/ BRUCE FERGUSON Director, Orbital August 30, 1996
- ----------------------------------------- Communications Corporation
BRUCE FERGUSON
</TABLE>
II-5
<PAGE> 182
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DULLES,
COMMONWEALTH OF VIRGINIA, ON AUGUST 30, 1996.
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. PARKER
---------------------------------
ALAN L. PARKER, PRESIDENT
POWER OF ATTORNEY
Each person whose signature appears below appoints Jeffrey V. Pirone as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------ ------- ------
<S> <C> <C>
/s/ ALAN L. PARKER President of Orbital August 30, 1996
- --------------------------------------- Communications Corporation
ALAN L. PARKER (Principal Executive Officer)
/s/ JEFFREY V. PIRONE Vice President and August 30, 1996
- --------------------------------------- Chief Financial Officer of
JEFFREY V. PIRONE Orbital Communications Corporation
(Principal Financial and
Accounting Officer)
/s/ DAVID W. THOMPSON Director of Orbital August 30, 1996
- --------------------------------------- Communications Corporation
DAVID W. THOMPSON
/s/ BRUCE FERGUSON Director of Orbital August 30, 1996
- --------------------------------------- Communications Corporation
BRUCE FERGUSON
</TABLE>
II-6
<PAGE> 183
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MONTREAL,
PROVINCE OF QUEBEC, COUNTRY OF CANADA, ON AUGUST 30, 1996.
TELEGLOBE MOBILE PARTNERS
By: TELEGLOBE MOBILE INVESTMENT INC.,
its managing partner
By: /s/ GUTHRIE J. STEWART
----------------------------------
GUTHRIE J. STEWART
CHIEF EXECUTIVE OFFICER
OF TELEGLOBE MOBILE INVESTMENT INC.
POWER OF ATTORNEY
Each person whose signature appears below appoints Guthrie J. Stewart as
his true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------ ------- ------
<S> <C> <C>
/s/ GUTHRIE J. STEWART Chairman of the Board and Director August 30, 1996
- -------------------------------------- of
GUTHRIE J. STEWART Teleglobe Mobile Investment Inc.
/s/ CLAUDE SEGUIN Director of Teleglobe Mobile August 30, 1996
- -------------------------------------- Investment Inc.
CLAUDE SEGUIN
Director of Teleglobe Mobile August 30, 1996
- -------------------------------------- Investment Inc.
WAN AISHAH WAN HAMID
</TABLE>
II-7
<PAGE> 184
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DULLES,
COMMONWEALTH OF VIRGINIA, ON AUGUST 30, 1996.
ORBCOMM GLOBAL CAPITAL CORP.
By: /s/ ALAN L. PARKER
----------------------------------
ALAN L. PARKER
PRESIDENT OF ORBCOMM GLOBAL CAPITAL
CORP.
POWER OF ATTORNEY
Each person whose signature appears below appoints Alan L. Parker as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------- ------- --------
<S> <C> <C>
/s/ ALAN L. PARKER President and Director of August 30, 1996
- -------------------------------------- ORBCOMM Global Capital Corp.
ALAN L. PARKER (Principal Executive Officer)
/s/ W. BARTLETT SNELL Vice President, Treasurer and August 30, 1996
- -------------------------------------- Director of ORBCOMM Global Capital
W. BARTLETT SNELL Corp.
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-8
<PAGE> 185
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MONTREAL,
PROVINCE OF QUEBEC, COUNTRY OF CANADA, ON AUGUST 30, 1996.
ORBCOMM INTERNATIONAL
PARTNERS, L.P.
By: TELEGLOBE MOBILE PARTNERS,
its general partner
By: TELEGLOBE MOBILE
INVESTMENT INC.,
its managing partner
By: /s/ GUTHRIE J. STEWART
------------------------------
GUTHRIE J. STEWART
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
OF TELEGLOBE MOBILE INVESTMENT
INC.
POWER OF ATTORNEY
Each person whose signature appears below appoints Alan L. Parker as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------- --------- ------
<S> <C> <C>
/s/ ALAN L. PARKER President, ORBCOMM August 30, 1996
- --------------------------------------- International Partners, L.P.
ALAN L. PARKER (Principal Executive Officer)
/s/ W. BARTLETT SNELL Vice President and Treasurer, August 30, 1996
- --------------------------------------- ORBCOMM International Partners, L.P.
W. BARTLETT SNELL (Principal Financial Officer)
/s/ DENIS PRONE Assistant Treasurer and Controller, August 30, 1996
- --------------------------------------- ORBCOMM International Partners, L.P.
DENIS PRONE (Principal Accounting Officer)
/s/ GUTHRIE J. STEWART Director, August 30, 1996
- --------------------------------------- Teleglobe Mobile Investment Inc.
GUTHRIE J. STEWART
/s/ CLAUDE SEGUIN Director, August 30, 1996
- --------------------------------------- Teleglobe Mobile Investment Inc.
CLAUDE SEGUIN
Director, August 30, 1996
- --------------------------------------- Teleglobe Mobile Investment Inc.
WAN AISHAH WAN HAMID
</TABLE>
II-9
<PAGE> 186
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
2 Purchase Agreement, dated as of August 2, 1996, by and among the Company,
ORBCOMM Global Capital Corp., ORBCOMM USA, L.P., ORBCOMM International
Partners, L.P., Orbital Communications Corporation, Teleglobe Mobile Partners,
Bear Stearns & Co. Inc., J.P. Morgan Securities Inc. and RBC Dominion
Securities Company ...........................................................
3 Organizational Documents......................................................
3.1* Certificate of Limited Partnership of the Company.............................
3.2 Restated Agreement of Limited Partnership of the Company......................
3.3* Certificate of Limited Partnership of ORBCOMM USA, L.P. ......................
3.4 Restated Agreement of Limited Partnership of ORBCOMM USA, L.P. ...............
3.5* Certificate of Limited Partnership of ORBCOMM International Partners, L.P. ...
3.6 Restated Agreement of Limited Partnership of ORBCOMM International
Partners, L.P. ...............................................................
4 Indenture, dated as of August 7, 1996, by and among the Company, ORBCOMM
Global Capital Corp., ORBCOMM USA, L.P., ORBCOMM International Partners, L.P.,
Orbital Communications Corporation, Teleglobe Mobile Partners and Marine
Midland Bank..................................................................
5* Opinion of Latham & Watkins regarding the validity of the Exchange Notes,
including consent.............................................................
8* Opinion of Latham & Watkins regarding certain federal income tax matters,
including consent.............................................................
10 Material Contracts ...........................................................
10.1 Registration Rights Agreement, dated as of August 7, 1996, by and among the
Company, ORBCOMM Global Capital Corp., ORBCOMM USA, L.P., ORBCOMM
International Partners, L.P., Orbital Communications Corporation, Teleglobe
Mobile Partners, Bear, Stearns & Co. Inc., J.P. Morgan Securities Inc. and RBC
Dominion Securities Corporation ..............................................
10.2 Pledge Agreement, dated as of August 7, 1996, by and among the Company,
ORBCOMM Global Capital Corp. and Marine Midland Bank as Collateral Agent. ....
10.3 International System Charge Agreement, restated as of September 12, 1995, by
and among
the Company, Teleglobe Mobile Partners and ORBCOMM International Partners,
L.P. .........................................................................
10.4 Master Agreement, restated as of September 12, 1995, by and among the Company,
Orbital Sciences Corporation, Teleglobe Inc. and Teleglobe Mobile Partners....
10.5* Procurement Agreement, dated as of September 12, 1995, by and between the
Company and Orbital Sciences Corporation......................................
10.6 Proprietary Information and Non-Competition Agreement, restated as of
September 12, 1995, by and among the Company, Orbital Sciences Corporation,
Orbital Communications Corporation, Teleglobe Inc., Teleglobe Mobile Partners,
ORBCOMM USA, L.P. and ORBCOMM International Partners, L.P. ...................
10.7 System Charge Agreement, restated as of September 12, 1995, by and between
Orbital Communications Corporation and ORBCOMM USA, L.P. .....................
10.8 System Construction Agreement, restated as of September 12, 1995, by and
between the Company and Orbital Communications Corporation....................
10.9 Amendment No. 1 to System Construction Agreement, dated as of July 1, 1996, by
and between the Company and Orbital Communications Corporation................
12 Computation of Ratio of Earnings to Fixed Charges.............................
21 Subsidiaries of the Company...................................................
23 Consents of Experts...........................................................
23.1 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM Global,
L.P. .........................................................................
</TABLE>
<PAGE> 187
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
23.2 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM
USA, L.P. ....................................................................
23.3 Consent of KPMG Peat Marwick LLP, independent auditors, to ORBCOMM
International Partners, L.P. .................................................
23.4 Consent of KPMG Peat Marwick LLP, independent auditors, to Orbital
Communications Corporation....................................................
23.5 Consent of Grant Thornton General Partnership Chartered Accountants...........
23.6* Consent of Latham & Watkins (included in the opinion filed as Exhibit to the
Registration Statement).......................................................
24 Powers of Attorney of the Company, ORBCOMM USA, ORBCOMM International, OCC,
Teleglobe Mobile, and ORBCOMM Global Capital Corp. (included on pages II-4 to
II-9 of the Registration Statement)
25 Statement of Eligibility and Qualifications on Form T-1 of Marine Midland
Bank, as Trustee, under the Indenture (No. )................................
27 Financial Data Schedule.......................................................
99 Other Exhibits................................................................
99.1 Form of Letter of Transmittal with respect to the Exchange Offer..............
99.2* Form of Notice of Guaranteed Delivery with respect to the Exchange Offer......
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 188
EDGAR APPENDIX
<TABLE>
<CAPTION>
PAGE DESCRIPTION
- ---- --------------------------------------------------------------------
<C> <S>
51 -- Segments of ORBCOMM system
71 -- Diagram of ORBCOMM system structure
</TABLE>
<PAGE> 1
EXHIBIT 2
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
$170,000,000
14% Senior Notes due 2004
With Revenue Participation Interest
PURCHASE AGREEMENT
August 2, 1996
Bear, Stearns & Co. Inc.
J.P. Morgan Securities Inc.
RBC Dominion Securities Corporation
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
ORBCOMM Global, L.P., a Delaware limited partnership
("ORBCOMM" or the "Company"), and ORBCOMM Global Capital Corp., a Delaware
corporation and a wholly owned subsidiary of ORBCOMM ("Capital" and, together
with ORBCOMM, the "Issuers"), jointly propose to issue and sell to Bear,
Stearns & Co. Inc., J.P. Morgan Securities Inc. and RBC Dominion Securities
Corporation (each, an "Initial Purchaser" and, together, the "Initial
Purchasers"), upon the terms set forth in this agreement (together with the
related pricing exhibit of even date herewith substantially in the form of
Exhibit A hereto (the "Pricing Exhibit"), the "Agreement"), an aggregate of
$170,000,000 principal amount of 14% Senior Notes due 2004 (the "Notes"). The
Notes are to be issued pursuant to the provisions of an indenture dated as of
August 7, 1996 (the "Indenture") among the Issuers, the Guarantors (as defined
below) and Marine Midland Bank, as trustee (the "Trustee"). This Agreement
shall be deemed to incorporate the Pricing Exhibit. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed to them in the
Indenture.
The Notes will be offered and sold to the Initial Purchasers
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance on an exemption from the registration requirements of the Act. In
<PAGE> 2
connection with the sale of the Notes, the Issuers prepared a preliminary
offering memorandum dated July 11, 1996 (the "Preliminary Offering Memorandum")
and a final offering memorandum dated August 2, 1996 (the "Offering
Memorandum"), each setting forth certain information concerning the Issuers,
the Guarantors and the Notes. The Issuers and the Guarantors hereby confirm
that they have authorized the use of the Preliminary Offering Memorandum and
the Offering Memorandum in connection with the offer and resale of the Notes by
the Initial Purchasers. Unless stated to the contrary, all references herein
to the Offering Memorandum are to the Offering Memorandum at the date hereof
(the "Execution Time") and are not meant to include any amendment or supplement
thereto subsequent to the Execution Time.
The Issuers understand that the Initial Purchasers propose to
make offerings of the Notes only on the terms and in the manner set forth in
the Offering Memorandum and Section 4 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom the Initial Purchasers reasonably believe to
be qualified institutional buyers ("QIBs") as defined in Rule 144A under the
Act as such rule may be amended from time to time ("Rule 144A"), in
transactions meeting the requirements of Rule 144A, and/or (ii) to a limited
number of other institutional "accredited investors" ("Institutional Accredited
Investors") as defined in Rule 501(a)(1), (2), (3) or (7) under Regulation D of
the Act, in private sales exempt from registration under the Act.
The Initial Purchasers and other holders of the Notes
(including subsequent transferees) will be entitled to the benefits of a
registration rights agreement (the "Registration Rights Agreement") to be dated
as of the Closing Time (as defined in Section 3(a) below) and substantially in
the form of Exhibit B hereto. Pursuant to the Registration Rights Agreement,
the Issuers and the Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein either (i) a registration statement under the Act registering the
Exchange Notes (as defined in the Registration
-2-
<PAGE> 3
Rights Agreement) to be offered in exchange for the Notes and to use their best
efforts to cause such registration statement to be declared effective or (ii) a
shelf registration statement pursuant to Rule 415 under the Act relating to the
resale of the Notes by the holders thereof or, if applicable, relating to the
resale of Private Exchange Notes (as defined in the Registration Rights
Agreement) by the Initial Purchasers, and to use their best efforts to cause
such shelf registration statement to be declared effective.
The Issuers will use a portion of the net proceeds from the
sale of the Notes to purchase a portfolio of Government Securities (the
"Pledged Securities") in an amount sufficient to provide for payment in full of
the first four scheduled interest payments due on the Notes. The Pledged
Securities will be pledged as security for the benefit of the Initial
Purchasers and other holders of the Notes (including subsequent transferees)
pursuant to a pledge agreement (the "Pledge Agreement") to be dated as of the
Closing Time and substantially in the form of Exhibit C hereto.
The obligations of the Issuers in connection with the Notes
will be jointly and severally guaranteed by Orbital Communications Corporation,
a Delaware corporation ("OCC"), Teleglobe Mobile Partners, a Delaware
partnership ("Teleglobe Mobile"), ORBCOMM USA, L.P., a Delaware limited
partnership ("USA"), and ORBCOMM International Partners, L.P., a Delaware
limited partnership ("International" and, together with OCC, Teleglobe Mobile
and USA, the "Guarantors"). Each of the Guarantors, and such other persons as
may from time to time become additional Guarantors, will guarantee (each, a
"Guarantee") the obligations of the Issuers in connection with the Notes as
provided in the Indenture. The Guarantees will be non-recourse to the partners
and/or the shareholders of such Guarantors (including OCC, Teleglobe Mobile and
Technology Resources Industries Bhd ("TRI")) and no shareholder or partner of
such Guarantors will have any liability for any claim under the Note.
This Agreement, the Indenture, the Notes, the Exchange Notes,
the Private Exchange Notes, the Registration Rights Agreement, the Pledge
Agreement and each of the Guarantees are referred to herein collectively as the
"Operative Documents."
Each of the Issuers and the Guarantors shall have joint and
several liability in respect of all obligations hereunder and under each
Operative Document to which each such Issuer or Guarantor is a party. Each of
the Issuers and the Guarantors hereby acknowledges that its obligations under
this Agreement and each Operative Document to which it is a party are
independent and several and may be enforced against each Issuer or Guarantor
separately, whether or not
-3-
<PAGE> 4
enforcement of any right or remedy hereunder has been sought against any other
Issuer or Guarantor, and each of the Issuers and the Guarantors hereby
expressly waives, with respect to any such obligations of any other Issuer or
Guarantor, diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Initial Purchasers exhaust any right,
power or remedy or proceed against any such Issuer or Guarantor with respect to
such obligations, or against any other person under any other guarantee of, or
security for, any of such obligations.
SECTION 1. Representations and Warranties.
(a) Each of the Issuers, jointly and severally, represent and warrant as to
all of the following, and each of the Guarantors, severally and not jointly,
represent and warrant as to such representations and warranties made with
respect to such Guarantor, to each Initial Purchaser as of the date hereof and
as of the Closing Time that:
(i) As of their respective dates, and at all
times subsequent thereto up to and including the Closing Time, neither the
Preliminary Offering Memorandum nor the Offering Memorandum nor any
amendment or supplement thereto contained or will contain an untrue
statement of a material fact or omitted or will omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty does not apply to (A) statements or omissions made in reliance on
and in conformity with information furnished in writing by the Initial
Purchasers to the Issuers expressly for use in the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment or supplement
thereto or (B) statements or omissions in the Preliminary Offering
Memorandum to the extent corrected in the Offering Memorandum.
(ii) When the Notes are issued and delivered pursuant
to this Agreement, such Notes will not be of the same class (within the
meaning of Rule 144A) as securities of any Issuer which are listed on a
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or quoted in a U.S.
automated inter-dealer quotation system. The Issuers have been advised
that the Notes have been designated PORTAL
-4-
<PAGE> 5
eligible securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD").
(iii) None of the Issuers or any of their affiliates
(as defined in Rule 501(b) under the Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security (as defined in the Act) that is or
will be integrated with the sale of the Notes in a manner that would
require the registration of the Notes under the Act.
(iv) None of the Issuers or any affiliate (as defined
in Rule 501(b) under the Act) of either Issuer or any person (other than an
Initial Purchaser, as to which the Issuers make no representation)
authorized to act on either Issuer's behalf has engaged, in connection with
the offering of the Notes, (A) in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Act, (B) in
any manner involving a public offering within the meaning of Section 4(2)
of the Act, or (C) in any action that would require the registration of the
offering and sale of the Notes pursuant to the Act or which would violate
applicable state "blue sky" laws.
(v) Assuming that the representations and warranties
of the Initial Purchasers contained in Section 4 are true, correct and
complete and assuming compliance by the Initial Purchasers with their
covenants in Section 4, and assuming that the representations and
warranties contained in the purchaser letters (substantially in the form of
Annex A to the Offering Memorandum) completed by Institutional Accredited
Investors are true and correct as of the Closing Time, and assuming
compliance by such Institutional Accredited Investors with the agreements
in such letters, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Initial Purchasers in the manner contemplated
by, or in connection with the initial resale of such Notes by the Initial
Purchasers in accordance with, this Agreement to register the Notes under
the Act or to qualify any indenture in respect of the Notes under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
-5-
<PAGE> 6
(vi) The only subsidiaries of the Issuers as of the
date hereof are those listed on Schedule 1 attached hereto (the
"Subsidiaries") and, except to the extent set forth in the Offering
Memorandum, (a) all of the issued and outstanding capital stock or other
equity securities or partnership interests of the Issuers and each of the
Subsidiaries has been duly authorized and validly issued, is fully paid and
nonassessable and was not issued in violation of any preemptive or similar
rights (whether provided contractually or pursuant to applicable law or any
Organizational Document (as defined below)), and (b) the capital stock or
other equity securities or partnership interests of the Subsidiaries are
owned by the Issuers free and clear of any security interest, mortgage,
pledge, lien, consensual encumbrance, claim or equity, other than Permitted
Liens (other than with respect to certain voting rights specified in the
Organizational Documents of the Issuers).
(vii) As of March 31, 1996, the Issuers had the authorized,
issued and outstanding capitalization set forth in the Offering Memorandum
under the caption "Capitalization." Except for interests in the
Subsidiaries or as otherwise disclosed in the Offering Memorandum, neither
of the Issuers owns, directly or indirectly, any shares or any other equity
or long-term debt securities or has any equity interest in any firm,
partnership, joint venture or other entity. No holder of any securities of
either Issuer is entitled to have such securities (other than the Notes,
the Exchange Notes and the Private Exchange Notes, if any) registered under
any registration rights or similar agreement.
(viii) Each of the Issuers and the Subsidiaries has been duly
formed, organized or incorporated, as the case may be, and is validly
existing and in good standing as a limited partnership or corporation, as
the case may be, under the laws of their respective jurisdiction of
formation or incorporation, as the case may be, with all requisite
partnership or corporate power and authority, as the case may be, under
such laws, and, except to the extent set forth in the Offering Memorandum
or on Schedule 3 hereto, all legally necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, (A) to own, lease and operate
their
-6-
<PAGE> 7
respective properties and to conduct their respective businesses as now
conducted and (B) to enter into, deliver, incur and perform their
respective obligations under the Operative Documents, to the extent they
are a party thereto, and each of the Issuers and Subsidiaries is duly
qualified to do business as a foreign partnership or foreign corporation,
as the case may be, and is in good standing in all other jurisdictions
where the ownership or leasing of their respective properties or the
conduct of their respective businesses requires such qualification, except
where the failure to be so qualified or to have obtained such
authorizations, approvals, orders, licenses, certificates and permits would
not have, individually or in the aggregate, a material adverse effect on
the business, assets, liabilities (contingent or otherwise), financial
condition, prospects or results of operations of the Issuers and the
Guarantors taken as a whole (a "Material Adverse Effect").
(ix) The general partners of the Company are OCC and
Teleglobe Mobile (collectively, the "General Partners"). Each of the
General Partners has been duly formed, organized or incorporated, as the
case may be, and is validly existing and in good standing as a partnership
or corporation, as the case may be, under the laws of its jurisdiction of
formation or incorporation, as the case may be, with all requisite
partnership or corporate power and authority, as the case may be, under
such laws, and, except to the extent set forth in the Offering Memorandum
or on Schedule 3 hereto, all legally necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, (A) to own, lease and operate
its properties and to conduct its business as now conducted and as
described in the Offering Memorandum and (B) to enter into, deliver, incur
and perform its obligations under the Operative Documents, to the extent it
is a party thereto, and each of the General Partners is duly qualified to
do business as a foreign partnership or foreign corporation, as the case
may be, and is in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified or
to have obtained such authorizations, approvals, orders, licenses,
certificates and permits would not have a Material Adverse Effect.
-7-
<PAGE> 8
(x) Each of the Notes, the Exchange Notes and the
Private Exchange Notes have been duly authorized by the Issuers, and the
Issuers have all requisite partnership or corporate power, as the case may
be, and authority to execute, issue and deliver the Notes, the Exchange
Notes and the Private Exchange Notes and to incur and perform their
respective obligations provided for therein. The Notes, when executed,
authenticated and issued in accordance with the terms of the Indenture
(assuming the due authorization, execution and delivery of the Notes by the
Trustee) and when delivered against payment of the purchase price therefor
as provided in this Agreement, and the Exchange Notes and the Private
Exchange Notes, if any, when executed, authenticated, issued and delivered
by the Issuers in exchange for the Notes, will constitute the valid and
legally binding obligations of each of the Issuers, will be entitled to the
benefits of the Indenture, and will be enforceable against each of the
Issuers in accordance with the terms thereof, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar types of laws of general applicability relating to or affecting
creditors' rights and remedies generally and subject to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(xi) Each of the Operative Documents (other than the
Notes, the Exchange Notes and the Private Exchange Notes) have been, or as
of the Closing Time will be, duly authorized, and validly executed and
delivered by each of the Issuers and the Guarantors party thereto, and each
of the Operative Documents constitutes or will constitute (assuming the due
authorization, execution and delivery by the other parties thereto) the
valid and legally binding obligations of each of the Issuers and the
Guarantors party thereto, enforceable against each of them in accordance
with the terms hereof or thereof, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar
types of laws of general applicability relating to or affecting creditors
rights and remedies generally and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law) and public policy.
(xii) Except as set forth in the Offering Memorandum or on
Schedule 3 hereto, no consent, authorization, approval, license or order
of, or
-8-
<PAGE> 9
filing, registration or qualification with, any court or governmental body
or agency, domestic or foreign, is legally required, including, without
limitation, under the federal Communications Act of 1934, as amended (the
"Communications Act"), or any order, rule, or policy of the Federal
Communications Commission (the "FCC"), for the performance by the Issuers
or the Guarantors of their respective obligations under the Operative
Documents, to the extent each is a party thereto, or for the consummation
of the transactions contemplated hereby or thereby and by the Offering
Memorandum, except (i) such as may be required (A) in connection with the
registration under the Act or the Securities Exchange Act of 1934, as
amended of the Notes, the Exchange Notes or the Private Exchange Notes, if
any, pursuant to the Registration Rights Agreement (including any filing
with the NASD), (B) in connection with the qualification of the Indenture
under the Trust Indenture Act pursuant to the Registration Rights
Agreement, and (C) under the "blue sky" laws of any jurisdiction in
connection with the offer and sale of the Notes, the Exchange Notes or the
Private Exchange Notes, if any, pursuant to the Registration Rights
Agreement and (ii) those which have been or as of the Closing Date shall
have been obtained and are or will be in full force and effect.
(xiii) The issuance, sale and delivery of the Notes, the
Exchange Notes and the Private Exchange Notes, if any, the execution,
delivery and performance by the Issuers and the Guarantors of their
respective obligations under the Operative Documents, to the extent each is
a party thereto, the consummation by the Issuers and the Guarantors of the
transactions contemplated hereby, thereby and in the Offering Memorandum
and the compliance by the Issuers and the Guarantors with the terms of each
of the foregoing, to the extent each is a party thereto, (including the use
of proceeds from the sale of the Notes as described in the Offering
Memorandum under the caption "Use of Proceeds") do not, and, at the Closing
Time, will not constitute or result in a breach or violation by either
Issuer or any Guarantor of (A) any of the terms or provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) by either Issuer or any Guarantor or give
rise to any right to accelerate the maturity or require the prepayment of
any indebtedness, or result in the creation or imposition of (or the
obligation to
-9-
<PAGE> 10
create or impose) any lien, charge or encumbrance upon any property or
assets of either Issuer or any Guarantor under, any contract, lease,
indenture, mortgage, deed of trust, loan agreement, note, license or other
agreement or document to which either Issuer or any Guarantor is a party or
by which any of them may be bound, or to which any of them or any of their
respective assets or businesses is subject (collectively, the "Contracts"),
(B) the certificate of limited partnership or limited partnership agreement
or the certificate of incorporation or by-laws or other organizational
documents, as the case may be (each, an "Organizational Document"), of
either Issuer or any Guarantor, or (C) any law, statute, rule or
regulation, or any judgment, decree or order, in any such case, of any
domestic or foreign court or governmental or regulatory agency or other
body having jurisdiction over either Issuer or any Guarantor or any of
their respective properties or assets, including, without limitation, any
order, rule, or policy of the FCC except, in the case of clauses (A) or (C)
above, for such defaults, accelerations, contraventions, conflicts or
violations that would neither have a Material Adverse Effect nor reasonably
be expected to materially and adversely affect the consummation of this
Agreement or the transactions contemplated hereby.
(xiv) The Notes, the Exchange Notes, the Registration
Rights Agreement, the Pledge Agreement, the Guarantees and the Indenture
each conform in all material respects to the descriptions thereof contained
in the Offering Memorandum.
(xv) The financial statements and schedules of the
Company and each of the other entities for which financial statements and
schedules are included in the Offering Memorandum, together with the
related notes thereto, comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the
Act, present fairly the financial position, results of operations and cash
flows of each of such entities, at the dates and for the periods to which
they relate, and have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP") consistently applied. The pro
forma financial information included in the Offering Memorandum present
fairly the information shown therein, have been prepared in accordance with
the applicable accounting requirements of Regulation
-10-
<PAGE> 11
S-X promulgated under the Exchange Act, have been prepared in accordance
with the Commission's rules and regulations with respect to pro forma
financial information, and have been properly computed on the basis
described therein. In the opinion of the Company, the pro forma
adjustments and assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein. Each of KPMG Peat
Marwick LLP (the "Accountant") and Grant Thornton General Partnership
Chartered Accountants, which has examined the financial statements and
schedules of certain of the entities included in the Offering Memorandum
for each of the periods set forth in its respective report included in the
Offering Memorandum, is an independent certified public accounting firm
with respect to each such entity within the meaning of the requirements of
the Act and the rules and regulations thereunder.
(xvi) Since the respective date as of which information
is given in the Offering Memorandum, and other than as disclosed in the
Offering Memorandum, there has been no (A) material adverse change in the
business, assets, liabilities (contingent or otherwise), financial
condition, prospects or results of operations of any of the Issuers or the
Guarantors, taken as a whole (a "Material Adverse Change") whether or not
arising in the ordinary course of business, (B) transaction entered into by
the Issuers or any Guarantor that is materially adverse to the Issuers and
such Guarantor, or (C) dividend or distribution of any kind declared, paid
or made by either Issuer or any Subsidiary or any Guarantor with respect to
any of their respective equity interests.
(xvii) None of the Issuers or any Guarantor is (A) in
violation of its respective Organizational Documents, (B) in default (or,
with notice or lapse of time or both, would be in default) in the
performance or observance of any obligation, agreement, covenant or
condition contained in any Contract, or (C) in violation of any law
(including any Environmental Law), statute, rule or regulation or any
judgment, decree or order, in any such case, of any domestic or foreign
court or governmental or regulatory agency or other body having
jurisdiction over such Issuer or such Guarantor, as the case may be, or any
of its properties or assets, including, without limitation, the
-11-
<PAGE> 12
Communications Act and the rules, regulations and policies of the FCC, in
the case of each of subclauses (A), (B) and (C) above that individually or
in the aggregate would be reasonably likely to (1) have or result in a
Material Adverse Effect, (2) materially impair either Issuer's or any
Guarantor's ability to perform any of its obligations contemplated by the
Operative Documents, or (3) materially adversely affect the consummation of
the transactions contemplated by the Operative Documents and the Offering
Memorandum. None of the Issuers or any Guarantor has received any notice
or claim of any default (or event, condition or omission that with notice
or lapse of time or both would result in a default) under any of its
respective material Contracts or has actual knowledge of any breach of any
of such Contracts by the other party or parties thereto that would be
reasonably likely to cause a Material Adverse Effect.
(xviii) To the best of their knowledge, the Issuers and
the Guarantors own or possess adequate trademarks, service marks, trade
names, copyrights and know-how (including trade secrets and other
intellectual property rights (collectively, "intellectual property")
necessary to conduct the business as now or proposed to be operated by each
of them except as described in the Offering Memorandum or identified on
Schedule 3 hereto. None of the Issuers or any Guarantor has infringed or
is infringing with asserted rights of others with respect to any of such
intellectual property except those which would not have a Material Adverse
Effect and none of the Issuers or any Guarantor has received notice of
infringement of (and none knows of any such infringement) asserted rights
of others with respect to any such intellectual property.
(xix) Except as described in the Offering Memorandum or
identified on Schedule 3 hereto, the Issuers and the Guarantors (or persons
or entities acting for or on their behalf, including, without limitation,
the United States Government and its agencies) have duly obtained all
consents, approvals, orders, certificates, licenses, permits, franchises
and other authorizations of and from, and have made all applications,
reports, declarations and filings with, all governmental and regulatory
authorities, all self-regulatory organizations, all international
organizations and bodies, all satellite systems and other non-governmental
entities, and all courts and
-12-
<PAGE> 13
other tribunals, domestic or foreign, legally necessary to own, lease,
license and use their respective properties and assets and to conduct their
respective businesses, other than those for which the failure to so obtain
or make would not, individually or in the aggregate, have a Material
Adverse Effect.
(xx) Except as disclosed in the Offering Memorandum or
as identified on Schedule 3 hereto, there is no legal action, suit,
proceeding, inquiry or investigation before or by any court or governmental
body or agency, domestic or foreign (including, without limitation, the
FCC), now pending or, to the actual knowledge of the Issuers, threatened,
against either Issuer or any Guarantor or affecting either Issuer or any
Guarantor or any of their respective properties (including, without
limitation, all licenses and applications with respect to the ORBCOMM
System) which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect or which, individually or in the
aggregate, would have a material adverse effect on the ability of either
Issuer or any Guarantor to perform its obligations under the Operative
Documents or to consummate the transactions contemplated hereby or thereby
or by the Offering Memorandum.
(xxi) The Issuers and the Guarantors have filed all
material federal, state and foreign income and franchise tax returns
required to be filed as of the date hereof and have paid all taxes shown as
due thereon, except to the extent such taxes are (A) currently payable
without penalty or interest or (B) being contested in good faith, and there
is no tax deficiency that has been asserted against either Issuer or any
Guarantor.
(xxii) Each of the Issuers and the Guarantors has good
title to all real and personal property described in the Offering
Memorandum as being owned by it, and good title to a leasehold estate in
the real and personal property described in the Offering Memorandum as
being leased by it under valid, subsisting and enforceable leases, in each
case free and clear of all liens, charges, encumbrances or restrictions and
without any exceptions, except Permitted Liens and except for liens,
charges, encumbrances or restrictions that would not, individually or in
the aggregate, have a Material Adverse Effect.
(xxiii) None of the Issuers or any Guarantor is now or
would be as a result of the transactions contemplated by the Offering
Memorandum an "investment company" or a company "controlled by" an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
-13-
<PAGE> 14
(xxiv) No labor problem, dispute or disturbance with the
employees of either Issuer or any Guarantor exists or, to the actual
knowledge of the Issuers, is threatened, which, individually or in the
aggregate, would have a Material Adverse Effect.
(xxv) Each of the Issuers and the Guarantors maintains
a system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with U.S. generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted only
in accordance with management's general or specific authorization, and (D)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(xxvi) The statements set forth under the heading
"Description of Notes" in the Offering Memorandum, insofar as such
statements purport to summarize certain provisions of the Notes, the
Indenture, the Registration Rights Agreement or the Guarantees, provide an
accurate summary of such provisions and information with respect thereto.
(xxvii) Except as described in the Offering Memorandum or
as identified on Schedule 4 hereto, none of the Issuers or any Guarantor
has any pension, profit sharing, deferred compensation, bonus, retirement,
stock option, stock purchase, phantom stock or similar plans, including
agreements evidencing or understandings with respect to rights to purchase
securities of an Issuer or any Guarantor.
(xxviii) Neither Issuer nor any agent acting on behalf of
either Issuer has taken or will take any action that
-14-
<PAGE> 15
might cause this Agreement or the sale of the Notes to violate Regulations
G, T, U or X of the Board of Governors of the Federal Reserve System, in
each case as in effect at the Closing Time.
(xxix) The statistical and market-related data included
in the Preliminary Offering Memorandum and the Offering Memorandum are
based on or derived from sources that the Issuers believe to be reliable
and accurate in all material respects or represent the Issuers' good faith
estimates that are made on the basis of data derived from such sources.
(xxx) Except as described in the Offering Memorandum or
as identified on Schedule 3 hereto each of the material licenses,
authorizations, permits and franchises (collectively, the "Licenses") held
by the Issuers and the Guarantors are in full force and effect, with no
material restrictions or qualifications thereon except as described in such
License, the Offering Memorandum or as identified on Schedule 3 hereto,
such Licenses constitute all of the Licenses necessary for the Issuers to
conduct their respective businesses in the manner and to the full extent
now operated or proposed to be operated and as described in the Offering
Memorandum, and, to the best knowledge of the Issuers or the Guarantors, no
event has occurred that permits, or with notice or lapse of time or both
would permit, the revocation or non-renewal of any of such Licenses
(assuming the timely filing and grant of renewal applications and payment
of all applicable filing and regulatory fees), or which might result,
individually or in the aggregate, in any other material impairment of the
rights of the Issuers and the Guarantors in such Licenses.
(xxxi) The Issuers are in compliance with all
environmental, safety or similar laws or regulations applicable to them or
their business or property relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants and the disposal of hazardous or toxic
substances, wastes, pollutants and contaminants (collectively,
"Environmental Laws"), except those which, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect.
-15-
<PAGE> 16
(xxxii) Since December 31, 1995, neither the Issuers nor
the Guarantors, nor, to their respective knowledge, any director, officer,
agent, employee, or other person associated with or acting on behalf of the
Issuers or the Guarantors has used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment or violated any
provision of the Prohibited Foreign Trade Practices Act.
(xxxiii) None of the Issuers, the Guarantors or any of
their respective directors, officers or controlling persons has since the
date of the Preliminary Offering Memorandum (i) sold, bid for, purchased or
paid to any person other than the Initial Purchasers any compensation for
soliciting purchases of, the Notes, the Exchange Notes or the Private
Exchange Notes, if any, or (ii) paid or agreed to pay to any person other
than the Initial Purchasers any compensation for soliciting another person
to purchase any other securities of the Issuers.
(xxxiv) Except as described in the Offering Memorandum,
the Issuers have not incurred any liability for a fee, commission, or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement or the
Offering Memorandum.
(b) Any certificate signed by any officer or representative of
the Issuers or Guarantors and delivered to the Initial Purchasers or to counsel
for the Initial Purchasers pursuant to the terms of this Agreement shall be
deemed a representation and warranty by the Issuers and/or the Guarantors to
each Initial Purchaser as to the matters covered thereby.
SECTION 2. Purchase and Sale of the Notes. On the basis of the
representations and warranties contained in this Agreement, and subject to the
terms and conditions herein set forth, the Issuers hereby agree to sell to the
Initial Purchasers, and the Initial Purchasers hereby agree to purchase from
the Issuers, the principal amount of Notes set forth opposite the names of the
Initial Purchasers on
-16-
<PAGE> 17
Schedule 2 attached hereto. The purchase price for the Notes shall be as set
forth in the Pricing Exhibit.
SECTION 3. Delivery and Payment. (a) Delivery of and payment of
the purchase price for the Notes shall be made at the offices of Paul,
Hastings, Janofsky & Walker, 399 Park Avenue, New York, New York, at 10:00 a.m.
New York City time on the third full business day following the date of this
Agreement, or such other location, date and time as the Initial Purchasers and
the Issuers shall agree (such date and time of delivery of and payment for the
Notes being herein called the "Closing Time").
(b) Delivery of the Notes in definitive form shall be made to the
Initial Purchasers, against payment of the purchase price therefor in
immediately available funds to an account or accounts specified in writing by
the Issuers not less than two business days in advance of the Closing Time, at
such location as the Initial Purchasers shall reasonably designate at least two
business days in advance of the Closing Time. Certificates evidencing the
Notes shall be in such form, and shall be registered in such names and in such
denominations, as the Initial Purchasers shall request at least two business
days in advance of the Closing Time. The Issuers shall make the Notes
available for inspection by the Initial Purchasers in New York, New York, not
later than 9:00 a.m. on the business day immediately preceding the Closing
Time.
SECTION 4. Resale of the Notes. The Initial Purchasers have
advised the Issuers that they propose to offer the Notes for resale ("Exempt
Resales") upon the terms and conditions set forth in this Agreement and in the
Offering Memorandum. The Initial Purchasers hereby, severally and not jointly,
represent and warrant to the Issuers that each of the Initial Purchasers (i) is
a QIB, (ii) has not and will not solicit offers for, or offer or sell, the
Notes by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner involving
a public offering within the meaning of Section 4(2) of the Act, and (iii) will
solicit offers for such Notes pursuant to Rule 144A, or resales not involving a
public offering, as applicable, only from, and will offer, sell or deliver the
Notes, as part of their initial offering, only to (A) persons in the United
States whom the Initial Purchasers reasonably believe to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such
-17-
<PAGE> 18
person has represented to the Initial Purchasers that each such account is a
QIB, to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A, and, in each case, in transactions under Rule 144A, and
(B) a limited number of other institutional investors whom the Initial
Purchasers reasonably believe to be Institutional Accredited Investors that are
purchasing for their own accounts or for the account of an Institutional
Accredited Investor, for investment purposes only and not with a view to, or
for offer or sale in connection with, any distribution of the Notes in
violation of the Act; provided, however, that with respect to clause (B) such
Institutional Accredited Investors shall be required to complete and deliver a
purchaser letter, substantially in the form of Annex A to the Offering
Memorandum, to the Initial Purchasers prior to the confirmation of any order.
SECTION 5. Covenants of the Issuers. Each of the Issuers,
jointly and severally, covenants with the Initial Purchasers as follows:
(a) The Issuers will advise the Initial Purchasers
promptly and, if requested by the Initial Purchasers, confirm such advice in
writing, (i) of the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of any of
the Notes for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority and (ii) of the happening of any event that makes any
statement of a material fact made in the Preliminary Offering Memorandum or the
Offering Memorandum untrue or that requires the making of any additions to or
changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Issuers shall use their best efforts
to prevent the issuance of any stop order suspending the qualification or
exemption of any Notes under any state securities or "blue sky" laws and, if at
any time any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption of any Notes under any
state securities or "blue sky" laws, the Issuers shall use their best efforts
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) The Issuers will furnish to the Initial Purchasers and
counsel for the Initial Purchasers, without
-18-
<PAGE> 19
charge, such number of copies of the Preliminary Offering Memorandum and the
Offering Memorandum and any amendments or supplements thereto as the Initial
Purchasers and their counsel may reasonably request. The Issuers and the
Guarantors hereby consent to the use of the Preliminary Offering Memorandum and
the Offering Memorandum and any amendments or supplements thereto by the
Initial Purchasers in connection with Exempt Resales.
(c) The Issuers will not at any time make any amendment or
supplement to the Preliminary Offering Memorandum or the Offering Memorandum
without the prior written consent of the Initial Purchasers (which shall not be
unreasonably withheld). Subject to Section 4(d) below, upon request by the
Initial Purchasers, the Issuers shall promptly prepare amendments or
supplements to the Preliminary Offering Memorandum or the Offering Memorandum
as may be advisable in connection with Exempt Resales.
(d) If at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to purchasers who are not their affiliates (as
determined by the Initial Purchasers) any event shall occur or condition shall
exist as a result of which it is necessary, in the opinion of the Initial
Purchasers or counsel for the Initial Purchasers, to amend or supplement the
Preliminary Offering Memorandum or Offering Memorandum so that it does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if in the opinion of the Initial Purchasers or counsel to the
Initial Purchasers, such amendment or supplement is necessary to comply with
applicable law, the Issuers will (subject to Section 5(c)), promptly prepare,
at their own expense, such amendment or supplement as may be necessary to
correct such untrue statement or omission or to effect such compliance, in form
and substance agreed upon by counsel to the Initial Purchasers, so that as so
amended or supplemented, the statements in the Preliminary Offering Memorandum
or Offering Memorandum will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is delivered
to a purchaser, not misleading or that such Preliminary Offering Memorandum or
Offering Memorandum will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such amendment or
supplement as the Initial Purchasers may
-19-
<PAGE> 20
reasonably request. The Issuers agree to notify the Initial Purchasers in
writing to suspend use of the Preliminary Offering Memorandum or Offering
Memorandum as promptly as practicable after the occurrence of an event
specified in this Section 5(d), and the Initial Purchasers hereby agree upon
receipt of such notice from the Issuers to suspend use of the Preliminary
Offering Memorandum or Offering Memorandum until the Issuers have amended or
supplemented it to correct such misstatement or omission or to effect such
compliance.
(e) Notwithstanding any provision of paragraph (c) or (d) to the
contrary, the Issuers' obligations under paragraphs (c) and (d) and the Initial
Purchasers' obligations under paragraph (d) shall terminate on the earliest to
occur of (i) the effective date of a registration statement with respect to the
Notes filed pursuant to the Registration Rights Agreement and (ii) the date
upon which each Initial Purchaser and their respective affiliates cease to hold
Notes acquired as part of their initial distribution or Private Exchange Notes,
if any.
(f) None of the Issuers or any of their affiliates (as defined in
Rule 501(b) under the Act) will solicit any offer to buy or offer or sell the
Notes, the Exchange Notes or the Private Exchange Notes, if any, by means of
any form of general solicitation or general advertising (as such terms are used
in Regulation D under the Act), or in any manner involving a public offering
within the meaning of Section 4(2) of the Act prior to the effectiveness of a
registration statement with respect to the Notes, the Exchange Notes or the
Private Exchange Notes, as applicable.
(g) None of the Issuers or any of their affiliates (as defined in
Rule 501(b) under the Act) will offer, sell or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) which
could be integrated with the sale of the Notes in a manner that would require
the registration of the Notes under the Act.
(h) Each Note and Private Exchange Note, if any, will bear the
following legend until such legend shall no longer be necessary or advisable
because the Notes are no longer subject to the restrictions on transfer
described herein:
-20-
<PAGE> 21
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ORBCOMM GLOBAL, L.P.
AND ORBCOMM GLOBAL CAPITAL CORP. (THE "ISSUERS") OR ANY AFFILIATE OF THE
ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
NOTES OF $100,000 FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS'
AND THE TRUSTEE'S RIGHT PRIOR TO ANY OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
THE CASE OF THE FOREGOING CLAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE
-21-
<PAGE> 22
OF THIS SECURITY TO BE COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
(i) The Issuers will arrange for the registration and
qualification of the Notes for offering and sale under the applicable
securities or "blue sky" laws of such states and other jurisdictions as the
Initial Purchasers may designate in connection with the resale of the Notes as
contemplated by this Agreement and the Offering Memorandum (including any
Exempt Resales) and will continue such qualifications in effect for as long as
may be necessary to complete such resales of the Notes; provided, however, that
in no event shall either Issuer be obligated to (i) qualify as a foreign
limited partnership or a foreign corporation, as the case may be, in any
jurisdiction where it would not otherwise be required to so qualify but for
this Section 5(l), (ii) file any general consent to service of process in any
jurisdiction where it is not at the Closing Time then so subject or (iii)
subject itself to taxation in any such jurisdiction where it is not so subject.
The Issuers will file such statements and reports as may be required by the
laws of each jurisdiction in which the Notes have been qualified as above
provided. The Issuers shall promptly advise the Initial Purchasers of the
receipt by either Issuer of any notification with respect to the suspension of
the qualification or exemption from qualification of the Notes for offering or
sale in any jurisdiction or the institution, threat or contemplation of any
proceeding for such purpose.
(j) The Issuers will use the proceeds received from the sale of
the Notes in the manner specified in the Offering Memorandum under the caption
"Use of Proceeds."
(k) The Issuers will not voluntarily claim, and will resist
actively any attempts to claim, the benefit of any usury laws against the
holders of any Notes, except to the extent that the waiver of rights under
usury laws may be unlawful.
(l) The Issuers will do and perform all things required to be
done and performed under this Agreement by them prior to or after the Closing
Date and to satisfy all conditions precedent on their part prior to the
delivery of the Notes.
-22-
<PAGE> 23
SECTION 6. Payment of Expenses. Whether or not any sale of the
Notes is consummated, the Issuers jointly and severally hereby agree to
reimburse the Initial Purchasers promptly upon demand for all costs and
expenses (other than expenses incurred in connection with the preparation,
printing and distribution of the Preliminary Offering Memorandum and Offering
Memorandum and any amendments or supplements thereto, and all expenses
(including travel expenses) of the Initial Purchasers in connection with any
meetings with prospective investors in the Notes) incurred by the Initial
Purchasers in connection with the proposed purchase and sale of the Notes,
including, without limitation, (i) the preparation, issuance, printing and
distribution of the Notes, the Exchange Notes and the Private Exchange Notes,
if any, (ii) the qualification of the Notes under applicable state securities
or "blue sky" laws in accordance with the provisions of Section 5(k) hereof,
and any filing for review of the offering with the NASD, if required, including
filing fees and the reasonable fees and disbursements of counsel to the Initial
Purchasers in connection therewith and in connection with the preparation of
any survey of state securities or "blue sky" laws or legal investment
memoranda, (iii) fees charged by rating agencies for rating the Notes, the
Exchange Notes and the Private Exchange Notes, if any, (iv) fees and expenses
of the Trustee, including the fees and disbursements of counsel to the Trustee,
and (v) all expenses and listing fees in connection with the application for
designation of the Notes as PORTAL securities and to permit the Notes, the
Exchange Notes and the Private Exchange Notes, as applicable, to be eligible
for clearance through the facilities of The Depository Trust Company; provided
that, except as set forth in clause (ii) above, the Issuers shall not be
responsible for the fees and expenses of counsel to the Initial Purchasers.
SECTION 7. Conditions to the Initial Purchasers' Obligations.
The obligations of the Initial Purchasers to purchase and pay for the Notes as
provided herein shall be subject to the continued accuracy, as of the date
hereof and as of the Closing Time, of the representations and warranties of the
Issuers and the Guarantors herein contained, to the accuracy in all material
respects of the statements of the Issuers and the Guarantors and officers of
the Issuers and the Guarantors made in any certificate pursuant to the
provisions hereof, to the performance by the Issuers of their respective
obligations hereunder, and to the following further conditions precedent:
-23-
<PAGE> 24
(a) At the Closing Time, the Initial Purchasers shall have
received in form and substance reasonably satisfactory to them: (1) the
opinion of Latham & Watkins, special counsel for the Issuers, the form of which
opinion is attached hereto as Exhibit D; (2) the opinion of counsel for
ORBCOMM, the form of which opinion is attached hereto as Exhibit E; (3) the
opinion of Halprin, Temple, Goodman & Sugrue, special regulatory counsel for
the Issuers, the form of which opinion is attached hereto as Exhibit F; (4) the
opinion of counsel for OCC, the form of which opinion is attached hereto as
Exhibit G; (5) the opinion of Sullivan and Worcester, counsel for Teleglobe
Mobile, the form of which opinion is attached hereto as Exhibit H; and (6) the
opinion of Paul, Hastings, Janofsky & Walker, counsel to the Initial
Purchasers, the form of which opinion is attached hereto as Exhibit I;
(b) The following conditions shall have been satisfied at and as
of the Closing Time, and each of the Issuers and the Guarantors shall have
furnished to the Initial Purchasers a certificate or certificates, signed by
the Chief Executive Officer or the President or the principal financial or
accounting officer of such entity, dated as of the Closing Time, to the effect
that such officer has carefully examined the Preliminary Offering Memorandum,
the Offering Memorandum, and any amendment or supplement thereto, and this
Agreement, and that:
(i) the representations and warranties of the Issuers and the
Guarantors in this Agreement are true and correct in all material respects
on and as of the Closing Time with the same effect as if made at the
Closing Time, and the Issuers and the Guarantors have performed or complied
in all material respects with all the agreements and satisfied all the
conditions under this Agreement required on their part to be performed or
satisfied at or prior to the Closing Time;
(ii) since the date of the most recent financial statements
included in the Offering Memorandum, there has been no Material Adverse
Change, and there has been no material adverse change in the capitalization
of the Issuers or the Guarantors, whether or not arising in the ordinary
course of business, except as disclosed in the Offering Memorandum; and
(iii) the sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
-24-
<PAGE> 25
(c) At the time that this Agreement is signed and at the Closing
Time, the Accountant shall have furnished to the Initial Purchasers a letter or
letters addressed to the Initial Purchasers with respect to the audited
financial statements and schedules of each entity or system, as the case may
be, identified in such letter or letters, dated respectively as of the date of
this Agreement and as of the Closing Time, in form and substance reasonably
satisfactory to the Initial Purchasers, confirming that they are independent
certified public accountants within the meaning of Rule 101 of the AICPA Code
of Professional Conduct and its interpretations and rulings, and:
(i) in their opinion the audited financial statements of such
entities, included in the Offering Memorandum comply as to form in all
material respects with GAAP;
(ii) on the basis of their reading the minutes of meetings of the
Issuers' partnership committee (and other management committees),
stockholders and board of directors (and committees thereof), as the case
may be, and the latest unaudited financial statements made available by
such entities or systems, as the case may be, carrying out certain
specified procedures (but not an audit in accordance with generally
accepted auditing standards), which may not necessarily reveal matters of
significance with respect to the comments set forth in such letter, and
inquiries of certain officials of such entities or systems, as the case may
be, who have responsibility for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter, nothing
has come to their attention that has caused them to believe that:
(A) the unaudited financial statements of
such entities included in the Offering Memorandum do not comply as
to form in all material respects with GAAP, and said unaudited
financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the
Offering Memorandum; or
(B) with respect to the period subsequent to
December 31, 1995, that at a specified date not more than five
business days prior to the date of the letter, there have been any
increases in the
-25-
<PAGE> 26
long-term or total indebtedness or decreases in the assets of such
entities other than those disclosed in the Offering Memorandum, as
compared with the amounts shown on the balance sheet of such
entities or systems, as the case may be, included in the Offering
Memorandum; or with respect to the period subsequent to December
31, 1995, that at a specified date not more than five business
days prior to the date of the letter, there have been any change
in the capital structure or position or any decreases in revenues
of such entities as compared with the comparable period in the
prior year;
(iii) they have read the unaudited financial information (the
"Unaudited Statements") included in the Offering Memorandum, made inquiries
of certain officials of the Company who have responsibility for financial
and accounting matters about the basis for their determination of the
adjustments thereto, and proved the arithmetic accuracy of the application
of the adjustments to the historical amounts in the Unaudited Statements,
and, on the basis of such procedures and such other inquiries and
procedures specified in such letter, nothing came to their attention that
caused them to believe that the Unaudited Statements included in the
Offering Memorandum do not comply as to form with the requirements of
Regulations S-K or have not been properly compiled; and
(iv) they have performed certain other specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records
of certain entities and are included in the Offering Memorandum, and have
compared such amounts, percentages and financial information with such
records of such entities or systems, as the case may be, and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation.
(d) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Offering Memorandum, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Issuers or the Guarantors the
effect of which is, in the sole judgment of the Initial
-26-
<PAGE> 27
Purchasers, so material and adverse as to make it impractical or inadvisable to
proceed with the purchase and the delivery of the Notes as contemplated by this
Agreement and the Offering Memorandum.
(e) At the Closing Time, counsel for the Initial Purchasers shall
have been furnished with such information, certificates and documents as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as contemplated herein, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained.
(f) The Issuers and the Guarantors shall have executed and
delivered the Registration Rights Agreement, and the Initial Purchasers shall
have received a counterpart thereof.
(g) The Issuers shall have executed and delivered the Pledge
Agreement, and the Initial Purchasers shall have received a counterpart
thereof.
(h) The Issuers, the Guarantors and the Trustee shall have
entered into and delivered the Indenture, and the Initial Purchasers shall have
received a counterpart thereof.
(i) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers as promptly as practicable following the
date of this Agreement, or at such later date and time as the Initial
Purchasers may agree, and no stop order suspending the qualification or
exemption from qualification of the Notes in any jurisdiction referred to in
Section 5(l) in which the Initial Purchasers reasonably expect to sell at least
10% of the Notes shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(j) Except as may be disclosed in the Preliminary Offering
Memorandum or the Offering Memorandum, no action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued
by any governmental agency which would, as of the Closing Time, have a Material
Adverse Effect on any of the Issuers or the
-27-
<PAGE> 28
Guarantors; no action, suit or proceeding shall have been commenced and be
pending against or affecting, or to their knowledge, threatened against, any of
the Issuers or the Guarantors before any court or arbitrator or any
governmental body, agency or official that, if adversely determined, might
result in a Material Adverse Effect; and no stop order shall have been issued
preventing the use of the Offering Memorandum, or any amendment or supplement
thereto, or which might have a Material Adverse Effect on the Issuers or any
Guarantor.
(k) Since the dates as of which information is given in the
Offering Memorandum, and except as disclosed in or as contemplated by the
Offering Memorandum, (i) there shall not have been any Material Adverse Change,
or any development that is reasonably likely to result in a Material Adverse
Change, in the capital stock or the long-term debt, or material increase in the
short-term debt, of either of the Issuers, (ii) no dividend or distribution of
any kind shall have been declared, paid or made by either of the Issuers, and
(iii) neither the Issuers nor any of the Subsidiaries shall have incurred any
liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Issuers and the Subsidiaries, taken as
a whole, and that are required to be disclosed on a balance sheet or notes
thereto in accordance with generally accepted accounting principles. Since the
date hereof and since the dates for which information is given in the Offering
Memorandum, there shall not have occurred any Material Adverse Change in the
operations and business of the Issuers or the Guarantors taken as a whole.
(l) The Issuers shall have purchased the Pledged Securities, the
Pledged Securities shall have been deposited into the Pledge Account, and the
Initial Purchasers shall have received the written opinion of a firm of
nationally recognized independent certified public accountants, in form and
substance satisfactory to the Initial Purchasers, to the effect that the
Pledged Securities, upon receipt of scheduled interest and principal payments
thereon, are sufficient to provide for the payment in full of the first four
scheduled interest payments due on the Notes.
(m) The Issuers shall have established a segregated account
satisfactory to the Initial Purchasers for the benefit of the holder of the
MetLife Note with a recognized financial institution and shall have deposited
into such segregated account an amount of funds sufficient to provide for the
payment in full when due of all remaining scheduled interest and principal
payments on the MetLife Note.
-28-
<PAGE> 29
(n) The Initial Purchasers shall have received a certificate or
certificates, dated the Closing Time, signed by the Chief Executive Officer or
the President and the principal financial or accounting officer of each Issuer
confirming, as of the Closing Time, the matters set forth in paragraphs (d),
(j), (k) and (l) of this Section 7.
(o) On or prior to the Closing Date, the Company shall have
received the Partners' Contingent Commitment and the Partners' Insurance
Contingent Commitment (each as described in the Offering Memorandum).
(p) On or prior to the Closing Date, the Initial Purchasers shall
have received a letter from an insurance broker reasonably satisfactory to the
Initial Purchasers with respect to the ability of the Issuers to procure
certain insurance as provided in the Offering Memorandum.
(q) On or prior to the Closing Date, each of Amendment No. 1 to
the Restated ORBCOMM System Construction Agreement between OCC and the Company,
the Tax Sharing Agreement between Orbital Sciences Corporation and OCC, and the
Teleglobe Administrative Services Agreement between the Company and Teleglobe,
Inc., each in form reasonably satisfactory to the Initial Purchasers, shall
have been duly executed and delivered by the respective parties thereto and the
Initial Purchasers shall have received a counterpart thereof.
(r) On or prior to the Closing Date, the Issuers and the
Guarantors shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may
reasonably request.
If any condition specified in this Section 7 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Initial Purchasers by notice to the Issuers, and such
termination shall be without liability of any party to any other party except
as provided in Section 6; provided, however, that notwithstanding any such
termination, the provisions of Sections 8, 9 and 16 shall remain in effect.
Notice of such cancellation shall be given to the Issuers in writing by hand
delivery or facsimile transmission or by telephone promptly confirmed in
writing.
-29-
<PAGE> 30
SECTION 8. Indemnification.
(a) Indemnification of Initial Purchasers. The Issuers agree,
jointly and severally, to indemnify and hold harmless the Initial Purchasers,
their respective affiliates, and each other person, if any, who controls the
Initial Purchasers or their respective affiliates within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and their respective
directors, officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(ii) against any and all expenses whatsoever (including the
reasonable fees and disbursements of counsel chosen by the Initial
Purchasers), as incurred, incurred in investigating, preparing for or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency or body, whether commenced or threatened, and
any amounts paid in settlement thereof, or any other claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under clause (i) above;
provided, however, that with respect to any Initial Purchaser, (A) this
indemnity agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising solely out of an untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished to the Issuers by such Initial Purchaser in writing
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum or any amendment or supplement thereto, and (B) with respect to any
untrue statement or omission or alleged untrue statement or omission made in
the Preliminary Offering Memorandum or the Offering Memorandum, this Agreement
shall not inure to the benefit of any indemnified party to the extent that such
loss, liability, claim, damage
-30-
<PAGE> 31
or expense of the indemnified party results from the fact that the Initial
Purchasers sold Notes to a person to whom there was not sent or given by the
Initial Purchasers or on the Initial Purchasers' behalf at or prior to the
written confirmation or sale of the Notes to such person, a copy of the
Offering Memorandum, if required by law to have been delivered, and if the
Offering Memorandum would have cured the defect giving rise to such loss,
liability, claim, damage or expense.
(b) Indemnification of Issuers, Directors and Officers. Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Issuers, their respective directors, officers, employees and
agents, and each person, if any, who controls either Issuer within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act from and against any
and all loss, liability, claim, damage and expense whatsoever described in
Section 8(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished
to the Issuers by such Initial Purchaser expressly for use in the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or supplement
thereto.
(c) Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party (but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability that it may have otherwise than on
account of this indemnity agreement). In the case of parties indemnified
pursuant to Section 8(a), counsel to the indemnified parties shall be selected
by Bear, Stearns & Co. Inc., and, in the case of parties indemnified pursuant
to Section 8(b), counsel to the indemnified parties shall be selected by
ORBCOMM Global, L.P. An indemnifying party may participate, at its own
expense, in the defense of any such action. If an indemnifying party so elects
within a reasonable time after receipt of such notice, such indemnifying party
may assume the defense of such action with counsel chosen by it and
-31-
<PAGE> 32
reasonably satisfactory to the indemnified party or parties defendant in such
action; provided, however, that if any such indemnified party reasonably
determines, upon written advice of counsel, that there may be legal defenses
available to such indemnified party that are different from or in addition to
those available to such indemnifying party or that representation of such
indemnifying party and any indemnified party by the same counsel would present
a conflict of interest, then such indemnifying party shall not be entitled to
assume such defense. If an indemnifying party is not so entitled to assume the
defense of such action, counsel for such indemnifying party shall be entitled
to conduct the defense of such indemnifying party and counsel for each
indemnified party or parties shall be entitled to conduct the defense of such
indemnified party or parties. If an indemnifying party assumes the defense of
an action in accordance with and as permitted by the provisions of this Section
8(c), such indemnifying party shall not be liable for any fees and expenses of
counsel for the indemnified parties incurred thereafter in connection with such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel for all indemnified parties in connection
with any one action, or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, which consent shall not be unreasonably withheld, settle or compromise
or consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 8 or Section 9 hereof, unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Waiver of Subrogation; Contribution. Notwithstanding any
payment or payments made by either Issuer or Guarantor hereunder, (i) each
Issuer and Guarantor hereby expressly waives subrogation to, and agrees that it
shall not be entitled to be subrogated to, any of the rights of any indemnified
party against any other Issuer or Guarantor or any right of offset held by any
indemnified party for the payment of any amounts owed to any indemnified
-32-
<PAGE> 33
party pursuant to this Section 8, and (ii) each Issuer and Guarantor hereby
expressly waives any right to contribution from any other Issuer or Guarantor;
provided, however, that if any of the foregoing provisions of this paragraph
are held to be contrary to applicable law or unenforceable by a court of
competent jurisdiction, each Issuer and Guarantor hereby expressly agrees that
any right of subrogation or contribution that such Issuer or Guarantor may have
as a result of such applicable law or unenforceability, as the case may be,
shall be subordinate in right of payment to the payment in full in cash of all
amounts owed to any indemnified party pursuant to this Section 8.
SECTION 9. Contribution. If the indemnification provided for in
Section 8 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantors on the one hand and the Initial Purchasers on the
other hand from the offering of the Notes pursuant to this Agreement, or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
the Guarantors on the one hand and of the Initial Purchasers on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Issuers and the Guarantors
on the one hand and the Initial Purchasers on the other hand in connection with
the offering of the Notes pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Notes pursuant to this Agreement (before deducting expenses) received by
the Issuers and the total underwriting discount received by the Initial
Purchasers bear to the aggregate initial offering price of the Notes.
The relative fault of the Issuers and the Guarantors on the one
hand and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement
-33-
<PAGE> 34
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Issuers and the Guarantors or by the
Initial Purchasers, and the respective parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Issuers, the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Notes underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each person, if any, who controls
an Initial Purchaser within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each director or officer of either of the Issuers and each
person, if any, who controls either of the Issuers within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Issuer. The Initial Purchasers' respective
obligations to contribute pursuant to this Section 9 are several in proportion
to the principal amount of Notes set forth opposite their respective names on
Schedule 2 hereto and not joint.
SECTION 10. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the front cover page and under
the heading "Plan of Distribution" in the Preliminary Offering Memorandum or
the Offering Memorandum, to the extent such statements relate to the Initial
Purchasers, constitute the only information
-34-
<PAGE> 35
furnished to the Issuers by the Initial Purchasers or by counsel to the Initial
Purchasers in writing expressly for use in the Preliminary Offering Memorandum
or the Offering Memorandum.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties, indemnities, agreements and other
statements of the Issuers and the Guarantors and their respective officers and
of the Initial Purchasers contained in or made pursuant to this Agreement shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any Initial Purchaser or any controlling person, or by
or on behalf of the Issuers or the Guarantors, and shall survive delivery of
and payment for the Notes hereunder.
SECTION 12. Termination of Agreement. (a) The Initial
Purchasers may terminate this Agreement, by notice to the Issuers, at any time
on or prior to the Closing Time if (i) the Issuers or the Guarantors shall have
failed, refused or been unable to perform in any material respect their
respective obligations hereunder, (ii) there has been, since the date of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum, any Material Adverse Change with respect to the Issuers,
the Guarantors or the ORBCOMM System, whether or not arising in the ordinary
course of business, or (iii) since the date of this Agreement (A) trading
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market has been suspended or materially limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities generally have been required, by any such exchange or by order of
the Commission, the NASD or any other authority having applicable jurisdiction,
(B) a general banking moratorium has been declared by either Federal or state
authorities, or (C) there has occurred any outbreak of hostilities or
escalation of existing hostilities, or other national or international calamity
or crisis, or any other material adverse change in general economic, political
or financial conditions, the effect of which on the financial securities
markets of the United States is such as to make it, in the judgment of any
Initial Purchaser, impracticable to market the Notes or to enforce contracts
for the sale of the Notes. As used in this Section 12(a), the term "Offering
Memorandum" means the Offering Memorandum in the form first used to confirm
sales of the Notes.
-35-
<PAGE> 36
(b) If this Agreement is terminated pursuant to this Section 12,
such termination shall be without liability of any party to any other party
except as provided in Section 6. Notwithstanding any such termination, the
provisions of Sections 8, 9 and 16 shall remain in full force and effect.
SECTION 13. Default By An Initial Purchaser. If one of the
Initial Purchasers shall fail at the Closing Time to purchase the Notes that it
is obligated to purchase under the terms of this Agreement, the other Initial
Purchasers shall have the right, but not the obligation, within 24 hours
thereafter, to make arrangements to purchase all, but not less than all, of
such Notes upon the terms herein set forth; if, however, the other Initial
Purchaser(s) shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of
any nondefaulting Initial Purchaser. No action pursuant to this Section shall
relieve any defaulting Initial Purchaser from liability in respect of its
default. In the event of any such default that does not result in a
termination of this Agreement, either a nondefaulting Initial Purchaser or an
Issuer shall have the right to postpone the Closing Time for a period not
exceeding seven days to effect any required changes in the Offering Memorandum
or in any other documents or arrangement.
SECTION 14. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication; provided,
however, that any notice of termination pursuant to Section 12 shall be given
by telephone (promptly confirmed in writing) or telecopy. Notices to the
Initial Purchasers shall be directed to the Initial Purchasers, c/o Bear,
Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167, Attention:
Joseph Sheehan, Facsimile No.: (212) 272-4918; and notices to the Issuers and
the Guarantors shall be directed to the Issuers or the Guarantors, c/o ORBCOMM
Global, L.P., 21700 Atlantic Boulevard, Dulles, Virginia 20166, Attention: Vice
President and General Counsel, Facsimile No.: (703) 404-8012.
SECTION 15. Parties. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchasers and the Issuers and their
respective successors and legal representatives. Nothing contained in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers and their
-36-
<PAGE> 37
respective affiliates and the Issuers and their respective successors and legal
representatives, and the controlling persons and officers, directors, employees
and agents referred to in Sections 8 and 9 and their respective successors,
heirs and legal representatives, any legal or equitable right, remedy or claim
under, by virtue of or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Initial Purchasers,
their respective affiliates and the Issuers and their respective successors and
legal representatives, and said controlling persons and officers, directors,
employees and agents and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Notes from
any Initial Purchaser shall be deemed to be a successor merely by reason of
such purchase.
SECTION 16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
SECTION 17. Counterparts. This Agreement may be executed in one
or more counterparts and, when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
SECTION 18. Limitation on Liability. No partner or shareholder of
OCC or Teleglobe Mobile shall have any liability with respect to this Agreement
or any of the obligations of the parties hereunder.
-37-
<PAGE> 38
If the foregoing correctly sets forth the understanding among each
of the parties hereto, please sign a counterpart hereof, whereupon this
instrument, along with all such counterparts, will become a binding agreement
between the Initial Purchasers, the Issuers and the Guarantors in accordance
with its terms.
Very truly yours,
ORBCOMM GLOBAL, L.P.
By:
----------------------------------
Name:
Title:
ORBCOMM GLOBAL CAPITAL CORP.
By:
----------------------------------
Name:
Title:
GUARANTORS:
----------
Accepted and agreed as of
the date first above written:
ORBITAL COMMUNICATIONS CORPORATION
By:
----------------------------------
Name:
Title:
TELEGLOBE MOBILE PARTNERS
By Teleglobe Mobile Investment Inc.,
its managing partner
By:
----------------------------------
Name:
Title:
ORBCOMM USA, L.P.
By:
----------------------------------
Name:
Title:
<PAGE> 39
ORBCOMM INTERNATIONAL PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
INITIAL PURCHASERS:
------------------
Accepted as of the
date first above written:
BEAR, STEARNS & CO. INC.
By:
----------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
----------------------------------
Name:
Title:
RBC DOMINION SECURITIES CORPORATION
By:
----------------------------------
Name:
Title:
<PAGE> 40
Schedule 1
Subsidiaries of ORBCOMM Global, L.P.
1. ORBCOMM USA, L.P.
2. ORBCOMM International Partners, L.P.
3. ORBCOMM Global Capital Corp.
Subsidiaries of ORBCOMM Global Capital Corp.
None
<PAGE> 41
Schedule 2
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Notes
- ----------------- ----------------
<S> <C>
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . $127,500,000
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . $ 34,000,000
RBC Dominion Securities Corporation . . . . . . . . . . . . $ 8,500,000
------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $170,000,000
============
</TABLE>
<PAGE> 42
SCHEDULE 3
LICENSES
1. Consistent with the requirements of the International Telecommunications
Union, the U.S. Government, on behalf of OCC, is coordinating use of the
ORBCOMM System on an international basis. The coordination efforts with
respect to the government of France and the government of Russia have not been
completed.
2. OCC has submitted to the Commission a request (File No. 5-SAT-ML-96) to
modify its licensed downlink frequencies in the 137-138 MHz band to support an
increase in the subscriber downlink data rate (to 9.6 kbps) and to make it
easier to coordinate use of the ORBCOMM System with other satellite systems.
That request has been opposed by several of the applicants whose applications
are being considered in the second NVNG MSS processing round and is also being
reviewed by NOAA.
3. OCC had submitted to the Commission a request (File No. 28-SAT-MP/ML-95) to
modify its satellite system license to operate its gateway uplink to the
Transit Band (149.9-150.05 MHz) and to add downlink frequencies in the
137-138 MHz band to support an additional 12 satellites in the ORBCOMM System.
That request has been opposed by all but one of the applicants whose
applications are being considered in the second NVNG MSS processing round.
4. Local regulatory approvals to import, construct and operate local ORBCOMM
gateways and provide services using the ORBCOMM System in countries outside the
United States will need to be obtained prior to their export.. Responsibility
for obtaining such approvals will reside with the various International
Licenses, rather than with the Company itself.
5. Regulatory licenses to provide services in the United States for more than
200,000 subscriber communicators will need to be obtained.
6. Department of Transportation licenses to launch ORBCOMM System satellites,
which licenses are the responsibility of Orbital Sciences Corporation and are
procured prior to launch, will need to be obtained.
7. Export authorization to export ORBCOMM gateways and certain associated
software will need to be obtained prior to export outside the United States.
8. To the extent replacement or "second generation" satellites are not similar
in design and functionality to the satellite design authorized by the FCC
License, additional FCC modifications or approvals may be required.
<PAGE> 43
SCHEDULE 4
STOCK OPTION AND OTHER BONUS OR COMPENSATION PLANS
1. Orbital Sciences Corporation Stock Option Plan (which is applicable to
OCC, ORBCOMM, ORBCOMM USA and ORBCOMM International)
2. Orbital Sciences Corporation 401(k) Plan (which is applicable to OCC)
3. Orbital Sciences Corporation Deferred Compensation Plan (which may be
applicable to OCC and its affiliates)
4. Orbital Communications Corporation 1992 Stock Option Plan and
associated stock option agreements
5. ORBCOMM, ORBCOMM USA and ORBCOMM International 401(k) Plan
<PAGE> 44
EXHIBIT A
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
$170,000,000
14% Senior Notes due 2004
With Revenue Participation Interest
PRICING EXHIBIT
August 2, 1996
This is the Pricing Exhibit referred to in the Purchase
Agreement; capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement.
1. The initial offering price of the Notes, determined
as provided in said Section 2, shall be 100.0% of the principal amount thereof,
plus accrued interest, if any, from August 7, 1996.
2. The purchase price of the Notes to be paid by the
Initial Purchasers shall be 96.75% of the principal amount thereof, plus
accrued interest, if any, from August 7, 1996.
3. The fixed interest rate to be borne by the Notes
shall be 14%.
4. Revenue Participation Interest (as defined in the
Indenture) shall be payable with respect to the Notes as further described in
the Indenture.
5. The Notes will mature on August 15, 2004.
6. The Notes will be redeemable at the option of the
Issuers, in whole or in part, at any time on or after August 15, 2001 at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest to the redemption date, if redeemed
during the 12-month period beginning August 15 of the years indicated below:
<PAGE> 45
<TABLE>
<CAPTION>
Redemption
Year Price
---------------------------------------------- ---------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . 115.000%
2002 . . . . . . . . . . . . . . . . . . . . 107.500%
2003 and thereafter . . . . . . . . . . . . 100.000%
</TABLE>
7. The price at which the Issuers shall redeem Notes
upon a Change of Control (as defined in the Indenture) is 101% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages (if
any) to the date of purchase, and the price at which the Issuers shall redeem
Notes with Net Proceeds of Asset Sales (as defined in the Indenture) is 100% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages (if any) to the date of purchase.
8. The interest payment dates shall be August 15 and
February 15, commencing February 15, 1997.
<PAGE> 1
EXHIBIT 3.2
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM GLOBAL, L.P.
<PAGE> 2
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM GLOBAL, L.P.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 THE LIMITED PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----
1.3. Nature of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------------
1.4. Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------
1.5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.6. Delaware Office; Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------------------------------
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Adjusted Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------
2.2. Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------
2.3. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------
2.4. Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.5. Capital Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.6. Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------
2.7. Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
2.10. Contribution Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------------
2.11. Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.12. Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------
2.13. Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
2.14. General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.15. Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
2.16. Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------
2.17. Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------
2.18. Master Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------
2.18. Monthly Cash Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------------
2.20. Net Income and Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------
2.21. Net Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------
2.22. Non-Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------
2.24. Original Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------
2.25. Participation Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------
2.26. Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.27. Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
2.28. Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------
2.29. Partnership Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
2.30. Recapture Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.31. Restatement Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.32. Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------
2.33. Super-Majority in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
2.34. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
2.36. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.37. Unrealized Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
2.38. Unrealized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
2.39. Unrecouped Capital Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------
SECTION 3 PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.2. Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------
3.4. Withdrawal of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------------
3.5. Contribution Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------
3.6. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----
3.7 Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------
4.2. Minimum Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
4.3. Nature of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------------
4.4. Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------
SECTION 5 PARTNERS' ACCOUNTS; ALLOCATION OF PARTNERSHIP INCOME AND EXPENSES . . . . . . . . . . . . . . . 10
5.1. Maintenance of Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------------------
5.2. Allocations of Net Income and Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------------------------
SECTION 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1. Authority of General Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------------
6.2. Super-Majority Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------------------
6.3. Enforcement of Definitive Agreements; Voting Interests in ORBCOMM Entities . . . . . . . . . . . 18
--------------------------------------------------------------------------
6.4. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------
6.5. Representation at Meetings; Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------------------------------
6.6. Designation of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------
6.7. Removal of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------
6.8. Certain Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
6.9. The System Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------
6.10. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7 AGREEMENTS AND AUTHORITY OF THE PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1. Rights and Duties of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------------------------------
7.2. Restrictions on General Partners' Authority; Loss Sharing . . . . . . . . . . . . . . . . . . . 20
---------------------------------------------------------
7.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
7.4. Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
SECTION 8 ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1. Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----
8.2. Partners' Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------
8.3. Certificates, Reports, Returns and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------------------------
8.4. Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------
8.5. Review Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
---------------
SECTION 9 TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1. Transfer of Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------------------
9.2. Prohibited Transfers Void . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------------------------
9.3. Withdrawal of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------
SECTION 10 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1. Events of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
10.2. Final Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
10.3. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-----------
10.4. Distribution in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------------
10.5. Cancellation of Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------------
SECTION 11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.1. Method of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------
11.2. Routine Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------------------
11.3. Computation of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-------------------
SECTION 12 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.1. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
----------------
12.2. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
12.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------
12.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------
12.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------
12.6. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------
12.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------
12.8. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
12.9. Waiver of Partition and Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------------------------
12.10. Coordination with Master Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------------------------------
12.11. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------
</TABLE>
-iii-
<PAGE> 5
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM GLOBAL, L.P.
THIS RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") of
ORBCOMM GLOBAL, L.P. (the "Partnership") is made and entered into as of
September 12, 1995 by and between ORBITAL COMMUNICATIONS CORPORATION, a
Delaware corporation ("ORBCOMM"), and TELEGLOBE MOBILE PARTNERS, a Delaware
general partnership ("Teleglobe Mobile"), as general partners (the "General
Partners"), and ORBCOMM and Teleglobe Mobile as limited partners (the "Limited
Partners"). The General Partners and the Limited Partners are collectively
referred to herein as the "Partners." This Agreement restates the Amended and
Restated Agreement of Limited Partnership of ORBCOMM Development Partners, L.P.
attached as Exhibit D to the Master Agreement (as defined below), as amended by
Amendment No. 1 to Master Agreement dated as of April 1, 1994; Amendment No. 2
to Master Agreement dated as of October 1, 1994; and Amendment No. 3 to Master
Agreement dated as of September 12, 1995.
WHEREAS, the Partnership was organized, in accordance with the
provisions of the Delaware Act (as hereinafter defined), by the filing by the
General Partners of a Certificate of Limited Partnership with the Secretary of
State of the State of Delaware (the "Certificate") pursuant to Section 17-201
of the Delaware Act;
WHEREAS, upon the filing of the Certificate, the Partners entered into
an Agreement of Limited Partnership dated as of June 30, 1993 (the "Original
Agreement") and the Partnership entered into agreements with ORBCOMM, Orbital
Sciences Corporation, a Delaware corporation ("Orbital"), and Teleglobe Inc., a
Canadian corporation ("Teleglobe"), for the development, construction,
operation and marketing of the ORBCOMM System (as hereinafter defined); and
WHEREAS, the Partners wish to revise the Original Agreement in its
entirety and enter into this Agreement setting forth their agreements with
respect to the conduct of the business of the Partnership and each of their
rights and obligations as Partners.
NOW THEREFORE, the Partners, in consideration of the foregoing
premises, the agreements and covenants contained herein and other good and
valuable consideration received, the receipt and sufficiency of which are
hereby acknowledged, hereby agree as follows:
SECTION 1
THE LIMITED PARTNERSHIP
1.1. Formation. The Partnership was formed and is being continued as
a limited partnership pursuant to the Delaware Act.
<PAGE> 6
1.2. Name. The name of the Partnership shall be ORBCOMM Global,
L.P., but the business of the Partnership may be conducted under any other name
agreed to by the General Partners and, in such event, the General Partners
shall notify the Partners of such name change promptly thereafter.
1.3. Nature of the Business. The business of the Partnership shall
be to engage in the development, construction, operation and marketing of a
global digital satellite communications system of low-Earth orbit satellites
intended to provide two-way data and message communications and position
determination services throughout the world (the "ORBCOMM System"), to contract
with the General Partners and other Persons for the development, construction
and operation of the spacecraft, the launch vehicles, the master network
control center, satellite control center, United States gateway Earth stations
and any other components of the ORBCOMM System, to market or arrange for the
marketing of the services of the ORBCOMM System, to engage in research and
development in connection therewith and to do all things necessary, appropriate
or advisable in connection with each of the foregoing.
1.4. Principal Office. The location of the principal office of the
Partnership shall be 21700 Atlantic Boulevard, Dulles, Virginia 20166 or at
such other location as may be selected from time to time by the General
Partners. If the General Partners change the location of the principal office
of the Partnership, the Partners shall be notified promptly thereafter. The
Partnership may maintain such other office(s) at such other place(s) as the
General Partners deem advisable.
1.5. Fiscal Year. The fiscal year of the Partnership, and the
taxable year of the Partnership for United States Federal income tax purposes,
shall be the calendar year (the "Partnership Year").
1.6. Delaware Office; Agent for Service of Process. The name of the
registered agent for service of process on the Partnership is Corporation
Service Company, 1013 Center Road, Wilmington, Delaware. The address of the
Partnership's registered office in the State of Delaware shall be the address
of its registered agent.
SECTION 2
DEFINITIONS
Except as otherwise defined herein, all terms used herein have the
meanings specified in the Master Agreement (as hereinafter defined). The
following defined terms used in this Agreement shall have the respective
meanings specified below.
2.1. Adjusted Property. "Adjusted Property" means property the
Carrying Value of which has been adjusted pursuant to Section 5.1(d).
<PAGE> 7
2.2. Affiliate. "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlled by, or under common control with, such
Person.
2.3. Agreement. "Agreement" shall have the meaning ascribed to such
term in the recitals hereto.
2.4. Capital Account. The "Capital Account" of a Partner means the
account maintained for such Partner in accordance with the provisions of
Section 5.1.
2.5. Capital Preference. The "Capital Preference" of a Partner shall
be the portion of such Partner's Partnership Interest described as such in
Section 3.1.
2.6. Carrying Value. "Carrying Value" means (a) with respect to
Contributed Property, the fair market value of such property at the time of its
contribution to the Partnership reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the
Partners' Capital Accounts pursuant to Section 5 with respect to such property,
and (b) with respect to any other property, the adjusted basis of such property
for United States Federal income tax purposes, as of the time of determination,
subject to those adjustments specified in the following sentence. The Carrying
Value of any property shall be adjusted from time to time in accordance with
Sections 5.1(c), 5.1(d), 5.1(e) and 5.1(f) and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions, acquisitions or
improvements of Partnership property, as deemed appropriate by the General
Partners, and in a manner consistent with United States Federal income tax
principles.
2.7. Certificate. "Certificate" shall have the meaning ascribed to
such term in the recitals hereto.
2.8. Contribution Obligation. The "Contribution Obligation" of a
Partner means the obligation of such Partner to make any capital contribution
under Section 3.2 or the Master Agreement to the extent that such obligation
remains unpaid.
2.9. Defaulting Partner. "Defaulting Partner" shall have the meaning
ascribed to such term in Section 3.3.
2.10. Delaware Act. "Delaware Act" means the Delaware Revised
Uniform Limited Partnership Act, 6 Del. Code Ann. tit. 6, Section Section
17-101, et. seq., as it may be amended from time to time, and any successor
thereto.
2.11. Event of Withdrawal. "Event of Withdrawal" shall have the
meaning ascribed to such term in Section 10.1(b).
2.12. General Partner. "General Partner" shall have the meaning
ascribed to such term in the recitals hereto.
-3-
<PAGE> 8
2.13. Indemnified Party. "Indemnified Party" shall have the meaning
ascribed to such term in Section 7.3.
2.14. Limited Partner. "Limited Partner" shall have the meaning
ascribed to such term in the recitals hereto.
2.15. Majority in Interest. "Majority in Interest" of the General
Partners means a General Partner or General Partners having Participation
Percentages aggregating at least a majority of the Participation Percentages
held by all General Partners.
2.16. Master Agreement. "Master Agreement" means the agreement
between Orbital, ORBCOMM, Teleglobe Mobile, and Teleglobe, dated as of June 30,
1993 and titled the "Master Agreement" as amended and restated from time to
time.
2.17. Monthly Cash Requirements. "Monthly Cash Requirements" for any
month means the total cash amounts that the Partnership anticipates it will be
obligated to pay for the next succeeding month, net of any anticipated cash
receipts of the Partnership for such succeeding month.
2.18. Net Income and Net Loss. "Net Income" or "Net Loss" means an
amount equal to the Partnership's taxable income or taxable loss for a relevant
period, adjusted as provided herein. Net Income and Net Loss shall be
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income
or loss), and adjusted as provided in Sections 5.1(b) through (e), and further
adjusted to reflect any adjustments resulting from amended returns, claims for
refund and tax audits.
2.19. Net Value. "Net Value" means, in the case of a contribution of
assets, the fair market value of assets contributed to the Partnership reduced
by the outstanding balance of any indebtedness either assumed by the
Partnership upon such contribution or to which such assets are subject when
contributed and, in the case of a distribution of assets, the fair market value
of assets distributed by the Partnership reduced by the outstanding balance of
any Partnership indebtedness assumed by the Partner receiving such distribution
or any indebtedness to which such distributed property is subject, as such fair
market value is determined (subject to Section 5.1(f)) by the General Partners
using such reasonable methods of valuation as they in their sole discretion
deem appropriate.
2.20. Non-Defaulting Partner. "Non-Defaulting Partner" shall have
the meaning ascribed to such term in Section 3.3.
2.21. Original Agreement. "Original Agreement" shall have the
meaning ascribed to such term in the recitals hereto.
2.22. Participation Percentage. The "Participation Percentage" of a
Partner shall be the portion of such Partner's Partnership Interest described
as such in Section 3.1.
-4-
<PAGE> 9
2.23. Partners. "Partners" shall have the meaning ascribed to such
term in the recitals hereto.
2.24. Partnership. "Partnership" shall have the meaning ascribed to
such term in the recitals hereto.
2.25. Partnership Interest. The "Partnership Interest" of a Partner
shall be the total interest of such Partner in the Partnership.
2.26. Partnership Year. "Partnership Year" shall have the meaning
ascribed to such term in Section 1.5.
2.27. Recapture Income. "Recapture Income" means any gain recognized
by the Partnership (but computed without regard to any adjustment required by
Section 734 or 743 of the Code) upon the disposition of any property or asset
of the Partnership that does not constitute capital gain for United States
Federal income tax purposes because such gain represents the recapture of
deductions or reductions in basis for tax credits previously taken with respect
to such property or assets.
2.28. Restatement Date. "Restatement Date" means September 12, 1995.
2.29. Section. Except as otherwise provided herein, "Section" means
a section of this Agreement.
2.30. Super-Majority in Interest. "Super-Majority in Interest" of
the General Partners means a General Partner or General Partners having
Participation Percentages aggregating more than eighty-six per cent (86%) of
the Participation Percentages held by all General Partners.
2.31. Tax Matters Partner. "Tax Matters Partner" shall have the
meaning ascribed to such term in Section 6231(a)(7) of the Code.
2.32. Transfer. "Transfer" means an assignment, sale, exchange,
gift, pledge, contribution, distribution, disposal, or other transfer.
2.33. Unrealized Gain. "Unrealized Gain" as of any date of
determination means the excess, if any, of the fair market value of property
(as determined under Sections 5.1(d) or (e) as of such date of determination)
over the Carrying Value of such property as of such date of determination
(prior to any adjustment to be made pursuant to Sections 5.1(d) or (e) as of
such date).
2.34. Unrealized Loss. "Unrealized Loss" as of any date of
determination means the excess, if any, of the Carrying Value of property as of
such date of determination (prior to any adjustment to be made pursuant to
Sections 5.1(d) or (e) as of such date) over the fair market
-5-
<PAGE> 10
value of such property (as determined under Sections 5.1(d) or (e) as of such
date of determination).
2.35. Unrecouped Capital Preference. "Unrecouped Capital Preference"
means the amount, if any, by which a Partner's Capital Preference exceeds
cumulative distributions by the Partnership to such Partner pursuant to Section
4 since the inception of the Partnership (but excluding deemed distributions
pursuant to Section 5.1(c)).
SECTION 3
PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS
3.1. Partnership Interests. The Partnership Interests shall be
expressed in terms of the Partners' Participation Percentages and Capital
Preferences. The Participation Percentage of each Partner shall initially be
fifty per cent (50%), subject to any adjustments pursuant to Section 3.7. The
Capital Preference of each Partner as of any date shall be equal to the sum of
the amounts actually contributed by such Partner to the Partnership in cash or
immediately available funds since the inception of the Partnership through such
date (including any amount contributed in exchange for Participation
Percentages), plus the amount of any Unrecouped Capital Preference in ORBCOMM
USA or ORBCOMM International contributed by such Partner pursuant to Section
3.2(a)(iii). The Capital Preferences of the Partners shall be determined
without regard to the contributions of Partnership Percentages in ORBCOMM USA
and ORBCOMM International required by Section 3.2(a)(i) or 3.2(a)(ii). The
Partners shall be required to make the capital contributions set forth in
Section 3.2 and shall be entitled to receive the distributions set forth in
Sections 4 and 10.
3.2. Capital Contributions.
(a) On the Restatement Date, (i) Teleglobe Mobile shall
contribute to the Partnership its entire Participation Percentage in
ORBCOMM USA and its entire Participation Percentage in ORBCOMM
International in excess of two per cent (2%) of the total
Participation Percentages in ORBCOMM International, (ii) ORBCOMM shall
contribute to the Partnership its entire Participation Percentage in
ORBCOMM International and its entire Participation Percentage in
ORBCOMM USA in excess of two per cent (2%) of the total Participation
Percentages in ORBCOMM USA, and (iii) each Partner shall contribute to
the Partnership its entire Capital Preferences and Unrecouped Capital
Preferences, if any, in ORBCOMM USA and ORBCOMM International. For
purposes of this Section 3.2(a), the "Participation Percentage,"
"Capital Preference" and "Unrecouped Capital Preference" of each
Partner in ORBCOMM USA or ORBCOMM International shall be determined by
reference to the respective partnership agreements of ORBCOMM USA and
ORBCOMM International.
(b) In accordance with the contribution schedule set forth
in Section 3.5, and in addition to the capital contributions
previously made pursuant to the Original
-6-
<PAGE> 11
Agreement or required to be made under Section 3.2(a), ORBCOMM hereby
agrees to contribute in cash or in immediately available funds
eighteen million three hundred twenty-five thousand one hundred
forty-one dollars ($18,325,141) and (ii) Teleglobe Mobile hereby
agrees to contribute in cash or in immediately available funds
seventy-four million five hundred twenty-five thousand dollars
($74,525,000).
3.3. Defaults. If any Partner (a "Defaulting Partner") fails to
fulfill a Contribution Obligation and fails to cure such failure within thirty
(30) days after receiving notice from any General Partner of such failure, then
the other Partners (the "Non-Defaulting Partners") shall have any and all
remedies they may have at law or in equity including without limitation to the
extent permitted by applicable law, (a) if the Defaulting Partner is a General
Partner, depriving the Defaulting Partner of its right to participate in the
management of the Partnership pursuant to Section 6, (b) seeking enforcement of
the Defaulting Partner's Contribution Obligation by appropriate legal
proceedings, (c) notwithstanding Section 6.2(e), making a loan to the
Partnership in an amount equal to the portion of the Defaulting Partner's
Contribution Obligation that is in default, which loan shall (i) bear interest
at the rate of the lesser of (x) the prime rate of Morgan Guaranty Trust
Company of New York as announced in the Wall Street Journal plus five per cent
(5%) or (y) the maximum rate permitted by law, (ii) be payable on the demand of
the Partner making the loan, prior to any distributions pursuant to Sections 4
or 10, and (iii) be without recourse to any Partner or (d) notwithstanding
Section 9, selling or assigning such Defaulting Partner's Partnership Interest
in the Partnership, in which event the proceeds of the sale or assignment shall
first be applied to the payment of the expenses of the sale or assignment, next
to the payment of the Contribution Obligation and the balance, if any, shall be
remitted to the Defaulting Partner. In addition to the foregoing, in the event
ORBCOMM fails to fulfill a Capital Obligation and fails to cure such failure
within thirty (30) days after receiving notice from Teleglobe Mobile or any
other General Partner, Orbital shall not be entitled to receive any portion of
the incentive fees remaining to be paid pursuant to Article 14 of the
Procurement Contract.
3.4. Withdrawal of Capital Contributions. No Partner shall have the
right to withdraw or reduce any part of its capital contributions except as
provided in this Agreement.
3.5. Contribution Schedule. The Partners agree to contribute to the
Partnership the amounts required to be contributed by them under Section 3.2(b)
in cash or in immediately available funds in accordance with the following
schedule:
(a) On the Restatement Date, Teleglobe Mobile shall
contribute to the Partnership an amount equal to twenty million
dollars ($20,000,000);
(b) Thereafter, the contributions required to be made
pursuant to Section 3.2(b) shall be made as follows: each month
ORBCOMM shall contribute an amount equal to fifty percent of the
Monthly Cash Requirements for such month, and Teleglobe Mobile shall
contribute an amount equal to the balance of the Monthly Cash
Requirements for such month, until such time as the sum of ORBCOMM's
and Teleglobe
-7-
<PAGE> 12
Mobile's contributions in cash or in immediately available funds made
pursuant to this Section 3.5(b) equals twenty million dollars
($20,000,000);
(c) Thereafter, the contributions required to be made
pursuant to Section 3.2(b) shall be made as follows: each month
ORBCOMM shall contribute an amount equal to the product of (i) eight
million three hundred twenty-five thousand one hundred forty-one
dollars ($8,325,141) divided by fifty-two million eight hundred fifty
thousand one hundred forty-one dollars ($52,850,141) and (ii) the
Monthly Cash Requirements for such month, and Teleglobe Mobile shall
contribute an amount equal to the balance of the Monthly Cash
Requirements for such month, until such time as the sum of ORBCOMM's
and Teleglobe Mobile's contributions in cash or in immediately
available funds made pursuant to this Section 3.5 equals the amount
required to be contributed by each Partner pursuant to Section 3.2(b).
3.6. Loans. (a) Optional Loans. Any General Partner shall have the
right to make a loan of cash to the Partnership at any time on such terms as
such General Partner may determine; provided, however, that in no event shall
any such optional loan be secured by Partnership assets, bear interest or
original issue discount, be with recourse to any Partner or replace any
Partner's obligations to make capital contributions pursuant to this Section 3.
(b) Stock Option Plan Loans. To the extent the Partnership has
agreed to reimburse ORBCOMM for the costs paid by ORBCOMM pursuant to Section
6.06 of the Orbital Communications Corporation 1992 Stock Option Plan
(including the payment by ORBCOMM of withholding taxes with respect to the
exercise of stock options) in purchasing stock acquired by employees or former
employees of the Partnership, ORBCOMM USA or ORBCOMM International (the "Stock
Option Plan Costs"), ORBCOMM agrees to provide to the Partnership a loan in the
amount of the Stock Option Plan Costs paid prior to January 1, 2001 (but only
to the extent that such Stock Option Costs have been paid with respect to
options granted prior to the Restatement Date). Such loan shall bear interest
at the rate of eight per cent (8%) per annum and the principal and interest of
such loan shall be repaid in whole or in part at such time as there is
Partnership cash on hand available for distribution to the Partners, with the
balance being repaid in three equal annual installments commencing on January
1, 2001 and ending on January 1, 2003.
3.7. Additional Capital Contributions. If the Partnership shall
require additional capital contributions in excess of one hundred fifty-nine
million eight hundred thousand dollars ($159,800,000), each Partner shall have
the opportunity to contribute in cash or immediately available funds an amount
equal to such excess multiplied by such Partner's Participation Percentage.
Any such contribution shall increase the contributing Partner's Capital
Preference in accordance with Section 3.1. If either Partner declines to make
a contribution pursuant to the preceding sentence, then:
(a) The other Partner shall be entitled to contribute
the amount so declined (in addition to any amount such Partner is
entitled to contribute pursuant to the preceding sentence), and
-8-
<PAGE> 13
(b) The Partners' Participation Percentages shall be
adjusted as follows:
(i) ORBCOMM's Participation Percentage shall
be adjusted so as to equal the percentage equal to the
quotient of (x) ORBCOMM's Capital Preference plus nine
million two hundred fifty thousand dollars ($9,250,000),
divided by (y) the aggregate Capital Preferences of the
Partners, both calculated after taking into account any
additional capital contributions pursuant to this Section
3.7 plus nine million two hundred fifty thousand dollars
($9,250,000); and
(ii) Teleglobe Mobile's Participation
Percentage shall be adjusted so as to equal one hundred per
cent (so adjusted) (100%) minus ORBCOMM's Participation
Percentage (so adjusted).
SECTION 4
DISTRIBUTIONS
4.1. Distributions. Subject to Sections 4.2 and 10.3, the amount and
timing of distributions by the Partnership shall be determined in the
discretion of the General Partners. Subject to Sections 4.4 and 10.3, all
distributions (including those made pursuant to Section 4.2) shall be made in
the following order of priority:
(a) First, to the Partners in proportion to their
Unrecouped Capital Preferences, until each Partner shall have received
cumulative distributions since the inception of the Partnership equal
to such Partner's Capital Preference; and
(b) Thereafter, to the Partners in proportion to their
Participation Percentages.
For purposes of this Section 4.1, the Capital Preferences, Unrecouped Capital
Preferences and Participation Percentages of the Partners shall be determined
as of the date of distribution.
4.2. Minimum Distribution. The Partnership shall, not later than the
end of the first quarter of each Partnership Year, make a distribution in the
proportions set forth in Section 4.1 in an amount sufficient to ensure that
each Partner shall have received at least an amount equal to the product of (a)
forty per cent (40%) multiplied by (b) the lesser of (i) such Partner's
distributive share of the Partnership's taxable income (if any) for the
preceding Partnership Year as determined based on the United States Federal
income tax return of the Partnership for such year, or (ii) the excess, if any,
of cumulative Net Income over cumulative Net Loss allocated to such Partner
since the inception of the Partnership. Notwithstanding the preceding
sentence, except with the approval of the General Partners no distribution
shall be made to a Partner if immediately prior to such distribution there is a
zero or negative balance in any Partner's Capital Account.
-9-
<PAGE> 14
4.3. Nature of Distributions. Distributions may be made in cash or
property, or both, in the discretion of the General Partners.
4.4. Tax Payments. If the Partnership withholds or pays any tax
(including any addition to tax, penalty, or interest (other than an addition to
tax, penalty, or interest attributable solely to an act or omission of the Tax
Matters Partner)) in respect of any Partner's distributive share of Partnership
income or distributions to any Partner, such payment or withholding shall be
treated as a distribution pursuant to Section 4.1 to such Partner.
SECTION 5
PARTNERS' ACCOUNTS; ALLOCATION OF
PARTNERSHIP INCOME AND EXPENSES
5.1. Maintenance of Capital Accounts.
(a) General Rule. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with Section 704 of
the Code and the regulations thereunder ("Capital Account"). If a
Partner is both a Limited Partner and a General Partner, a single
Capital Account shall be maintained for such Partner. Each Partner's
Capital Account shall be increased by (i) the cash amount or Net Value
of all capital contributions made by such Partner to the Partnership
and (ii) all items of Net Income allocated to such Partner and
decreased by (A) the cash amount or Net Value of all actual and deemed
distributions of cash or property made to such Partner and (B) all
items of Net Loss allocated to such Partner.
(b) Computation of Items of Income, Gain, Loss or
Deduction. For purposes of computing the amount of any item of
income, gain, deduction or loss to be reflected in the Partners'
Capital Accounts, the determination, recognition and classification of
any such item shall be the same as its determination, recognition and
classification for United States Federal income tax purposes
(including any method of depreciation, cost recovery or amortization
used for this purpose), provided that:
(i) In accordance with the requirements of
Section 704(c) of the Code and Treasury Regulations Section
1.704-1(b)(2)(iv)(d), any deductions for depreciation, cost
recovery or amortization attributable to Contributed
Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the
Partnership was equal to the fair market value of such
property. Upon an adjustment pursuant to Section 5.1(d) to
the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or
amortization attributable to such property shall be
determined as if the adjusted basis of such
-10-
<PAGE> 15
property was equal to the Carrying Value of such property
immediately following such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by
the Partnership as if the adjusted basis of such property
as of such date of disposition was equal in amount to the
Partnership's Carrying Value with respect to such property
as of such date.
(iii) The computation of all items of income,
gain, loss and deduction shall be made, as to those items
described in Section 705(a)(1)(B) or Section 705(a)(2)(B)
of the Code, without regard to the fact that such items are
not includable in gross income or are neither currently
deductible nor capitalizable for United States Federal
income tax purposes. For this purpose, amounts paid or
incurred to organize the Partnership or to promote the sale
of interests in the Partnership that are neither deductible
nor amortizable under Section 709 of the Code, and
deductions for any losses incurred in connection with the
sale or exchange of Partnership assets disallowed pursuant
to Section 267(a)(1) or Section 707(b) of the Code, shall
be treated as expenditures described in Section
705(a)(2)(B) of the Code.
(c) Transferees. Generally, a transferee of a Partner's
Partnership Interest will succeed to the Capital Account relating to
the interest transferred. However, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties shall be deemed to have been distributed
in liquidation of the Partnership to the Partners (including the
transferee of a Partnership Interest) and deemed recontributed by such
Partners in reconstitution of the Partnership. In such event, the
Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed distribution pursuant to Section
5.1(e) (and such adjusted Carrying Values shall constitute the Net
Values of such properties upon this deemed contribution to the
reconstituted Partnership). The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the
principles of this Section 5.1.
(d) Adjustments to Carrying Values. In accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f), in connection with
either (i) the contribution of money or other property (other than a
de minimis amount) to the Partnership by a new or existing Partner in
consideration for an interest in the Partnership or (ii) a
distribution of money or other property (other than a de minimis
amount) by the Partnership to a retiring or continuing Partner as
consideration for an interest in the Partnership, the Capital Accounts
of all Partners and the Carrying Values of all Partnership properties
may at the sole discretion of the General Partners be adjusted
(consistent with the provisions hereof) upwards or downwards to
reflect any Unrealized Gain or Unrealized Loss attributable to each
Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized upon an actual sale of each such property at such
time and had been allocated to the Partners pursuant to Section 5.2.
For purposes of determining such Unrealized Gain or Unrealized Loss,
the fair market value of Partnership assets shall be determined
-11-
<PAGE> 16
by the General Partners using such reasonable methods of valuation as
they in their sole discretion deem appropriate.
(e) Effect of Distributions in Kind on Capital Accounts.
In accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(e),
immediately prior to the actual or deemed distribution of any
Partnership property in kind, the Capital Accounts of all Partners and
the Carrying Value of each such Partnership property shall be adjusted
(consistent with the provisions hereof) upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such
Partnership property as if such Unrealized Gain or Unrealized Loss had
been recognized upon an actual sale of each such property immediately
prior to such distribution and had been allocated to the Partners, at
such time, pursuant to Section 5.2. For purposes of determining such
Unrealized Gain or Unrealized Loss, the fair market values of relevant
Partnership properties shall be determined by the General Partners
pursuant to Section 6.4 using such reasonable methods of valuation as
they in their sole discretion deem appropriate.
(f) Restatement Date Carrying Values and Capital Accounts.
The Partners agree that as of the Restatement Date, for purposes of
determining Net Values, Carrying Values, and Capital Accounts, the
fair market value of each interest in ORBCOMM USA and ORBCOMM
International contributed by a Partner to the Partnership pursuant to
Section 3.2(a) shall be equal to the positive Capital Account balance
(if any) in ORBCOMM USA or ORBCOMM International transferred to the
Partnership in respect of such interest.
5.2. Allocations of Net Income and Net Loss.
(a) In General. Subject to Section 5.2(b), Net Income and
Net Loss shall be allocated to the Capital Accounts as follows:
(i) Subject to Section 5.2(a)(iii), Net Income
shall be allocated to the Partners in proportion to their
Participation Percentages.
(ii) Subject to Section 5.2(a)(iii), Net Loss
shall be allocated to the Partners in proportion to their
Participation Percentages.
(iii) To the extent Net Loss allocated to a
Partner pursuant to Section 5.2(a)(ii) or this Section
5.2(a)(iii) would, but for this Section 5.2(a)(iii), cause
or increase any deficit in the Capital Account maintained
with respect to such Partner as of the end of such
Partnership Year, such Net Loss shall be reallocated first
to the other Partners in proportion to, and to the extent
of, their positive Capital Account balances, and then to
the General Partners in proportion to their Participation
Percentages. If any Net Loss is or was reallocated
pursuant to the preceding sentence (or its counterpart in
the Original Agreement), Net Income shall thereafter be
allocated so as to offset, to the extent possible, such
reallocations of Net Loss.
-12-
<PAGE> 17
(b) Special Provisions Governing Capital Account
Allocations. To the extent inconsistent with the provisions of
Section 5.2(a) the following special provisions shall govern
allocations to Capital Accounts:
(i) If there is a net decrease in "partnership
minimum gain" (within the meaning of Treasury Regulations
Section 1.704-2(b)(2)) during a taxable year, each Partner
shall (subject to the exceptions set forth in Treasury
Regulations Section 1.704-2(f)) be allocated items of
income and gain for such year (and, if necessary, for
subsequent years) equal to the portion of such Partner's
share of the net decrease in partnership minimum gain.
This Section 5.2(b)(i) is intended to be a "minimum gain
chargeback" within meaning of Treasury Regulations Section
1.704-2(f), and is to be interpreted to comply with the
requirements of such regulation.
(ii) If any Partner unexpectedly receives any
adjustments, allocations or distributions described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items
of income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate a
deficit in its Capital Account (after taking into account
adjustments, distributions and allocations described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
and (6)) in excess of its obligations to restore such
deficit (within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(d)) created by such adjustments,
allocations or distributions as quickly as possible. This
Section 5.2(b)(ii) is intended to constitute a "qualified
income offset" within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(3) and is to be interpreted to
comply with the requirements of such regulation.
(iii) The interest of the General Partners as
general partners, including the interests of any additional
or substituted general partner, taken together, in each
material item of Partnership income, gain, loss, deduction
or credit shall be equal to at least one percent (1%) of
each such item at all times during the existence of the
Partnership.
(iv) In accordance with Treasury Regulations
Section 1.704-2,
(A) any items of partnership loss,
deduction or expenditure (including expenditures
described in Section 705(a)(2)(B) of the Code)
that are attributable to liabilities of the
Partnership for which no Partner bears the
economic risk of loss shall be allocated in the
same manner as Net Losses hereunder, and
(B) any items of partnership loss,
deduction or expenditure (including expenditures
described in Section 705(a)(2)(B) of the Code)
-13-
<PAGE> 18
that are attributable to nonrecourse debt of the
Partnership for which one or more Partners bears
the economic risk of loss shall be allocated to
each Partner in proportion to the extent to which
such Partner bears such economic risk of loss.
(v) Any special allocations of items of income or
gain pursuant to Sections 5.2(b)(i), (ii), (iii) and (iv)
shall be taken into account in computing subsequent
allocations of items of income, gain, deduction or loss so
that the net amounts of any items so allocated shall, to
the extent possible and consistent with such Sections, be
equal to the net amounts that would have been allocated to
each Partner had the allocations made pursuant to such
Sections not been made.
(c) Allocations for Tax Purposes.
(i) For United States Federal income tax
purposes, except as otherwise provided in this Section
5.2(c), each item of income, gain, loss, and deduction of
the Partnership shall be allocated among the Partners in
the same proportions as items comprising Net Income or Net
Loss, as the case may be, are allocated among the Partners.
Credits shall be allocated as provided in Treasury
Regulations Section 1.704-1(b)(4)(ii).
(ii) In the case of Contributed Property, items
of income, gain, loss, depreciation, amortization and cost
recovery shall be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code. In the case of Adjusted Property, items of income,
gain, loss, depreciation and cost recovery deductions
attributable thereto shall (A) first, be allocated among
the Partners in a manner consistent with the principles of
Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such
property and the allocation thereof pursuant to Section
5.1(c) or 5.1(d), and (B) second, in the event such
property was originally Contributed Property, be allocated
among the Partners in a manner consistent with subsection
(ii) above.
(iii) To the extent permissible under applicable
Treasury Regulations, the amount of any gain from a
disposition allocated to (or recognized by) a Partner (or
its successor in interest) for United States Federal income
tax purposes pursuant to the above provisions shall be
deemed to be Recapture Income to the extent such Partner
has been allocated any deduction or credit directly or
indirectly giving rise to the treatment of such gain as
Recapture Income.
(iv) All items of income, gain, loss, deduction
and credit recognized by the Partnership for United States
Federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be
determined
-14-
<PAGE> 19
without regard to any adjustment made pursuant to Section
743 of the Code; provided, however, that such allocations,
once made, shall be adjusted as necessary or appropriate to
take into account those adjustments permitted by Section
743 of the Code, and any adjustments made pursuant to
Section 734 of the Code shall be allocated to the extent
permitted under and in accordance with the rules of
Treasury Regulations Section 1.704-1(b)(2)(iv)(m).
(d) Other Rules Pertaining to Allocations. Subject to
Section 6.2(g), the Tax Matters Partner may adopt and employ such
methods and procedures for (i) the determination and allocation of
adjustments under Sections 704(c), 734 and 743 of the Code, (ii) the
provision of tax information and reports to Partners, (iii) the
adoption of reasonable conventions and methods for the valuation of
assets and the determination of tax basis, (iv) the allocation of
asset values and tax basis, and (v) conventions for the determination
of cost recovery, depreciation and amortization deductions and the
maintenance of inventories, as it determines in its sole discretion
are necessary and appropriate to execute the provisions of this
Agreement, and to comply with United States Federal and state tax
laws. To the fullest extent permitted by law, the Tax Matters Partner
shall be indemnified and held harmless by the Partnership for any
expenses, penalties or other liabilities arising as a result of
decisions made in good faith on any of the matters referred to in the
preceding sentence.
SECTION 6
MANAGEMENT
6.1. Authority of General Partners. Except to the extent required by
law or specific provisions of this Agreement, the management of the Partnership
and all Partnership affairs shall be the exclusive responsibility of the
General Partners. Subject to Sections 6.2 and 6.3 hereof, the act of a
Majority in Interest of the General Partners shall be the act of the General
Partners, and no General Partner may act on behalf of the Partnership without
the approval of a Majority in Interest of the General Partners. Without
limiting the generality of the foregoing, subject to Sections 6.2 and 6.3, a
Majority in Interest of the General Partners is authorized on behalf of the
Partnership, without the consent of any Partner, to:
(a) expend the capital and revenues of the Partnership in
furtherance of the Partnership's business and pay, in accordance with
the provisions of this Agreement, all expenses, debts and obligations
of the Partnership to the extent that funds of the Partnership are
available therefor;
(b) invest and reinvest the Partnership's funds;
(c) enter into, amend or terminate agreements (including
without limitation partnership agreements) and contracts with any
Person or Persons, institute, defend and
-15-
<PAGE> 20
settle litigation arising therefrom, and give receipts, releases and
discharges with respect to all of the foregoing and any matters
incident thereto;
(d) maintain, at the expense of the Partnership, adequate
records and accounts of all operations and expenditures and furnish
the Partners with the reports referred to in Section 8;
(e) purchase, at the expense of the Partnership,
liability, casualty, fire and other insurance and bonds to protect the
Partnership's properties, business, partners and employees, the
General Partners, their stockholders and their respective directors,
officers and employees;
(f) borrow for working capital and, in connection
therewith, issue notes, debentures and other debt securities and
mortgage, pledge, encumber or hypothecate the assets of the
Partnership, to secure repayment of such borrowed sums;
(g) obtain replacement of any mortgage, encumbrance,
pledge, hypothecation or other security device and prepay, in whole or
in part, modify, consolidate or extend any such mortgage, encumbrance,
pledge, hypothecation or other security device, subject to the
limitations contained in this Agreement;
(h) sell, lease, trade, exchange or otherwise dispose of
all or any portion of the property of the Partnership subject to the
limitations contained in this Agreement;
(i) employ, at the expense of the Partnership,
consultants, accountants, attorneys, brokers, engineers, escrow agents
and others and terminate such employment;
(j) execute and deliver any and all instruments necessary
or incidental to the conduct of the business of the Partnership;
(k) determine the amount, timing and character of
distributions to Partners pursuant to Sections 4.1 and 4.3;
(l) appoint or remove officers to the Partnership;
(m) act on behalf of the Partnership with respect to the
obligations of the Partnership under any of the Definitive Agreements;
and
(n) do such other things and engage in such other
activities related to the foregoing as may be necessary, convenient or
advisable with respect to the conduct of the business of the
Partnership, and have and exercise all of the powers and rights
conferred upon limited partnerships formed under the Delaware Act.
-16-
<PAGE> 21
By executing this Agreement each Partner, including the General
Partners, shall be deemed to have consented to any exercise by a Majority in
Interest of the General Partners of any of the foregoing powers.
6.2. Super-Majority Approval. Subject to Section 6.1, the approval
of a Super-Majority in Interest of the General Partners shall be required to:
(a) Transfer all or substantially all the assets of the
Partnership or contract to do so;
(b) merge or consolidate the Partnership with any other
Person;
(c) permit the entry by the Partnership into any
additional lines of business other than those described in Section 1.3
or directly related thereto;
(d) admit any Person to the Partnership as a General or
Limited Partner;
(e) subject to Section 6.8 cause the Partnership to borrow
any amount on a recourse basis or any amount in excess of five million
dollars ($5,000,000) on a non-recourse basis;
(f) subject to Section 6.3(c) enter into any transaction
(excluding the Definitive Agreements and any amendment or modification
to or waiver of the Procurement Contract, but including any amendment
or modification to a Definitive Agreement other than the Procurement
Contract) with an Affiliate of a General Partner;
(g) select or remove the independent certified public
accountant for the Partnership pursuant to Section 8.4 or adopt, or
modify in any material respect, any significant accounting policy or
tax policy;
(h) make on behalf of the Partnership an assignment for
the benefit of creditors, decide on behalf of the Partnership to
subject the Partnership to any proceedings under any bankruptcy or
insolvency law, decide to avail the Partnership of the benefit of any
other legislation for the benefit of debtors, or take steps to wind up
or terminate the Partnership existence;
(i) delegate any of the powers of the Partnership to a
Person;
(j) determine the value of the Partnership for purposes of
Article X of the Master Agreement; and
(k) amend any provision of this Agreement, except that no
such amendment may (i) decrease the Capital Account or increase the
amount required to be contributed by a Partner without the consent of
such Partner, or (ii) amend the provisions of, or adopt any provisions
inconsistent with, Sections 6.2, 6.3 and 6.4.
-17-
<PAGE> 22
6.3. Enforcement of Definitive Agreements; Voting Interests in
ORBCOMM Entities. Notwithstanding the provisions of Section 6.1 and 6.2,
(a) Any action of the Partnership with respect to the
enforcement by it of its rights under any Definitive Agreement or
other contract or agreement to which any General Partner or any
Affiliate thereof is a party with respect to a breach, default or
dispute by such General Partner or Affiliate, including without
limitation the institution or prosecution of any arbitration or other
proceedings, may be taken by General Partners having a majority of the
Participation Percentages held by the General Partners other than such
General Partner;
(b) So long as the Partnership holds voting rights in
either of ORBCOMM USA or ORBCOMM International, each General Partner
shall be entitled to exercise directly a fraction of such rights
determined by dividing such General Partner's Participation Percentage
by the total Participation Percentages held by all General Partners;
and
(c) Subject to the terms of Section 6.3(a), in the event
that a Majority in Interest of the General Partners, each acting in
the best interests of the Partnership, shall be unable to agree on
exercising or enforcing the rights of the Partnership under the
Procurement Contract including, without limitation, the rights to
exercise the options thereunder, to stop work, to request changes and
to send notices to preserve or exercise any such rights, then the
President of the Partnership shall decide on the appropriate action
with respect to such rights, and the Partnership shall then act upon
such decision.
6.4. Meetings. Meetings of the General Partners may be called by any
General Partner and shall be held at the principal offices of the Partnership
or at such other location as shall be reasonably determined by the General
Partners. Notwithstanding any provision of applicable law, not less than
forty-eight (48) hours prior written notice of the time, place and purpose of
each meeting of the General Partners shall be provided to each General Partner
calling such meeting, provided that any General Partner may waive compliance
with such notice requirement. Any meeting may be adjourned from time to time
by the General Partners, and the meeting may be held as adjourned without
further notice. Any one or more General Partners may participate in any
meeting by means of conference telephone, video or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by General Partners in a meeting held by means
of a conference telephone, video or similar communications equipment shall
constitute presence in person at a meeting. Any action required or permitted
to be taken with the approval of General Partners may be taken without a
meeting upon the written consent of all General Partners, which written consent
shall be filed with the records of the meetings of the General Partners.
6.5. Representation at Meetings; Reimbursement. Each General Partner
shall be represented at meetings of the General Partners by up to three
authorized officers or other authorized agents, it being the expectation of the
General Partners that each General Partner will select three representatives
who will use reasonable efforts to attend each meeting of the General
-18-
<PAGE> 23
Partners. At each meeting of the General Partners, one representative of each
General Partner shall be entitled to vote such General Partner's Participation
Percentage. Each General Partner shall be entitled to reimbursement of the
reasonable out-of-pocket expenses incurred by it or its representatives in
attending meetings of the General Partners. No amount so paid to any such
member shall be deemed to be a distribution of Partnership assets for purposes
of this Agreement or the Delaware Act. Except for the reimbursement of
expenses as provided in this Section 6.5, no General Partner or representative
thereof shall receive any compensation for its, his or her services as such.
6.6. Designation of Officers. Officers of the Partnership shall be
nominated by the President of the Partnership and elected by the General
Partners and shall exercise such authority as they are granted by the General
Partners. If an officer is an employee of a General Partner, the Partnership
will promptly reimburse such General Partner the pro rata share of expenses,
including compensation and overhead, attributable to such officer of the
Partnership by reference to the share of his or her total time spent upon
Partnership operations. Without limiting the foregoing, the General Partners
shall, no later than promptly following the Restatement Date, appoint one or
more officers to have such authority as the General Partners determine to be
appropriate to act for the Partnership with respect to the Procurement Contract
after the Restatement Date.
6.7. Removal of Officers. Any officer of the Partnership may be
removed at any time and for any reason by approval or written consent of the
General Partners. Any officer removed pursuant to this Section shall remain
entitled to exculpation and indemnification from the Partnership pursuant to
Section 7.3 with respect to any matter arising prior to his or her removal.
6.8. Certain Borrowings. Teleglobe Mobile hereby consents to any
borrowing by the Partnership on commercially reasonable terms (and, in
connection with any such borrowing, to the grant of a security interest in all
or any portion of the Partnership's assets) in furtherance of the business of
the Partnership so long as (a) such borrowing is without recourse to Teleglobe
Mobile, (b) the aggregate outstanding balance at any time of all such
borrowings does not exceed five million dollars ($5,000,000), and (c) Teleglobe
Mobile receives prior notice of the borrowings.
6.9. The System Charge. The System Charge for any calendar quarter
shall be equal to the sum of (a) Output Capacity Charge (as such term is
defined in Section 4.l(a) of the System Charge Agreement) for such calendar
month minus 1.15% of Total Aggregate Revenues and (b) the International Output
Capacity Charge (as such term is defined in Section 6.1(a) of the International
System Charge Agreement) for such calendar month minus 1.15% of Total Aggregate
Revenues. For purposes of this Section 6.9, "Total Aggregate Revenues" shall
mean the total aggregate revenues invoiced by both ORBCOMM USA and ORBCOMM
International to their respective Subscribers, Resellers and Licensees in
connection with the operation, marketing and use of the ORBCOMM System in such
calendar quarter; provided that revenues invoiced by either ORBCOMM USA or
ORBCOMM International in connection with the sale of network control centers,
gateway earth stations and subscriber communicators shall be excluded from the
calculation of total aggregate revenues; and provided further that, within five
(5) days of
-19-
<PAGE> 24
the receipt by the Partnership from ORBCOMM USA and ORBCOMM International of
the amount of total aggregate revenues invoiced by them during a calendar
quarter, the Partnership shall notify each of ORBCOMM and Teleglobe Mobile of
the amount of the Total Aggregate Revenues for such quarter. The amount
determined pursuant to clause (a) above shall be ORBCOMM's allocated portion of
the System Charge and the amount determined pursuant to clause (b) above shall
be Teleglobe Mobile's allocated portion of the System Charge.
6.10. [RESERVED].
SECTION 7
AGREEMENTS AND AUTHORITY OF THE PARTNERS
7.1. Rights and Duties of Limited Partners.
(a) Except as otherwise specifically provided in this
Agreement, the Limited Partners in their capacities as such shall not
participate in the control, management, direction or operation of the
business or affairs of the Partnership and shall have no power to act
for or bind the Partnership.
(b) Pursuant to Delaware law (and provided that such
Limited Partner does not, in addition to the exercise of its rights
and powers as a Limited Partner, take part in the control of the
business of the Partnership), no Limited Partner shall be liable for
losses or debts of the Partnership in its capacity as a Limited
Partner beyond the aggregate amount of its capital contributions,
except that (i) when a Limited Partner has received a return of any
part of its capital contribution without violation of this Agreement
or the Delaware Act it shall be liable to the Partnership for one year
thereafter for the amount of the returned contribution, but only to
the extent necessary to discharge the Partnership's liabilities to
creditors who extended credit to the Partnership during the period the
capital contribution was held by the Partnership, and (ii) if the
Limited Partner has received the return of any part of its capital
contribution in violation of this Agreement or the Delaware Act, it is
liable to the Partnership for a period of six years thereafter for the
amount of such contribution wrongfully returned to it; provided,
however, that to the extent any Limited Partner repays to the
Partnership pursuant to the foregoing provision a greater percentage
of the distributions made to it than any or all other Limited Partners
similarly liable to the Partnership, such Limited Partner shall have a
right of contribution from each such other Limited Partner to the
extent that such other Limited Partner has repaid pursuant to such
provision a lesser percentage of the distributions made to it.
7.2. Restrictions on General Partners' Authority; Loss Sharing.
(a) No General Partner may, without the approval or
written consent to the specific act by all of the Partners given in
this Agreement or by other written instrument
-20-
<PAGE> 25
executed and delivered by the Partners subsequent to the date of this
Agreement, do any of the following:
(i) any act in contravention of this Agreement or
the Certificate;
(ii) any act which would make it impossible to
carry on the ordinary business of the Partnership, except
as otherwise provided in this Agreement; or
(iii) assign any rights in specific Partnership
property, for other than a Partnership purpose.
(b) The General Partners shall share responsibility for
all obligations and losses of the Partnership in excess of the
Partners' aggregate capital contributions in proportion to their
Participation Percentages.
7.3. Exculpation. None of the General Partners, any of their
respective officers, directors, partners, employees or agents, including any
Person who formerly served in any of the foregoing capacities (each, an
"Indemnified Party"), shall be liable, in damages or otherwise, to the
Partnership or to any of the Limited Partners for any act or omission by such
Indemnified Party pursuant to the authority granted by this Agreement except if
such act or omission results from gross negligence, willful or wanton
misconduct or bad faith of such Indemnified Party. The Partnership shall
indemnify, defend and hold harmless each Indemnified Party from and against any
and all claims or liabilities of any nature whatsoever, including reasonable
attorneys' fees, arising out of or in connection with any action taken or
omitted by any General Partner or the officers of the Partnership pursuant to
the authority granted by this Agreement, except where attributable to the gross
negligence, willful or wanton misconduct or bad faith of such Indemnified
Party. An Indemnified Party shall be entitled to rely on the advice of counsel,
public accountants or other independent experts experienced in the matter at
issue, and any act or omission of such Person pursuant to such advice shall in
no event subject such Indemnified Party to liability to the Partnership or any
Partner.
7.4. Other Activities. Subject to the Proprietary Information and
Non-Competition Agreement among Orbital, ORBCOMM, Teleglobe, Teleglobe Mobile,
the Partnership, ORBCOMM USA, and ORBCOMM International, any Partner may engage
in or possess an interest in other business venture of any nature or
description, independently or with others, whether presently existing or
hereafter created, including the development, operation and commercial
exploitation of aerospace technology and communications systems, and neither
the Partnership nor any Partner shall have any rights in or to such independent
ventures or the income or profits derived therefrom.
-21-
<PAGE> 26
SECTION 8
ACCOUNTS
8.1. Books. Each Partner shall have the right to inspect the
Partnership's books and records (including a list of the names and addresses of
Partners) at any reasonable time upon advance written request to the General
Partners, which books and records shall be maintained by the Partnership.
8.2. Partners' Accounts. Separate Capital Accounts shall be
maintained for each Partner in accordance with the provisions of Section 5.
8.3. Certificates, Reports, Returns and Audits.
(a) The books of account shall be closed promptly after
the end of each Partnership Year. Within twenty (20) days of the end
of the Partnership Year, the General Partners shall provide each
Person who was a Partner at any time during such Partnership Year an
unaudited statement of profit and loss for such year. Within sixty
(60) days of the end of the Partnership Year, a written report shall
be made to each Person who was a Partner at any time during such
Partnership Year that shall include a statement of profit and loss and
a statement of cash flows for the year then ended, a balance sheet as
of the close of the Partnership Year and a statement of such Partner's
Capital Account, all of which shall be prepared in accordance with
generally accepted accounting principles in the United States, and
shall be audited by the Partnership's independent public accountants.
The annual report shall also contain such additional statements with
respect to the status of the Partnership's business, transactions by
the Partnership with any of the Partners or any of their Affiliates
and the distribution of Partnership funds as are considered necessary
by the General Partners to advise all Partners properly about their
investment in the Partnership. With the sole exception of the
mathematical errors in computation, the annual report and the
information contained therein shall be deemed conclusive and binding
upon each Partner unless written objection shall be lodged with the
General Partners within ninety (90) days after the giving of such
reports to such Partner.
(b) Within twenty (20) days after the close of each month
of the Partnership Year other than the final month of the Year,
commencing with the month of July, 1993, a written report shall be
made to each Person who was a Partner during the month then ended that
shall include details with respect to the Partnership's business and
unaudited financial statements and other relevant information
regarding the Partnership and its activities during the month,
including statements with respect to any transactions by the
Partnership with any of the Partners or any of their respective
Affiliates and the distribution of Partnership funds as are considered
necessary by the General Partners to advise all Partners properly
about their investment in the Partnership. All such monthly reports
shall be prepared in accordance with generally accepted accounting
principles in the United States, using ORBCOMM financial formats,
which formats shall be
-22-
<PAGE> 27
previously approved by Teleglobe Mobile. The June, 1993 report shall
be provided to such Partners on or before July 30, 1993.
(c) ORBCOMM shall be the Tax Matters Partner of the
Partnership. The Tax Matters Partner shall prepare or cause to be
prepared all United States, state, local and foreign tax returns of
the Partnership for each year for which such returns are required to
be filed. The Partnership shall reimburse the Tax Matters Partner for
all expenses incurred by the Tax Matters Partner in carrying out its
responsibilities as such under the terms of this Agreement, other than
expenses that attributable to the gross negligence, willful or wanton
conduct or bad faith of the Tax Matters Partner.
(d) Each General Partner shall be obligated to forward a
copy of this Agreement as filed, or any amendments hereto, to all of
the General Partners and only to such Limited Partners as expressly
request a copy in writing.
8.4. Auditors. For purposes of financial reporting and Federal
income tax return preparation, the independent certified public accounting firm
for the Partnership initially shall be KPMG Peat Marwick; provided, however,
that so long as the Participation Percentage of Teleglobe Mobile is at least
fifteen percent (15%), the audit and tax partners from such independent
certified public accounting firm responsible for the Partnership shall be
chosen by Teleglobe Mobile.
8.5. Review Policies. The Partnership shall adhere to the following
policies:
(a) The General Partners shall review, at the end of each
quarter, the projected monthly cash requirements of the Partnership
under the Definitive Agreements or otherwise for the next succeeding
quarter. If in any month in the next succeeding quarter, the actual
cash requirements of the Partnership for such month equal or exceed
one hundred twenty per cent (120%) of the projected monthly cash
requirements of the Partnership entity for such month previously
reviewed, the General Partners shall meet to review and discuss any
such excess cash requirements. In addition, at the end of any month
during the next succeeding quarter, if the actual cash requirements of
the Partnership are less than eighty per cent (80%) of the projected
monthly cash requirements of the Partnership for such month, the
General Partners shall meet to review any such variance; and
(b) The financial performance of the Partnership shall be
reviewed at least quarterly by the General Partners.
-23-
<PAGE> 28
SECTION 9
TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS
9.1. Transfer of Partnership Interests. No Partner shall be
permitted, without the consent of each General Partner (which may be withheld
in such General Partner's absolute discretion) (i) to substitute any other
Person for itself as a General or Limited Partner, (ii) to Transfer all or any
portion of its Partnership Interest, (iii) to assign its obligations as a
General or Limited Partner or (iv) to withdraw from the Partnership.
9.2. Prohibited Transfers Void. Any purported Transfer of all or any
portion of a Partner's Partnership Interest that is not in compliance with
Section 9.1 is hereby declared to be null and void and of no force or effect
whatsoever.
9.3. Withdrawal of Partners. If any Partner withdraws or resigns
from the Partnership in violation of this Agreement, the total amount that such
Partner may then or thereafter be required to contribute to the Partnership
pursuant to this Agreement or the Master Agreement shall become immediately due
and payable and such Partner shall not be entitled to any further distributions
from the Partnership.
SECTION 10
DISSOLUTION
10.1. Events of Dissolution. The Partnership shall continue until
11:59 p.m. on December 31, 2013, unless sooner dissolved upon the earliest to
occur of the following events:
(a) removal, withdrawal, resignation, liquidation or
Bankruptcy (or death, in the case of an individual) (an "Event of
Withdrawal") of the last remaining General Partner unless a new
General Partner is appointed within ninety (90) days with the
unanimous consent of the remaining Partners; or
(b) at any time, with the written consent of all the
General Partners.
10.2. Final Accounting. Upon the dissolution of the Partnership, the
Partnership shall prepare an accounting of such dissolution, which accounting
shall be audited by the Partnership's independent public accountants from the
date of the last previous accounting to the date of dissolution.
10.3. Liquidation. Upon the dissolution of the Partnership, the
General Partners, or, in the case of an Event of Withdrawal of the last
remaining General Partner, one of the Limited Partners elected by a majority
vote of the Limited Partners, shall act as liquidate to wind up the
Partnership. The liquidate shall have full power and authority to sell, assign
and encumber any or all of the Partnership's assets and to wind up and
liquidate the affairs of the Partnership in an
-24-
<PAGE> 29
orderly and business-like manner. All proceeds from liquidation shall be
distributed in the following order of priority: (a) to the payment of the
debts and liabilities of the Partnership and expenses of liquidation; (b) to
the setting up of such reserves as the liquidate may reasonably deem necessary
for any contingent liability of the Partnership; and (c) the balance to the
Partners in the proportions of their positive Capital Account balances, if any
(determined after taking into account all allocations of Net Income and Net
Loss pursuant to Section 5 for the year of liquidation).
10.4. Distribution in Kind. If the liquidate shall determine that a
portion of the Partnership's assets should be distributed in kind to the
Partners, the liquidate shall obtain an independent appraisal of the fair
market value of each such asset as of a date reasonably close to the date of
liquidation.
10.5. Cancellation of Certificate. Upon the completion of the
distribution of Partnership assets as provided in Section 10.3 and 10.4, the
Partnership shall be terminated and the Person acting as liquidate shall cause
the cancellation of the Certificate and shall take such other actions as may be
appropriate to terminate the Partnership.
SECTION 11
NOTICES
11.1. Method of Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including any
facsimile transmission or similar writing), and shall be sent either by
telecopier or delivered in person by reputable overnight courier addressed as
follows: if to ORBCOMM, to Orbital Communication Corporations, 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attention: President; if to Teleglobe
Mobile, to it, c/o Teleglobe Inc., 1000, rue de La Gauchetiere ouest, Montreal,
Quebec, Canada H3B 4X5, Attention: Executive Vice President, Corporate
Development and Corporate Secretary (except that any Partner may from time to
time give notice changing its address for this purpose). Each such notice,
request or other communication shall be effective (a) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate answerback is received, (b) if given by reputable
overnight courier, one (1) business day after being delivered to such courier,
or (c) if given by any other means, when received at the address specified in
this Section.
11.2. Routine Communications. Notwithstanding the provisions of
Section 11.1, routine communications such as distribution checks or financial
statements of the Partnership (but not the notice of any meeting required to be
delivered pursuant to Section 6.4) may be sent by first-class mail, postage
prepaid.
11.3. Computation of Time. Except as may be otherwise provided under
the Delaware Act, in computing any period of time under this Agreement, the day
of the act, event or default from which the designated period of time begins to
run shall not be included. The last day of the
-25-
<PAGE> 30
period so computed shall be included, unless it is a Saturday, Sunday or legal
holiday, in which event the period shall run until the end of the next day
which is not a Saturday, Sunday or legal holiday.
SECTION 12
GENERAL PROVISIONS
12.1. Entire Agreement. This Agreement, together with each of the
Definitive Agreements, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes any prior agreement or
understanding among the parties with respect to the subject matter hereof.
12.2. Amendment; Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by the parties.
12.3. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without giving effect
to the provisions, policies or principles thereof relating to choice or
conflict of laws.
12.4. Binding Effect. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns.
12.5. Counterparts. This Agreement may be executed in any number of
counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
12.6. Separability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.7. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.8. Gender and Number. Whenever required by the context hereof,
the singular shall include the plural and the plural shall include the
singular. The masculine gender shall include the feminine and neuter genders,
and the neuter gender shall include the masculine and feminine genders.
12.9. Waiver of Partition and Dissolution. Each Partner hereby
irrevocably waives, during the term of the Partnership, any right that it may
have to maintain any actions (a) for
-26-
<PAGE> 31
partition with respect to any Partnership property, and (b) for dissolution of
the Partnership except upon any of the events described in Section 10.
12.10. Coordination with Master Agreement. The provisions of this
Agreement shall be subject to the provisions of the Master Agreement. If there
is a conflict between this Agreement and the Master Agreement, the provisions
of the Master Agreement shall control.
12.11. Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement.
-27-
<PAGE> 32
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written..
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. PARKER
----------------------------
Name: Alan L. Parker
Title: President
TELEGLOBE MOBILE PARTNERS
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ GUTHRIE J. STEWART
-------------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
-28-
<PAGE> 1
EXHIBIT 3.4
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM USA, L.P.
<PAGE> 2
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM USA, L.P.
Table of Contents
<TABLE>
<S> <C> <C>
SECTION 1 THE LIMITED PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----
1.3. Nature of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------------
1.4. Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------
1.5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.6. Delaware Office; Agent for Service of Process . . . . . . . . . . . . . . . . 2
---------------------------------------------
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Adjusted Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------
2.2. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------
2.3. Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.4. Capital Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.5. Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------
2.6. Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
2.7. Contributed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
2.8. Contribution Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------------
2.9. Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.10. Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------
2.11. Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
2.12. General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.13. Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------
2.14. Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------
2.15. Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------
2.16. Master Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------
2.17. Net Income and Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------
2.18. Net Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------
2.19. Non-Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------
2.22. Participation Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------
2.23. Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------
2.24. Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
2.25. Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------
2.26. Partnership Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.29. Recapture Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.30. Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------
2.31. Super-Majority in Interest. . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
2.32. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
2.34. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.35. Unrealized Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
2.36. Unrealized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
2.37. Unrecouped Capital Preference . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------
SECTION 3 PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 6
3.1. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.2. Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
--------
3.4. Withdrawal of Capital Contributions . . . . . . . . . . . . . . . . . . . . . 7
-----------------------------------
3.5. Optional Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
SECTION 4 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------------
4.2. Minimum Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------------
4.3. Nature of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------
4.4. Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------
SECTION 5 PARTNERS' ACCOUNTS; ALLOCATION OF PARTNERSHIP INCOME AND EXPENSES . . . . . . . . . 8
5.1. Maintenance of Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------------
5.2. Allocations of Net Income and Net Loss . . . . . . . . . . . . . . . . . . . 10
--------------------------------------
SECTION 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1. Authority of General Partners . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------
6.2. Super-Majority Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------
6.3. Enforcement of Definitive Agreements . . . . . . . . . . . . . . . . . . . . 15
------------------------------------
6.4. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------
6.5. Representation at Meetings; Reimbursement . . . . . . . . . . . . . . . . . . 16
-----------------------------------------
6.6. Designation of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7. Removal of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
SECTION 7 AGREEMENTS AND AUTHORITY OF THE PARTNERS . . . . . . . . . . . . . . . . . . . . . . 16
7.1. Rights and Duties of Limited Partners . . . . . . . . . . . . . . . . . . . . 16
-------------------------------------
7.2. Restrictions on General Partners' Authority; Loss Sharing . . . . . . . . . . 17
---------------------------------------------------------
7.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------
7.4. Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------
SECTION 8 ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1. Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----
8.2. Partners' Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
8.3. Certificates, Reports, Returns and Audits . . . . . . . . . . . . . . . . . . 18
-----------------------------------------
8.4. Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------
8.5. Review Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------
SECTION 9 TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS . . . . . . . . . . . . . . . . . . 20
9.1. Transfer of Partnership Interests . . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------
9.2. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3. Prohibited Transfers Void . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------------------
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
9.4. Withdrawal of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------
SECTION 10 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1. Events of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------
10.2. Final Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------------
10.3. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
10.4. Distribution in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------
10.5. Cancellation of Certificate . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------------
SECTION 11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.1. Method of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------
11.2. Routine Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------------
11.3. Computation of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------
SECTION 12 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------
12.2. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------
12.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------
12.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------
12.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------
12.6. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------
12.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------
12.8. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-----------------
12.9. Waiver of Partition and Dissolution . . . . . . . . . . . . . . . . . . . . 23
-----------------------------------
12.10. Coordination with Master Agreement . . . . . . . . . . . . . . . . . . . . 23
----------------------------------
12.11. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
</TABLE>
iii
<PAGE> 5
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM USA, L.P.
THIS RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") of
ORBCOMM USA, L.P. (the "Partnership") is made and entered into as of September
12, 1995, by and between ORBITAL COMMUNICATIONS CORPORATION, a Delaware
corporation ("ORBCOMM"), and ORBCOMM GLOBAL, L.P., a Delaware limited
partnership ("ORBCOMM Global"), as general partners (the "General Partners"),
and ORBCOMM and ORBCOMM Global as limited partners (the "Limited Partners").
The General Partners and the Limited Partners are collectively referred to
herein as the "Partners." This Agreement restated the Agreement of Limited
Partnership of ORBCOMM USA, L.P. dated as of June 30, 1993, as amended by
Amendment No. 1 to Agreement of Limited Partnership of ORBCOMM U.S. Partners,
L.P. dated as of September 12, 1995.
WHEREAS, the Partnership was organized, in accordance with the
provisions of the Delaware Act (as hereinafter defined), by the filing by the
General Partners of a Certificate of Limited Partnership with the Secretary of
State of the State of Delaware (the "Certificate") pursuant to Section 17-201
of the Delaware Act;
WHEREAS, the Partnership, the Partners, Orbital Sciences Corporation,
a Delaware corporation ("Orbital"), Teleglobe Inc., a Canadian corporation
("Teleglobe"), Teleglobe Mobile Partners, a Delaware general partnership
("Teleglobe Mobile"), and ORBCOMM International Partners, L.P., a Delaware
limited partnership ("ORBCOMM International"), are entering into certain
agreements for the development, construction, operation and marketing of the
ORBCOMM System (as hereinafter defined); and
WHEREAS, the Partners wish to enter into this Agreement setting forth
their agreements with respect to the conduct of the business of the Partnership
and each of their rights and obligations as Partners.
NOW THEREFORE, the Partners, in consideration of the foregoing
premises, the agreements and covenants contained herein and other good and
valuable consideration received, the receipt and sufficiency of which are
hereby acknowledged, hereby agree as follows:
SECTION 1
THE LIMITED PARTNERSHIP
1.1. Formation. The Partnership was formed as a limited partnership
pursuant to the Delaware Act.
<PAGE> 6
1.2. Name. The name of the Partnership shall be ORBCOMM USA, L.P.,
but the business of the Partnership may be conducted under any other name
agreed to by the General Partners and, in such event, the General Partners
shall notify the Partners of such name change promptly thereafter.
1.3. Nature of the Business. The business of the Partnership shall
be to engage in or arrange for the development, construction, operation and
marketing of a global digital satellite communications system of low-Earth
orbit satellites intended to provide two-way data and message communications
and position determination services throughout the world (the "ORBCOMM
System"), to contract with the General Partners and other Persons therefor, to
engage in research and development in connection therewith and to do all things
necessary, appropriate or advisable in connection with each of the foregoing.
1.4. Principal Office. The location of the principal office of the
Partnership shall be 21700 Atlantic Boulevard, Dulles, Virginia 20166 or at
such other location as may be selected from time to time by the General
Partners. If the General Partners change the location of the principal office
of the Partnership, the Partners shall be notified promptly thereafter. The
Partnership may maintain such other office(s) at such other place(s) as the
General Partners deem advisable.
1.5. Fiscal Year. The fiscal year of the Partnership, and the
taxable year of the Partnership for United States Federal income tax purposes,
shall be the calendar year (the "Partnership Year").
1.6. Delaware Office; Agent for Service of Process. The name of the
registered agent for service of process on the Partnership is Corporation
Service Company, 1013 Centre Road, Wilmington, Delaware. The address of the
Partnership's registered office in the State of Delaware shall be the address
of its registered agent.
SECTION 2
DEFINITIONS
Except as otherwise defined herein all terms used herein have the
meanings specified in the Master Agreement (as hereinafter defined). The
following defined terms used in this Agreement shall have the respective
meanings specified below.
2.1. Adjusted Property. "Adjusted Property" means property the
Carrying Value of which has been adjusted pursuant to Section 5.1(d).
2.2. Agreement. "Agreement" shall have the meaning ascribed to such
term in the recitals hereto.
2
<PAGE> 7
2.3. Capital Account. The "Capital Account" of a Partner means the
account maintained for such Partner in accordance with the provisions of
Section 5.1.
2.4. Capital Preference. The "Capital Preference" of a Partner shall
be the portion of such Partner's Partnership Interest described as such in
Section 3.1.
2.5. Carrying Value. "Carrying Value" means (a) with respect to
Contributed Property, the fair market value of such property at the time of its
contribution to the Partnership reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the
Partners' Capital Accounts pursuant to Section 5 with respect to such property,
and (b) with respect to any other property, the adjusted basis of such property
for United States Federal income tax purposes, as of the time of determination,
subject to those adjustments specified in the following sentence. The Carrying
Value of any property shall be adjusted from time to time in accordance with
Sections 5.1(c), 5.1(d) and 5.1(e) and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions, acquisitions or
improvements of Partnership property, as deemed appropriate by the General
Partners, and in a manner consistent with United States Federal income tax
principles.
2.6. Certificate. "Certificate" shall have the meaning ascribed to
such term in the recitals hereto.
2.7. Contributed Property. "Contributed Property" means any property
contributed to the Partnership other than cash.
2.8. Contribution Obligation. The "Contribution Obligation" of a
Partner means the obligation of such Partner to make any capital contribution
under Section 3.2 or the Master Agreement to the extent that such obligation
remains unpaid.
2.9. Defaulting Partner. "Defaulting Partner" shall have the meaning
ascribed to such term in Section 3.3.
2.10. Delaware Act. "Delaware Act" means the Delaware Revised
Uniform Limited Partnership Act, 6 Del. Code Ann. tit. 6, Section Section
17-101, et. seq., as it may be amended from time to time, and any successor
thereto.
2.11. Event of Withdrawal. "Event of Withdrawal" shall have the
meaning ascribed to such term in Section 10.1(b).
2.12. General Partner. "General Partner" shall have the meaning
ascribed to such term in the recitals hereto.
2.13. Indemnified Party. "Indemnified Party" shall have the meaning
ascribed to such term in Section 7.3.
3
<PAGE> 8
2.14. Limited Partner. "Limited Partner" shall have the meaning
ascribed to such term in the recitals hereto.
2.15. Majority in Interest. "Majority in Interest" of the General
Partners means a General Partner or General Partners having Participation
Percentages aggregating at least a majority of the Participation Percentages
held by all General Partners, provided that for purposes of determining a
Majority in Interest of the General Partners each general partner of ORBCOMM
Global shall be treated as a General Partner of the Partnership holding
directly a fraction of ORBCOMM Global's Participation Percentage in the
Partnership, such fraction being determined by reference to the ORBCOMM Global
Partnership Agreement, as the same may be amended or restated from time to
time.
2.16. Master Agreement. "Master Agreement" means the agreement
between Orbital, ORBCOMM, Teleglobe Mobile, and Teleglobe, dated as of June 30,
1993 and titled the "Master Agreement" as amended and restated from time to
time.
2.17. Net Income and Net Loss. "Net Income" or "Net Loss" means an
amount equal to the Partnership's taxable income or taxable loss for a relevant
period, adjusted as provided herein. Net Income and Net Loss shall be
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income
or loss), and adjusted as provided in Sections 5.1(b) through (e), and further
adjusted to reflect any adjustments resulting from amended returns, claims for
refund and tax audits.
2.18. Net Value. "Net Value" means, in the case of a contribution of
assets, the fair market value of assets contributed to the Partnership reduced
by the outstanding balance of any indebtedness either assumed by the
Partnership upon such contribution or to which such assets are subject when
contributed and, in the case of a distribution of assets, the fair market value
of assets distributed by the Partnership reduced by the outstanding balance of
any Partnership indebtedness assumed by the Partner receiving such distribution
or any indebtedness to which such distributed property is subject, as such fair
market value is determined by the General Partners using such reasonable
methods of valuation as they in their sole discretion deem appropriate.
2.19. Non-Defaulting Partner. "Non-Defaulting Partner" shall have
the meaning ascribed to such term in Section 3.3.
2.20. Participation Percentage. The "Participation Percentage" of a
Partner shall be the portion of such Partner's Partnership Interest described
as such in Section 3.1.
2.21. Partners. "Partners" shall have the meaning ascribed to such
term in the recitals hereto.
2.22. Partnership. "Partnership" shall have the meaning ascribed to
such term in the recitals hereto.
4
<PAGE> 9
2.23. Partnership Interest. The "Partnership Interest" of a Partner
shall be the total interest of such Partner in the Partnership.
2.24. Partnership Year. "Partnership Year" shall have the meaning
ascribed to such term in Section 1.5.
2.25. Recapture Income. "Recapture Income" means any gain recognized
by the Partnership (but computed without regard to any adjustment required by
Section 734 or 743 of the Code) upon the disposition of any property or asset
of the Partnership that does not constitute capital gain for United States
Federal income tax purposes because such gain represents the recapture of
deductions or reductions in basis for tax credits previously taken with respect
to such property or assets.
2.26. Section. Except as otherwise provided herein, "Section" means
a section of this Agreement.
2.27. Super-Majority in Interest. "Super-Majority in Interest" of the
General Partners means a General Partner or General Partners having
Participation Percentages aggregating more than eighty-six per cent (86%) of
the Participation Percentages held by all General Partners, provided that for
purposes of determining a Super-Majority in Interest of the General Partners
each general partner of ORBCOMM Global shall be treated as a General Partner of
the Partnership holding directly a fraction of ORBCOMM Global's Participation
Percentage in the Partnership, such fraction being determined by reference to
the ORBCOMM Global Partnership Agreement, as the same may be amended or
restated from time to time.
2.28. Tax Matters Partner. "Tax Matters Partner" shall have the
meaning ascribed to such term in Section 6231(a)(7) of the Code.
2.29. Transfer. "Transfer" means an assignment, sale, exchange,
gift, pledge, contribution, distribution, disposal, or other transfer.
2.30. Unrealized Gain. "Unrealized Gain" as of any date of
determination means the excess, if any, of the fair market value of property
(as determined under Sections 5.1(d) or (e) as of such date of determination)
over the Carrying Value of such property as of such date of determination
(prior to any adjustment to be made pursuant to Sections 5.1(d) or (e) as of
such date).
2.31. Unrealized Loss. "Unrealized Loss" as of any date of
determination means the excess, if any, of the Carrying Value of property as of
such date of determination (prior to any adjustment to be made pursuant to
Sections 5.1(d) or (e) as of such date) over the fair market value of such
property (as determined under Sections 5.1(d) or (e) as of such date of
determination).
5
<PAGE> 10
2.32. Unrecouped Capital Preference. "Unrecouped Capital Preference"
means the amount, if any, by which a Partner's Capital Preference exceeds
cumulative distributions by the Partnership to such Partner pursuant to Section
4 (but excluding deemed distributions pursuant to Section 5.1(c)).
SECTION 3
PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS
3.1. Partnership Interests. The Partnership Interests shall be
expressed in terms of the Partners' Participation Percentages and Capital
Preferences. The Participation Percentage of ORBCOMM Global shall be
ninety-eight per cent (98%), the Participation Percentage of ORBCOMM shall be
two per cent (2%), and the Capital Preference of each Partner as of any date
shall be equal to the amount actually contributed by such Partner in cash or in
immediately available funds to the Partnership through such date (including any
amount contributed in exchange for Participation Percentages), provided that
any amounts contributed to the Partnership by Teleglobe Mobile prior to the
exercise of the Teleglobe Mobile Option shall be deemed for purposes of this
Agreement to have been made by ORBCOMM Global. The Partners shall be required
to make the capital contributions set forth in Section 3.2 in exchange for
their Partnership Interests and shall be entitled to receive the distributions
set forth in Sections 4 and 10 in respect of such Partnership Interests.
3.2. Capital Contributions. As of the Restatement Date, ORBCOMM
shall be deemed to have contributed two hundred dollars ($200) and ORBCOMM
Global shall be deemed to have contributed nine thousand eight hundred dollars
($9,800) in cash or in immediately available funds.
3.3. Defaults. If any Partner (a "Defaulting Partner") fails to
fulfill a Contribution Obligation and fails to cure such failure within thirty
(30) days after receiving notice from any General Partner of such failure, then
the other Partners (the "Non-Defaulting Partners") shall have any and all
remedies they may have at law or in equity including without limitation to the
extent permitted by applicable law, (a) if the Defaulting Partner is a General
Partner, depriving the Defaulting Partner of its right to participate in the
management of the Partnership pursuant to Section 6, (b) seeking enforcement of
the Defaulting Partner's Contribution Obligation by appropriate legal
proceedings, (c) notwithstanding Section 6.2(e), making a loan to the
Partnership in an amount equal to the portion of the Defaulting Partner's
Contribution Obligation that is in default, which loan shall (i) bear interest
at the rate of the lesser of (x) the prime rate of Morgan Guaranty Trust
Company of New York as announced in the Wall Street Journal plus five per cent
(5%) or (y) the maximum rate permitted by law, (ii) be payable on the demand of
the Partner making the loan, prior to any distributions pursuant to Sections 4
or 10, and (iii) be without recourse to any Partner or (d) notwithstanding
Section 9, selling or assigning such Defaulting Partner's Partnership Interest
in the Partnership, in which event the proceeds of the sale or assignment shall
first be applied to the payment of the expenses of the sale or assignment, next
to the payment of the Contribution Obligation and the balance, if any, shall be
remitted to the Defaulting Partner.
6
<PAGE> 11
3.4. Withdrawal of Capital Contributions. No Partner shall have the
right to withdraw or reduce any part of its capital contributions except as
provided in this Agreement.
3.5. Optional Loans. Notwithstanding Section 6.2(e), any General
Partner shall have the right to make a loan of cash to the Partnership at any
time on such terms as such General Partner may determine; provided, however,
that in no event shall any such optional loan be secured by Partnership assets,
bear interest or original issue discount, be with recourse to any Partner or
replace any Partner's obligations to make capital contributions pursuant to
this Section 3.
SECTION 4
DISTRIBUTIONS
4.1. Distributions. Subject to Sections 4.2 and 10.3, the amount and
timing of distributions by the Partnership shall be determined in the
discretion of the General Partners. Subject to Sections 4.4 and 10.3, all
distributions (including those made pursuant to Section 4.2) shall be made in
the following order of priority:
(a) First, to the Partners in proportion to their Unrecouped
Capital Preferences, until each Partner shall have received cumulative
distributions since the inception of the Partnership equal to such
Partner's Capital Preference; and
(b) Thereafter, to the Partners in proportion to their
Participation Percentages.
For purposes of this Section 4.1, the Capital Preferences, Unrecouped Capital
Preferences and Participation Percentages of the Partners shall be determined
as of the date of distribution.
4.2. Minimum Distribution. The Partnership shall, not later than the
end of the first quarter of each Partnership Year, make a distribution in the
proportions set forth in Section 4.1 in an amount sufficient to ensure that
each Partner shall have received at least an amount equal to the product of (a)
forty per cent (40%) multiplied by (b) the lesser of (i) such Partner's
distributive share of the Partnership's taxable income (if any) for the
preceding Partnership Year as determined based on the United States Federal
income tax return of the Partnership for such year, or (ii) the excess, if any,
of cumulative Net Income over cumulative Net Loss allocated to such Partner
since the inception of the Partnership. Notwithstanding the preceding sentence,
except with the approval of the General Partners no distribution shall be made
to a Partner if immediately prior to such distribution there is a zero or
negative balance in any Partner's Capital Account.
4.3. Nature of Distributions. Distributions may be made in cash or
property, or both, in the discretion of the General Partners.
7
<PAGE> 12
4.4. Tax Payments. If the Partnership withholds or pays any tax
(including any addition to tax, penalty, or interest (other than an addition to
tax, penalty, or interest attributable solely to an act or omission of the Tax
Matters Partner)) in respect of any Partner's distributive share of Partnership
income or distributions to any Partner, such payment or withholding shall be
treated as a distribution pursuant to Section 4.1 to such Partner.
SECTION 5
PARTNERS' ACCOUNTS; ALLOCATION OF
PARTNERSHIP INCOME AND EXPENSES
5.1. Maintenance of Capital Accounts.
(a) General Rule. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with Section 704 of
the Code and the regulations thereunder ("Capital Account"). If a
Partner is both a Limited Partner and a General Partner, a single
Capital Account shall be maintained for such Partner. Each Partner's
Capital Account shall be increased by (i) the cash amount or Net Value
of all capital contributions made by such Partner to the Partnership
and (ii) all items of Net Income allocated to such Partner and
decreased by (A) the cash amount or Net Value of all actual and deemed
distributions of cash or property made to such Partner and (B) all
items of Net Loss allocated to such Partner.
(b) Computation of Items of Income, Gain, Loss or Deduction.
For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification
for United States Federal income tax purposes (including any method of
depreciation, cost recovery or amortization used for this purpose),
provided that:
(i) In accordance with the requirements of Section
704(c) of the Code and Treasury Regulations Section
1.704-1(b)(2)(iv)(d), any deductions for depreciation, cost
recovery or amortization attributable to Contributed Property
shall be determined as if the adjusted basis of such property
on the date it was acquired by the Partnership was equal to
the fair market value of such property. Upon an adjustment
pursuant to Section 5.1(d) to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property
shall be determined as if the adjusted basis of such property
was equal to the Carrying Value of such property immediately
following such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by the
Partnership as if the adjusted basis of
8
<PAGE> 13
such property as of such date of disposition was equal in
amount to the Partnership's Carrying Value with respect to
such property as of such date.
(iii) The computation of all items of income, gain,
loss and deduction shall be made, as to those items described
in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable
in gross income or are neither currently deductible nor
capitalizable for United States Federal income tax purposes.
For this purpose, amounts paid or incurred to organize the
Partnership or to promote the sale of interests in the
Partnership that are neither deductible nor amortizable under
Section 709 of the Code, and deductions for any losses
incurred in connection with the sale or exchange of
Partnership assets disallowed pursuant to Section 267(a)(1) or
Section 707(b) of the Code, shall be treated as expenditures
described in Section 705(a)(2)(B) of the Code.
(c) Transferees. Generally, a transferee of a Partner's
Partnership Interest will succeed to the Capital Account relating to
the interest transferred. However, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties shall be deemed to have been distributed
in liquidation of the Partnership to the Partners (including the
transferee of a Partnership Interest) and deemed recontributed by such
Partners in reconstitution of the Partnership. In such event, the
Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed distribution pursuant to Section
5.1(e) (and such adjusted Carrying Values shall constitute the Net
Values of such properties upon this deemed contribution to the
reconstituted Partnership). The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the
principles of this Section 5.1.
(d) Adjustments to Carrying Values. In accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f), in connection with
either (i) the contribution of money or other property (other than a
de minimis amount) to the Partnership by a new or existing Partner in
consideration for an interest in the Partnership or (ii) a
distribution of money or other property (other than a de minimis
amount) by the Partnership to a retiring or continuing Partner as
consideration for an interest in the Partnership, the Capital Accounts
of all Partners and the Carrying Values of all Partnership properties
may at the sole discretion of the General Partners be adjusted
(consistent with the provisions hereof) upwards or downwards to
reflect any Unrealized Gain or Unrealized Loss attributable to each
Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized upon an actual sale of each such property at such
time and had been allocated to the Partners pursuant to Section 5.2.
For purposes of determining such Unrealized Gain or Unrealized Loss,
the fair market value of Partnership assets shall be determined by the
General Partners using such reasonable methods of valuation as they in
their sole discretion deem appropriate.
(e) Effect of Distributions in Kind on Capital Accounts. In
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(e),
immediately prior to the actual or
9
<PAGE> 14
deemed distribution of any Partnership property in kind, the Capital
Accounts of all Partners and the Carrying Value of each such
Partnership property shall be adjusted (consistent with the provisions
hereof) upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property as if such
Unrealized Gain or Unrealized Loss had been recognized upon an actual
sale of each such property immediately prior to such distribution and
had been allocated to the Partners, at such time, pursuant to Section
5.2. For purposes of determining such Unrealized Gain or Unrealized
Loss, the fair market values of relevant Partnership properties shall
be determined by the General Partners pursuant to Section 6 using such
reasonable methods of valuation as they in their sole discretion deem
appropriate.
5.2. Allocations of Net Income and Net Loss.
(a) In General. Subject to Section 5.2(b), Net Income and
Net Loss shall be allocated to the Capital Accounts as follows:
(i) Subject to Section 5.2(a)(iii), Net Income shall
be allocated to the Partners in proportion to their
Participation Percentages.
(ii) Subject to Section 5.2(a)(iii), Net Loss shall
be allocated to the Partners in proportion to their
Participation Percentages.
(iii) To the extent Net Loss allocated to a Partner
pursuant to Section 5.2(a)(ii) or this Section 5.2(a)(iii)
would, but for this Section 5.2(a)(iii), cause or increase any
deficit in the Capital Account maintained with respect to such
Partner as of the end of such Partnership Year, such Net Loss
shall be reallocated first to the other Partners in proportion
to, and to the extent of, their positive Capital Account
balances, and then to the General Partners in proportion to
their Participation Percentages. If any Net Loss is
reallocated pursuant to the preceding sentence, Net Income
shall thereafter be allocated so as to offset, to the extent
possible, such reallocations of Net Loss.
(b) Special Provisions Governing Capital Account Allocations.
To the extent inconsistent with the provisions of Section 5.2(a) the
following special provisions shall govern allocations to Capital
Accounts:
(i) If there is a net decrease in "partnership
minimum gain" (within the meaning of Treasury Regulations
Section 1.704-2(b)(2)) during a taxable year, each Partner
shall (subject to the exceptions set forth in Treasury
Regulations Section 1.704-2(f)) be allocated items of income
and gain for such year (and, if necessary, for subsequent
years) equal to the portion of such Partner's share of the net
decrease in partnership minimum gain. This Section 5.2(b)(i)
is intended to be a "minimum gain chargeback" within the
meaning of Treasury Regulations Section 1.704-2(f), and is to
be interpreted to comply with the requirements of such
regulation.
10
<PAGE> 15
(ii) If any Partner unexpectedly receives any
adjustments, allocations or distributions described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
income and gain shall be specially allocated to such Partner
in an amount and manner sufficient to eliminate a deficit in
its Capital Account (after taking into account adjustments,
distributions and allocations described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) in
excess of its obligations to restore such deficit (within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(d))
created by such adjustments, allocations or distributions as
quickly as possible. This Section 5.2(b)(ii) is intended to
constitute a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(3) and is to
be interpreted to comply with the requirements of such
regulation.
(iii) The interest of the General Partners as
general partners, including the interests of any additional or
substituted general partner, taken together, in each material
item of Partnership income, gain, loss, deduction or credit
shall be equal to at least one per cent (1%) of each such item
at all times during the existence of the Partnership.
(iv) In accordance with Treasury Regulations Section
1.704-2,
(A) any items of partnership loss, deduction
or expenditure (including expenditures described in
Section 705(a)(2)(B) of the Code) that are
attributable to liabilities of the Partnership for
which no Partner bears the economic risk of loss
shall be allocated in the same manner as Net Losses
hereunder, and
(B) any items of partnership loss, deduction
or expenditure (including expenditures described in
Section 705(a)(2)(B) of the Code) that are
attributable to nonrecourse debt of the Partnership
for which one or more Partners bears the economic
risk of loss shall be allocated to each Partner in
proportion to the extent to which such Partner bears
such economic risk of loss.
(v) Any special allocations of items of income or
gain pursuant to Sections 5.2(b)(i), (ii), (iii) and (iv)
shall be taken into account in computing subsequent
allocations of items of income, gain, deduction, or loss so
that the net amounts of any items so allocated shall, to the
extent possible and consistent with such Sections, be equal to
the net amounts that would have been allocated to each Partner
had the allocations made pursuant to such Sections not been
made.
11
<PAGE> 16
(c) Allocations for Tax Purposes.
(i) For United States Federal income tax purposes,
except as otherwise provided in this Section 5.2(c), each item
of income, gain, loss, and deduction of the Partnership shall
be allocated among the Partners in the same proportions as
items comprising Net Income or Net Loss, as the case may be,
are allocated among the Partners. Credits shall be allocated
as provided in Treasury Regulations Section 1.704-1(b)(4)(ii).
(ii) In the case of Contributed Property, items of
income, gain, loss, depreciation, amortization and cost
recovery shall be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code.
In the case of Adjusted Property, items of income, gain, loss,
depreciation and cost recovery deductions attributable thereto
shall (A) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocation thereof
pursuant to Section 5.1(c) or 5.1(d), and (B) second, in the
event such property was originally Contributed Property, be
allocated among the Partners in a manner consistent with
subsection (ii) above.
(iii) To the extent permissible under applicable
Treasury Regulations, the amount of any gain from a
disposition allocated to (or recognized by) a Partner (or its
successor in interest) for United States Federal income tax
purposes pursuant to the above provisions shall be deemed to
be Recapture Income to the extent such Partner has been
allocated any deduction or credit directly or indirectly
giving rise to the treatment of such gain as Recapture Income.
(iv) All items of income, gain, loss, deduction and
credit recognized by the Partnership for United States Federal
income tax purposes and allocated to the Partners in
accordance with the provisions hereof shall be determined
without regard to any adjustment made pursuant to Section 743
of the Code; provided, however, that such allocations, once
made, shall be adjusted as necessary or appropriate to take
into account those adjustments permitted by Section 743 of the
Code, and any adjustments made pursuant to Section 734 of the
Code shall be allocated to the extent permitted under and in
accordance with the rules of Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(d) Other Rules Pertaining to Allocations.
Subject to Section 6, the Tax Matters Partner may adopt and
employ such methods and procedures for (i) the determination and
allocation of adjustments under Sections 704(c), 734 and 743 of the
Code, (ii) the provision of tax information and reports to Partners,
(iii) the adoption of reasonable conventions and methods for the
12
<PAGE> 17
valuation of assets and the determination of tax basis, (iv) the
allocation of asset values and tax basis, and (v) conventions for the
determination of cost recovery, depreciation and amortization
deductions and the maintenance of inventories, as it determines in its
sole discretion are necessary and appropriate to execute the
provisions of this Agreement, and to comply with United States Federal
and state tax laws. To the fullest extent permitted by law, the Tax
Matters Partner shall be indemnified and held harmless by the
Partnership for any expenses, penalties or other liabilities arising
as a result of decisions made in good faith on any of the matters
referred to in the preceding sentence.
SECTION 6
MANAGEMENT
6.1. Authority of General Partners. Except to the extent required by
law or specific provisions of this Agreement, the management of the Partnership
and all Partnership affairs shall be the exclusive responsibility of the
General Partners. Subject to Sections 6.2 and 6.3 hereof, the act of a
Majority in Interest of the General Partners shall be the act of the General
Partners, and no General Partner may act on behalf of the Partnership without
the approval of a Majority in Interest of the General Partners. Without
limiting the generality of the foregoing, subject to Sections 6.2 and 6.3, a
Majority in Interest of the General Partners is authorized on behalf of the
Partnership, without the consent of any Partner, to:
(a) expend the capital and revenues of the Partnership in
furtherance of the Partnership's business and pay, in accordance with
the provisions of this Agreement, all expenses, debts and obligations
of the Partnership to the extent that funds of the Partnership are
available therefor;
(b) invest and reinvest the Partnership's funds;
(c) enter into, amend or terminate agreements (including
without limitation partnership agreements) and contracts with any
Person or Persons, institute, defend and settle litigation arising
therefrom, and give receipts, releases and discharges with respect to
all of the foregoing and any matters incident thereto;
13
<PAGE> 18
(d) maintain, at the expense of the Partnership, adequate
records and accounts of all operations and expenditures and furnish
the Partners with the reports referred to in Section 8;
(e) purchase, at the expense of the Partnership,
liability, casualty, fire and other insurance and bonds to protect the
Partnership's properties, business, partners and employees, the
General Partners, their stockholders and their respective directors,
officers and employees;
(f) borrow for working capital and, in connection
therewith, issue notes, debentures and other debt securities and
mortgage, pledge, encumber or hypothecate the assets of the
Partnership, to secure repayment of such borrowed sums;
(g) obtain replacement of any mortgage, encumbrance,
pledge, hypothecation or other security device and prepay, in whole or
in part, modify, consolidate or extend any such mortgage, encumbrance,
pledge, hypothecation or other security device, subject to the
limitations contained in this Agreement;
(h) sell, lease, trade, exchange or otherwise dispose of
all or any portion of the property of the Partnership subject to the
limitations contained in this Agreement;
(i) employ, at the expense of the Partnership,
consultants, accountants, attorneys, brokers, engineers, escrow agents
and others and terminate such employment;
(j) execute and deliver any and all instruments necessary
or incidental to the conduct of the business of the Partnership;
(k) determine the amount, timing and character of
distributions to Partners pursuant to Sections 4.1 and 4.3;
(l) appoint or remove officers of the Partnership who
shall be nominated by the President of ORBCOMM Global, including a
President of the Partnership;
(m) act on behalf of the Partnership with respect to the
obligations of the Partnership under any of the Definitive Agreements;
and
(n) do such other things and engage in such other
activities related to the foregoing as may be necessary, convenient or
advisable with respect to the conduct of the business of the
Partnership, and have and exercise all of the powers and rights
conferred upon limited partnerships formed under the Delaware Act.
By executing this Agreement each Partner, including the General
Partners, shall be deemed to have consented to any exercise by a Majority in
Interest of the General Partners of any of the foregoing powers.
6.2. Super-Majority Approval. Subject to Section 6.1, the approval
of a Super-Majority in Interest of the General Partners shall be required to:
(a) Transfer all or substantially all the assets of the
Partnership or contract to do so;
(b) merge or consolidate the Partnership with any other
Person;
14
<PAGE> 19
(c) permit the entry by the Partnership into any
additional lines of business other than those described in Section 1.3
or directly related thereto;
(d) except as provided in the Master Agreement, admit any
Person to the Partnership as a General or Limited Partner;
(e) cause the Partnership to borrow on a recourse basis
any amount or on a non-recourse basis in excess of five million
dollars ($5,000,000);
(f) enter into any transaction (excluding the Definitive
Agreements, but including any amendment or modification to a
Definitive Agreement) with an Affiliate of a General Partner;
(g) select or remove the independent certified public
accountant for the Partnership pursuant to Section 8.4 or adopt, or
modify in any material respect, any significant accounting policy or
tax policy;
(h) make on behalf of the Partnership an assignment for
the benefit of creditors, decide on behalf of the Partnership to
subject the Partnership to any proceedings under any bankruptcy or
insolvency law, decide to avail the Partnership of the benefit of any
other legislation for the benefit of debtors, or take steps to wind up
or terminate the Partnership existence;
(i) delegate any of the powers of the Partnership to a
Person; and
(j) amend any provision of this Agreement, except that no
such amendment may (i) decrease the Capital Account or increase the
amount required to be contributed by a Partner without the consent of
such Partner, or (ii) amend the provisions of, or adopt any provisions
inconsistent with, Sections 6.2, 6.3 and 6.4.
6.3. Enforcement of Definitive Agreements. Notwithstanding the
provisions of Section 6.1 and 6.2, any action of the Partnership with respect
to the enforcement by it of its rights under any Definitive Agreement or other
contract or agreement to which any General Partner or any Affiliate thereof is
a party with respect to a breach, default or dispute by such General Partner or
Affiliate, including without limitation the institution or prosecution of any
arbitration or other proceedings, may be taken by General Partners having a
majority of the Participation Percentages held by the General Partners other
than such General Partner.
6.4. Meetings. Meetings of the General Partners may be called by any
General Partner and shall be held at the principal offices of the Partnership
or at such other location as shall be reasonably determined by General
Partners. Notwithstanding any provision of applicable law, not less than
forty-eight (48) hours prior written notice of the time, place and purpose of
each meeting of the General Partners shall be provided to each General Partner
calling such meeting, provided that any General Partner may waive compliance
with such notice requirement. Any meeting may be adjourned from time to time
by the General Partners, and the meeting may be
15
<PAGE> 20
held as adjourned without further notice. Any one or more General Partners may
participate in any meeting by means of conference telephone, video or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by General Partners in a
meeting held by means of a conference telephone, video or similar
communications equipment shall constitute presence in person at a meeting. Any
action required or permitted to be taken with the approval of General Partners
may be taken without a meeting upon the written consent of all General
Partners, which written consent shall be filed with the records of the meetings
of the General Partners.
6.5. Representation at Meetings; Reimbursement. Each General Partner
shall be represented at meetings of the General Partners by up to three
authorized officers or other authorized agents, it being the expectation of the
General Partners that each General Partner will select three representatives
who will use reasonable efforts to attend each meeting of the General Partners.
At each meeting of the General Partners, one representative of each General
Partner shall be entitled to vote such General Partner's Participation
Percentage. Each General Partner shall be entitled to reimbursement of the
reasonable out-of-pocket expenses incurred by it or its representatives in
attending meetings of the General Partners. No amount so paid to any such
member shall be deemed to be a distribution of Partnership assets for purposes
of this Agreement or the Delaware Act. Except for the reimbursement of
expenses as provided in this Section 6.5, no General Partner or representative
thereof shall receive any compensation for its, his or her services as such.
6.6. Designation of Officers. Subject to Section 6.1(l), officers of
the Partnership shall be nominated by the President of the Partnership and
elected by the General Partners and shall exercise such authority as they are
granted by the General Partners. If an officer is an employee of a General
Partner, the Partnership will promptly reimburse such General Partner the pro
rata share of expenses, including compensation and overhead, attributable to
such officer of the Partnership by reference to the share of his or her total
time spent on Partnership Operations.
6.7. Removal of Officers. Any officer of the Partnership may be
removed at any time and for any reason by approval or written consent of the
General Partners. Any officer removed pursuant to this Section shall remain
entitled to exculpation and indemnification from the Partnership pursuant to
Section 7.3 with respect to any matter arising prior to his or her removal.
SECTION 7
AGREEMENTS AND AUTHORITY OF THE PARTNERS
7.1. Rights and Duties of Limited Partners.
(a) Except as otherwise specifically provided in this
Agreement, the Limited Partners in their capacities as such shall not
participate in the control, management, direction or operation of the
business or affairs of the Partnership and shall have no power to act
for or bind the Partnership.
16
<PAGE> 21
(b) Pursuant to Delaware law (and provided that such
Limited Partner does not, in addition to the exercise of its rights
and powers as a Limited Partner, take part in the control of the
business of the Partnership), no Limited Partner shall be liable for
losses or debts of the Partnership in its capacity as a Limited
Partner beyond the aggregate amount of its capital contributions,
except that (i) when a Limited Partner has received a return of any
part of its capital contribution without violation of this Agreement
or the Delaware Act it shall be liable to the Partnership for one year
thereafter for the amount of the returned contribution, but only to
the extent necessary to discharge the Partnership's liabilities to
creditors who extended credit to the Partnership during the period the
capital contribution was held by the Partnership, and (ii) if the
Limited Partner has received the return of any part of its capital
contribution in violation of this Agreement or the Delaware Act, it is
liable to the Partnership for a period of six years thereafter for the
amount of such contribution wrongfully returned to it; provided,
however, that to the extent any Limited Partner repays to the
Partnership pursuant to the foregoing provision a greater percentage
of the distributions made to it than any or all other Limited Partners
similarly liable to the Partnership, such Limited Partner shall have a
right of contribution from each such other Limited Partner to the
extent that such other Limited Partner has repaid pursuant to such
provision a lesser percentage of the distributions made to it.
7.2. Restrictions on General Partners' Authority; Loss Sharing.
(a) No General Partner may, without the approval or
written consent to the specific act by all of the Partners given in
this Agreement or by other written instrument executed and delivered
by the Partners subsequent to the date of this Agreement, do any of
the following:
(i) any act in contravention of this Agreement or
the Certificate;
(ii) any act which would make it impossible to
carry on the ordinary business of the Partnership, except
as otherwise provided in this Agreement; or
(iii) assign any rights in specific Partnership
property, for other than a Partnership purpose.
(b) The General Partners shall share responsibility for
all obligations and losses of the Partnership in excess of the
Partners' aggregate capital contributions in proportion to their
Participation Percentages.
7.3. Exculpation. None of the General Partners, any of their
respective officers, directors, partners, employees or agents, including any
Person who formerly served in any of the foregoing capacities (each, an
"Indemnified Party"), shall be liable, in damages or otherwise, to the
Partnership or to any of the Limited Partners for any act or omission by such
Indemnified Party pursuant to the authority granted by this Agreement except if
such act or omission results
17
<PAGE> 22
from gross negligence, willful or wanton misconduct or bad faith of such
Indemnified Party. The Partnership shall indemnify, defend and hold harmless
each Indemnified Party from and against any and all claims or liabilities of
any nature whatsoever, including reasonable attorneys' fees, arising out of or
in connection with any action taken or omitted by any General Partner or the
officers of the Partnership pursuant to the authority granted by this
Agreement, except where attributable to the gross negligence, willful or wanton
misconduct or bad faith of such Indemnified Party. An Indemnified Party shall
be entitled to rely on the advice of counsel, public accountants or other
independent experts experienced in the matter at issue, and any act or omission
of such Person pursuant to such advice shall in no event subject such
Indemnified Party to liability to the Partnership or any Partner.
7.4. Other Activities. Subject to the Proprietary Information and
Non-Competition Agreement among Orbital, ORBCOMM, Teleglobe, Teleglobe Mobile,
ORBCOMM Global, the Partnership, and ORBCOMM International, any Partner may
engage in or possess an interest in other business venture of any nature or
description, independently or with others, whether presently existing or
hereafter created, including the development, operation and commercial
exploitation of aerospace technology and communications systems, and neither
the Partnership nor any Partner shall have any rights in or to such independent
ventures or the income or profits derived therefrom.
SECTION 8
ACCOUNTS
8.1. Books. Each Partner shall have the right to inspect the
Partnership's books and records (including a list of the names and addresses of
Partners) at any reasonable time upon advance written request to the General
Partners, which books and records shall be maintained by ORBCOMM Global.
8.2. Partners' Accounts. Separate Capital Accounts shall be
maintained for each Partner in accordance with the provisions of Section 5.
8.3. Certificates, Reports, Returns and Audits.
(a) The books of account shall be closed promptly after
the end of each Partnership Year. Within twenty (20) days of the end
of the Partnership Year, the General Partners shall provide each
Person who was a Partner at any time during such Partnership Year an
unaudited statement of profit and loss for such year. Within sixty
(60) days of the end of the Partnership Year, a written report shall
be made to each Person who was a Partner at any time during such
Partnership Year that shall include a statement of profit and loss and
a statement of cash flows for the year then ended, a balance sheet as
of the close of the Partnership Year and a statement of such Partner's
Capital Account, all of which shall be prepared in accordance with
generally accepted accounting principles in the United States, and
shall be audited by the Partnership's independent public
18
<PAGE> 23
accountants. The annual report shall also contain such additional
statements with respect to the status of the Partnership's business,
transactions by the Partnership with any of the Partners or any of
their Affiliates and the distribution of Partnership funds as are
considered necessary by the General Partners to advise all Partners
properly about their investment in the Partnership. With the sole
exception of the mathematical errors in computation, the annual report
and the information contained therein shall be deemed conclusive and
binding upon each Partner unless written objection shall be lodged
with the General Partners within ninety (90) days after the giving of
such reports to such Partner.
(b) Within twenty (20) days after the close of each month
of the Partnership Year other than the final month of the Year,
commencing with the month of July, 1993, a written report shall be
made to each Person who was a Partner during the month then ended that
shall include details with respect to the Partnership's business and
unaudited financial statements and other relevant information
regarding the Partnership and its activities during the month,
including statements with respect to any transactions by the
Partnership with any of the Partners or any of their respective
Affiliates and the distribution of Partnership funds as are considered
necessary by the General Partners to advise all Partners properly
about their investment in the Partnership. All such monthly reports
shall be prepared in accordance with generally accepted accounting
principles in the United States, using ORBCOMM financial formats,
which formats shall be previously approved by ORBCOMM Global. The
June, 1993 report shall be provided to such Partners on or before July
30, 1993.
(c) ORBCOMM shall be the Tax Matters Partner of the
Partnership. The Tax Matters Partner shall prepare or cause to be
prepared all United States, state, local and foreign tax returns of
the Partnership for each year for which such returns are required to
be filed. The Partnership shall reimburse the Tax Matters Partner for
all expenses incurred by the Tax Matters Partner in carrying out its
responsibilities as such under the terms of this Agreement, other than
expenses that attributable to the gross negligence, willful or wanton
conduct or bad faith of the Tax Matters Partner.
(d) Each General Partner shall be obligated to forward a
copy of this Agreement as filed, or any amendments hereto, to all of
the General Partners and only to such Limited Partners as expressly
request a copy in writing.
8.4. Auditors. For purposes of financial reporting and Federal
income tax return preparation, the independent certified public accounting firm
for the Partnership initially shall be KPMG Peat Marwick; provided, however,
that so long as the Participation Percentage of Teleglobe Mobile is at least
fourteen per cent (14%), the audit and tax partners from such independent
certified public accounting firm responsible for the Partnership shall be
chosen by Teleglobe Mobile.
19
<PAGE> 24
8.5. Review Policies. The Partnership shall adhere to the following
policies:
(a) The General Partners shall review, at the end of each
quarter, the projected monthly cash requirements of the Partnership
for the next succeeding quarter, if any; and
(b) The financial performance of the Partnership shall be
reviewed at least quarterly by the General Partners.
SECTION 9
TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS
9.1. Transfer of Partnership Interests. Except as provided in the
Master Agreement, no Partner shall be permitted, without the consent of each
General Partner (which may be withheld in such General Partner's absolute
discretion) (i) to substitute any other Person for itself as a General or
Limited Partner (ii) to Transfer all or any portion of its Partnership
Interest, (iii) to assign its obligations as a General or Limited Partner or
(iv) to withdraw from the Partnership.
9.2. [RESERVED ]
9.3. Prohibited Transfers Void. Any purported Transfer of all or any
portion of a Partner's Partnership Interest that is not in compliance with
Section 9.1 is hereby declared to be null and void and of no force or effect
whatsoever.
9.4. Withdrawal of Partners. If any Partner withdraws or resigns
from the Partnership in violation of this Agreement, the total amount that such
Partner may then or thereafter be required to contribute to the Partnership
pursuant to this Agreement or the Master Agreement shall become immediately due
and payable and such Partner shall not be entitled to any further distributions
from the Partnership.
SECTION 10
DISSOLUTION
10.1. Events of Dissolution. The Partnership shall continue until
11:59 p.m. on December 31, 2013, unless sooner dissolved upon the earliest to
occur of the following events:
(a) 11:59 p.m. on July 22, 1993, if the Master Agreement
has not been executed by all parties thereto prior to such time; or
(b) removal, withdrawal, resignation, liquidation or
Bankruptcy (or death, in the case of an individual) (an "Event of
Withdrawal") of the last remaining General
20
<PAGE> 25
Partner unless a new General Partner is appointed within ninety (90)
days with the unanimous consent of the remaining Partners; or
(c) at any time, with the written consent of all the
General Partners.
10.2. Final Accounting. Upon the dissolution of the Partnership, the
Partnership shall prepare an accounting of such dissolution, which accounting
shall be audited by the Partnership's independent public accountants from the
date of the last previous accounting to the date of dissolution.
10.3. Liquidation. Upon the dissolution of the Partnership, the
General Partners, or, in the case of an Event of Withdrawal of the last
remaining General Partner, one of the Limited Partners elected by a majority
vote of the Limited Partners, shall act as liquidator to wind up the
Partnership. The liquidator shall have full power and authority to sell,
assign and encumber any or all of the Partnership's assets and to wind up and
liquidate the affairs of the Partnership in an orderly and business-like
manner. All proceeds from liquidation shall be distributed in the following
order of priority: (a) to the payment of the debts and liabilities of the
Partnership and expenses of liquidation; (b) to the setting up of such reserves
as the liquidator may reasonably deem necessary for any contingent liability of
the Partnership; and (c) the balance to the Partners in the proportions of
their positive Capital Account balances, if any (determined after taking into
account all allocations of Net Income and Net Loss pursuant to Section 5 for
the year of liquidation).
10.4. Distribution in Kind. If the liquidator shall determine that a
portion of the Partnership's assets should be distributed in kind to the
Partners, the liquidator shall obtain an independent appraisal of the fair
market value of each such asset as of a date reasonably close to the date of
liquidation.
10.5. Cancellation of Certificate. Upon the completion of the
distribution of Partnership assets as provided in Section 10.3 and 10.4, the
Partnership shall be terminated and the Person acting as liquidator shall cause
the cancellation of the Certificate and shall take such other actions as may be
appropriate to terminate the Partnership.
SECTION 11
NOTICES
11.1. Method of Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including any
facsimile transmission or similar writing), and shall be sent either by
telecopier or delivered in person by reputable overnight courier addressed as
follows: If to ORBCOMM, to Orbital Communications Corporation, 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attention: President; if to ORBCOMM Global,
to ORBCOMM Global, L.P., 21700 Atlantic Boulevard, Dulles, Virginia 20166,
Attention: President, with a copy to Teleglobe Inc., 1000, rue de La
Gauchetiere ouest, Montreal, Quebec, Canada H3B 4X5, Attention:
21
<PAGE> 26
Executive Vice President, Corporate Development and Corporate Secretary (except
that any Partner may from time to time give notice changing its address for
this purpose). Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section and the appropriate answerback is
received, (b) if given by reputable overnight courier, one (1) business day
after being delivered to such courier, or (c) if given by any other means, when
received at the address specified in this Section.
11.2. Routine Communications. Notwithstanding the provisions of
Section 11.1, routine communications such as distribution checks or financial
statements of the Partnership (but not the notice of any meeting required to be
delivered pursuant to Section 6.4) may be sent by first-class mail, postage
prepaid.
11.3. Computation of Time. Except as may be otherwise provided under
the Delaware Act, in computing any period of time under this Agreement, the day
of the act, event or default from which the designated period of time begins to
run shall not be included. The last day of the period so computed shall be
included, unless it is a Saturday, Sunday or legal holiday, in which event the
period shall run until the end of the next day which is not a Saturday, Sunday
or legal holiday.
SECTION 12
GENERAL PROVISIONS
12.1. Entire Agreement. This Agreement, together with each of the
Definitive Agreements, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes any prior agreement or
understanding among the parties with respect to the subject matter hereof.
12.2. Amendment; Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by the parties.
12.3. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without giving effect
to the provisions, policies or principles thereof relating to choice or
conflict of laws.
12.4. Binding Effect. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns.
12.5. Counterparts. This Agreement may be executed in any number of
counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
22
<PAGE> 27
12.6. Separability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.7. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.8. Gender and Number. Whenever required by the context hereof,
the singular shall include the plural and the plural shall include the
singular. The masculine gender shall include the feminine and neuter genders,
and the neuter gender shall include the masculine and feminine genders.
12.9. Waiver of Partition and Dissolution. Each Partner hereby
irrevocably waives, during the term of the Partnership, any right that it may
have to maintain any actions (a) for partition with respect to any Partnership
property, and (b) for dissolution of the Partnership except upon any of the
events described in Section 10.1.
12.10. Coordination with Master Agreement. The provisions of this
Agreement shall be subject to the provisions of the Master Agreement. If there
is a conflict between this Agreement and the Master Agreement, the provisions
of the Master Agreement shall control.
12.11. Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement.
23
<PAGE> 28
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
ORBCOMM GLOBAL, L.P.
By: Orbital Communications Corporation,
General Partner
By: /s/ ALAN L. PARKER
--------------------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ GUTHRIE J. STEWART
----------------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. PARKER
----------------------------------------
Name: Alan L. Parker
Title: President
24
<PAGE> 1
EXHIBIT 3.6
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM INTERNATIONAL PARTNERS, L.P.
<PAGE> 2
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM INTERNATIONAL PARTNERS, L.P.
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 THE LIMITED PARTNERSHIP . . . . . . . . . . . . . . . . . . . . 1
1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----
1.3. Nature of the Business . . . . . . . . . . . . . . . . . . . . . . 2
----------------------
1.4. Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------
1.5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.6. Delaware Office; Agent for Service of Process . . . . . . . . . . . 2
---------------------------------------------
SECTION 2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Adjusted Property . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------
2.2. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------
2.3. Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.4. Capital Preference . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.5. Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------
2.6. Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
2.7. Contributed Property . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
2.8. Contribution Obligation . . . . . . . . . . . . . . . . . . . . . . 3
-----------------------
2.9. Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
2.10. Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------
2.11. Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
2.12. General Partner . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
2.13. Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
2.14. Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------------
2.15. Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . 4
--------------------
2.16. Master Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------
2.17. Net Income and Net Loss . . . . . . . . . . . . . . . . . . . . . 4
-----------------------
2.18. Net Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
---------
2.19. Non-Defaulting Partner . . . . . . . . . . . . . . . . . . . . . . 4
----------------------
2.22. Participation Percentage . . . . . . . . . . . . . . . . . . . . . 5
------------------------
2.23. Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.24. Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
2.25. Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------
2.26. Partnership Year . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.29. Recapture Income. . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
2.30. Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
2.31. Super-Majority in Interest. . . . . . . . . . . . . . . . . . . . 5
--------------------------
2.32. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . 5
-------------------
2.33. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.35. Unrealized Gain . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------------
2.36. Unrealized Loss . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
2.37. Unrecouped Capital Preference . . . . . . . . . . . . . . . . . . 6
-----------------------------
SECTION 3 PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS . . . . . . . . 6
3.1. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.2. Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
3.3. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
--------
3.4. Withdrawal of Capital Contributions . . . . . . . . . . . . . . . . 7
-----------------------------------
SECTION 4 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-------------
4.2. Minimum Distribution . . . . . . . . . . . . . . . . . . . . . . . 7
--------------------
4.3. Nature of Distributions . . . . . . . . . . . . . . . . . . . . . . 8
-----------------------
4.4. Tax Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------
SECTION 5 PARTNERS' ACCOUNTS; ALLOCATION OF PARTNERSHIP INCOME AND
EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1. Maintenance of Capital Accounts . . . . . . . . . . . . . . . . . . 8
-------------------------------
5.2. Allocations of Net Income and Net Loss . . . . . . . . . . . . . 10
--------------------------------------
SECTION 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1. Authority of General Partners . . . . . . . . . . . . . . . . . . 13
-----------------------------
6.2. Super-Majority Approval . . . . . . . . . . . . . . . . . . . . . 15
-----------------------
6.3. Enforcement of Definitive Agreements . . . . . . . . . . . . . . 16
------------------------------------
6.4. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------
6.5. Representation at Meetings; Reimbursement . . . . . . . . . . . . 16
-----------------------------------------
6.6. Designation of Officers . . . . . . . . . . . . . . . . . . . . . 17
-----------------------
6.7. Removal of Officers . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------
SECTION 7 AGREEMENTS AND AUTHORITY OF THE PARTNERS . . . . . . . . . . . 17
7.1. Rights and Duties of Limited Partners . . . . . . . . . . . . . . 17
-------------------------------------
7.2. Restrictions on General Partners' Authority; Loss Sharing . . . . 18
---------------------------------------------------------
7.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------
7.4. Other Activities . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------
SECTION 8 ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.1. Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----
8.2. Partners' Accounts . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
8.3. Certificates, Reports, Returns and Audits . . . . . . . . . . . . 19
-----------------------------------------
8.4. Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------
8.5. Review Policies . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------
SECTION 9 TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS . . . . . . . . 21
9.1. Transfer of Partnership Interests . . . . . . . . . . . . . . . . 21
---------------------------------
9.3. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
9.3. Prohibited Transfers Void . . . . . . . . . . . . . . . . . . . . 21
-------------------------
9.4. Withdrawal of Partners . . . . . . . . . . . . . . . . . . . . . 21
----------------------
SECTION 10 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.1. Events of Dissolution . . . . . . . . . . . . . . . . . . . . . 21
---------------------
10.2. Final Accounting . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------
10.3. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------
10.4. Distribution in Kind . . . . . . . . . . . . . . . . . . . . . . 22
--------------------
10.5. Cancellation of Certificate . . . . . . . . . . . . . . . . . . 22
---------------------------
SECTION 11 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.1. Method of Notices . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------
11.2. Routine Communications . . . . . . . . . . . . . . . . . . . . . 23
----------------------
11.3. Computation of Time . . . . . . . . . . . . . . . . . . . . . . 23
-------------------
SECTION 12 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 23
12.1. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------
12.2. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . . 23
-----------------
12.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------
12.4. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------------
12.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------
12.6. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------
12.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------
12.8. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . 24
-----------------
12.9. Waiver of Partition and Dissolution . . . . . . . . . . . . . . 24
-----------------------------------
12.10. Coordination with Master Agreement . . . . . . . . . . . . . . 24
----------------------------------
12.11. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 24
------------------
</TABLE>
-iii-
<PAGE> 5
RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ORBCOMM INTERNATIONAL PARTNERS, L.P.
THIS RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") of
ORBCOMM INTERNATIONAL PARTNERS, L.P. (the "Partnership") is entered into as
September 12, 1995, by and between ORBCOMM Global, L.P., a Delaware limited
partnership ("ORBCOMM Global"), and TELEGLOBE MOBILE PARTNERS, a Delaware
general partnership ("Teleglobe Mobile"), as general partners (the "General
Partners"), and ORBCOMM Global and Teleglobe Mobile as limited partners (the
"Limited Partners"). The General Partners and the Limited Partners are
collectively referred to herein as the "Partners." This Agreement restated the
Agreement of Limited Partnership of ORBCOMM International Partners, L.P. dated
as of June 30, 1993, as amended by Amendment No. 1 to Agreement of Limited
Partnership of ORBCOMM International Partners, L.P. dated as of September 12,
1995.
WHEREAS, the Partnership was organized, in accordance with the
provisions of the Delaware Act (as hereinafter defined), by the filing by the
General Partners of a Certificate of Limited Partnership with the Secretary of
State of the State of Delaware (the "Certificate") pursuant to Section 17-201
of the Delaware Act;
WHEREAS, the Partnership, the Partners, Orbital Sciences Corporation,
a Delaware corporation ("Orbital"), Teleglobe Inc., a Canadian corporation
("Teleglobe"), Orbital Communications Corporation, a Delaware corporation
("ORBCOMM"), and ORBCOMM USA, L.P., a Delaware limited partnership ("ORBCOMM
USA") are entering into certain agreements for the development, construction,
operation and marketing of the ORBCOMM System (as hereinafter defined); and
WHEREAS, the Partners wish to enter into this Agreement setting forth
their agreements with respect to the conduct of the business of the Partnership
and each of their rights and obligations as Partners.
NOW THEREFORE, the Partners, in consideration of the foregoing
premises, the agreements and covenants contained herein and other good and
valuable consideration received, the receipt and sufficiency of which are
hereby acknowledged, hereby agree as follows:
SECTION 1
THE LIMITED PARTNERSHIP
1.1. Formation. The Partnership was formed as a limited partnership
pursuant to the Delaware Act.
<PAGE> 6
1.2. Name. The name of the Partnership shall be ORBCOMM
INTERNATIONAL PARTNERS, L.P., but the business of the Partnership may be
conducted under any other name agreed to by the General Partners and, in such
event, the General Partners shall notify the Partners of such name change
promptly thereafter.
1.3. Nature of the Business. The business of the Partnership shall
be to engage in or arrange for the development, construction, operation and
marketing of a global digital satellite communications system of low-Earth
orbit satellites intended to provide two-way data and message communications
and position determination services throughout the world (the "ORBCOMM
System"), to contract with the General Partners and other Persons therefor, to
engage in research and development in connection therewith and to do all things
necessary, appropriate or advisable in connection with each of the foregoing.
1.4. Principal Office. The location of the principal office of the
Partnership shall be 21700 Atlantic Boulevard, Dulles, Virginia 20166 or at
such other location as may be selected from time to time by the General
Partners. If the General Partners change the location of the principal office
of the Partnership, the Partners shall be notified promptly thereafter. The
Partnership may maintain such other office(s) at such other place(s) as the
General Partners deem advisable.
1.5. Fiscal Year. The fiscal year of the Partnership, and the
taxable year of the Partnership for United States Federal income tax purposes,
shall be the calendar year (the "Partnership Year").
1.6. Delaware Office; Agent for Service of Process. The name of the
registered agent for service of process on the Partnership is Corporation
Service Company, 1013 Centre Road, Wilmington, Delaware. The address of the
Partnership's registered office in the State of Delaware shall be the address
of its registered agent.
SECTION 2
DEFINITIONS
Except as otherwise defined herein all terms used herein have the
meanings specified in the Master Agreement (as hereinafter defined). The
following defined terms used in this Agreement shall have the respective
meanings specified below.
2.1. Adjusted Property. "Adjusted Property" means property the
Carrying Value of which has been adjusted pursuant to Section 5.1(d).
<PAGE> 7
2.2. Agreement. "Agreement" shall have the meaning ascribed to such
term in the recitals hereto.
2.3. Capital Account. The "Capital Account" of a Partner means the
account maintained for such Partner in accordance with the provisions of
Section 5.1.
2.4. Capital Preference. The "Capital Preference" of a Partner shall
be the portion of such Partner's Partnership Interest described as such in
Section 3.1.
2.5. Carrying Value. "Carrying Value" means (a) with respect to
Contributed Property, the fair market value of such property at the time of its
contribution to the Partnership reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the
Partners' Capital Accounts pursuant to Section 5 with respect to such property,
and (b) with respect to any other property, the adjusted basis of such property
for United States Federal income tax purposes, as of the time of determination,
subject to those adjustments specified in the following sentence. The Carrying
Value of any property shall be adjusted from time to time in accordance with
Sections 5.1(c), 5.1(d) and 5.1(e) and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions, acquisitions or
improvements of Partnership property, as deemed appropriate by the General
Partners, and in a manner consistent with United States Federal income tax
principles.
2.6. Certificate. "Certificate" shall have the meaning ascribed to
such term in the recitals hereto.
2.7. Contributed Property. "Contributed Property" means any property
contributed to the Partnership other than cash.
2.8. Contribution Obligation. The "Contribution Obligation" of a
Partner means the obligation of such Partner to make any capital contribution
under Section 3.2 or the Master Agreement to the extent that such obligation
remains unpaid.
2.9. Defaulting Partner. "Defaulting Partner" shall have the meaning
ascribed to such term in Section 3.3.
2.10. Delaware Act. "Delaware Act" means the Delaware Revised
Uniform Limited Partnership Act, 6 Del. Code Ann. tit. 6, Section Section
17-101, et. seq., as it may be amended from time to time, and any successor
thereto.
2.11. Event of Withdrawal. "Event of Withdrawal" shall have the
meaning ascribed to such term in Section 10.1(b).
2.12. General Partner. "General Partner" shall have the meaning
ascribed to such term in the recitals hereto.
-3-
<PAGE> 8
2.13. Indemnified Party. "Indemnified Party" shall have the meaning
ascribed to such term in Section 7.3.
2.14. Limited Partner. "Limited Partner" shall have the meaning
ascribed to such term in the recitals hereto.
2.15. Majority in Interest. "Majority in Interest" of the General
Partners means a General Partner or General Partners having Participation
Percentages aggregating at least a majority of the Participation Percentages
held by all General Partners, provided that for purposes of determining a
Majority in Interest of the General Partners each general partner of ORBCOMM
Global shall be treated as a General Partner of the Partnership holding
directly a fraction of ORBCOMM Global's Participation Percentage in the
Partnership, such fraction being determined by reference to the ORBCOMM Global
Partnership Agreement, as the same may be amended or restated from time to
time.
2.16. Master Agreement. "Master Agreement" means the agreement
between Orbital, ORBCOMM, Teleglobe Mobile, and Teleglobe, dated as of June 30,
1993 and titled the "Master Agreement" as amended and restated from time to
time.
2.17. Net Income and Net Loss. "Net Income" or "Net Loss" means an
amount equal to the Partnership's taxable income or taxable loss for a relevant
period, adjusted as provided herein. Net Income and Net Loss shall be
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income
or loss), and adjusted as provided in Sections 5.1(b) through (e), and further
adjusted to reflect any adjustments resulting from amended returns, claims for
refund and tax audits.
2.18. Net Value. "Net Value" means, in the case of a contribution of
assets, the fair market value of assets contributed to the Partnership reduced
by the outstanding balance of any indebtedness either assumed by the
Partnership upon such contribution or to which such assets are subject when
contributed and, in the case of a distribution of assets, the fair market value
of assets distributed by the Partnership reduced by the outstanding balance of
any Partnership indebtedness assumed by the Partner receiving such distribution
or any indebtedness to which such distributed property is subject, as such fair
market value is determined by the General Partners using such reasonable
methods of valuation as they in their sole discretion deem appropriate.
2.19. Non-Defaulting Partner. "Non-Defaulting Partner" shall have
the meaning ascribed to such term in Section 3.3.
-4-
<PAGE> 9
2.20. Participation Percentage. The "Participation Percentage" of a
Partner shall be the portion of such Partner's Partnership Interest described
as such in Section 3.1.
2.21. Partners. "Partners" shall have the meaning ascribed to such
term in the recitals hereto.
2.22. Partnership. "Partnership" shall have the meaning ascribed to
such term in the recitals hereto.
2.23. Partnership Interest. The "Partnership Interest" of a Partner
shall be the total interest of such Partner in the Partnership.
2.24. Partnership Year. "Partnership Year" shall have the meaning
ascribed to such term in Section 1.5.
2.25. Recapture Income. "Recapture Income" means any gain recognized
by the Partnership (but computed without regard to any adjustment required by
Section 734 or 743 of the Code) upon the disposition of any property or asset
of the Partnership that does not constitute capital gain for United States
Federal income tax purposes because such gain represents the recapture of
deductions or reductions in basis for tax credits previously taken with respect
to such property or assets.
2.26. Section. Except as otherwise provided herein, "Section" means
a section of this Agreement.
2.27. Super-Majority in Interest. "Super-Majority in Interest" of
the General Partners means a General Partner or General Partners having
Participation Percentages aggregating more than eighty-six per cent (86%) of
the Participation Percentages held by all General Partners, provided that for
purposes of determining a Super-Majority in Interest of the General Partners
each general partner of ORBCOMM Global shall be treated as a General Partner of
the Partnership holding directly a fraction of ORBCOMM Global's Participation
Percentage in the Partnership, such fraction being determined by reference to
the ORBCOMM Global Partnership Agreement, as the same may be amended or
restated from time to time.
2.28. Tax Matters Partner. "Tax Matters Partner" shall have the
meaning ascribed to such term in Section 6231(a)(7) of the Code.
2.29. Transfer. "Transfer" means an assignment, sale, exchange,
gift, pledge, contribution, distribution, disposal, or other transfer.
2.30. Unrealized Gain. "Unrealized Gain" as of any date of
determination means the excess, if any, of the fair market value of property
(as determined under Sections 5.1(d) or (e) as of such date of determination)
over the Carrying Value of such property as of such date of
-5-
<PAGE> 10
determination (prior to any adjustment to be made pursuant to Sections 5.1(d)
or (e) as of such date).
2.31. Unrealized Loss. "Unrealized Loss" as of any date of
determination means the excess, if any, of the Carrying Value of property as of
such date of determination (prior to any adjustment to be made pursuant to
Sections 5.1(d) or (e) as of such date) over the fair market value of such
property (as determined under Sections 5.1(d) or (e) as of such date of
determination).
2.32. Unrecouped Capital Preference. "Unrecouped Capital Preference"
means the amount, if any, by which a Partner's Capital Preference exceeds
cumulative distributions by the Partnership to such Partner pursuant to Section
4 (but excluding deemed distributions pursuant to Section 5.1(c)).
SECTION 3
PARTNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS
3.1. Partnership Interests. The Partnership Interests shall be
expressed in terms of the Partners' Participation Percentages and Capital
Preferences. The Participation Percentage of ORBCOMM Global shall be
ninety-eight percent (98%), the Participation Percentage of Teleglobe Mobile
shall be two percent (2%), and the Capital Preference of each Partner as of any
date shall be equal to the amount actually contributed by such Partner in cash
or in immediately available funds to the Partnership through such date
(including any amount contributed in exchange for Participation Percentages),
provided that any amounts contributed to the Partnership by ORBCOMM prior to
the exercise of the Teleglobe Mobile Option shall be deemed for purposes of
this Agreement to have been made by ORBCOMM Global. The Partners shall be
required to make the capital contributions set forth in Section 3.2 in exchange
for their Partnership Interests and shall be entitled to receive the
distributions set forth in Sections 4 and 10 in respect of such Partnership
Interests.
3.2. Capital Contributions. As of the Restatement Date, ORBCOMM
Global shall be deemed to have contributed nine thousand eight hundred dollars
($9,800) and Teleglobe Mobile shall be deemed to have contributed two hundred
dollars ($200) in cash or in immediately available funds.
3.3. Defaults. If any Partner (a "Defaulting Partner") fails to
fulfill a Contribution Obligation and fails to cure such failure within thirty
(30) days after receiving notice from any General Partner of such failure, then
the other Partners (the "Non-Defaulting Partners") shall have any and all
remedies they may have at law or in equity including without limitation to the
extent permitted by applicable law, (a) if the Defaulting Partner is a General
Partner, depriving the Defaulting Partner of its right to participate in the
management of the Partnership pursuant to
-6-
<PAGE> 11
Section 6, (b) seeking enforcement of the Defaulting Partner's Contribution
Obligation by appropriate legal proceedings, (c) notwithstanding Section
6.2(e), making a loan to the Partnership in an amount equal to the portion of
the Defaulting Partner's Contribution Obligation that is in default, which loan
shall (i) bear interest at the rate of the lesser of (x) the prime rate of
Morgan Guaranty Trust Company of New York as announced in the Wall Street
Journal plus five per cent (5%) or (y) the maximum rate permitted by law, (ii)
be payable on the demand of the Partner making the loan, prior to any
distributions pursuant to Sections 4 or 10, and (iii) be without recourse to
any Partner or (d) notwithstanding Section 9, selling or assigning such
Defaulting Partner's Partnership Interest in the Partnership, in which event
the proceeds of the sale or assignment shall first be applied to the payment of
the expenses of the sale or assignment, next to the payment of the Contribution
Obligation and the balance, if any, shall be remitted to the Defaulting
Partner.
3.4. Withdrawal of Capital Contributions. No Partner shall have the
right to withdraw or reduce any part of its capital contributions except as
provided in this Agreement.
3.5. Optional Loans. Notwithstanding Section 6.2(e), any General
Partner shall have the right to make a loan of cash to the Partnership at any
time on such terms as such General Partner may determine; provided, however,
that in no event shall any such optional loan be secured by Partnership assets,
bear interest or original issue discount, be with recourse to any Partner or
replace any Partner's obligations to make capital contributions pursuant to
this Section 3.
SECTION 4
DISTRIBUTIONS
4.1. Distributions. Subject to Sections 4.2 and 10.3, the amount and
timing of distributions by the Partnership shall be determined in the
discretion of the General Partners. Subject to Sections 4.4 and 10.3, all
distributions (including those made pursuant to Section 4.2) shall be made in
the following order of priority:
(a) First, to the Partners in proportion to their
Unrecouped Capital Preferences, until each Partner shall have received
cumulative distributions since the inception of the Partnership equal
to such Partner's Capital Preference; and
(b) Thereafter, to the Partners in proportion to their
Participation Percentages.
For purposes of this Section 4.1, the Capital Preferences, Unrecouped Capital
Preferences and Participation Percentages of the Partners shall be determined
as of the date of distribution.
4.2. Minimum Distribution. The Partnership shall, not later than the
end of the first quarter of each Partnership Year, make a distribution in the
proportions set forth in Section 4.1 in
-7-
<PAGE> 12
an amount sufficient to ensure that each Partner shall have received at least
an amount equal to the product of (a) forty per cent (40%) multiplied by (b)
the lesser of (i) such Partner's distributive share of the Partnership's
taxable income (if any) for the preceding Partnership Year as determined based
on the United States Federal income tax return of the Partnership for such
year, or (ii) the excess, if any, of cumulative Net Income over cumulative Net
Loss allocated to such Partner since the inception of the Partnership.
Notwithstanding the preceding sentence, except with the approval of the General
Partners no distribution shall be made to a Partner if immediately prior to
such distribution there is a zero or negative balance in any Partner's Capital
Account.
4.3. Nature of Distributions. Distributions may be made in cash or
property, or both, in the discretion of the General Partners.
4.4. Tax Payments. If the Partnership withholds or pays any tax
(including any addition to tax, penalty, or interest (other than an addition to
tax, penalty, or interest attributable solely to an act or omission of the Tax
Matters Partner)) in respect of any Partner's distributive share of Partnership
income or distributions to any Partner, such payment or withholding shall be
treated as a distribution pursuant to Section 4.1 to such Partner.
SECTION 5
PARTNERS' ACCOUNTS; ALLOCATION OF
PARTNERSHIP INCOME AND EXPENSES
5.1. Maintenance of Capital Accounts.
(a) General Rule. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with Section 704 of
the Code and the regulations thereunder ("Capital Account"). If a
Partner is both a Limited Partner and a General Partner, a single
Capital Account shall be maintained for such Partner. Each Partner's
Capital Account shall be increased by (i) the cash amount or Net Value
of all capital contributions made by such Partner to the Partnership
and (ii) all items of Net Income allocated to such Partner and
decreased by (A) the cash amount or Net Value of all actual and deemed
distributions of cash or property made to such Partner and (B) all
items of Net Loss allocated to such Partner.
(b) Computation of Items of Income, Gain, Loss or
Deduction. For purposes of computing the amount of any item of
income, gain, deduction or loss to be reflected in the Partners'
Capital Accounts, the determination, recognition and classification of
any such item shall be the same as its determination, recognition and
classification for United States Federal income tax purposes
(including any method of depreciation, cost recovery or amortization
used for this purpose), provided that:
-8-
<PAGE> 13
(i) In accordance with the requirements of
Section 704(c) of the Code and Treasury Regulations Section
1.704-1(b)(2)(iv)(d), any deductions for depreciation, cost
recovery or amortization attributable to Contributed
Property shall be determined as if the adjusted basis of
such property on the date it was acquired by the
Partnership was equal to the fair market value of such
property. Upon an adjustment pursuant to Section 5.1(d) to
the Carrying Value of any Partnership property subject to
depreciation, cost recovery or amortization, any further
deductions for such depreciation, cost recovery or
amortization attributable to such property shall be
determined as if the adjusted basis of such property was
equal to the Carrying Value of such property immediately
following such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any property shall be determined by
the Partnership as if the adjusted basis of such property
as of such date of disposition was equal in amount to the
Partnership's Carrying Value with respect to such property
as of such date.
(iii) The computation of all items of income,
gain, loss and deduction shall be made, as to those items
described in Section 705(a)(1)(B) or Section 705(a)(2)(B)
of the Code, without regard to the fact that such items are
not includable in gross income or are neither currently
deductible nor capitalizable for United States Federal
income tax purposes. For this purpose, amounts paid or
incurred to organize the Partnership or to promote the sale
of interests in the Partnership that are neither deductible
nor amortizable under Section 709 of the Code, and
deductions for any losses incurred in connection with the
sale or exchange of Partnership assets disallowed pursuant
to Section 267(a)(1) or Section 707(b) of the Code, shall
be treated as expenditures described in Section
705(a)(2)(B) of the Code.
(c) Transferees. Generally, a transferee of a Partner's
Partnership Interest will succeed to the Capital Account relating to
the interest transferred. However, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties shall be deemed to have been distributed
in liquidation of the Partnership to the Partners (including the
transferee of a Partnership Interest) and deemed recontributed by such
Partners in reconstitution of the Partnership. In such event, the
Carrying Values of the Partnership properties shall be adjusted
immediately prior to such deemed distribution pursuant to Section
5.1(e) (and such adjusted Carrying Values shall constitute the Net
Values of such properties upon this deemed contribution to the
reconstituted Partnership). The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the
principles of this Section 5.1.
-9-
<PAGE> 14
(d) Adjustments to Carrying Values. In accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f), in connection with
either (i) the contribution of money or other property (other than a
de minimis amount) to the Partnership by a new or existing Partner in
consideration for an interest in the Partnership or (ii) a
distribution of money or other property (other than a de minimis
amount) by the Partnership to a retiring or continuing Partner as
consideration for an interest in the Partnership, the Capital Accounts
of all Partners and the Carrying Values of all Partnership properties
may at the sole discretion of the General Partners be adjusted
(consistent with the provisions hereof) upwards or downwards to
reflect any Unrealized Gain or Unrealized Loss attributable to each
Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized upon an actual sale of each such property at such
time and had been allocated to the Partners pursuant to Section 5.2.
For purposes of determining such Unrealized Gain or Unrealized Loss,
the fair market value of Partnership assets shall be determined by the
General Partners using such reasonable methods of valuation as they in
their sole discretion deem appropriate.
(e) Effect of Distributions in Kind on Capital Accounts.
In accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(e),
immediately prior to the actual or deemed distribution of any
Partnership property in kind, the Capital Accounts of all Partners and
the Carrying Value of each such Partnership property shall be adjusted
(consistent with the provisions hereof) upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such
Partnership property as if such Unrealized Gain or Unrealized Loss had
been recognized upon an actual sale of each such property immediately
prior to such distribution and had been allocated to the Partners, at
such time, pursuant to Section 5.2. For purposes of determining such
Unrealized Gain or Unrealized Loss, the fair market values of relevant
Partnership properties shall be determined by the General Partners
pursuant to Section 6 using such reasonable methods of valuation as
they in their sole discretion deem appropriate.
5.2. Allocations of Net Income and Net Loss.
(a) In General. Subject to Section 5.2(b), Net Income and
Net Loss shall be allocated to the Capital Accounts as follows:
(i) Subject to Section 5.2(a)(iii), Net Income
shall be allocated to the Partners in proportion to their
Participation Percentages.
(ii) Subject to Section 5.2(a)(iii), Net Loss
shall be allocated to the Partners in proportion to their
Participation Percentages.
(iii) To the extent Net Loss allocated to a
Partner pursuant to Section 5.2(a)(ii) or this Section
5.2(a)(iii) would, but for this Section 5.2(a)(iii), cause
or increase any deficit in the Capital Account maintained
with respect to such
-10-
<PAGE> 15
Partner as of the end of such Partnership Year, such Net
Loss shall be reallocated first to the other Partners in
proportion to, and to the extent of, their positive Capital
Account balances, and then to the General Partners in
proportion to their Participation Percentages. If any Net
Loss is reallocated pursuant to the preceding sentence, Net
Income shall thereafter be allocated so as to offset, to
the extent possible, such reallocations of Net Loss.
(b) Special Provisions Governing Capital Account
Allocations. To the extent inconsistent with the provisions of
Section 5.2(a) the following special provisions shall govern
allocations to Capital Accounts:
(i) If there is a net decrease in "partnership
minimum gain" (within the meaning of Treasury Regulations
Section 1.704-2(b)(2)) during a taxable year, each Partner
shall (subject to the exceptions set forth in Treasury
Regulations Section 1.704-2(f)) be allocated items of
income and gain for such year (and, if necessary, for
subsequent years) equal to the portion of such Partner's
share of the net decrease in partnership minimum gain.
This Section 5.2(b)(i) is intended to be a "minimum gain
chargeback" within the meaning of Treasury Regulations
Section 1.704-2(f), and is to be interpreted to comply with
the requirements of such regulation.
(ii) If any Partner unexpectedly receives any
adjustments, allocations or distributions described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items
of income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate a
deficit in its Capital Account (after taking into account
adjustments, distributions and allocations described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
and (6)) in excess of its obligations to restore such
deficit (within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(d)) created by such adjustments,
allocations or distributions as quickly as possible. This
Section 5.2(b)(ii) is intended to constitute a "qualified
income offset" within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(3) and is to be interpreted to
comply with the requirements of such regulation.
(iii) The interest of the General Partners as
general partners, including the interests of any additional
or substituted general partner, taken together, in each
material item of Partnership income, gain, loss, deduction
or credit shall be equal to at least one per cent (1%) of
each such item at all times during the existence of the
Partnership.
(iv) In accordance with Treasury Regulations
Section 1.704-2,
-11-
<PAGE> 16
(A) any items of partnership loss,
deduction or expenditure (including expenditures
described in Section 705(a)(2)(B) of the Code)
that are attributable to liabilities of the
Partnership for which no Partner bears the
economic risk of loss shall be allocated in the
same manner as Net Losses hereunder, and
(B) any items of partnership loss,
deduction or expenditure (including expenditures
described in Section 705(a)(2)(B) of the Code)
that are attributable to nonrecourse debt of the
Partnership for which one or more Partners bears
the economic risk of loss shall be allocated to
each Partner in proportion to the extent to which
such Partner bears such economic risk of loss.
(v) Any special allocations of items of income or
gain pursuant to Sections 5.2(b)(i), (ii), (iii) and (iv)
shall be taken into account in computing subsequent
allocations of items of income, gain, deduction or loss so
that the net amounts of any items so allocated shall, to
the extent possible and consistent with such Sections, be
equal to the net amounts that would have been allocated to
each Partner had the allocations made pursuant to such
Sections not been made.
(c) Allocations for Tax Purposes.
(i) For United States Federal income tax
purposes, except as otherwise provided in this Section
5.2(c), each item of income, gain, loss, and deduction of
the Partnership shall be allocated among the Partners in
the same proportions as items comprising Net Income or Net
Loss, as the case may be, are allocated among the Partners.
Credits shall be allocated as provided in Treasury
Regulations Section 1.704-1(b)(4)(ii).
(ii) In the case of Contributed Property, items
of income, gain, loss, depreciation, amortization and cost
recovery shall be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code. In the case of Adjusted Property, items of income,
gain, loss, depreciation and cost recovery deductions
attributable thereto shall (A) first, be allocated among
the Partners in a manner consistent with the principles of
Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such
property and the allocation thereof pursuant to Section
5.1(c) or 5.1(d), and (B) second, in the event such
property was originally Contributed Property, be allocated
among the Partners in a manner consistent with subsection
(ii) above.
-12-
<PAGE> 17
(iii) To the extent permissible under applicable
Treasury Regulations, the amount of any gain from a
disposition allocated to (or recognized by) a Partner (or
its successor in interest) for United States Federal income
tax purposes pursuant to the above provisions shall be
deemed to be Recapture Income to the extent such Partner
has been allocated any deduction or credit directly or
indirectly giving rise to the treatment of such gain as
Recapture Income.
(iv) All items of income, gain, loss, deduction
and credit recognized by the Partnership for United States
Federal income tax purposes and allocated to the Partners
in accordance with the provisions hereof shall be
determined without regard to any adjustment made pursuant
to Section 743 of the Code; provided, however, that such
allocations, once made, shall be adjusted as necessary or
appropriate to take into account those adjustments
permitted by Section 743 of the Code, and any adjustments
made pursuant to Section 734 of the Code shall be allocated
to the extent permitted under and in accordance with the
rules of Treasury Regulations Section 1.704-1(b)(2)(iv)(m).
(d) Other Rules Pertaining to Allocations.
Subject to Section 6, the Tax Matters Partner may adopt and
employ such methods and procedures for (i) the determination and
allocation of adjustments under Sections 704(c), 734 and 743 of the
Code, (ii) the provision of tax information and reports to Partners,
(iii) the adoption of reasonable conventions and methods for the
valuation of assets and the determination of tax basis, (iv) the
allocation of asset values and tax basis, and (v) conventions for the
determination of cost recovery, depreciation and amortization
deductions and the maintenance of inventories, as it determines in its
sole discretion are necessary and appropriate to execute the
provisions of this Agreement, and to comply with United States Federal
and state tax laws. To the fullest extent permitted by law, the Tax
Matters Partner shall be indemnified and held harmless by the
Partnership for any expenses, penalties or other liabilities arising
as a result of decisions made in good faith on any of the matters
referred to in the preceding sentence.
SECTION 6
MANAGEMENT
6.1. Authority of General Partners. Except to the extent required by
law or specific provisions of this Agreement, the management of the Partnership
and all Partnership affairs shall be the exclusive responsibility of the
General Partners. Subject to Sections 6.2 and 6.3 hereof, the act of a
Majority in Interest of the General Partners shall be the act of the General
Partners, and no General Partner may act on behalf of the Partnership without
the approval of a Majority
-13-
<PAGE> 18
in Interest of the General Partners. Without limiting the generality of the
foregoing, subject to Sections 6.2 and 6.3, a Majority in Interest of the
General Partners is authorized on behalf of the Partnership, without the
consent of any Partner, to:
(a) expend the capital and revenues of the Partnership in
furtherance of the Partnership's business and pay, in accordance with
the provisions of this Agreement, all expenses, debts and obligations
of the Partnership to the extent that funds of the Partnership are
available therefor;
(b) invest and reinvest the Partnership's funds;
(c) enter into, amend or terminate agreements (including
without limitation partnership agreements) and contracts with any
Person or Persons, institute, defend and settle litigation arising
therefrom, and give receipts, releases and discharges with respect to
all of the foregoing and any matters incident thereto;
(d) maintain, at the expense of the Partnership, adequate
records and accounts of all operations and expenditures and furnish
the Partners with the reports referred to in Section 8;
(e) purchase, at the expense of the Partnership,
liability, casualty, fire and other insurance and bonds to protect the
Partnership's properties, business, partners and employees, the
General Partners, their stockholders and their respective directors,
officers and employees;
(f) borrow for working capital and, in connection
therewith, issue notes, debentures and other debt securities and
mortgage, pledge, encumber or hypothecate the assets of the
Partnership, to secure repayment of such borrowed sums;
(g) obtain replacement of any mortgage, encumbrance,
pledge, hypothecation or other security device and prepay, in whole or
in part, modify, consolidate or extend any such mortgage, encumbrance,
pledge, hypothecation or other security device, subject to the
limitations contained in this Agreement;
(h) sell, lease, trade, exchange or otherwise dispose of
all or any portion of the property of the Partnership subject to the
limitations contained in this Agreement;
(i) employ, at the expense of the Partnership,
consultants, accountants, attorneys, brokers, engineers, escrow agents
and others and terminate such employment;
(j) execute and deliver any and all instruments necessary
or incidental to the conduct of the business of the Partnership;
-14-
<PAGE> 19
(k) determine the amount, timing and character of
distributions to Partners pursuant to Sections 4.1 and 4.3;
(l) appoint or remove officers of the Partnership who
shall be nominated by the President of ORBCOMM Global, including a
President of the Partnership and a senior officer of the Partnership
who shall report directly to the President and be located in Montreal
or such other location as the Partners shall determine;
(m) act on behalf of the Partnership with respect to the
obligations of the Partnership under any of the Definitive Agreements;
and
(n) do such other things and engage in such other
activities related to the foregoing as may be necessary, convenient or
advisable with respect to the conduct of the business of the
Partnership, and have and exercise all of the powers and rights
conferred upon limited partnerships formed under the Delaware Act.
By executing this Agreement each Partner, including the General
Partners, shall be deemed to have consented to any exercise by a Majority in
Interest of the General Partners of any of the foregoing powers.
6.2. Super-Majority Approval. Subject to Section 6.1, the approval
of a Super-Majority in Interest of the General Partners shall be required to:
(a) Transfer all or substantially all the assets of the
Partnership or contract to do so;
(b) merge or consolidate the Partnership with any other
Person;
(c) permit the entry by the Partnership into any
additional lines of business other than those described in Section 1.3
or directly related thereto;
(d) except as provided in the Master Agreement, admit any
Person to the Partnership as a General or Limited Partner;
(e) cause the Partnership to borrow on a recourse basis
any amount or on a non-recourse basis in excess of five million
dollars ($5,000,000);
(f) enter into any transaction (excluding the Definitive
Agreements, but including any amendment or modification to a
Definitive Agreement) with an Affiliate of a General Partner;
-15-
<PAGE> 20
(g) select or remove the independent certified public
accountant for the Partnership pursuant to Section 8.4 or adopt, or
modify in any material respect, any significant accounting policy or
tax policy;
(h) make on behalf of the Partnership an assignment for
the benefit of creditors, decide on behalf of the Partnership to
subject the Partnership to any proceedings under any bankruptcy or
insolvency law, decide to avail the Partnership of the benefit of any
other legislation for the benefit of debtors, or take steps to wind up
or terminate the Partnership existence;
(i) delegate any of the powers of the Partnership to a
Person; and
(j) amend any provision of this Agreement, except that no
such amendment may (i) decrease the Capital Account or increase the
amount required to be contributed by a Partner without the consent of
such Partner, or (ii) amend the provisions of, or adopt any provisions
inconsistent with, Sections 6.2, 6.3 and 6.4.
6.3. Enforcement of Definitive Agreements. Notwithstanding the
provisions of Section 6.1 and 6.2, any action of the Partnership with respect
to the enforcement by it of its rights under any Definitive Agreement or other
contract or agreement to which any General Partner or any Affiliate thereof is
a party with respect to a breach, default or dispute by such General Partner or
Affiliate, including without limitation the institution or prosecution of any
arbitration or other proceedings, may be taken by General Partners having a
majority of the Participation Percentages held by the General Partners other
than such General Partner.
6.4. Meetings. Meetings of the General Partners may be called by any
General Partner and shall be held at the principal offices of the Partnership
or at such other location as shall be reasonably determined by General
Partners. Notwithstanding any provision of applicable law, not less than
forty-eight (48) hours prior written notice of the time, place and purpose of
each meeting of the General Partners shall be provided to each General Partner
calling such meeting, provided that any General Partner may waive compliance
with such notice requirement. Any meeting may be adjourned from time to time
by the General Partners, and the meeting may be held as adjourned without
further notice. Any one or more General Partners may participate in any
meeting by means of conference telephone, video or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by General Partners in a meeting held by means
of a conference telephone, video or similar communications equipment shall
constitute presence in person at a meeting. Any action required or permitted
to be taken with the approval of General Partners may be taken without a
meeting upon the written consent of all General Partners, which written consent
shall be filed with the records of the meetings of the General Partners.
6.5. Representation at Meetings; Reimbursement. Each General Partner
shall be represented at meetings of the General Partners by up to three
authorized officers or other
-16-
<PAGE> 21
authorized agents, it being the expectation of the General Partners that each
General Partner will select three representatives who will use reasonable
efforts to attend each meeting of the General Partners. At each meeting of the
General Partners, one representative of each General Partner shall be entitled
to vote such General Partner's Participation Percentage. Each General Partner
shall be entitled to reimbursement of the reasonable out-of-pocket expenses
incurred by it or its representatives in attending meetings of the General
Partners. No amount so paid to any such member shall be deemed to be a
distribution of Partnership assets for purposes of this Agreement or the
Delaware Act. Except for the reimbursement of expenses as provided in this
Section 6.5, no General Partner or representative thereof shall receive any
compensation for its, his or her services as such.
6.6. Designation of Officers. Subject to Section 6.1(l), officers of
the Partnership shall be nominated by the President of the Partnership and
elected by the General Partners and shall exercise such authority as they are
granted by the General Partners. If an officer is an employee of a General
Partner, the Partnership will promptly reimburse such General Partner the pro
rata share of expenses, including compensation and overhead, attributable to
such officer of the Partnership by reference to the share of his or her total
time spent upon Partnership operations.
6.7. Removal of Officers. Any officer of the Partnership may be
removed at any time and for any reason by approval or written consent of the
General Partners. Any officer removed pursuant to this Section shall remain
entitled to exculpation and indemnification from the Partnership pursuant to
Section 7.3 with respect to any matter arising prior to his or her removal.
SECTION 7
AGREEMENTS AND AUTHORITY OF THE PARTNERS
7.1. Rights and Duties of Limited Partners.
(a) Except as otherwise specifically provided in this
Agreement, the Limited Partners in their capacities as such shall not
participate in the control, management, direction or operation of the
business or affairs of the Partnership and shall have no power to act
for or bind the Partnership.
(b) Pursuant to Delaware law (and provided that such
Limited Partner does not, in addition to the exercise of its rights
and powers as a Limited Partner, take part in the control of the
business of the Partnership), no Limited Partner shall be liable for
losses or debts of the Partnership in its capacity as a Limited
Partner beyond the aggregate amount of its capital contributions,
except that (i) when a Limited Partner has received a return of any
part of its capital contribution without violation of this Agreement
or the Delaware Act it shall be liable to the Partnership for one year
thereafter for the amount of the returned contribution, but only to
the extent necessary to discharge
-17-
<PAGE> 22
the Partnership's liabilities to creditors who extended credit to the
Partnership during the period the capital contribution was held by the
Partnership, and (ii) if the Limited Partner has received the return
of any part of its capital contribution in violation of this Agreement
or the Delaware Act, it is liable to the Partnership for a period of
six years thereafter for the amount of such contribution wrongfully
returned to it; provided, however, that to the extent any Limited
Partner repays to the Partnership pursuant to the foregoing provision
a greater percentage of the distributions made to it than any or all
other Limited Partners similarly liable to the Partnership, such
Limited Partner shall have a right of contribution from each such
other Limited Partner to the extent that such other Limited Partner
has repaid pursuant to such provision a lesser percentage of the
distributions made to it.
7.2. Restrictions on General Partners' Authority; Loss Sharing.
(a) No General Partner may, without the approval or
written consent to the specific act by all of the Partners given in
this Agreement or by other written instrument executed and delivered
by the Partners subsequent to the date of this Agreement, do any of
the following:
(i) any act in contravention of this Agreement or
the Certificate;
(ii) any act which would make it impossible to
carry on the ordinary business of the Partnership, except
as otherwise provided in this Agreement; or
(iii) assign any rights in specific Partnership
property, for other than a Partnership purpose.
(b) The General Partners shall share responsibility for
all obligations and losses of the Partnership in excess of the
Partners' aggregate capital contributions in proportion to their
Participation Percentages.
7.3. Exculpation. None of the General Partners, any of their
respective officers, directors, partners, employees or agents, including any
Person who formerly served in any of the foregoing capacities (each, an
"Indemnified Party"), shall be liable, in damages or otherwise, to the
Partnership or to any of the Limited Partners for any act or omission by such
Indemnified Party pursuant to the authority granted by this Agreement except if
such act or omission results from gross negligence, willful or wanton
misconduct or bad faith of such Indemnified Party. The Partnership shall
indemnify, defend and hold harmless each Indemnified Party from and against any
and all claims or liabilities of any nature whatsoever, including reasonable
attorneys' fees, arising out of or in connection with any action taken or
omitted by any General Partner or the officers of the Partnership pursuant to
the authority granted by this Agreement, except where attributable to the gross
negligence, willful or wanton misconduct or bad faith of such Indemnified
Party. An Indemnified Party shall be entitled to rely on the advice of counsel,
-18-
<PAGE> 23
public accountants or other independent experts experienced in the matter at
issue, and any act or omission of such Person pursuant to such advice shall in
no event subject such Indemnified Party to liability to the Partnership or any
Partner.
7.4. Other Activities. Subject to the Proprietary Information and
Non-Competition Agreement among Orbital, ORBCOMM, Teleglobe, Teleglobe Mobile,
ORBCOMM Global, the Partnership, and ORBCOMM USA, any Partner may engage in or
possess an interest in other business venture of any nature or description,
independently or with others, whether presently existing or hereafter created,
including the development, operation and commercial exploitation of aerospace
technology and communications systems, and neither the Partnership nor any
Partner shall have any rights in or to such independent ventures or the income
or profits derived therefrom.
SECTION 8
ACCOUNTS
8.1. Books. Each Partner shall have the right to inspect the
Partnership's books and records (including a list of the names and addresses of
Partners) at any reasonable time upon advance written request to the General
Partners, which books and records shall be maintained by ORBCOMM Global.
8.2. Partners' Accounts. Separate Capital Accounts shall be
maintained for each Partner in accordance with the provisions of Section 5.
8.3. Certificates, Reports, Returns and Audits.
(a) The books of account shall be closed promptly after
the end of each Partnership Year. Within twenty (20) days of the end
of the Partnership Year, the General Partners shall provide each
Person who was a Partner at any time during such Partnership Year an
unaudited statement of profit and loss for such year. Within sixty
(60) days of the end of the Partnership Year, a written report shall
be made to each Person who was a Partner at any time during such
Partnership Year that shall include a statement of profit and loss and
a statement of cash flows for the year then ended, a balance sheet as
of the close of the Partnership Year and a statement of such Partner's
Capital Account, all of which shall be prepared in accordance with
generally accepted accounting principles in the United States, and
shall be audited by the Partnership's independent public accountants.
The annual report shall also contain such additional statements with
respect to the status of the Partnership's business, transactions by
the Partnership with any of the Partners or any of their Affiliates
and the distribution of Partnership funds as are considered necessary
by the General Partners to advise all Partners properly about their
investment in the Partnership. With the sole exception of the
mathematical errors in
-19-
<PAGE> 24
computation, the annual report and the information contained therein
shall be deemed conclusive and binding upon each Partner unless
written objection shall be lodged with the General Partners within
ninety (90) days after the giving of such reports to such Partner.
(b) Within twenty (20) days after the close of each month
of the Partnership Year other than the final month of the Year,
commencing with the month of July, 1993, a written report shall be
made to each Person who was a Partner during the month then ended that
shall include details with respect to the Partnership's business and
unaudited financial statements and other relevant information
regarding the Partnership and its activities during the month,
including statements with respect to any transactions by the
Partnership with any of the Partners or any of their respective
Affiliates and the distribution of Partnership funds as are considered
necessary by the General Partners to advise all Partners properly
about their investment in the Partnership. All such monthly reports
shall be prepared in accordance with generally accepted accounting
principles in the United States, using ORBCOMM financial formats,
which formats shall be previously approved by Teleglobe Mobile. The
June, 1993 report shall be provided to such Partners on or before July
30, 1993.
(c) ORBCOMM shall be the Tax Matters Partner of the
Partnership; provided, however, that upon exercise of the Teleglobe
Mobile Option, Teleglobe Mobile shall become the Tax Matters Partner
on the Teleglobe Mobile Option Effective Date. The Tax Matters Partner
shall prepare or cause to be prepared all United States, state, local
and foreign tax returns of the Partnership for each year for which
such returns are required to be filed. The Partnership shall
reimburse the Tax Matters Partner for all expenses incurred by the Tax
Matters Partner in carrying out its responsibilities as such under the
terms of this Agreement, other than expenses that attributable to the
gross negligence, willful or wanton conduct or bad faith of the Tax
Matters Partner.
(d) Each General Partner shall be obligated to forward a
copy of this Agreement as filed, or any amendments hereto, to all of
the General Partners and only to such Limited Partners as expressly
request a copy in writing.
8.4. Auditors. For purposes of financial reporting and Federal
income tax return preparation, the independent certified public accounting firm
for the Partnership initially shall be KPMG Peat Marwick; provided, however,
that so long as the Participation Percentage of Teleglobe Mobile is at least
fourteen per cent (14%), the audit and tax partners from such independent
certified public accounting firm responsible for the Partnership shall be
chosen by Teleglobe Mobile.
8.5. Review Policies. The Partnership shall adhere to the following
policies:
-20-
<PAGE> 25
(a) The General Partners shall review, at the end of each
quarter, the projected monthly cash requirements of the Partnership
for the next succeeding quarter, if any; and
(b) The financial performance of the Partnership shall be
reviewed at least quarterly by the General Partners.
SECTION 9
TRANSFERS OF PARTNERSHIP INTERESTS; WITHDRAWALS
9.1. Transfer of Partnership Interests. Except as provided in the
Master Agreement, no Partner shall be permitted, without the consent of each
General Partner (which may be withheld in such General Partner's absolute
discretion) (i) to substitute any other Person for itself as a General or
Limited Partner (ii) to Transfer all or any portion of its Partnership
Interest, (iii) to assign its obligations as a General or Limited Partner or
(iv) to withdraw from the Partnership.
9.2. [RESERVED]
9.3. Prohibited Transfers Void. Any purported Transfer of all or any
portion of a Partner's Partnership Interest that is not in compliance with
Section 9.1 is hereby declared to be null and void and of no force or effect
whatsoever.
9.4. Withdrawal of Partners. If any Partner withdraws or resigns
from the Partnership in violation of this Agreement, the total amount that such
Partner may then or thereafter be required to contribute to the Partnership
pursuant to this Agreement or the Master Agreement shall become immediately due
and payable and such Partner shall not be entitled to any further distributions
from the Partnership.
SECTION 10
DISSOLUTION
10.1. Events of Dissolution. The Partnership shall continue until
11:59 p.m. on December 31, 2013, unless sooner dissolved upon the earliest to
occur of the following events:
(a) 11:59 p.m. on July 22, 1993, if the Master Agreement
has not been executed by all parties thereto prior to such time; or
(b) removal, withdrawal, resignation, liquidation or
Bankruptcy (or death, in the case of an individual) (an "Event of
Withdrawal") of the last remaining General
-21-
<PAGE> 26
Partner unless a new General Partner is appointed within ninety (90)
days with the unanimous consent of the remaining Partners; or
(c) at any time, with the written consent of all the
General Partners.
10.2. Final Accounting. Upon the dissolution of the Partnership, the
Partnership shall prepare an accounting of such dissolution, which accounting
shall be audited by the Partnership's independent public accountants from the
date of the last previous accounting to the date of dissolution.
10.3. Liquidation. Upon the dissolution of the Partnership, the
General Partners, or, in the case of an Event of Withdrawal of the last
remaining General Partner, one of the Limited Partners elected by a majority
vote of the Limited Partners, shall act as liquidator to wind up the
Partnership. The liquidator shall have full power and authority to sell,
assign and encumber any or all of the Partnership's assets and to wind up and
liquidate the affairs of the Partnership in an orderly and business-like
manner. All proceeds from liquidation shall be distributed in the following
order of priority: (a) to the payment of the debts and liabilities of the
Partnership and expenses of liquidation; (b) to the setting up of such reserves
as the liquidator may reasonably deem necessary for any contingent liability of
the Partnership; and (c) the balance to the Partners in the proportions of
their positive Capital Account balances, if any (determined after taking into
account all allocations of Net Income and Net Loss pursuant to Section 5 for
the year of liquidation).
10.4. Distribution in Kind. If the liquidator shall determine that a
portion of the Partnership's assets should be distributed in kind to the
Partners, the liquidator shall obtain an independent appraisal of the fair
market value of each such asset as of a date reasonably close to the date of
liquidation.
10.5. Cancellation of Certificate. Upon the completion of the
distribution of Partnership assets as provided in Section 10.3 and 10.4, the
Partnership shall be terminated and the Person acting as liquidator shall cause
the cancellation of the Certificate and shall take such other actions as may be
appropriate to terminate the Partnership.
SECTION 11
NOTICES
11.1. Method of Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including any
facsimile transmission or similar writing), and shall be sent either by
telecopier or delivered in person by reputable overnight courier addressed as
follows: if to ORBCOMM Global, to ORBCOMM Global, L.P., 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attention: President, with a copy to
Orbital, 21700 Atlantic Boulevard,
-22-
<PAGE> 27
Dulles, Virginia 20166, Attention: Executive Vice President and General
Manager/Communications and Information Systems Group; if to Teleglobe Mobile to
Teleglobe Mobile Partners, c/o Teleglobe Inc., 1000, rue de La Gauchetiere
ouest, Montreal, Quebec, Canada H3B 4X5, Attention: Executive Vice President,
Corporate Development and Corporate Secretary (except that any Partner may from
time to time give notice changing its address for this purpose). Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate answerback is received, (b) if given by
reputable overnight courier, one (1) business day after being delivered to such
courier, or (c) if given by any other means, when received at the address
specified in this Section.
11.2. Routine Communications. Notwithstanding the provisions of
Section 11.1, routine communications such as distribution checks or financial
statements of the Partnership (but not the notice of any meeting required to be
delivered pursuant to Section 6.4) may be sent by first-class mail, postage
prepaid.
11.3. Computation of Time. Except as may be otherwise provided under
the Delaware Act, in computing any period of time under this Agreement, the day
of the act, event or default from which the designated period of time begins to
run shall not be included. The last day of the period so computed shall be
included, unless it is a Saturday, Sunday or legal holiday, in which event the
period shall run until the end of the next day which is not a Saturday, Sunday
or legal holiday.
SECTION 12
GENERAL PROVISIONS
12.1. Entire Agreement. This Agreement, together with each of the
Definitive Agreements, constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes any prior agreement or
understanding among the parties with respect to the subject matter hereof.
12.2. Amendment; Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by the parties.
12.3. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without giving effect
to the provisions, policies or principles thereof relating to choice or
conflict of laws.
-23-
<PAGE> 28
12.4. Binding Effect. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns.
12.5. Counterparts. This Agreement may be executed in any number of
counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
12.6. Separability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.7. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
12.8. Gender and Number. Whenever required by the context hereof,
the singular shall include the plural and the plural shall include the
singular. The masculine gender shall include the feminine and neuter genders,
and the neuter gender shall include the masculine and feminine genders.
12.9. Waiver of Partition and Dissolution. Each Partner hereby
irrevocably waives, during the term of the Partnership, any right that it may
have to maintain any actions (a) for partition with respect to any Partnership
property, and (b) for dissolution of the Partnership except upon any of the
events described in Section 10.1.
12.10. Coordination with Master Agreement. The provisions of this
Agreement shall be subject to the provisions of the Master Agreement. If there
is a conflict between this Agreement and the Master Agreement, the provisions
of the Master Agreement shall control.
12.11. Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement.
-24-
<PAGE> 29
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first above written.
ORBCOMM GLOBAL, L.P.
By: Orbital Communications Corporation,
General Partner
By: /s/ ALAN L. PARKER
------------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ GUTHRIE J. STEWART
------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
TELEGLOBE MOBILE PARTNERS
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ GUTHRIE J. STEWART
------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
-25-
<PAGE> 1
EXHIBIT 4
================================================================================
ORBCOMM GLOBAL, L.P.
AND
ORBCOMM GLOBAL CAPITAL CORP.,
as Issuers,
ORBITAL COMMUNICATIONS CORPORATION,
TELEGLOBE MOBILE PARTNERS,
ORBCOMM USA, L.P.
AND
ORBCOMM INTERNATIONAL PARTNERS, L.P.,
as Guarantors,
AND
MARINE MIDLAND BANK,
as Trustee
----------------------------------
Indenture
Dated as of August 7, 1996
----------------------------------
$170,000,000
14% Senior Notes Due 2004
----------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.3 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II.
THE NOTES
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.2 Execution and Authentication; Aggregate Principal
Amount; Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.3 Registrar, Paying Agent and Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.4 Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.5 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.7 Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.8 Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.9 Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.10 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.12 Payment of Interest; Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.13 CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.14 Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.15 Book-Entry Provisions for Global Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.16 Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III.
REDEMPTION
SECTION 3.1 Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.2 Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.3 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.4 Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.5 Notes to Be Redeemed Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.6 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.7 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.8 Notes Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.9 Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE IV.
COVENANTS
SECTION 4.1 Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.3 Corporate or Partnership Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.4 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.5 Maintenance of Properties and Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.6 Compliance Certificate; Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.8 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.9 Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.10 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.11 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.12 Limitation on Incurrence of Additional Indebtedness or
Issuance of Restricted Subsidiary Disqualified Stock . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.14 Limitation on Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.15 Limitation on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.16 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.17 Additional Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.18 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.19 Partners' Contingent Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.20 Contingency Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE V.
MERGER, CONSOLIDATION
SECTION 5.1 Mergers, Consolidations and Certain Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.2 Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.6 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.7 Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII.
TRUSTEE
SECTION 7.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 7.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 7.3 Individual Rights of Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.8 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.9 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 7.10 Successor Trustee by Merger, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 7.11 Trustee Required; Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 7.12 Preferential Collection of Claims Against Issuers . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VIII.
DEFEASANCE AND SATISFACTION AND DISCHARGE
SECTION 8.1 Defeasance and Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.2 Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.3 Survival of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.4 Acknowledgment of Discharge by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.5 Application of Trust Moneys and Government Securities . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.6 Repayment to the Issuers or the Guarantors; Unclaimed Money. . . . . . . . . . . . . . . . . . . . 68
SECTION 8.7 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.4 Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.5 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.6 Reference in Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 9.7 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE X.
GUARANTEE
SECTION 10.1 Unconditional Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.2 Priority of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.4 Release of a Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.5 Limitation of Subsidiary Guarantor's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 10.6 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.7 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.8 Execution of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.9 Waiver of Stay, Extension or Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 10.10 Obligations of the Guarantors Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 11.2 Notices to Issuers and Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.3 Notices to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.4 Trustee, Paying Agent and Registrar Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.5 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.6 Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.7 Acts of Holders; Registered Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.10 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.11 Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.12 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.13 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 11.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
-iv-
<PAGE> 6
INDENTURE, dated as of August 7, 1996, by and among ORBCOMM
Global, L.P., a Delaware limited partnership (the "Company" or "ORBCOMM") and
ORBCOMM Global Capital Corp., a Delaware corporation ("Capital"), as joint and
several obligors (each, an "Issuer" and, collectively, the "Issuers"), each
Issuer having its principal office at 21700 Atlantic Boulevard, Dulles,
Virginia 20166, Orbital Communications Corporation, a Delaware corporation
("OCC"), Teleglobe Mobile Partners, a Delaware general partnership ("Teleglobe
Mobile"), ORBCOMM USA, L.P., a Delaware limited partnership ("USA"), and
ORBCOMM International Partners, L.P., a Delaware limited partnership
("International" and, together with OCC, Teleglobe Mobile and USA, the
"Guarantors"), each Guarantor having its principal office at 21700 Atlantic
Boulevard, Dulles, Virginia 20166 (other than Teleglobe Mobile, which has its
principal office at 1000 rue de La Gauchetiere ouest, Montreal, Quebec H313
4X5, Canada) and Marine Midland Bank, a New York banking corporation and trust
company, as trustee (the "Trustee").
RECITALS:
WHEREAS, the Issuers have duly authorized the issuance of
$170,000,000 aggregate principal amount of their 14% Senior Notes due August
15, 2004 (the "Notes") of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Issuers and the Guarantors have duly
authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make the Notes, when executed by
the Issuers and authenticated and delivered hereunder, duly issued by the
Issuers, the valid obligations of the Issuers and the Guarantors, and to make
this Indenture a valid and binding agreement of the Issuers and the Guarantors,
in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH: for and in
consideration of the premises and the purchase of the Notes by the Holders (as
hereinafter defined) thereof, each party hereto hereby mutually covenants and
agrees, for the equal and proportionate benefit of all Holders of the Notes, as
follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions.
"Acceleration Notice" has the meaning set forth in Section 6.2(a).
"Accrual Period" has the meaning set forth in the form of the Note
attached hereto as Exhibit Exhibit A.
"Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing
at the time such other Person is merged with or into or became a Restricted
Subsidiary of such specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Restricted Subsidiary of
such specified Person; and
<PAGE> 7
(ii) Indebtedness secured by a Lien encumbering
any asset acquired by such specified Person.
"Act" has the meaning set forth in Section 11.7.
"Administrative Services Agreement" means the Administrative
Services Agreement dated as of September 12, 1995 between Orbital and the
Company.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities (or
the equivalent) of a Person shall be deemed to be control.
"Agent Member" shall mean members of, or participants in, the
Depositary.
"Asset Sale" means:
(i) the sale, lease, conveyance or other
disposition of any assets, other than the sale or other disposition by a
Credit Party of an Equity Interest in any other Credit Party (including,
without limitation, by way of a sale and leaseback) (provided that the
sale, lease, conveyance or other disposition of all or substantially all of
the assets of the Credit Parties and their Restricted Subsidiaries taken as
a whole will be governed by the provisions of Section 4.14 and/or Article V
hereof and not by the provisions of Section 4.15); and
(ii) except to the extent excluded by clause
(i) above, the issuance by any of the Credit Parties' Restricted
Subsidiaries of Equity Interests or the sale by the Credit Parties or any
of their Restricted Subsidiaries of Equity Interests of any of their
Subsidiaries,
in the case of either clause (i) or (ii) above, whether in a single transaction
or a series of related transactions: (a) that have a Fair Market Value in
excess of $5 million; or (b) for net proceeds in excess of $5 million.
Notwithstanding the foregoing: (i) sales of territory and ORBCOMM System
rights to resellers, grants of licenses and other associated rights to use the
ORBCOMM System to international licensees and sales of services, products or
inventory in the ordinary course of business; (ii) a transfer of assets by any
of the Credit Parties to any other Credit Party or to a Restricted Subsidiary
of any of the Credit Parties or by a Restricted Subsidiary to any of the Credit
Parties or to a Restricted Subsidiary of any of the Credit Parties; (iii) an
issuance of Equity Interests by a Restricted Subsidiary of any of the Credit
Parties to any of the Credit Parties or to a Wholly Owned Restricted Subsidiary
of any Credit Party; and (iv) a Restricted Payment that is permitted by Section
4.10 will be deemed not to be Asset Sales.
"Asset Sale Offer" has the meaning set forth in Section 4.15(a).
"Asset Sale Offer Trigger Date" has the meaning set forth in
Section 4.15(a).
"Authenticating Agent" has the meaning set forth in Section 2.3.
-2-
<PAGE> 8
"Bank Credit Facility" means one or more credit facilities
(whether a term or a revolving facility) of the type customarily entered into
with commercial banks, between the Company and any of the other Credit Parties,
on the one hand, and any commercial banks, financial institutions or other
lenders, on the other hand, which Bank Credit Facilities are by their terms
designated as a "Bank Credit Facility" for purposes of this Indenture.
"Business Day" means any day other than a Saturday, Sunday or
legal holiday or day on which commercial banking institutions in The City of
New York, New York are authorized or obligated by law or executive order to
close.
"Canada Service License Agreement" means the Service License
Agreement dated as of December 19, 1995 between ORBCOMM International and
ORBCOMM Canada Inc.
"Capital" means ORBCOMM Global Capital Corp., a Delaware
corporation, or its successor.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means:
(i) in the case of a corporation, corporate
stock;
(ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(iii) in the case of a partnership,
partnership interests (whether general or limited); and
(iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"Cash Consideration" means any consideration received from an
Asset Sale in the form of cash or Cash Equivalents, in either case in U.S.
dollars or another currency freely convertible into U.S. dollars.
"Cash Equivalents" means:
(i) U.S. dollars;
(ii) Government Securities;
(iii) certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any Eligible Institution;
-3-
<PAGE> 9
(iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (ii) and (iii) above entered into with any Eligible Institution;
(v) commercial paper having the highest
rating obtainable from Moody's or S&P and in each case maturing within six
months after the date of acquisition; and
(vi) mutual funds or other pooled investment
vehicles investing solely in investments of the types described in (i)
through (v) above.
"Cash Insurance" has the meaning set forth in Section 4.5(c).
"Change of Control" means:
(i) the sale, lease, transfer, conveyance or
other disposition, in one transaction or a series of related transactions,
directly or indirectly, including through a liquidation or dissolution, of
all or substantially all of the assets of the Credit Parties and their
Restricted Subsidiaries (other than any such transfer to any other Credit
Party or any Wholly Owned Restricted Subsidiary of a Credit Party);
(ii) the adoption of a plan relating to the
liquidation or dissolution of any of the Credit Parties (other than any
such liquidation or dissolution to or for the benefit of any other Credit
Party or any Wholly Owned Restricted Subsidiary of a Credit Party);
(iii) at any time prior to the date on which at
least 20 satellites have been launched and tested and, together with the
related ground systems, are reasonably believed by the Company to be ready
for commercial operation as part of the ORBCOMM System, such time as
Orbital ceases, directly or indirectly, including by way of a consolidation
or merger, either (a) to be the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of (1) at least 70% of the total Voting
Equity Interests of OCC or (2) at least 50% of the total Voting Equity
Interests of the Company or (b) to be the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of (1) at least 70% of the total Equity
Interests of OCC or (2) at least 50% of the total Equity Interests of the
Company; provided, however, that in the event Orbital beneficially owns
more than 50% of the total Voting Equity Interests of OCC, then Orbital
shall be deemed to beneficially own 100% of OCC's interest in the Company;
and provided, further, that notwithstanding the foregoing provisions of
this clause (iii), it shall not constitute a Change of Control in the event
OCC sells, transfers, conveys or otherwise disposes of Equity Interests in
the Company to a Strategic Investor, or the Company issues Equity Interests
to a Strategic Investor, in each case such that, following such sale or
issuance, OCC owns not less than 35% of the fully diluted Equity Interests
of the Company (provided that prior to any such sale or issuance the
partners shall amend the Company's limited partnership agreement so that
all actions taken by or on behalf of the Company that require the approval
of OCC pursuant to the terms of the Company's limited partnership agreement
as in effect on the Issue Date shall continue to require the approval of
OCC following such sale or issuance);
(iv) at any time after the date on which at
least 20 satellites have been launched and tested and, together with the
related ground systems, are reasonably believed by the Company to be ready
for commercial operation as part of the ORBCOMM System, such
-4-
<PAGE> 10
time as Orbital and Teleglobe, collectively, cease, directly or indirectly,
including by way of a consolidation or merger, either (a) to be the
"beneficial owners" (as defined in Rule 13d-3 under the Exchange Act) of at
least 40% of the total Voting Equity Interests of the Company or (b) to be
the "beneficial owners" (as defined in Rule 13d-3 under the Exchange Act)
of at least 40% of the total Equity Interests of the Company; provided,
however, that in the event Orbital or Teleglobe, as the case may be,
beneficially owns more than 50% of the total Voting Equity Interests of OCC
or Teleglobe Mobile, respectively, then Orbital or Teleglobe, as the case
may be, shall be deemed to beneficially own 100% of OCC's or Teleglobe
Mobile's interest, respectively, in the Company; or
(v) at any time prior to the date on which at
least 20 satellites have been launched and tested and, together with the
related ground systems, are reasonably believed by the Company to be ready
for commercial operation as part of the ORBCOMM System, the admission of
any Person as a general partner of the Company after which OCC and
Teleglobe Mobile do not, collectively, retain the exclusive power to take
all of the actions which they are entitled to take under the limited
partnership agreement of the Company as in effect on the Issue Date by vote
of a Majority-in-Interest or a Super-Majority-in-Interest (as such terms
are defined in the Company's limited partnership agreement as in effect on
the Issue Date);
provided, however, that for purposes of the foregoing calculations, all options
to acquire common stock of OCC under the OCC Stock Option Plan and shares of
common stock issued upon exercise thereof shall be deemed to be held by OCC as
treasury shares.
"Change of Control Date" has the meaning set forth in Section
4.14(b).
"Change of Control Offer" has the meaning set forth in Section
4.14(a).
"Change of Control Payment" has the meaning set forth in Section
4.14(a).
"Change of Control Payment Date" has the meaning set forth in
Section 4.14(b).
"Collateral Agent" means the collateral agent under the Pledge
Agreement.
"Commission" means the Securities and Exchange Commission, or
successor body performing the duties now assigned to it under the TIA.
"Company" means ORBCOMM Global, L.P., a Delaware limited
partnership, or its successor.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period, plus, to
the extent deducted or otherwise excluded in computing such Consolidated Net
Income:
(i) an amount equal to any extraordinary loss
plus any net loss realized in connection with a sale of assets;
(ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period;
-5-
<PAGE> 11
(iii) Consolidated Interest Expense less
consolidated interest income of such Person and its Restricted Subsidiaries
for such period; and
(iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization
of prepaid cash expenses that were paid in a prior period) and other
non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period
or amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period;
in each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash charges of, a
Restricted Subsidiary that is not a Subsidiary Guarantor of any such Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow
only to the extent (and in the same proportion) that the Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income
of such Person and only if a corresponding amount would be permitted at the
date of determination to be distributed by dividend to such Person by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP, whether paid or accrued and whether or not capitalized
(including, without limitation, Revenue Participation Interest on the Notes,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financing, and net payments (if any) pursuant to Hedging
Obligations).
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(i) the Net Income of any Person that is not
a Subsidiary Guarantor or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends
or distributions actually paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof;
(ii) the Net Income of any Restricted
Subsidiary that is not a Subsidiary Guarantor shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such Net Income is not at
the date of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
Restricted Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded;
-6-
<PAGE> 12
(iv) the cumulative effect of a change in
accounting principles shall be excluded; and
(v) the Net Income of any Unrestricted
Subsidiary shall be included only to the extent of the amount of dividends
or distributions actually paid in cash to the referent Person or a
Restricted Subsidiary thereof.
"Consolidated Net Worth" means, with respect to any Person as of
any date:
(i) the consolidated equity of the equity
holders of such Person and its consolidated Restricted Subsidiaries as of
such date; plus
(ii) the respective amounts reported on such
Person's balance sheet as of such date with respect to any series of
preferred Equity Interests (other than Disqualified Stock) that by its
terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any cash received
by such Person upon issuance of such preferred stock; minus
(iii) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible
assets of a going-concern business made within 12 months after the
acquisition of such business) subsequent to the date of the Indenture in
the book value of any asset owned by such Person or a consolidated
Subsidiary of such Person; minus
(iv) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted
Subsidiaries; minus
(v) all unamortized debt discount and
expense and unamortized deferred charges as of such date.
"Consolidated Tangible Net Assets" means, with respect to any
Person, the Consolidated Net Worth of such Person less goodwill and any other
intangible assets shown on the consolidated balance sheet of such Person and
its Restricted Subsidiaries.
"Contingency Event" shall have the meaning set forth in Section
4.19.
"Contingency Fund" shall have the meaning set forth in Section
4.20.
"Corporate Trust Office" means, with respect to the Trustee or any
agent, the principal corporate trust office of such Person.
"Covenant Defeasance" has the meaning set forth in Section 8.1(c).
"Credit Parties" means, collectively, the Issuers and any
Guarantor other than any Subsidiary Guarantor established after the Issue Date,
and any of their respective successors.
"Credit Parties' Fixed Charge Coverage Ratio" means, for any
period, the ratio of (A) the sum of (without duplication) (1) Consolidated Cash
Flow of the Company (excluding the
-7-
<PAGE> 13
Consolidated Cash Flow of USA and International), plus (2) Consolidated Cash
Flow of USA, plus (3) Consolidated Cash Flow of International to (B) the Credit
Parties' Fixed Charges for such period.
"Credit Parties' Fixed Charges" means, for any period, the sum of
(i) the sum of (without duplication) Consolidated Interest Expense of each of
the Credit Parties for such period, plus (ii) the sum of (without duplication)
Consolidated Interest Expense of each of the Credit Parties that was
capitalized during such period, plus (iii) to the extent not included above,
any Consolidated Interest Expense on Indebtedness of another Person that is
guaranteed by any of the Credit Parties or secured by a Lien on assets of any
of the Credit Parties (whether or not such guarantee or Lien is called upon).
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Defeasance" has the meaning set forth in Section 8.1(b).
"Deficiency Amount" has the meaning set forth in Section 4.19.
"Depository" means, with respect to the Notes issuable or issued
in whole or in part in the form of one or more Global Notes, the Depository
Trust Company, for so long as it shall be a clearing agency registered under
the Exchange Act, or such successor as the Company shall designate from time to
time in an Officers' Certificate delivered to the Trustee.
"Disqualified Capital Contribution" means, with respect to any of
the Credit Parties, any contribution to the equity capital of such Person that
(i) when added to all prior contributions to any of the Credit Parties, results
in total contributed capital equal to or less than $160 million, without
duplication; or (ii) in the case of the Company, comprises proceeds of any
transaction other than (x) a contribution to the equity capital of OCC and/or
Teleglobe Mobile or (y) a contribution to the equity capital of the Company
from a party other than OCC and Teleglobe Mobile.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event: (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise; or (ii) is redeemable or is convertible or
exchangeable for Indebtedness at the option of the Holder thereof, in whole or
in part, on or prior to the date on which the Notes are repaid, redeemed or
retired in full.
"Eligible Institution" means a domestic commercial banking
institution that has combined capital and surplus of not less than $500 million
or its equivalent in foreign currency, whose debt is rated "A" or higher
according to S&P or Moody's at the time as of which any investment or rollover
therein is made.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning specified in Section 6.1.
-8-
<PAGE> 14
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act) and the rules and regulations thereunder.
"Exchange Offer" has the meaning set forth in Section 2.2.
"Exchange Offer Registration Statement" has the meaning set forth
in Section 2.2.
"Exchange Note" means any Note issued in exchange for an Original
Note pursuant to the Exchange Offer or the Private Exchange Offer.
"Existing Indebtedness" means Indebtedness of the Company in
existence on the Issue Date, until such amounts are repaid.
"Fair Market Value" means, with respect to any asset, the price
(after taking into account any liabilities relating to such assets) which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that the Fair Market Value of
any such asset or assets shall be determined by the General Partners of the
Company, acting in good faith and by unanimous resolution, and which
determination shall be evidenced by an Officers' Certificate delivered to the
Trustee.
"FCC License" means the FCC authorization granted to OCC on
October 20, 1994 to construct, launch and operate 36 satellites for the purpose
of providing two-way data and messaging communications and position
determination services in the United States.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession and which are in effect on the Issue Date.
"Gateway Maintenance Contract" means the Gateway Maintenance
Contract between the Company and Orbital effective as of August 1, 1996, as the
same may be amended, supplemented or otherwise modified from time to time.
"Global Note" has the meaning set forth in Section 2.1.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"Guarantee" means each of the guarantees of the Guarantors
pursuant to Article X hereof.
"guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
-9-
<PAGE> 15
"Guarantor" means each of USA, International, OCC and Teleglobe
Mobile, and any other Person that guarantees the obligations of the Issuers
under the Notes and this Indenture in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) foreign currency
hedge obligations, and (iii) other agreements or arrangements designed to
protect such Person against fluctuations in interest and foreign currency
rates.
"Holder" means a Person in whose name a Note is registered in the
Note Register.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable to
the extent that any such accrued expense or trade payable is not more than 90
days overdue or is otherwise being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, if and to the extent
any of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person and, in the event such indebtedness is not assumed by,
and is otherwise non-recourse to, such Person, the amount of such indebtedness
shall be deemed to equal the greater of the book value or Fair Market Value of
such asset) and, to the extent not otherwise included, the guarantee by such
Person of any indebtedness of any other Person; provided, however, that amounts
outstanding under the MetLife Note shall not constitute "Indebtedness;" and
provided, further, that "Indebtedness" shall be calculated in all cases without
duplication and after elimination of Intercompany Indebtedness.
"Indebtedness to Cash Flow Ratio" means, with respect to any
Person as of any date of determination, the ratio of:
(i) total Indebtedness of such Person and its
Restricted Subsidiaries as of such date to
(ii) four times Consolidated Cash Flow of such
Person and its Restricted Subsidiaries for the most recently ended fiscal
quarter for which financial statements of such Person are available (the
"Measurement Period");
provided, however, that: (a) in making such computation, the total
Indebtedness of such Person and its Restricted Subsidiaries shall include the
total amount of funds outstanding and available under any credit facilities;
(b) in the event such Person or any of its Restricted Subsidiaries consummates
a material acquisition or sale of assets subsequent to the commencement of the
Measurement Period, then the Indebtedness to Cash Flow Ratio shall be
calculated giving pro forma effect to such material acquisition or sale of
assets as if the same had occurred at the beginning of the Measurement Period;
and (c) in making such calculation for the Credit Parties, total Indebtedness
shall include total Indebtedness of the Credit Parties and their respective
Restricted Subsidiaries and Consolidated Cash Flow shall include only the sum
of (without duplication) (1) Consolidated Cash Flow of the Company
-10-
<PAGE> 16
(excluding the Consolidated Cash Flow of USA and International), plus (2)
Consolidated Cash Flow of USA, plus (3) Consolidated Cash Flow of
International.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the good
faith judgment of the General Partners of the Company (evidenced by a unanimous
resolution of the General Partners of the Company as set forth in an Officers'
Certificate delivered to the Trustee), qualified to perform the task for which
it has been engaged and is disinterested and independent with respect to the
Credit Parties and their Affiliates.
"Initial Deployment Date" has the meaning set forth in Section
4.19.
"Initial Purchasers" means Bear, Stearns & Co. Inc., J.P. Morgan
Securities Inc. and RBC Dominion Securities Corporation.
"Institutional Accredited Investor" shall have the meaning
ascribed to such term under Rule 144A of the Securities Act.
"Insurance Account" has the meaning set forth in Section 4.5(c).
"Insurance Contingency Event" has the meaning set forth in Section
4.5(c).
"Insurance Launch Deficiency Amount" has the meaning set forth in
Section 4.5(c).
"Intercompany Indebtedness" has the meaning set forth in Section
4.12(b).
"Interest Payment Date" means, with respect to any installment of
interest on the Notes, the date specified in such Note as the fixed date on
which such installment of interest is due and payable.
"International" means ORBCOMM International Partners, L.P., a
Delaware limited partnership, or its successors.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of direct
or indirect loans, guarantees, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common
Equity Interests (other than Disqualified Stock) of any Credit Party shall not
be deemed to be an Investment.
"Issue Date" means the date on which the Notes are first
authenticated and delivered under this Indenture.
-11-
<PAGE> 17
"Issuers" means each of ORBCOMM and Capital.
"Joint Venture" means a Person in a Related Business in which any
Credit Party holds 50% or less of the Voting Equity Interests.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" has the meaning set forth in Section 2(e) of
the Registration Rights Agreement dated as of August 7, 1996 among the Issuers,
the Guarantors and the Initial Purchasers, as the same may be amended,
supplemented or otherwise modified from time to time.
"Magellan Agreement" means the Subscriber Communicator
Manufacturing Agreement between the Company and Magellan Corporation dated as
of July 31, 1996, as the same may be amended, supplemented or otherwise
modified from time to time.
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not
more than 270 days after the date of acquisition issued by, or time deposit
of, an Eligible Institution;
(iii) commercial paper maturing not more than
270 days after the date of acquisition issued by a corporation (other than
an Affiliate of the Credit Parties) with a rating, at the time as of which
any investment therein is made, of "A-1" (or higher) according to S&P or
"P-1" (or higher) according to Moody's;
(iv) any banker's acceptances or money market
deposit accounts issued or offered by an Eligible Institution; and
(v) any fund investing exclusively in
investments of the types described in clauses (i) through (iv) above.
"Maturity Date" means August 15, 2004, or such other date
principal of the Notes becomes due and payable under this Indenture.
"MetLife Note" means the Loan and Security Agreement dated
December 22, 1994 between the Company and MetLife Capital Corporation, as the
same may be amended, supplemented or otherwise modified from time to time,
which loan is guaranteed by Orbital.
"Monthly Revenue Participation Interest" means, with respect to
any month and any Note, the product of 5.0% of System Revenue for such month
times a fraction, the numerator of which is the principal amount outstanding on
such Note and the denominator of which is $170,000,000.
-12-
<PAGE> 18
"Moody's" means Moody's Investors Service, Inc. or its successors.
"Net Income" means, with respect to any Person, the net income (or
loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however;
(i) any gain (but not loss), together with
any related provision for taxes on such gain (but not loss), realized in
connection with:
(a) any sale of assets (including,
without limitation, dispositions pursuant to sale and leaseback
transactions); or
(b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and
(ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by any
of the Credit Parties or any of their Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-Cash Consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements and provided that
any such amount not so required to be paid for taxes shall be deemed to
constitute Net Proceeds at the time such amount is not retained for such
purpose), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets (including Equity Interests) that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or asset (including Equity Interests) established in
accordance with GAAP (provided that the amount of any such reserve shall be
deemed to constitute Net Proceeds at the time such reserve shall have been
released or is not otherwise required to be retained for such purpose).
"Non-Recourse Debt" means Indebtedness:
(i) as to which neither any of the Credit
Parties nor any of their Restricted Subsidiaries:
(a) provides credit support of any
kind (including any undertaking, agreement or instrument that
would constitute Indebtedness);
(b) is directly or indirectly liable
(as a guarantor or otherwise); or
(c) constitutes the lender;
(ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse
of time or both) any holder of any other Indebtedness of any of the Credit
-13-
<PAGE> 19
Parties or any of their Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or
assets of any of the Credit Parties or any of their Restricted
Subsidiaries.
"Note Register" has the meaning specified in Section 2.3.
"Notes" means the Exchange Notes and the Original Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OCC" means Orbital Communications Corporation, a Delaware
corporation, or its successors.
"OCC Stock Option Plan" means the Orbital Communications
Corporation 1992 Stock Option Plan, as the same may be amended from time to
time.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer or President and the chief
financial or accounting officer of such Person, or their equivalent.
"Opinion of Counsel" means a written opinion of legal counsel
acceptable to the Trustee, and delivered to the Trustee.
"ORBCOMM" means ORBCOMM Global, L.P., a Delaware limited
partnership, or its successors.
"ORBCOMM System" means ORBCOMM's global digital satellite
communications system of low-earth orbit satellites and certain terrestrial
facilities intended to provide two-way data and messaging communications
services throughout the world.
"Orbital" means Orbital Sciences Corporation, a Delaware
corporation.
"Original Notes" means the Notes initially issued under this
Indenture prior to the issuance of the Exchange Notes.
"Partners' Contingent Commitment" shall mean a commitment by
Orbital and Teleglobe to provide, in the aggregate, to the Company up to the
lesser of (x) $30 million less amounts drawn under the Partners' Insurance
Contingent Commitment or (y) the Deficiency Amount or (z) the amount required
to complete deployment of, and place in commercial service, 20 satellites, in
capital contributions or debt financing expressly subordinated to the Notes (at
then prevailing interest rates, which subordinated debt financing shall not
mature or be subject to acceleration prior to maturity of the Notes and which
shall not provide for cash interest payments prior to maturity of the Notes)
from and after a Contingency Event through the Initial Deployment Date.
-14-
<PAGE> 20
"Partners' Insurance Contingent Commitment" has the meaning set
forth in Section 4.5(c).
"Paying Agent" has the meaning set forth in Section 2.3.
"Permitted Investment" means:
(i) any Investment in any Credit Party or in
any Wholly Owned Restricted Subsidiary of any Credit Party;
(ii) any Investments in cash or Cash
Equivalents;
(iii) Investments by any of the Credit Parties
or any of their Restricted Subsidiaries in a Person if, as a result of such
Investment:
(a) such Person becomes a Restricted
Subsidiary of any Credit Party; or
(b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, any
Credit Party or any Restricted Subsidiary of any Credit Party;
(iv) any Investment made as a result of the
receipt of non-Cash Consideration from an Asset Sale that was made pursuant
to and in compliance with Section 4.15;
(v) any Investment made with Excess Proceeds
remaining after the consummation of an Asset Sale Offer as described in
Section 4.15;
(vi) Investments in any Joint Venture;
provided that at the time any such Investment is made, such Investment will
not cause the sum of (a) the aggregate amount of Investments at any one
time outstanding under this clause (vi) and (b) the book value or Fair
Market Value of all assets, businesses, divisions or other property of all
Subsidiaries that are not Subsidiary Guarantors to exceed the greater of
(x) $5 million or (y) 5% of the System Consolidated Net Worth;
(vii) any Investment made by the Credit Parties
or any of their Restricted Subsidiaries in any Unrestricted Subsidiary
using the proceeds of a substantially concurrent contribution to the equity
capital (other than a Disqualified Capital Contribution) of the Company,
OCC and/or Teleglobe Mobile; and
(viii) any Investment made by the Credit Parties
or any of their Restricted Subsidiaries in a Related Business; provided
that at the time any such Investment is made, such Investment will not
cause the aggregate amount of Investments at any one time outstanding under
this clause (viii) to exceed $5 million.
"Permitted Liens" means:
(i) Liens securing the Notes;
-15-
<PAGE> 21
(ii) Liens in favor of the Credit Parties;
(iii) Liens on property of a Person existing at
the time such Person is merged into or consolidated with any of the Credit
Parties or any of their Restricted Subsidiaries, provided that such Liens
were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with such Credit Party or its Restricted
Subsidiary;
(iv) Liens on property existing at the time of
acquisition thereof by any of the Credit Parties or any of their Restricted
Subsidiaries, provided that such Liens were in existence prior to the
contemplation of such acquisition;
(v) Liens to secure the performance of
statutory obligations, surety, appeal or performance bonds or other
obligations of a like nature or mechanics' or purchase money Liens incurred
in the ordinary course of business;
(vi) Liens existing on the Issue Date;
(vii) Liens on inventory, accounts receivable
or domestic and/or international gateways and related ground systems
securing Indebtedness incurred under clause (vii) or (x) of Section
4.12(b), or securing Permitted Refinancing Indebtedness incurred pursuant
hereto to refinance Indebtedness under clause (vii) or (x) of Section 4.12;
(viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; and
(ix) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries.
"Permitted Refinancing Indebtedness" has the meaning set forth in
Section 4.12(b).
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledge Account" means the account established with the Collateral
Agent pursuant to the terms of the Pledge Agreement for the deposit of the
Pledged Securities.
"Pledge Agreement" means the Pledge Agreement dated as of the date
of this Indenture by and between the Issuers and the Collateral Agent governing
the Pledge Account, as the same may be amended, supplemented or otherwise
modified from time to time.
"Pledged Securities" means the Government Securities purchased by
the Issuers with a portion of the net proceeds from the Offering to be
deposited in the Pledge Account and pledged as security for the Notes.
"Private Exchange Offer" has the meaning set forth in Section 2.2.
-16-
<PAGE> 22
"Private Placement Legend" has the meaning set forth in Section
2.1.
"Proceeds Purchase Date" has the meaning set forth in Section
4.15.
"Procurement Agreement" means the ORBCOMM System Procurement
Agreement dated as of September 12, 1995, between ORBCOMM and Orbital, as the
same may be amended, supplemented or otherwise modified from time to time.
"Purchase Agreement" means the Purchase Agreement, dated as of
August 2, 1996, between the Issuers, the Guarantors and the Initial Purchasers,
as the same may be amended, supplemented or otherwise modified from time to
time.
"QIB" means a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act.
"Record Date" shall have the meaning set forth in the form of the
Note attached hereto as Exhibit A.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning set forth in Section 2.3.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Related Assets" means all assets used in connection with the
design, development, procurement, installation, operation or marketing of
satellite-based messaging and data communications systems and any activities or
assets ancillary thereto.
"Related Business" means any business relating to the design,
procurement, installation and operation of satellite-based mobile messaging and
data communications systems.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payment" has the meaning set forth in Section 4.10.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act.
"Revenue Participation Interest" means, as of any payment date,
Revenue Participation Interest on the Notes accrued through the Accrual Period
last ended (including any Accrual Period that ends on such payment date) and
any Revenue Participation Interest previously accrued and the payment of which
has been permitted to be deferred.
-17-
<PAGE> 23
"Restricted Subsidiary" of a Person means any Subsidiary of such
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"S&P" means Standard & Poor's Ratings Services, or its successors.
"Securities Act" means the Securities Act of 1933, as amended (or
any successor act) and the rules and regulations thereunder.
"Semi-annual Period" means each period that begins on January 1
and ends on the next succeeding June 30 or each period that begins on July 1
and ends on the next succeeding December 31.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Strategic Investor" means, for purposes of clause (iii) of the
definition of "Change of Control," a Person having a total market
capitalization of at least $750 million and a long-term debt rating assigned by
either of Moody's or S&P of investment grade.
"Subsidiary" means, with respect to any Person:
(i) any corporation, association or other
business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person (or a
combination thereof); and
(ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are
such Person or one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Guarantee" means any Guarantee of the Issuers'
obligations under this Indenture and the Notes given by a Subsidiary Guarantor.
"Subsidiary Guarantor" means USA, International and any Restricted
Subsidiary of a Credit Party that has issued a Guarantee of the Issuers'
obligations under this Indenture and the Notes.
"Successor Note" of any particular Note means every Note issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.7 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
-18-
<PAGE> 24
"System Consolidated Net Worth" means the sum of (without
duplication) the Consolidated Net Worth of each of the Credit Parties,
reflecting elimination of intercompany transactions.
"System Revenue" means, for any period, the sum of (without
duplication) the gross revenue of each of the Credit Parties and their
Restricted Subsidiaries for such period, reflecting elimination of intercompany
transactions.
"Tax Sharing Agreement" means the Tax Sharing Agreement between
Orbital and OCC dated as of August 1, 1996, as the same may be amended,
supplemented or otherwise modified from time to time.
"Teleglobe" means Teleglobe Inc., a Canadian corporation, or its
successors.
"Teleglobe Administrative Services Agreement" means the
Administrative Services Agreement between the Company and Teleglobe dated
August 7, 1996, as the same may be amended, supplemented or otherwise modified
from time to time.
"Teleglobe Mobile" means Teleglobe Mobile Partners, a Delaware
general partnership, or its successors.
"TIA" means the Trust Indenture Act of 1939, as amended, as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act is amended after such date, "TIA"
means, to the extent required by such amendment, the Trust Indenture Act of
1939 as so amended.
"Trustee" means Marine Midland Bank until a successor Trustee
shall have been appointed pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" of a Person means any Subsidiary of such
Person that is designated by such Person as an Unrestricted Subsidiary, but
only if and for so long as such Subsidiary:
(i) has no Indebtedness other than
Non-Recourse Debt;
(ii) is not party to any agreement, contract,
arrangement or understanding with any of the Credit Parties or any
Restricted Subsidiary of any of the Credit Parties unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to such Credit Party or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of
any of the Credit Parties;
(iii) is a Person with respect to which neither
any Credit Party nor any of their Restricted Subsidiaries has any direct or
indirect obligation:
(1) to subscribe for additional
Equity Interests; or
(2) to maintain or preserve such
Person's financial condition or to cause such
Person to achieve any specified levels of
operating results;
-19-
<PAGE> 25
(iv) has not guaranteed or otherwise directly
or indirectly provided credit support for any Indebtedness of any of the
Credit Parties or any of their Restricted Subsidiaries (other than
Subsidiary Guarantees under this Indenture); and
(v) in the case of a corporate entity or
limited liability company, has at least one director on its board of
directors and at least one executive officer, in each case who is not a
director or executive officer of any of the Credit Parties or any of their
Restricted Subsidiaries.
A Credit Party may designate any Restricted Subsidiary of such Credit Party to
be an Unrestricted Subsidiary if such designation would not cause a Default
and, at the time of and after giving effect to such designation, the Company
could incur $1.00 of additional Indebtedness under the applicable provisions of
the first paragraph under Section 4.12(a); provided that in no event shall all
or any portion of the assets or properties (other than cash) owned by the
Credit Parties on the Issue Date be transferred to or held by an Unrestricted
Subsidiary of any of the Credit Parties and provided, further, that such
ability to incur $1.00 of additional Indebtedness shall not be required in the
case of any newly created Unrestricted Subsidiary funded solely with an
Investment described in clause (vii) of the definition of "Permitted
Investment." For purposes of making such determination, all outstanding
Investments by the Credit Parties and their Restricted Subsidiaries (except to
the extent repaid in cash and except for Investments described in clause (vii)
of the definition of "Permitted Investment") in the Subsidiary so designated
will be deemed to be Restricted Payments at the time of such designation and
will reduce the amount available for Restricted Payments under the first
paragraph of this covenant. All such outstanding Investments will be deemed to
constitute Investments in an amount equal to the greatest of: (1) the net book
value of such Investments at the time of such designation; (2) the Fair Market
Value of such Investments at the time of such designation; and (3) the original
Fair Market Value of such Investments at the time they were made.
Such designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
"USA" means ORBCOMM USA, L.P., a Delaware limited partnership, or
its successors.
"Voting Equity Interests" means the Equity Interest in a
corporation or other Person with voting power under ordinary circumstances
entitling the holders thereof to elect or appoint the board of directors,
executive committee or other governing body of such corporation or Person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(i) the sum of the products obtained by
multiplying: (a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by
(ii) the then outstanding principal of such
Indebtedness.
-20-
<PAGE> 26
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person and one or more other Wholly Owned
Restricted Subsidiaries of such Person; provided, however, that with respect to
any Credit Party, the term "Wholly Owned Restricted Subsidiary" shall mean any
Restricted Subsidiary of such Credit Party all of the outstanding Capital Stock
or other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned, directly or indirectly, by all of the Credit
Parties, considered as one enterprise.
SECTION 1.2 Incorporation by Reference of Trust Indenture
Act.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
(1) "indenture securities" means the Notes;
(2) "indenture security holder" means a Holder;
(3) "indenture to be qualified" means this Indenture;
(4) "indenture trustee" or "institutional trustee"
means the Trustee; and
(5) "obligor" on the indenture securities means the
Issuers, the Guarantors, or any other obligor on the Notes or the Guarantees.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA and not otherwise defined herein have the meanings assigned to
them therein.
SECTION 1.3 Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and, where appropriate, words of the
masculine gender shall mean and include correlative words of the feminine and
neutral genders and words importing the singular numbers shall mean and include
the plural number, and vice versa;
(2) accounting terms used herein and not otherwise
defined have the meanings ascribed to them in accordance with GAAP;
(3) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
-21-
<PAGE> 27
(4) Articles and Sections referred to by number shall
mean the corresponding Articles and Sections of this Indenture;
(5) any headings preceding the texts of the several
Articles and Sections of this Indenture, and any table of contents or marginal
notes appended to copies hereof, shall be solely for convenience of reference,
and shall not constitute a part of this Indenture, nor shall they affect its
meaning, construction or effect; and
(6) any reference to a statute shall be construed to
include any statutory provision consolidating, amending or replacing the
statute referred to.
ARTICLE II.
THE NOTES
SECTION 2.1 Forms Generally.
The Original Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Exchange Notes and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit B hereto. The Notes may have such notations, legends or
endorsements required by this Indenture, applicable law, securities exchange
rule or depository rule or usage. The Issuers, the Guarantors and the Trustee
shall approve the form of the Notes and any notation, legend or endorsement
thereon. Each Note shall be dated the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibit A and Exhibit B, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Issuers, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global Notes in registered form,
substantially in the form of Exhibit A hereto (the "Global Note"), registered
in the name of the Depository or its nominee, deposited with the Trustee, as
custodian for the Depository, and shall bear the legend set forth in Exhibit A
hereto (the "Private Placement Legend"), duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
SECTION 2.2 Execution and Authentication; Aggregate Principal
Amount; Denominations.
The Notes shall be executed on behalf of the Issuers by the Chief
Executive Officer, President, an Executive Vice President or a Vice President
of the Company and Capital. The signature of any of these officers on the
Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company and/or Capital shall
bind the Issuers, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of such Notes.
-22-
<PAGE> 28
At any time and from time to time after the execution and delivery
of this Indenture, the Issuers may deliver Notes executed by the Issuers to the
Trustee for authentication, together with a request for the authentication and
delivery of such Notes, and the Trustee, in accordance with such request, shall
authenticate and deliver such Notes as provided in this Indenture.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Original Notes for original
issue in the aggregate principal amount not to exceed $170,000,000, and (ii)
Exchange Notes issued, either (x) in an exchange offer (the "Exchange Offer")
for the Original Notes pursuant to a registration statement (the "Exchange
Offer Registration Statement") filed with the Commission from time to time or
(y) in a private exchange offer (the "Private Exchange Offer") pursuant to the
Section 2(a) of the Registration Rights Agreement, for issue only in exchange
for a like principal amount of Original Notes, in each case upon written orders
of the Issuers in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of Notes to be authenticated and the date
on which the Notes are to be authenticated, whether the Notes are to be
Original Notes or Exchange Notes. Except as contemplated by Section 2.7
hereof, the aggregate principal amount of Notes outstanding at any time may not
exceed $170,000,000.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof, subject
to a minimum initial purchase amount of $100,000.
SECTION 2.3 Registrar, Paying Agent and Authenticating Agent.
The Issuers shall maintain an office or agency (which may be the
Trustee) located in the Borough of Manhattan in The City of New York, State of
New York to which (a) Notes may be presented or surrendered for registration of
transfer or for exchange (the "Registrar"), (b) Notes may be presented or
surrendered for payment (the "Paying Agent") and (c) notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served. The
Registrar shall keep a register of the Notes and of their transfer and exchange
(the "Note Register"). The Issuers, upon prior written notice to the Trustee,
may have one or more co-registrars and one or more additional paying agents
reasonably acceptable to the Trustee. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
Neither the Issuers nor any Affiliate of the Issuers may act as Paying Agent.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") with respect to the Notes, which Authenticating Agent
shall be authorized to act on behalf of the Trustee to authenticate the Notes
hereunder. Notes so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Issuers and otherwise comply in all respects with the
eligibility requirements of the Trustee contained in this Indenture.
-23-
<PAGE> 29
The Issuers shall enter into an appropriate agency agreement with
any agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that
relate to such agent. The Issuers shall notify the Trustee, in advance, of the
name and address of any such agent. If the Issuers fail to maintain a
Registrar or Paying Agent, or fail to give the foregoing notice, the Trustee
shall act as such.
The Issuers hereby appoint the Trustee as Registrar and Paying
Agent and agent for service of demands and notices in connection with the
Notes, until such time as the Trustee has resigned or a successor has been
appointed. The Registrar or Paying Agent may resign upon 30 days' notice to
the Company.
SECTION 2.4 Paying Agent to Hold Assets in Trust.
The Company shall require the Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by the Paying Agent for
the payment of principal and premium (if any) of, or interest (including
Revenue Participation Interest, if any) and Liquidated Damages (if any) on, the
Notes (whether such assets have been distributed to it by the Issuers or any
other obligor on the Notes), and the Issuers and the Paying Agent shall notify
the Trustee of any Default by the Issuers (or any other obligor on the Notes)
in making any such payment. The Issuers at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon such distribution and accounting to the Trustee, the Paying
Agent shall have no further liability for such assets.
SECTION 2.5 Persons Deemed Owners.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders in the Note Register and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar, the Issuers shall furnish or
cause the Registrar to furnish to the Trustee as of each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
Prior to due presentment of a Note for registration of transfer,
the Issuers and the Trustee and any agent of the Issuers or the Trustee may
treat the Person in whose name such Note is registered as the owner of such
Note for the purpose of receiving payment of principal and premium (if any) of
and interest (including Revenue Participation Interest, if any) and Liquidated
Damages (if any) on such Note and for all other purposes whatsoever, and none
of the Issuers, the Trustee or any agent of the Issuers or the Trustee shall be
affected by notice to the contrary.
-24-
<PAGE> 30
SECTION 2.6 Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Notes
are presented to the Registrar with a request to register the transfer of such
Notes or to exchange such Notes for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Notes presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registrations of transfer and exchanges, the Issuers shall execute
and the Trustee shall authenticate Notes at the Registrar's request. No
service charge shall be made for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Section 2.10, 3.9, 4.14 or 4.15, in which case the
Issuers shall be responsible for the payment of such taxes).
The Registrar shall not be required to register the transfer of or
exchange of any Note (i) during a period beginning at the opening of business
on a Business Day 15 days before the mailing of a notice of redemption of Notes
and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any such Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
SECTION 2.7 Replacement Notes.
If any mutilated Note is surrendered to the Trustee, the Issuers
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Issuers and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice
to the Issuers or the Trustee that such Note has been acquired by a bona fide
purchaser, the Issuers shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Note under this Section, the Issuers
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuers, whether or not the
-25-
<PAGE> 31
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
every such new Note shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.
SECTION 2.8 Outstanding Notes.
The Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee, except those cancelled by it, those delivered to
it for cancellation and those otherwise described in this Section as not
outstanding. Subject to the provisions of Section 2.9, a Note does not cease
to be outstanding because the Issuers, the Guarantors or any of their
respective Affiliates holds such Note.
If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.7.
SECTION 2.9 Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Issuers, the Guarantors or any of their respective
Affiliates shall be considered as though they are not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes which the Trustee
actually knows are so owned shall be so considered. The Issuers and the
Guarantors shall notify the Trustee, in writing, when any of the Issuers, the
Guarantors or any of their Affiliates repurchases or otherwise acquires Notes
and the aggregate principal amount of such Notes so repurchased or otherwise
acquired.
SECTION 2.10 Temporary Notes.
Pending the preparation of definitive Notes, the Issuers may
execute, and upon written order in the form of an Officers' Certificate the
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Notes in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuers shall cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at any office or agency of the
Issuers designated pursuant to Section 4.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuers
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like tenor and principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects
be entitled to the same rights, benefits and privileges under this Indenture as
definitive Notes.
-26-
<PAGE> 32
SECTION 2.11 Cancellation.
The Issuers may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuers may have acquired in any manner whatsoever. The Registrar and
Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee shall cancel all
Notes surrendered for registration of transfer, exchange, replacement or
cancellation and shall destroy cancelled Notes (subject to the record retention
requirements of the Exchange Act) unless the Company directs the Trustee in
writing that such cancelled Notes shall be returned to them. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Indenture.
SECTION 2.12 Payment of Interest; Defaulted Interest.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Note is registered in the Note Register at the close of
business on the applicable Record Date. With respect to any payment of Revenue
Participation Interest, the Issuers shall deliver to the Trustee, not less than
five (5) Business Days prior to the date on which such Revenue Participation
Interest is payable, and promptly following a written request therefor made by
the Trustee, at any other time, an Officers' Certificate certifying the amount
and the calculations with respect thereto. The Trustee shall be entitled to
rely conclusively on the information set forth in any such Officers'
Certificate and shall have no duty or obligation to recalculate or otherwise
verify the amounts or calculations set forth therein.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest (including
Revenue Participation Interest, if any) accrued and unpaid, and to accrue,
which were carried by such other Note.
If the Issuers default in a payment of interest (including Revenue
Participation Interest, if any) on the Notes, they shall pay the Persons who
are Holders on a subsequent special record date, which date shall be the
fifteenth day next preceding the date fixed by the Issuers for the payment of
defaulted interest, or the next succeeding Business Day if such date is not a
Business Day. At least 15 days before the subsequent special record date, the
Issuers shall mail to each Holder, as of a recent date selected by the Issuers,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP Number.
The Issuers in issuing the Notes shall use a CUSIP number, and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the certificates representing the Notes, and
that reliance may be placed only on the other identification numbers printed on
the certificates representing the Notes.
-27-
<PAGE> 33
SECTION 2.14 Deposit of Moneys.
On each Interest Payment Date and each date on which principal of
the Notes is payable, the Issuers shall, not later than 11:00 a.m., New York
City time, deposit with the Paying Agent in immediately available funds money
sufficient to make any cash payments due on such date in a timely manner which
permits the Paying Agent to remit payment to the Holders on such date.
SECTION 2.15 Book-Entry Provisions for Global Note.
(a) The Global Note initially shall (i) be registered
in the name of the Depository or the nominee of the Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear
legends as set forth in Exhibit C hereto.
Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under
the Global Note, and the Depository may be treated by the Issuers, the Trustee
and any agent of the Issuers or the Trustee as the absolute owner of the Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall (x) prevent the Issuers, the Trustee or any agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or (y) impair, as between the
Depository and its Participants, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of the Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Note may be
transferred or exchanged for certificated Notes in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16. In
addition, certificated Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in the Global Note if (i) the
Depository notifies the Issuers that it is unwilling or unable to continue as
Depository for the Global Note and a successor depositary is not appointed by
the Issuers within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue certificated Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in the Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more certificated
Notes are to be issued) reflect on its books and records the date and a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more certificated Notes of like tenor and amount.
(d) In connection with the transfer of the entire
Global Note to beneficial owners pursuant to paragraph (b), the Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of
certificated Notes of authorized denominations.
(e) Any certificated Note constituting a Restricted
Security delivered in exchange for an interest in the Global Note pursuant to
paragraph (b) or (c) shall, except as otherwise provided
-28-
<PAGE> 34
by paragraphs (a)(i)(x) and (c) of Section 2.16, bear the legend regarding
transfer restrictions applicable to the certificated Notes set forth in Exhibit
A hereto.
(f) The Holder of the Global Note may grant proxies
and otherwise authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 2.16 Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB:
(i) the Registrar shall register the transfer of any
Note constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after three
years from the Issue Date or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB, the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Annex A to the Offering Memorandum used in connection with the
sale of the Notes; and
(ii) if the proposed transferor is an Agent Member
holding a beneficial interest in the Global Note, upon receipt by the
Registrar of (x) the certificate, if any, required by paragraph (i) above
and (y) instructions given in accordance with the Depository's and the
Registrar's procedures;
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding certificated Notes)
a decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuers shall execute and the Trustee shall
authenticate and deliver one or more certificated Notes of like tenor and
amount.
(b) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed transfer of a Note
constituting a Restricted Security to a QIB:
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Issuers and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Note stating, or has
otherwise advised the Issuers and the Registrar in writing, that it is
purchasing the Note for its own account or an account with respect to which
it exercises sole investment discretion and that it and any such account is
a QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Issuers as it has requested pursuant to Rule
144A or has determined not to request such information and that it is aware
that the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A; and
-29-
<PAGE> 35
(ii) if the proposed transferee is an Agent Member,
and the Notes to be transferred consist of Certificated Notes which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the Global Note in an amount equal to the principal amount of the
Certificated Notes to be transferred, and the Trustee shall cancel the
Certificated Notes so transferred.
(c) Private Placement Legend. Upon the registration
of transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private
Placement Legend. Upon the registration of transfer, exchange or replacement
of Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless (i) the circumstance
contemplated by paragraph (a)(i)(x) of this Section 2.16 exists or (ii) there
is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to
the Issuers, the Registrar and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain, for a minimum of two years, copies of
all letters, notices and other written communications received pursuant to
Section 2.15 or this Section 2.16. The Issuers shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
ARTICLE III.
REDEMPTION
SECTION 3.1 Right of Redemption.
(a) Optional Redemption. The Notes will be
redeemable, at the option of the Issuers, in whole or in part at any time or
from time to time, on and after August 15, 2001, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the
twelve-month period commencing on August 15 of the years set forth below, plus,
in each case, accrued and unpaid interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) thereon to the applicable
date of redemption:
-30-
<PAGE> 36
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.000%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.500%
2003 and thereafter . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Sale of Capital Stock.
Notwithstanding the provisions of paragraph (a) above, at any time, or from
time to time, on or prior to August 15, 1999, the Issuers may, at their option,
use the net proceeds of one or more sales of Capital Stock (other than
Disqualified Stock) of OCC, Teleglobe Mobile or the Company to one or more
Persons to redeem the Notes at a redemption price equal to 115.000% of the
principal amount thereof, plus accrued and unpaid interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any) thereon to the
redemption date; provided, however, that (i) not less than $127,500,000
aggregate principal amount of Notes remain outstanding immediately after any
such redemption and (ii) such redemption shall occur within 30 days after the
date of closing of such sale of Capital Stock.
SECTION 3.2 Mandatory Redemption.
The Issuers will not be required to make mandatory redemption or
sinking fund payments with respect to the Notes, except as set forth in
Sections 4.14 and 4.15 hereto.
SECTION 3.3 Applicability of Article.
Redemption of Notes at the election of the Issuers, as permitted
or required by any provision of this Indenture, shall be made in accordance
with such provision and this Article.
SECTION 3.4 Election to Redeem; Notice to Trustee.
The election of the Issuers to redeem any Notes pursuant to this
Article shall be evidenced by an Officers' Certificate of the Issuers. In case
of any redemption at the election of the Issuers of less than all the Notes,
the Issuers shall, at least 60 days prior to the Redemption Date fixed by the
Issuers (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
Notes to be redeemed. In the case of any redemption of Notes prior to the
expiration of any restriction on such redemption provided in the terms of such
Notes or elsewhere in this Indenture, the Issuers shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction.
SECTION 3.5 Notes to Be Redeemed Pro Rata.
If less than all the Notes are to be redeemed in any redemption,
the Notes to be redeemed shall be selected by the Trustee by prorating, as
nearly as may be practicable, the principal amount of Notes to be redeemed or
in such other manner as the Trustee shall deem fair and appropriate. In any
proration pursuant to this Section, the Trustee shall make such adjustments,
reallocations and eliminations as it shall deem proper (and in compliance with
the requirements of the
-31-
<PAGE> 37
principal national securities exchange, if any, on which the Notes are listed)
to the end that the principal amount of Notes so prorated shall be $1,000 or a
multiple thereof, by increasing or decreasing or eliminating the amount which
would be allocable to any Holder on the basis of exact proportion by an amount
not exceeding $1,000. The Trustee in its discretion may determine the
particular Notes (if there are more than one) registered in the name of any
Holder which are to be redeemed, in whole or in part.
The Trustee shall promptly notify the Issuers and each Registrar
(if other than the Trustee) in writing of the Notes selected for redemption
and, in the case of any Notes selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion
of the principal amount of such Notes which has been or is to be redeemed.
SECTION 3.6 Notice of Redemption.
(a) Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date, to each Holder of Notes to be redeemed, at
such Holder's address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, and the amount of accrued
interest (including the method by which Revenue Participation Interest, if
any, will be calculated) and Liquidated Damages (if any) to be paid;
(iii) the paragraph of the Notes and/or section of this
Indenture to which the redemption is being made;
(iv) if less than all the outstanding Notes are to be
redeemed, the identification (and, in the case of partial redemption of any
Notes, the principal amounts) of the particular Notes to be redeemed;
(v) that on the Redemption Date the Redemption Price
will become due and payable upon each such Note to be redeemed and that
interest (including Revenue Participation Interest) thereon will cease to
accrue on and after said date;
(vi) the place or places where such Notes are to be
surrendered for payment of the Redemption Price;
(vii) that in the case that a Note is only redeemed in
part, upon surrender of such Note, the Issuers shall execute and the
Trustee shall authenticate and deliver to the Holder of such Note without
charge a new Note or Notes in an aggregate principal amount equal to the
unredeemed portion of the Note;
-32-
<PAGE> 38
(viii) the aggregate principal amount of Notes being
redeemed; and
(ix) the CUSIP number or numbers of the Notes being
redeemed.
(b) Notice of redemption of Notes to be redeemed at
the election of the Issuers shall be given by the Issuers or, if request is
made to the Trustee no less than 45 days prior to the Redemption Date, by the
Trustee in the name and at the expense of the Issuers.
SECTION 3.7 Deposit of Redemption Price.
On or prior to any Redemption Date, the Issuers shall, by 11:00
a.m., New York City time, deposit with the Trustee or with the Paying Agent an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued and unpaid interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any) with respect to all the Notes which are to be redeemed on that date.
SECTION 3.8 Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Issuers shall default in the payment of the Redemption Price, accrued and
unpaid interest (including Revenue Participation Interest, if any) or
Liquidated Damages (if any), such Notes shall cease to bear interest (including
Revenue Participation Interest). Upon surrender of any such Note for
redemption in accordance with said notice, such Note shall be paid by the
Issuers at the Redemption Price, together with accrued and unpaid interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any) to the Redemption Date.
If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium (if any) shall,
until paid, bear interest (including Revenue Participation Interest) from the
Redemption Date at the rate provided by the Note.
SECTION 3.9 Notes Redeemed in Part.
Any Note that is to be redeemed only in part shall be surrendered
at an office or agency of the Issuers designated for that purpose pursuant to
Section 4.2 (with, if the Issuers or the Trustee so require, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuers and
the Trustee duly executed by, the Holder thereof or its attorney duly
authorized in writing), and the Issuers shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge, a
new Note or Notes of like tenor, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
-33-
<PAGE> 39
Upon surrender of a Note that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Note or Notes equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.1 Payment of Notes.
The Issuers shall pay or cause to be paid the principal and
premium (if any) of, and interest (including Revenue Participation Interest, if
any) and Liquidated Damages (if any) on, the Notes on the dates and in the
manner provided in the Notes and in this Indenture. An installment of
principal and premium (if any) of, or interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) on, the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other
than the Issuers or an Affiliate of the Issuers) holds no later than 11:00
a.m., New York City time on that date U.S. dollars designated for and
sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture. The Trustee
or the Paying Agent, as the case may be, shall return to the Issuers no later
than five days following the date of payment, any money that exceeds such
installment of principal and premium (if any) of, and interest (including
Revenue Participation Interest, if any) and Liquidated Damages (if any) payable
on, the Notes.
The Issuers shall pay, to the extent such payments are lawful,
interest on overdue principal and on overdue installments of interest
(including Revenue Participation Interest, if any) (without regard to any
applicable grace periods) from time to time on demand at the rate borne by the
Notes plus 1% per annum. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this
Indenture, the Issuers may, to the extent they are required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
SECTION 4.2 Maintenance of Office or Agency.
The Issuers shall maintain the office or agency required under
Section 2.3. The Issuers shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 11.2.
The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Issuers
shall give prior written notice to
-34-
<PAGE> 40
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the
Trustee as such office or agency of the Issuers in accordance with Section 2.3.
SECTION 4.3 Corporate or Partnership Existence.
Except as otherwise permitted by Articles IV and V, each Credit
Party shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its corporate or
partnership existence and the corporate or partnership existence of each of its
Subsidiaries in accordance with the respective organizational documents of each
such Credit Party and each such Subsidiary and the material rights (charter and
statutory) and franchises of such Credit Party and each such Subsidiary;
provided, however, that no Credit Party shall be required to preserve, with
respect to itself, any material right or franchise and, with respect to any of
its Subsidiaries, any such existence, material right or franchise, if the Board
of Directors or other applicable governing body of such Credit Party shall
determine in good faith that the preservation thereof is no longer desirable in
the conduct of the business of such Credit Party and its Subsidiaries, taken as
a whole.
SECTION 4.4 Payment of Taxes and Other Claims.
Each Credit Party shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or its properties or any of its Subsidiaries' properties and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, would by law become a Lien upon its properties or any of its
Subsidiaries' properties; provided, however, that no Credit Party shall be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith and by appropriate proceedings properly instituted and
diligently conducted and for which adequate reserves, to the extent required
under GAAP, have been taken or where the failure to effect such payment is not
adverse in any material respect to the Holders.
SECTION 4.5 Maintenance of Properties and Insurance.
(a) Each Credit Party shall, and shall cause each of
its Subsidiaries to, maintain its properties in good working order and
condition (subject to ordinary wear and tear) and make all reasonably necessary
repairs, renewals, replacements, additions and improvements required for it to
actively conduct and carry on its business; provided, however, that nothing in
this Section 4.5 shall prevent any Credit Party or any of its Subsidiaries from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the good faith judgment of the Board of Directors or
other governing body of the Credit Party or the Subsidiary concerned, as the
case may be, desirable in the conduct of its businesses and is not
disadvantageous in any material respect to the Holders.
-35-
<PAGE> 41
(b) Each Credit Party shall maintain insurance
(including appropriate self-insurance) against loss or damage of the kinds
that, in the good faith judgment of such Credit Party, are adequate and
appropriate for the conduct of the business of such Credit Party and its
Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall
be customary, in the good faith judgment of such Credit Party, for companies
similarly situated in the industry (provided that insurance with respect to the
satellites shall be governed by clause (c) below).
(c) In addition to the foregoing, the Issuers shall
maintain in full force and effect: (i) on or prior to the date on which at
least 26 satellites have been launched and tested and, together with the
related ground systems, are reasonably believed by the Company to be ready for
commercial operation as part of the ORBCOMM System, at the time of the launch
of each such satellite, launch insurance in an amount sufficient to provide for
the procurement of a launch vehicle in the event of a launch failure; (ii) at
all times following the date a satellite has been successfully launched and
deployed and is placed in commercial service, in-orbit insurance with respect
to such satellite representing the value of such failed satellite (taking into
account the foregone useful life of such satellite) and the pro rata cost of a
launch vehicle, payable in the event that such satellite ceases to be used for
commercial revenue producing service (provided that such insurance may contain
customary provisions for deductible payments and minimum thresholds for
satellite failure); and (iii) in the event (1) the Company is required to use
four or more of the Company's "ground spare" satellites available under the
Procurement Agreement, or (2) the Company loses four or more satellites within
any plane of eight satellites, or six or more satellites within any two planes
of eight satellites, as a result of a launch failure or in-orbit failure prior
to the placement of satellites into commercial service, for the time periods
specified in clause (i) above, insurance sufficient to provide for the
construction and launch of replacement satellites of equivalent capacity and
functionality payable in the event of a loss of four or more satellites within
any plane of eight satellites, or six or more satellites within any two planes
of eight satellites, as a result of a launch failure or in-orbit failure prior
to placement of such satellites into commercial service.
Notwithstanding the foregoing, the Company shall not be obligated
to obtain launch or in-orbit insurance with respect to the two satellites
operational on the Issue Date and the two satellites with respect to which the
Company has the option to launch on a Taurus launch vehicle or launch insurance
with respect to other launches of up to an aggregate of three additional
satellites on a secondary basis.
The obligation of the Issuers to maintain insurance pursuant to
clause (c) above may be satisfied by any combination of: (i) insurance
commitments obtained from any recognized insurance provider; (ii) insurance
commitments obtained from any entity other than an entity referred to in clause
(i) if the general partners of the Company determine in good faith (evidenced
by a unanimous resolution of the general partners of the Company and set forth
in an Officers' Certificate delivered to the Trustee) that such entity is
credit-worthy and otherwise capable of bearing the financial risk of providing
such insurance and making payments in respect of any claims on a timely basis;
and (iii) unrestricted cash segregated and maintained by the Company in a
segregated account established with an Eligible Institution (the "Insurance
Account") solely for disbursement in accordance with the terms of clause (c)
above ("Cash Insurance"), and to be held in trust for the sole and express
benefit of the Holders.
-36-
<PAGE> 42
Within 30 days following any date on which the Issuers are
required to obtain insurance pursuant hereto, the Company will deliver to the
Trustee an insurance certificate certifying the amount of insurance then
carried, and in full force and effect, and an Officers' Certificate stating
that such insurance, together with any other insurance or Cash Insurance
maintained by the Issuers, complies with the provisions hereof. In addition,
the Issuers will cause to be delivered to the Trustee within 30 days following
January 1 of each year, commencing January 1, 1997, an insurance certificate
setting forth the amount of insurance then carried, which insurance certificate
shall entitle the Trustee to: (i) notice of any claim under any such insurance
policy; and (ii) at least 30 days' notice from the provider of such insurance
prior to the cancellation of any such insurance.
In the event that the Issuers maintain any Cash Insurance in
satisfaction of any part of their obligation to maintain insurance pursuant to
this covenant, the Issuers shall deliver, in lieu of any insurance certificate
otherwise required by this covenant, an Officers' Certificate to the Trustee
certifying the amount of such Cash Insurance.
In the event that the Issuers receive any proceeds of any
insurance that they are required to maintain pursuant to this covenant, the
Issuers shall promptly deposit such proceeds into an escrow account established
with an Eligible Institution for such purpose. If the Issuers maintain any
Cash Insurance in satisfaction of any part of their obligation to maintain
insurance pursuant to this covenant, the Issuers shall transfer the cash
maintained in the Insurance Account to such escrow account upon the occurrence
of the event (e.g., a launch failure) that would have entitled the Issuers to
the payment of insurance had the Issuers purchased insurance from a recognized
insurance provider. The Company may use monies on deposit in such escrow
account for the design, development, construction, procurement, launch and
insurance of replacement satellites if: (i) the Company delivers to the Trustee
a certificate of the Company's President certifying that such replacement
satellites are of comparable or superior technological capability as compared
with the satellites being replaced; and (ii) within 30 days following the
receipt of such insurance proceeds, the Company delivers to the Trustee an
Officers' Certificate certifying that (A) such replacement satellites are
scheduled to be launched within 18 months following delivery from the escrow
account of such insurance proceeds; and (B) the Company will have sufficient
funds to service the Company's projected debt service requirements until the
scheduled launch of such replacement satellite and to develop, construct,
launch and insure such replacement satellite.
In the event (an "Insurance Contingency Event") that (i) four or
more satellites within any plane of eight satellites, or six or more satellites
within any two planes of satellites, suffer an in-orbit failure prior to such
satellites being placed in commercial service, and, as a result thereof, the
Company is required to launch its ground spare satellites; and (ii) there are
not sufficient insurance proceeds to procure a launch vehicle for the launch of
such ground spare satellites (the amount of any such insufficiency being
referred to as the "Insurance Launch Deficiency Amount"), then the Company
shall be required to draw-down on the Partners' Insurance Contingent Commitment
(as defined below) prior to any further borrowings under any Bank Credit
Facility if, but only to the extent that, the Company's existing levels of cash
and cash equivalents are less than $15 million at any time after the Insurance
Contingency Event through the date the Company has 26 satellites in commercial
operation (the "Full Deployment Date"). As used herein, "Partners' Insurance
Contingent Commitment" shall mean a commitment by Teleglobe and Orbital, each
dated August 7, 1996, to provide, in the aggregate, up to the lesser of (x) $15
million less any amounts drawn under the Partners' Insurance Contingent
Commitment or (y) the Insurance Launch Deficiency Amount in capital
contributions or debt financing expressly subordinated to the Notes (at then
prevailing interest rates, which subordinated debt financing shall not mature
or be subject to acceleration prior to
-37-
<PAGE> 43
maturity of the Notes and which shall not provide for cash interest payments
prior to maturity of the Notes) from and after an Insurance Contingency Event
through the Full Deployment Date. The Company shall maintain the Partners'
Insurance Contingent Commitment in full force and effect from the Issue Date
through the Full Deployment Date (and the Partners' Insurance Contingent
Commitments shall thereafter expire) and the Company shall enforce all
obligations under such Partners' Insurance Contingent Commitment in accordance
with their terms.
Following the Full Deployment Date, Teleglobe and Orbital shall be
permitted to receive a distribution equal to the unused portion of any amounts
drawn under the Partners' Insurance Contingent Commitment.
SECTION 4.6 Compliance Certificate; Notice of Default.
(a) Each Credit Party shall deliver to the Trustee,
within 15 days after the end of each of the Company's fiscal quarters, an
Officers' Certificate stating that a review of its activities during the
preceding fiscal quarter has been made under the supervision of the signing
officers with a view to determining whether it has kept, observed, performed
and fulfilled its obligations under this Indenture and further stating, as to
each such officer signing such certificate, that to the best of such officer's
knowledge the Credit Party during such preceding fiscal quarter has kept,
observed, performed and fulfilled each and every such covenant and no Default
or Event of Default occurred during such quarter and that to each officer's
knowledge at the date of such certificate there is no Default or Event of
Default that has occurred and is continuing or, if such signers do know of such
Default or Event of Default, the certificate shall describe the Default or
Event of Default and its status with particularity.
(b) The annual financial statements delivered
pursuant to Section 4.8 shall be accompanied by a written report of the
Company's independent accountants (who shall be a firm of established national
reputation) that in conducting their audit of such financial statements nothing
has come to their attention that would lead them to believe that the Company
has violated any provisions of Article IV, V or VI of this Indenture insofar as
they relate to accounting matters or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) If any Default or Event of Default has occurred
and is continuing or if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 11.2 hereof,
by registered or certified mail or by telegram or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such event, notice or other action within five Business Days of its
becoming aware of such occurrence.
SECTION 4.7 Compliance with Laws.
Each Credit Party shall, and shall cause each of its Subsidiaries
to, comply with all applicable statutes, rules, regulations and orders of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the conduct of its
businesses and
-38-
<PAGE> 44
the ownership of its properties, except for such noncompliances as not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of such Credit Party and its Subsidiaries,
taken as a whole.
SECTION 4.8 Reports.
(a) The Issuers shall furnish to the Holders and the
Trustee, whether or not required by the rules and regulations of the
Commission, (i) within 45 days following the end of each fiscal quarter and 90
days following the end of each fiscal year, respectively, all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Issuers were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition and
results of operations of the Issuers and their Restricted Subsidiaries and,
with respect to the annual information only, a report thereon by the Issuers'
independent certified public accountants, and (ii) all information that would
be required to be filed with the Commission on Form 8-K if the Issuers were
required to file such reports promptly upon the occurrence of any event which
leads to such requirement within the time requirements imposed by the
Commission.
In addition, together with the information provided in clauses (i)
and (ii) above, the Issuers will provide supplemental financial information to
the extent permitted by the Commission in the Management's Discussion and
Analysis of Financial Condition and Results of Operations section of such
reports or other section of such reports as appropriate consisting of revenue
(allocated between domestic and international operations), expense, earnings
before interest and taxes, net income, capital expenditures, cash,
Indebtedness, depreciation and amortization and subscriber data for the
Company, USA and International and reflecting elimination of intercompany
transactions. In the event the Commission does not permit such supplemental
financial information to be included in such reports, then the Issuers will
supply such information supplementally to the Holders, unless providing such
information supplementally would, in the reasonable judgment of counsel to the
Company, violate applicable laws, rules or regulations of the Commission.
(b) The Issuers will furnish to the Holders and the
Trustee all information that OCC, Teleglobe Mobile, USA and International would
be required to file with the Commission if the Issuers were required to file
with the Commission the forms and reports specified in the clauses (a)(i) and
(a)(ii) above.
(c) Whether or not required by the rules and
regulations of the Commission but only if permitted by the Commission, the
Issuers and, to the extent set forth in the clause (b) above, OCC, Teleglobe
Mobile, USA and International, will file a copy of all such information and
reports with the Commission for public availability and make such information
available to securities analysts and prospective investors upon request.
(d) The Issuers, OCC, Teleglobe Mobile, USA and
International will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(e) Upon qualification of this Indenture under the
TIA, the Credit Parties shall also comply with the provisions of TIA 314(a).
-39-
<PAGE> 45
SECTION 4.9 Waiver of Stay, Extension or Usury Laws.
The Issuers covenant (to the extent that they may lawfully do so)
that they will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Issuers from paying
all or any portion of the principal or premium (if any) of, or interest
(including Revenue Participation Interest (if any) or Liquidated Damages (if
any) on, the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that they may lawfully do so) the Issuers
hereby expressly waive all benefit or advantage of any such law, and covenant
that they will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.10 Limitation on Restricted Payments.
(a) The Credit Parties shall not, and shall not cause
or permit any of their Restricted Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on account of the Equity
Interests of any Credit Party (including, without limitation, any payment in
connection with any merger or consolidation involving the Credit Parties or any
of their Restricted Subsidiaries), other than dividends or distributions
payable (a) in Equity Interests (other than Disqualified Stock) of the Credit
Parties or any of their Restricted Subsidiaries or (b) to any Credit Party or
to any Restricted Subsidiary of a Credit Party, (ii) purchase, redeem, defease,
retire or otherwise acquire or return for value any Equity Interests of any
Credit Party, other than such Equity Interests owned by a Credit Party or any
Wholly Owned Restricted Subsidiary of a Credit Party, (iii) make any principal
payment on (including at maturity), or purchase, defease, redeem, or otherwise
acquire or retire for value, any Indebtedness that is subordinate (whether
pursuant to its terms, by operation of law, structurally or otherwise) to the
Notes or (iv) make any Restricted Investment (each of the foregoing actions set
forth in clauses (i) through (iv) above being referred to as a "Restricted
Payment"), unless, at the time of and after giving effect to such Restricted
Payment (a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (b) the Issuers would, at
the time of such Restricted Payment and after giving pro forma effect thereto
as if such Restricted Payment had been made at the beginning of the immediately
preceding fiscal quarter, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Indebtedness to Cash Flow Ratio test
set forth in Section 4.12; and (c) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Credit Parties and their
Restricted Subsidiaries after the Issue Date (excluding Restricted Payments
permitted by clauses (iii) through (v) of the next succeeding paragraph), is
less than the sum of: (1) the sum of (without duplication) 50% of the
Consolidated Net Income of each of the Credit Parties after elimination of any
intercompany items and in each case for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing after the
Issue Date to the end of the Company's most recently ended fiscal quarter for
which financial statements are available at the time of such Restricted Payment
(or, if such aggregate Consolidated Net Income for such period is a deficit,
less 100% of such deficit); plus (2) 100% of the aggregate net cash proceeds
received by the Credit Parties from the issue or sale since the Issue Date of
Equity Interests of any Credit Party or of debt securities of any Credit Party
that have been converted into such Equity Interests (other than (A) Equity
Interests (or convertible debt securities) sold to a Subsidiary of any Credit
Party, (B) Disqualified Stock or debt securities that have been converted into
Disqualified Stock, (C) Disqualified Capital Contributions and (D) equity
capital contributions described in clause (vii) of the
-40-
<PAGE> 46
definition of "Permitted Investment"); plus (3) to the extent that any
Restricted Investment that was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
(b) Notwithstanding the foregoing, the provisions set
forth in paragraph (a) above shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of any Credit Party in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Subsidiary of
any Credit Party) of other Equity Interests of any Credit Party (other than any
Disqualified Stock and Disqualified Capital Contributions); provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause (2)
of the paragraph (a) above; (iii) the repayment, defeasance, redemption or
repurchase of Intercompany Indebtedness or Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Subsidiary of any Credit Party)
of Equity Interests of any Credit Party (other than Disqualified Stock and
Disqualified Capital Contributions); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase, retirement
or other acquisition shall be excluded from clause (2) of paragraph (a) above;
(iv) the payment of cash dividends on preferred partnership interests of any
Credit Party that is a partnership if, at the time such preferred partnership
interests were issued, such Credit Party delivered to the Trustee an Officers'
Certificate certifying that (a) the aggregate liquidation preference of the
preferred partnership interest so issued does not exceed the aggregate amount
of Indebtedness that the Company is then permitted to incur pursuant to clauses
(vii) and (x) of the exceptions to the covenants set forth in Section 4.12 and
(b) the Company is electing to reduce permanently the amount of Indebtedness
that any Person is permitted to incur pursuant to such clauses (vii) and (x) by
the amount of such aggregate liquidation preference; (v) the purchase,
redemption or retirement by OCC of shares of its common stock held by an
employee or former employee of one of the Credit Parties or their Subsidiaries
or Orbital issued under the OCC Stock Option Plan pursuant to the terms of such
OCC Stock Option Plan; provided that (1) the aggregate number of shares of
common stock purchased, redeemed, or retired from and after the Issue Date does
not exceed 900,000 shares, and (2) the amount of any such payments in any
fiscal year does not exceed $1,000,000; and provided further, that the
limitations set forth in clauses (1) and (2) of the foregoing proviso do not
apply to the purchase, redemption or retirement of shares of common stock with
funds or other property (including common stock of Orbital) contributed by
partners of OCC, Teleglobe Mobile or the Company (other than Disqualified
Capital Contributions) or amounts paid by any of the Credit Parties for which
any of the Credit Parties receives concurrent reimbursement from any other
person (other than the Credit Parties or their Subsidiaries); (vi) payments
and/or distributions (1) by OCC to its shareholders pursuant to the Tax Sharing
Agreement and (2) by Teleglobe Mobile to its partners to the extent necessary
to pay income tax liabilities of such partners (determined on a hypothetical
basis using the highest marginal income tax rate applicable to such partners at
the time of such payment) arising from income of Teleglobe Mobile allocable to
such partners and attributable to Teleglobe Mobile's investment in the Company,
but only to the extent Teleglobe Mobile is not subject to income tax on such
income; and (vii) distributions made to Orbital and Teleglobe of unused
portions of any amount drawn under the Partners' Insurance Contingent
Commitment (as described in Section 4.5) and the Partners' Contingent
Commitment (as described in Section 4.19).
-41-
<PAGE> 47
The amount of all Restricted Payments, if not made in cash, shall
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
proposed to be transferred by the Credit Party or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. Not later than the
date of making any Restricted Payment, the Issuers shall deliver to the Trustee
an Officers' Certificate stating that such Restricted Payment complies with
this Indenture and setting forth the basis upon which the required calculations
were computed, which calculations may be based upon the latest available
internal quarterly financial statements of ORBCOMM, USA and International.
SECTION 4.11 Limitation on Transactions with Affiliates.
(a) The Credit Parties shall not, and shall not
permit any of their Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of their properties or assets to, or purchase any
property or assets from, or enter into or make any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless: (i) such
Affiliate Transaction is on terms that are no less favorable to the Credit
Party or such Restricted Subsidiary than those that would have been obtained in
a comparable transaction by the Credit Party or such Restricted Subsidiary with
an unrelated Person; (ii) such Credit Party delivers to the Trustee: (A) with
respect to any Affiliate Transaction involving aggregate consideration in
excess of $1 million, an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above; and (B) with respect to any
Affiliate Transaction involving aggregate consideration in excess of $5
million, an opinion as to the fairness of such Affiliate Transaction to the
Credit Party or Restricted Subsidiary involved in such Affiliate Transaction
from a financial point of view issued by an Independent Financial Advisor or,
with respect to communications-related matters, a recognized expert in the
communications industry.
(b) The restrictions set forth in paragraph (a) above
shall not apply to: (i) any employment agreement, stock option or stock
purchase agreement (including the OCC Stock Option Plan) entered into by any
Credit Party or any of their Restricted Subsidiaries with any of their
respective employees in the ordinary course of business; (ii) transactions
between or among the Credit Parties and/or their Wholly Owned Restricted
Subsidiaries; (iii) Restricted Payments permitted by clauses (i), (ii), (iv),
(v), (vi) and (vii) of Section 4.10(b) and Permitted Investments of a type
referred to in clauses (i), (iii), (vi) and (vii) of the definition of
Permitted Investments; (iv) the sale of common Equity Interests (other than
Disqualified Stock) of any Credit Party for cash to Affiliates of the Credit
Parties; (v) transactions pursuant to agreements entered into with resellers of
ORBCOMM's products and services, manufacturers of subscriber communicators and
international licensees on terms substantially the same as ORBCOMM's standard
agreements entered into with such parties in the ordinary course of business,
and transactions pursuant to a service license agreement for Malaysia or a
region including Malaysia with Technology Resources Industries Bhd ("TRI") or
any Person in which TRI holds an interest, provided that such agreement is
approved by the unanimous consent of the general partners of ORBCOMM; (vi)
transactions pursuant to the Procurement Agreement, the Administrative Services
Agreement, the Canada Service License Agreement, the Teleglobe Administrative
Services Agreement, the Magellan Agreement and the Gateway Maintenance
Contract, in each case as in effect on the Issue Date, including the exercise
of any option specified in Section 2.2, 2.6, 2.8, 2.9 or 2.10 of the
Procurement Agreement (including entering into time and material agreements
thereunder pursuant to the terms of the Procurement Agreement) and the exercise
of any option or right under the Gateway Maintenance Contract and amendments,
supplements or other modifications to the Procurement Agreement or the Gateway
Maintenance Contract required to
-42-
<PAGE> 48
effectuate the exercise of such option or rights; (vii) amendments, supplements
or other modifications effecting design or other technical specifications
changes to the Procurement Agreement that do not involve the payment of cash by
any of the Credit Parties or any of their Restricted Subsidiaries in connection
therewith; provided that any such amendment, supplement or modification shall
have been evidenced by the unanimous consent of all the general partners of the
Company; and (viii) the sale of securities of any of the Credit Parties for
cash to Affiliates of such Credit Parties; provided that: (A) an amount of such
securities at least equal to the amount sold to such Affiliates have been or
are being sold substantially simultaneously to Persons that are not Affiliates
of the Credit Parties; (B) the price per security paid by such Affiliates is no
less than the price paid by such non-Affiliates; and (C) none of the Credit
Parties shall have entered into any other arrangement with such non-Affiliates
to induce such non-Affiliates to purchase such securities; and (ix) the
procurement of a launch vehicle from an Affiliate of the Company, if required
to launch the "ground spare" or replacement satellites, provided such
procurement is on terms substantially similar to those contained in the
Procurement Agreement.
SECTION 4.12 Limitation on Incurrence of Additional
Indebtedness or Issuance of
Restricted Subsidiary Disqualified Stock.
(a) The Credit Parties shall not, and shall not
permit any of their Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) or any Disqualified Stock of any
Restricted Subsidiary; provided, however, that the Issuers, USA or
International or any of their Restricted Subsidiaries may incur Indebtedness
(including Acquired Debt) if, after giving pro forma effect to the incurrence
of such Indebtedness and the use of proceeds thereof, the aggregate
Indebtedness to Cash Flow Ratio of the Credit Parties does not exceed 4.0 to 1.
For purposes of the foregoing, the total amount of funds available under any
Bank Credit Facility will be deemed to have been incurred at the time that the
Company entered into the instruments or agreements providing therefor.
(b) The restrictions set forth in clause (a) above
shall not apply to: (i) the incurrence by the Issuers of Indebtedness
represented by the Notes and this Indenture or the incurrence by the Guarantors
of Indebtedness represented by the Guarantees; (ii) Existing Indebtedness;
(iii) Indebtedness under (A) Hedging Obligations, provided that (1) the
notional principal amount of any interest rate protection agreement does not
significantly exceed the principal amount of the Indebtedness to which such
interest rate protection agreement relates and (2) any agreements related to
fluctuations in currency rates do not increase the outstanding Indebtedness
other than as result of fluctuations in foreign currency exchange rates, and
(B) performance, surety and workers' compensation bonds or other obligations of
a like nature incurred in the ordinary course of business; (iv) the incurrence
by any Unrestricted Subsidiary of the Credit Parties of Non-Recourse Debt;
provided that if any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary such event shall be deemed to constitute an incurrence
of Indebtedness by a Restricted Subsidiary; (v) Indebtedness of any of the
Credit Parties or of any Restricted Subsidiary of any of the Credit Parties
owed to and held by any of the Credit Parties or any of their Wholly Owned
Restricted Subsidiaries or a Guarantor's obligations under a guarantee thereof,
as the case may be (the Indebtedness incurred pursuant to this clause (v) being
hereafter referred to as "Intercompany Indebtedness"); provided that an
incurrence of Indebtedness shall be deemed to have occurred upon (A) any sale
or other disposition of Intercompany Indebtedness to a Person other than the
Credit Parties or any of their Restricted Subsidiaries, (B) any sale or other
disposition of Equity Interests of
-43-
<PAGE> 49
any of the Credit Parties' Restricted Subsidiaries which holds Intercompany
Indebtedness such that such Restricted Subsidiary ceases to be a Restricted
Subsidiary after such sale or other disposition or (C) designation of a
Restricted Subsidiary as an Unrestricted Subsidiary; (vi) Non-Recourse Debt to
finance purchase money obligations; (vii) the incurrence by any of the Issuers,
USA or International or any of their Restricted Subsidiaries (or by OCC or
Teleglobe Mobile as a guarantor of such Indebtedness) of Indebtedness under a
Bank Credit Facility, provided that the aggregate principal amount at any time
outstanding under this clause (vii) does not exceed $35 million, less the
aggregate liquidation preference of any preferred partnership interests issued
in reliance on clause (iv) of the Section 4.10(b) and less the aggregate
principal amount of Indebtedness under this clause (vii) which is refinanced
under clause (viii) below; (viii) Indebtedness of any of the Issuers, USA or
International or any of their Restricted Subsidiaries ("Permitted Refinancing
Indebtedness") incurred to refinance, replace or refund Indebtedness
("Refinanced Indebtedness") incurred pursuant to the Indebtedness to Cash Flow
Ratio test set forth in the first paragraph of this covenant or pursuant to
clause (i), (ii), (vii) or (x) of this Section 4.12(b); provided that: (A) the
aggregate principal amount of such Permitted Refinancing Indebtedness does not
exceed the aggregate principal amount of the Refinanced Indebtedness (including
accrued and unpaid interest thereon); (B) such Permitted Refinancing
Indebtedness shall have a final maturity equal to or later than, and a Weighted
Average Life to Maturity equal to or greater than, the final maturity and
Weighted Average Life to Maturity of the Refinanced Indebtedness, respectively;
(C) such Permitted Refinancing Indebtedness shall rank no higher relative to
the Notes than the Refinanced Indebtedness and in no event may any Indebtedness
of any of the Issuers, USA or International or any of their Restricted
Subsidiaries be refinanced with Indebtedness of any Restricted Subsidiary under
this clause (viii) (except to the extent that any such Restricted Subsidiary
was, prior to such refinancing, a guarantor of such Refinanced Indebtedness);
and (D) in no event shall ORBCOMM incur any Indebtedness to refinance, replace
or refund the MetLife Note unless the Liens securing such MetLife Note are
released in full; (ix) the incurrence by any of the Issuers, USA or
International or any of their Restricted Subsidiaries of Capital Lease
Obligations in an aggregate amount not to exceed $5 million at any one time
outstanding; (x) the incurrence by any of the Issuers, USA or International or
any of their Restricted Subsidiaries of Indebtedness to finance the
acquisition, construction or development, either alone or together with third
Persons, of domestic and/or international gateways, related ground systems and
associated costs and expenses in an aggregate amount not to exceed $10 million
at any one time outstanding for all such Persons less the aggregate liquidation
preference of any preferred partnership interests issued in reliance on clause
(iv) of Section 4.10(b) and less the aggregate amount of Indebtedness under
this clause (x) which is refinanced under clause (viii) above; (xi) the
incurrence by OCC and/or Teleglobe Mobile of Indebtedness in an aggregate
amount (for OCC and Teleglobe Mobile, taken together as a whole) at any one
time outstanding not to exceed $10 million; provided that such Indebtedness
could then otherwise have been incurred by the Issuers, USA or International
under the Indebtedness to Cash Flow Ratio test set forth under the first
paragraph of this covenant; and (xii) the incurrence of Indebtedness under the
Partners' Insurance Contingent Commitment pursuant to Section 4.5. and the
Partners' Contingent Commitment pursuant to Section 4.19.
SECTION 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
(a) The Credit Parties shall not, and shall not
permit any of their Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to: (i) pay dividends
or make any other distributions to any Credit Party or any of their Restricted
Subsidiaries on its Capital
-44-
<PAGE> 50
Stock or with respect to any other interest or participation in, or measured
by, its profits; (ii) pay any Indebtedness owed to any Credit Party or any of
their Restricted Subsidiaries; (iii) make loans or advances to any Credit Party
or any of their Restricted Subsidiaries; or (iv) transfer any of its properties
or assets to any Credit Party or any of their Restricted Subsidiaries.
(b) The restrictions set forth in clause (a) above
shall not apply to encumbrances or restrictions existing under or by reason of:
(i) this Indenture, the Pledge Agreement, the Notes and the Guarantees; (ii)
Existing Indebtedness; (iii) applicable law; (iv) any instrument governing
Indebtedness or Capital Stock of a Person acquired by any of the Credit Parties
or any of their Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired;
(v) customary non-assignment provisions in leases or other agreements entered
into in the ordinary course of business; (vi) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions
of the nature described in clause (a)(iv) above on the property so acquired;
(vii) Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Refinanced Indebtedness; (viii) any instrument governing Indebtedness of a
Subsidiary Guarantor, provided such Indebtedness is incurred in accordance with
this Indenture; or (ix) in the case of clauses (i), (ii), (iv), (v), (vi),
(vii) and (viii) above, any amendments, modifications, restatements, renewals,
increases, supplements, modifications, restatements or refinancing thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, modifications, restatements or refinancings are not
materially more restrictive with respect to such dividend and other payment
restrictions than those contained in such instruments as in effect on the date
of their incurrence.
SECTION 4.14 Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder shall have a right to require the Issuers to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest (including Revenue Participation Interest, if
any) and Liquidated Damages (if any) thereon to the date of purchase (the
"Change of Control Payment").
(b) Within 10 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), the Issuers shall
send, by first class mail, a notice to each Holder, with a copy to the Trustee,
which notice shall govern the terms of the Change of Control Offer. The notice
to the Holders shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Change of Control Offer. Such
notice shall state:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered and not withdrawn
shall be accepted for payment;
(2) the purchase price (including the amount of
accrued interest (including the method by which Revenue Participation
Interest, if any, will be calculated)) and Liquidated Damages (if any) and
the purchase date (which shall be no earlier than 30 days nor later than
-45-
<PAGE> 51
45 days from the date such notice is mailed, other than as may be required
by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to
accrue interest (including Revenue Participation Interest);
(4) that, unless the Issuers default in making
payment therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest (including Revenue
Participation Interest) after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased
pursuant to a Change of Control Offer will be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified
in the notice prior to the close of business on the third Business Day
prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five Business Days
prior to the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that
such Holder is withdrawing such Holder's election to have such Notes
purchased;
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal to the
unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in an original principal amount
of $1,000 or integral multiples thereof; and
(8) the circumstances and relevant facts regarding
such Change of Control.
On or before the Change of Control Payment Date, the Issuers shall
to the extent lawful (i) accept for payment all Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent in U.S. dollars, an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee, Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Issuers. The Paying Agent shall
promptly mail to the Holders of Notes so accepted the Change of Control Payment
for such Notes and the Trustee shall promptly authenticate and mail (or cause
to be transferred by book entry) to such Holders new Notes equal in principal
amount to any unpurchased portion of the Notes surrendered; provided that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Any Notes not so accepted shall be promptly mailed by the Issuers to
the Holder thereof. For purposes of this Section 4.14, the Trustee shall act
as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to a
Change of Control Offer shall be returned by the Trustee to the Issuers.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this
-46-
<PAGE> 52
Section 4.14, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.14 by virtue thereof.
The Issuers shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) The foregoing provisions above shall not apply if
a third party makes the Change of Control Offer in the manner, at the time and
otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.15 Limitation on Asset Sales.
(a) The Credit Parties shall not, and shall not
permit any of their Restricted Subsidiaries to, engage in an Asset Sale unless
(i) the Credit Party or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets sold or otherwise disposed of; and (ii) the
aggregate Fair Market Value of all non-Cash Consideration received therefor by
such Credit Party or Restricted Subsidiary, as the case may be, when aggregated
with the Fair Market Value of all other non-Cash Consideration received by the
Credit Parties and their respective Restricted Subsidiaries from all other
Asset Sales since the Issue Date that has not yet been converted into cash or
Cash Equivalents (in either case, in U.S. dollars or freely convertible into
U.S. dollars), does not exceed the sum of (without duplication) 5% of the
Consolidated Tangible Net Assets of all of the Credit Parties at the time of
such Asset Sale; provided, however, that any notes or similar obligations
received by any of the Credit Parties or such Restricted Subsidiaries from such
transferees that are immediately converted by the Credit Parties or such
Restricted Subsidiaries into cash shall be deemed to be cash (to the extent of
the net cash received) for purposes of this clause (a).
Within 270 days after the receipt of any Net Proceeds, the Issuers
may apply such Net Proceeds to: (i) repay, and thereby permanently reduce the
commitments or amounts available to be reborrowed under the Bank Credit
Facility pursuant to clause (vii) of Section 4.12 or to repay the Notes or the
MetLife Note; or (ii) an investment in Related Assets or a Related Business.
Pending the final application of any such Net Proceeds, the Issuers may
temporarily invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds that are not applied or invested as provided
in the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate cumulative amount of Excess Proceeds exceeds $5
million (the "Asset Sale Offer Trigger Date"), the Issuers shall be required to
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase on a
date not less than 30 nor more than 45 days following the Asset Sale Offer
Trigger Date the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds (and not solely the amount in excess of $5 million), at an
offer price in cash in an amount equal to 100% of the principal amount thereof,
plus accrued and unpaid interest (including Revenue Participation Interest, if
any) and Liquidated Damages (if any) thereon to the date of purchase, in
accordance with the procedures set forth in clause (b). To the extent that the
offer price of the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Issuers may use any remaining
Excess Proceeds for general business purposes. If the offer price of the
aggregate amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee will select the Notes to be purchased on a pro
rata basis.
-47-
<PAGE> 53
Upon completion of such offer to purchase, the amount of Excess Proceeds will
be reset at zero. The Asset Sale Offer shall remain open for a period of 20
Business Days or such longer period as may be required by law.
(b) Each notice of an Asset Sale Offer pursuant to
this Section 4.15 shall be mailed or caused to be mailed, by first class mail,
by the Company not more than 25 days after the Asset Sale Offer Trigger Date to
all Holders at their last registered addresses as of a date within 15 days of
the mailing of such notice, with a copy to the Trustee. The notice shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer and shall state the following
terms:
(1) that the Asset Sale Offer is being made pursuant
to Section 4.15 and that all Notes tendered will be accepted for payment;
provided, however, that if the aggregate principal amount of Notes tendered
in an Asset Sale Offer plus accrued interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any) at the
expiration of such offer exceeds the aggregate amount of the Asset Sale
Offer, the Trustee shall select the Notes to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the Trustee so
that only Notes in denominations of $1,000 or multiples thereof shall be
purchased);
(2) the purchase price (including the amount of
accrued interest (including the method by which Revenue Participation
Interest, if any, will be calculated)) and the purchase date (which shall
be 20 Business Days from the date of mailing of notice of such Asset Sale
Offer, or such longer period as required by law) (the "Proceeds Purchase
Date");
(3) that any Note not tendered will continue to
accrue interest (including Revenue Participation Interest);
(4) that, unless the Issuers default in making
payment therefor, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest (including Revenue Participation
Interest) after the Proceeds Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the third Business Day prior to
the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than five Business Days
prior to the Proceeds Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Notes the Holder delivered for purchase and a statement that
such Holder is withdrawing such Holder's election to have such Note
purchased; and
(7) that Holders whose Notes are purchased only in
part will be issued new Notes in a principal amount equal to the
unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in an original principal amount
of $1,000 or integral multiples thereof.
-48-
<PAGE> 54
On or before the Proceeds Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Asset
Sale Offer which are to be purchased in accordance with item (b)(1) above, (ii)
deposit with the Paying Agent in U.S. dollars, an amount sufficient to pay the
purchase price plus accrued interest (including Revenue Participation Interest,
if any) and Liquidated Damages (if any) of all Notes to be purchased and (iii)
deliver to the Trustee Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof being purchased by the Issuers. The
Paying Agent shall promptly mail to the Holders of Notes so accepted payment in
an amount equal to the purchase price plus accrued interest (including Revenue
Participation Interest, if any) and Liquidated Damages, if any. For purposes
of this Section 4.15, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to an
Asset Sale Offer shall be returned by the Trustee to the Company.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
Section 4.15 by virtue thereof.
(c) The foregoing provisions shall not apply to the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of either of the Issuers, OCC or Teleglobe Mobile, which shall be
governed by the provisions of Article V.
SECTION 4.16 Limitation on Liens.
The Credit Parties shall not, and shall not cause or permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset of any of the Credit Parties whether owned on the
Issue Date or acquired after the Issue Date, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, except
Permitted Liens.
SECTION 4.17 Additional Subsidiary Guarantees.
In the event: (i) the Credit Parties or any other Guarantor shall
transfer or cause to be transferred, in one transaction or a series of related
transactions, any assets, businesses, divisions or other property having a book
value determined in accordance with GAAP or a Fair Market Value which, when
aggregated with all Investments described in clause (vi) of the definition of
"Permitted Investment," would be in excess of the greater of (x) $5 million or
(y) 5% of the System Consolidated Net Worth as of the date of transfer to any
Subsidiary that is not a Subsidiary Guarantor; (ii) the Credit Parties or any
other Guarantor shall acquire another Subsidiary with assets having either a
book value determined in accordance with GAAP or a Fair Market Value which,
when aggregated with all Investments described in clause (vi) of the definition
of "Permitted Investment," would be in excess of the greater of (x) $5 million
or (y) or 5% of the System Consolidated Net Worth as of the date on which any
such acquisition is consummated; or (iii) at any time after the Issue Date,
Restricted Subsidiaries of the Credit Parties and any Guarantors which are not
Subsidiary Guarantors shall, in the aggregate, hold, own or otherwise control
assets, businesses,
-49-
<PAGE> 55
divisions or property having either a book value determined in accordance with
GAAP or a Fair Market Value which, when aggregated with all Investments
described in clause (vi) of the definition of "Permitted Investment," would be
in excess of the greater or (x) $5 million or (y) 5% of the System Consolidated
Net Worth as of any date, then, in each such case, the Credit Parties or the
Guarantor shall cause such Restricted Subsidiary or any number of Restricted
Subsidiaries, as the case may be, to (i) execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes and this Indenture on the terms set forth in this
Indenture and (ii) deliver to the Trustee an Opinion of Counsel that such
supplemental indenture has been duly authorized, executed and delivered by such
Subsidiary and constitutes a legal, valid, binding and enforceable obligation
of such Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all
purposes of this Indenture.
SECTION 4.18 Conduct of Business.
The Credit Parties shall not, and shall not permit any of their
Restricted Subsidiaries to, engage in any businesses other than that which is
related to the design, development, procurement, installation, marketing and
operation of telecommunications systems and businesses. Capital shall not own
any operating assets or other property or conduct any business other than to
serve as Issuer and obligor with respect to the Notes.
SECTION 4.19 Partners' Contingent Commitment.
In the event (a "Contingency Event") that (i) at least 20
satellites have not been placed in commercial service by December 31, 1998 and
(ii) the Company's existing levels of cash and cash equivalents are less than
$25 million (the amount of any such shortfall at any time prior to the Initial
Deployment Date (as defined below) being referred to as the "Deficiency
Amount"), then the Company shall draw-down on the Partners' Contingent
Commitment from time to time after the Contingency Event through the date the
Company has 20 satellites in commercial operation (the "Initial Deployment
Date"). The Company shall maintain the Partners' Contingent Commitment in full
force and effect from the Issue Date through the Initial Deployment Date (and
the Partners' Contingent Commitment thereafter shall expire) and the Company
shall enforce all obligations under such Partners' Contingent Commitment in
accordance with their terms. Following the Initial Deployment Date, Teleglobe
and Orbital shall be permitted to receive a distribution equal to the unused
portion of any amounts drawn under the Partners' Contingent Commitment.
SECTION 4.20 Contingency Fund.
The Company shall establish a segregated account with a recognized
financial institution and shall deposit $13 million into such account from the
proceeds of the Notes (the "Contingency Fund"). The Company shall not expend
monies in the Contingency Fund unless and until it has already expended all of
the remaining proceeds of the offering of the Notes, and shall only expend
monies in the Contingency Fund to fund development and deployment of the
ORBCOMM System and related operating expenses. The Company may invest amounts
in such segregated account comprising the Contingency Fund in cash or Cash
Equivalents in accordance with the terms hereof.
-50-
<PAGE> 56
SECTION 4.21 MetLife Segregated Account
Promptly following the date hereof, the Company shall establish a
segregated account with a recognized financial institution and shall deposit
into such account from the proceeds of the Notes an amount sufficient to pay in
full when due all remaining scheduled interest and principal payments on the
MetLife Note. Interest earned on such account shall be payable to the Company.
In the event the funds held in such segregated account exceed the amount
sufficient to provide for payment in full of the principal of and interest on
the MetLife Note, the Company shall be permitted to receive from such
segregated account any such excess amount. At all times that the Company is
complying with the terms of this Section 4.21, amounts outstanding under the
MetLife Note shall not constitute Indebtedness and amounts held in such
segregated account shall not constitute assets of any Credit Party hereunder.
ARTICLE V.
MERGER, CONSOLIDATION OR SALE OF ASSETS
SECTION 5.1 Mergers, Consolidations and Certain Sales of
Assets.
(a) Neither the Credit Parties nor any Guarantor (to
the extent not permitted by the sale provisions under Article X) may, in a
single transaction or a series of related transactions, consolidate or merge
with or into (whether or not any such Credit Party or such Guarantor, as the
case may be, is the surviving Person), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another Person (other than any
consolidation or merger of a Credit Party or Guarantor with or into, or the
sale, assignment, transfer, lease, conveyance or disposal by a Credit Party or
Guarantor to, any other Credit Party or Guarantor), unless:
(i) such Credit Party or Guarantor, as the
case may be, is the surviving Person or the Person formed by or surviving
any such consolidation or merger (if other than such Credit Party or
Guarantor, as the case may be) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia;
(ii) the Person formed by or surviving any
such consolidation or merger (if other than such Credit Party or Guarantor,
as the case may be) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made
assumes all the obligations of such Credit Party or Guarantor, as the case
may be, under the Notes, this Indenture, the Pledge Agreement and the
Guarantees pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee;
(iii) immediately after such transaction, no
Default or Event of Default exists;
-51-
<PAGE> 57
(iv) such Credit Party or Guarantor, as the
case may be, or the Person formed by or surviving any such consolidation or
merger (if other than such Credit Party or Guarantor, as the case may be)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated
Net Worth of such Credit Party or such Guarantor immediately preceding the
transaction;
(v) the Issuers will, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the immediately preceding
fiscal quarter, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Indebtedness to Cash Flow Ratio set forth in
the first paragraph of Section 4.12;
(vi) each Guarantor, unless it is the other
party to the transaction, shall have by supplemental indenture in form and
substance satisfactory to the Trustee confirmed that after consummation of
such transaction its Guarantee shall apply, as such Guarantee applied on
the date it was granted, to the obligations of the Issuers under this
Indenture and the Notes; and
(vii) such Credit Party or Guarantor, as the
case may be, and the surviving entity, shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with
all applicable provisions of this Indenture and that all conditions
precedent in this Indenture relating to such transaction have been
satisfied.
(b) For purposes of the foregoing, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of the Issuers, the Capital Stock of which constitutes all or
substantially all of the properties and assets of such Issuer, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
such Issuer.
SECTION 5.2 Successor Substituted.
Upon any consolidation of either of the Issuers with, or merger of
either of the Issuers with or into, any other Person or any conveyance,
transfer or lease of the properties and assets of either of the Issuers
substantially as an entity in accordance with Section 5.1, the successor Person
formed by such consolidation or into which either of the Issuers is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, such Issuer under
this Indenture with the same effect as if such successor Person had been named
as such Issuer herein.
-52-
<PAGE> 58
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default for 30 days in the payment when
due of interest (including Revenue Participation Interest, if any) on, or
Liquidated Damages (if any) with respect to, the Notes;
(ii) default in payment when due (whether at
maturity, upon redemption or repurchase, or otherwise) of the principal of
or premium (if any) on the Notes;
(iii) default in the payment of principal,
interest (including Revenue Participation Interest, if any) or Liquidated
Damages (if any) on Notes required to be purchased pursuant to Section 4.14
or Section 4.15 or failure by the Credit Parties to comply with the
provisions of Article V;
(iv) failure by any of the Credit Parties or
any of their Restricted Subsidiaries for 30 days after notice to comply
with any of their other covenants in this Indenture or the Notes;
(v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by any of the Credit
Parties or any of their Restricted Subsidiaries (or the payment of which is
guaranteed by any of the Credit Parties or any of their Restricted
Subsidiaries), whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default:
(a) is caused by a failure to pay principal
of, or premium, if any, or interest on, such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default"); or
(b) results in the acceleration (which
acceleration has not been rescinded) of such Indebtedness prior to
its express maturity, and, in each case described in clause (a)
and (b) of this paragraph, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5 million
or more;
(vi) failure by any of the Credit Parties or
any of their Restricted Subsidiaries to pay final judgments (other than any
judgments as to which a reputable insurance company has accepted full
liability and whose bond, premium or similar charge
-53-
<PAGE> 59
therefor is not in excess of $5 million) aggregating in excess of $5
million, which judgments are not paid, discharged or stayed within 60 days
after their entry;
(vii) breach by the Issuers of any
representation or warranty set forth in the Pledge Agreement, or default by
the Issuers in the performance of any covenant set forth in the Pledge
Agreement, or repudiation by the Issuers of any of their obligations under
the Pledge Agreement or the unenforceability of the Pledge Agreement
against the Issuers for any reason which in any one case or in the
aggregate results in a material impairment of the rights intended to be
afforded thereby;
(viii) termination or loss, for any reason, of
the FCC License; provided, however, that the transfer of the FCC License to
any of the Credit Parties shall not constitute an Event of Default;
(ix) the entry by a court having jurisdiction
in the premises of (A) a decree or order for relief in respect of any
Issuer, Guarantor, Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging any Issuer, Guarantor, Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary, a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of any Issuer, Guarantor,
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, under any applicable
Federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of any Issuer,
Guarantor, Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary, or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 60
consecutive days;
(x) the commencement by any Issuer,
Guarantor, Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary, of a
voluntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of
any Issuer, Guarantor, Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar
law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of any Issuer,
Guarantor, Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary, or of any
substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by
-54-
<PAGE> 60
any Issuer, Guarantor, Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, in furtherance of any such action; or
(xi) any Guarantee of the Notes shall be held
in a judicial proceeding to be unenforceable or invalid or shall cease for
any reason to be in full force and effect, or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations
under its Guarantee of any Notes.
SECTION 6.2 Acceleration.
(a) If an Event of Default, other than an Event of
Default specified in Section 6.1(ix) or (x), occurs and is continuing and has
not been waived pursuant to Section 6.4, then the Trustee or the Holders of at
least 25% in principal amount of outstanding Notes may declare the principal of
and accrued interest (including Revenue Participation Interest, if any) and
Liquidated Damages (if any) on all the outstanding Notes to be due and payable
by notice in writing to the Issuers and the Trustee specifying the respective
Event of Default, such notice to be deemed a "notice of acceleration" (the
"Acceleration Notice"), and the same shall become immediately due and payable.
(b) If an Event of Default specified in Section
6.1(ix) or (x) occurs and is continuing, then all unpaid principal of, and
premium (if any) and accrued and unpaid interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any) on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or further act or notice on the part of the Trustee or
any Holder.
(c) At any time after a declaration of acceleration
with respect to the Notes in accordance with Section 6.2(a), the Holders of a
majority in principal amount of the Notes may rescind and cancel such
declaration and its consequences, but only: (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest (including
Revenue Participation Interest, if any) or Liquidated Damages (if any) that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest
(including Revenue Participation Interest, if any) and overdue principal, which
has become due otherwise than by such declaration of acceleration, has been
paid, (iv) if the Issuers have paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and all
other amounts due the Trustee pursuant to Section 7.7, and (v) if the Trustee
shall have received an Officers' Certificate that such Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
(d) In the case of any Event of Default occurring by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Issuers with the intention of avoiding payment of the premium that the
Issuers would have had to pay if the Issuers then had elected to redeem the
Notes pursuant to the optional redemption provisions of this Indenture, an
equivalent premium shall also become and be immediately due and payable upon
the acceleration of the Notes pursuant to Section 6.1(a) or (b). If an Event
of Default occurs prior to August 15, 2003 by reason of any such willful action
(or inaction) by or on behalf of the Issuers with the intention of avoiding the
prohibition on redemption of the Notes prior to August 15, 2003, then the
premium specified herein shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes pursuant to Section
6.2(a) or (b).
-55-
<PAGE> 61
SECTION 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal or premium (if any) of or interest (including Revenue
Participation Interest, if any) or Liquidated Damages (if any) on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.4 Waiver of Past Defaults.
Subject to Sections 2.9, 6.7 and 9.2, the Holders of not less than
a majority in principal amount of the outstanding Notes, by notice to the
Trustee, may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal or premium (if any)
of or interest (including Revenue Participation Interest, if any) or Liquidated
Damages (if any) on any Note as specified in clauses (i) and (ii) of Section
6.1.
SECTION 6.5 Control by Majority.
Subject to Section 2.9, the Holders of a majority in principal
amount of the outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it, including, without limitation, any remedies
provided for in Section 6.3. Subject to Section 7.1, however, the Trustee may
refuse to follow any direction that the Trustee reasonably believes conflicts
with any law or this Indenture or that the Trustee determines may be unduly
prejudicial to the rights of another Holder. Notwithstanding any provision to
the contrary herein, the Trustee shall not be obligated to take any action with
respect to the provisions of Section 6.2(d) unless directed to do so pursuant
to this Section 6.5.
SECTION 6.6 Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture
or the Notes unless:
(a) the Holder gives to the Trustee written notice of
a continuing Event of Default;
(b) Holders of at least 25% in principal amount of
the outstanding Notes make a written request to the Trustee to pursue the
remedy;
-56-
<PAGE> 62
(c) such Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense to be incurred in compliance with such request;
(d) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of satisfactory
indemnity; and
(e) during such 60-day period the Holders of a
majority in principal amount of the outstanding Notes do not give the
Trustee a direction which, in the opinion of the Trustee, is inconsistent
with the request.
The foregoing limitations shall not apply to a suit instituted by
a Holder for the enforcement of the payment of principal and premium (if any)
or interest (including Revenue Participation Interest, if any) and Liquidated
Damages (if any) on such Note on or after the respective due dates set forth in
such Note (including upon acceleration thereof) or the institution of any
proceeding with respect to this Indenture or any remedy hereunder, including,
without limitation, acceleration, by the Holders of a majority in principal
amount of outstanding Notes, provided that upon institution of any proceeding
or exercise of any remedy, such Holders provide the Trustee with prompt notice
thereof.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder, it
being understood and intended that no one or more Holders shall have any right
by virtue of any provision of this Indenture to affect, disturb or prejudice
the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders, or to enforce any right under this Indenture
except in the manner herein provided and for the equal and ratable benefit of
all the Holders.
SECTION 6.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right
of any Holder to receive payment of principal of, and interest (including
Revenue Participation Interest, if any) and Liquidated Damages (if any) on a
Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
(including Revenue Participation Interest, if any) or Liquidated Damages (if
any) specified in clause (i) or (ii) of Section 6.1 occurs and is continuing,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Issuers or any other obligor on the Notes for the
whole amount of principal and accrued interest (including Revenue Participation
Interest, if any) remaining unpaid and Liquidated Damages, if any, together
with interest on overdue principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and all other amounts due to
the Trustee pursuant to Section 7.7.
-57-
<PAGE> 63
SECTION 6.9 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel and all other
amounts due to the Trustee pursuant to Section 7.7) and the Holders allowed in
any judicial proceedings relating to the Issuers or any other obligor upon the
Notes, any of their respective creditors or any of their respective property
and shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator or other similar
official in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.7. The Company's payment obligations
to the Trustee under this Section 6.9 shall be secured in accordance with the
provisions of Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities.
If the Trustee collects any money or property pursuant to this
Article VI, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to the Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and premium (if any) and interest (including Revenue
Participation Interest, if any) and Liquidated Damages (if any), ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for principal and premium, and interest (including
Revenue Participation Interest, if any) and Liquidated Damages,
respectively; and
Fourth: to the Issuers, the Guarantors or any other obligor on
the Notes, as their interests may appear, or as a court of competent
jurisdiction may direct.
The Trustee, upon prior notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
-58-
<PAGE> 64
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.
ARTICLE VII.
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) The duties and responsibilities of the Trustee
shall be as provided by the TIA and this Indenture. No provision of this
Indenture shall require the Trustee 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 to it.
(b) If a Default or an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(c) Except during the continuance of a Default or an
Event of Default:
(i) The Trustee need perform only those duties as are
required by the TIA or specifically set forth in this Indenture and no
other covenants or obligations shall be implied in this Indenture against
the Trustee.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(d) Notwithstanding anything to the contrary herein
contained, the Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct.
(e) Every provision of this Indenture that relates to
the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
-59-
<PAGE> 65
(f) The Trustee shall not be liable for interest on
any money or assets received by it except as the Trustee may agree in writing.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.2 Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely and shall be fully protected
in acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may consult with counsel and may require an Officers' Certificate or an
Opinion of Counsel, or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action
that it takes or omits to take in good faith which it reasonably believes
to be authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request, direction,
consent, order, bond, debenture, or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Issuers, to examine the books,
records, and premises of the Issuers, personally or by agent or attorney
and to consult with the officers and representatives of the Issuers,
including the Issuers' accountants and attorneys.
(f) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders pursuant to the
provisions of this Indenture including, without limitation, the provisions
of Section 6.5 hereof, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee shall not be required to give any
bond or surety in respect of the performance of its powers and duties
hereunder.
(h) the Trustee shall not be charged with knowledge
of any Default or Event of Default unless either (1) a Responsible Officer
of the Trustee shall have actual knowledge of such Default or Event of
Default or (2) written notice of such Default or Event of Default shall
have been given to the Trustee by the Issuers or any Holder.
-60-
<PAGE> 66
SECTION 7.3 Individual Rights of Trustee and Agents.
Each of the Trustee, any Paying Agent and any Registrar, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Issuers, the Guarantors, or any of their respective
Subsidiaries or Affiliates with the same rights it would have if it were not
Trustee or such agent.
SECTION 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture, the Pledge Agreement, the Pledged Securities or the Notes,
and it shall not be accountable for the Issuers' use of the proceeds from the
Notes, and it shall not be responsible for any statement of the Issuers in this
Indenture or the Notes, other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder notice of
the uncured Default or Event of Default within 30 days after such Default or
Event of Default becomes known to the Trustee. Except in the case of a Default
or an Event of Default in payment of principal of, premium, if any, interest
(including Revenue Participation Interest, if any) or Liquidated Damages (if
any) on any Note, including an accelerated payment and the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer or on to the Proceeds Purchase Date pursuant to an Asset Sale Offer, and,
except in the case of a failure to comply with Article V hereof, the Trustee
may withhold the notice if and so long as it in good faith determines that
withholding such notice is in the interest of the Holders.
SECTION 7.6 Reports by Trustee to Holders.
Within 60 days after each May 15, the Trustee shall, to the extent
that any of the events described in TIA Section 313(a) occurred within the
previous twelve months, but not otherwise, mail to each Holder a report dated
as of such date that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Sections 313(b) and (c).
A copy of each report at the time of its mailing to Holders shall
be mailed to the Issuers and filed with the Commission and each securities
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any securities exchange and the Trustee shall comply with TIA Section
313(d).
-61-
<PAGE> 67
SECTION 7.7 Compensation and Indemnity.
(a) The Issuers agree:
(i) to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(iii) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense (including the reasonable
compensation, expenses and disbursements of its agents, accountants,
experts and counsel) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of enforcing this Indenture
against the Issuers (including, without limitation, this Section 7.7) and
of defending itself against any claim (whether asserted by any Holder or
the Issuers) or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
(b) The Trustee shall notify the Issuers promptly of
any claim asserted against the Trustee for which it may seek indemnity.
Failure by the Trustee to so notify the Issuers shall not relieve the Issuers
of their obligations hereunder.
(c) The Issuers need not reimburse any expense or
indemnify the Trustee against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
(d) To secure the Issuers' payment obligations in
this Section 7.7, the Trustee shall have a lien prior to the Notes on all
assets or money held or collected by the Trustee, in its capacity as Trustee,
except assets or money held in trust to pay principal of, or interest
(including Revenue Participation Interest, if any) or Liquidated Damages (if
any) on, particular Notes. The Trustee's right to receive payment of any
amounts due under this Section 7.7 shall not be subordinate to any other
liability or indebtedness of the Issuers.
(e) When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 6.1(ix) or (x) occurs,
such expenses and the compensation for such services are intended to constitute
expenses of administration under Title 11, U.S. Code, or any similar Federal or
state law.
(f) The provisions of this Section 7.7 shall survive
the satisfaction and discharge of this Indenture.
(g) The Trustee shall comply with the provisions of
TIA Section 313(b)(2) to the extent possible.
-62-
<PAGE> 68
SECTION 7.8 Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article VII shall become
effective until the acceptance of appointment by the successor Trustee under
Section 7.9, at which time the retiring Trustee shall be fully discharged from
its obligations hereunder.
(b) The Trustee may resign at any time by giving at
least 30 days' advance written notice thereof to the Issuers. If an instrument
of acceptance by a successor Trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by notice,
in writing, of the Holders of a majority in principal amount of the outstanding
Notes, delivered to the Trustee and to the Issuers.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
7.11 hereof; or
(ii) the Trustee shall cease to be eligible under
Section 7.11 and shall fail to resign after written request therefor by the
Issuers or by any such Holder; or
(iii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case (1) the
Issuers by an appropriate partnership or board resolution evidenced by an
Officers' Certificate may remove the Trustee, or (2) subject to Section
6.11, any Holder may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Issuers, by an appropriate partnership or board resolution
evidenced by an Officers' Certificate shall promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability,
or the occurrence of such vacancy, a successor Trustee shall be appointed by
Act of the Holders of a majority in principal amount of the outstanding Notes
delivered to the Issuers and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Issuers.
If no successor Trustee shall have been so appointed by the Issuers or the
Holders and accepted appointment in the manner herein provided, any Holder may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) If the Trustee, after written request by the
Issuer or by any Holder who has been a Holder for at least six months, fails to
comply with Section 7.11 hereof, such Holder may petition any court of
competent jurisdiction for the removal of the Trustee or the appointment of a
successor Trustee.
-63-
<PAGE> 69
(g) The Issuers shall give or cause to be given
notice of each resignation and each removal of the Trustee and each appointment
of a successor Trustee to all Holders in the manner provided herein. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 7.9 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Issuers and to the retiring Trustee a written
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee. Upon request of the
Issuers or the successor Trustee, the retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, in each case subject to the lien of the retiring Trustee
granted pursuant hereto. Upon request of any such successor Trustee, the
Issuers shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article VII.
SECTION 7.10 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee, provided that such
corporation shall be otherwise qualified and eligible under this Article VII.
In case any Notes shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the Notes
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
SECTION 7.11 Trustee Required; Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the TIA to act as such, and has a combined
capital and surplus of at least $50,000,000 and its Corporate Trust Office in
the Borough of Manhattan, The City of New York, New York. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of a Federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect specified in this Article VII. If the Trustee has or shall
acquire a conflicting interest within the meaning of the TIA, the Trustee shall
either eliminate
-64-
<PAGE> 70
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the TIA and this Indenture.
SECTION 7.12 Preferential Collection of Claims Against
Issuers.
If and when the Trustee shall be or become a creditor of either of
the Issuers (or any other obligor upon the Notes), the Trustee shall be subject
to the provisions of the TIA regarding the collection of claims against such
Issuer (or any such other obligor).
ARTICLE VIII.
DEFEASANCE AND SATISFACTION AND DISCHARGE
SECTION 8.1 Defeasance and Covenant Defeasance.
(a) Issuers' Option to Effect Defeasance or Covenant
Defeasance. The Issuers may at their option, by an appropriate partnership or
board resolution evidenced by an Officers' Certificate, at any time (subject to
10-day prior written notification to the Trustee), elect to have the provisions
of either Section 8.1(b) or (c) applied to the outstanding Notes upon
compliance with the conditions set forth below in this Article VIII.
(b) Defeasance and Discharge. Upon the Issuers'
exercise of the option provided in Section 8.1(a) applicable to this Section,
the Issuers and the Guarantors shall be deemed to have been discharged from
their obligations with respect to the outstanding Notes on the date the
conditions set forth below are satisfied (hereinafter, "Defeasance"). For this
purpose, such Defeasance means that the Issuers shall be deemed to have paid
and discharged the entire indebtedness represented by the outstanding Notes and
to have satisfied all their other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Issuers, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to
receive, solely from the trust fund described in Section 8.1(d) and as more
fully set forth in such Section, payments in respect of the principal and
premium (if any) of and interest (including Revenue Participation Interest, if
any) and Liquidated Damages (if any) on such Notes when such payments are due,
(ii) the Issuers' and the Guarantors' obligations with respect to such Notes
under Sections 2.4, 2.6, 2.7, 2.10 and 4.2, (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (iv) this Article VIII.
Subject to compliance with this Article VIII, the Issuers may exercise their
option under this Section 8.1(b) notwithstanding the prior exercise of their
option under Section 8.1(c).
(c) Covenant Defeasance. Upon the Issuers' exercise
of the option provided in Section 8.1(a) applicable to this Section, (i) the
Issuers and the Guarantors shall be released from their obligations under
Sections 4.5 through 4.18, inclusive and (ii) the occurrence of an event
specified in Section 6.1(iv) shall not be deemed to be an Event of Default, on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Issuers may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly by
-65-
<PAGE> 71
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any
other document, but the remainder of this Indenture and such Notes shall be
unaffected thereby.
(d) Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 8.1(b)
or 8.1(c) to the outstanding Notes:
(i) The Issuers shall irrevocably have deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such Notes:
(A) cash in U.S. dollars, or (B) non-callable Government Securities which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee to pay and discharge, the principal
and premium (if any) of, and interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) on the Notes on the
Maturity Date of such principal or installment of interest on the day on
which such payments are due and payable in accordance with the terms of
this Indenture and of such Notes;
(ii) No Default or Event of Default shall have
occurred and be continuing on the date of such deposit;
(iii) Such Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest as described in Section
7.11 and for purposes of the TIA with respect to any securities of the
Issuers;
(iv) Such Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which any Issuer or
Guarantor is a party or by which it is bound;
(v) The Issuers shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Defeasance under
Section 8.1(b) or the Covenant Defeasance under Section 8.1(c), as the case
may be, have been complied with;
(vi) In the case of an election under Section 8.1(b),
the Issuers shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling, or (y) since the date
of this Indenture there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred;
(vii) In the case of an election under Section 8.1(c),
the Issuers shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Notes
-66-
<PAGE> 72
will not recognize income, gain or loss for Federal income tax purposes as
a result of such deposit and Covenant Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(viii) The Issuers shall have delivered to the Trustee
an Opinion of Counsel to the effect that such deposit and Defeasance or
Covenant Defeasance shall not result in the trust arising from such deposit
constituting an investment company as defined in the Investment Company Act
of 1940, as amended, or such trust shall be qualified under such act or
exempt from regulation thereunder.
SECTION 8.2 Satisfaction and Discharge.
In addition to the Issuers' rights under Section 8.1, the Issuers
may terminate all of their obligations under this Indenture, and the
obligations of the Guarantors shall terminate (subject to Section 8.3), when:
(a) all Notes theretofore authenticated and delivered
(other than Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7 and Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuers and thereafter repaid to the Issuers or
discharged from such trust) have been delivered to the Trustee for
cancellation or all such Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuers have irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust solely for that purpose an amount of money sufficient to pay and
discharge the entire principal and premium (if any) of and interest
(including Revenue Participation Interest, if any) and Liquidated Damages
(if any) on the Notes not theretofore delivered to the Trustee for
cancellation;
(b) the Issuers have paid or caused to be paid all
other sums payable hereunder;
(c) the Issuers have delivered irrevocable
instructions to the Trustee to apply the deposited money toward the payment
of the Notes at maturity or redemption, as the case may be; and
(d) the Issuers have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, stating that all
conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with.
SECTION 8.3 Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture
and of the Notes referred to in Section 8.1 or 8.2, the respective obligations
of the Issuers, the Guarantors and the Trustee under Sections 2.2, 2.3, 2.4,
2.5, 2.6, 2.7, 2.10, 2.12, 2.13, 4.1, 4.2, 6.7, Article VII, and Sections 8.5,
8.6 and 8.7 shall survive until no Notes are outstanding, and thereafter the
obligations of the Issuers, the Guarantors and the Trustee under Sections 7.7,
8.5, 8.6 and 8.7 shall survive.
-67-
<PAGE> 73
Nothing contained in this Article VIII shall abrogate any of the obligations or
duties of the Trustee under this Indenture.
SECTION 8.4 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.1 or 8.2 have been
satisfied, (ii) the Issuers have paid or caused to be paid all other sums
payable hereunder and (iii) the Issuers have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee, upon written request, shall acknowledge in writing the discharge of
the Issuers' and Guarantors' obligations under this Indenture, except for those
surviving obligations specified in Section 8.3.
SECTION 8.5 Application of Trust Moneys and Government
Securities.
Subject to the provisions of Section 2.4, all money and Government
Securities (including the proceeds thereof) deposited with the Trustee pursuant
to Section 8.1(d)(i) in respect of the Notes shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Holders of such Notes, of all sums due and to
become due thereon in respect of principal and premium (if any) of and interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any) on the Notes, but such money and Government Securities need not be
segregated from other funds except to the extent required by law.
The Issuers and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the
Government Securities deposited pursuant to Section 8.1(d)(i) or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon request by
an Officers' Certificate any money or Government Securities held by it as
provided in Section 8.1(d)(i) which, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
defeasance or covenant defeasance.
SECTION 8.6 Repayment to the Issuers or the Guarantors;
Unclaimed Money.
Any money or Government Securities deposited with the Trustee or
the Paying Agent in trust for the payment of the principal and premium (if any)
of and interest (including Revenue Participation Interest, if any) and
Liquidated Damages (if any) on the Notes and remaining unclaimed for two years
after it has become due and payable shall be paid to the Issuers (or, if
deposited by a Guarantor, to such Guarantor) upon written request in the form
of an Officers' Certificate, and the Holder of such security shall thereafter,
as a creditor, look only to the Issuers (or such Guarantor) for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being
-68-
<PAGE> 74
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers (or such Guarantor).
SECTION 8.7 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money or
Government Securities in accordance with Section 8.1(b) or 8.1(c) by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuers' and
the Guarantors' obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or Government Securities in accordance with Section 8.1(b) or 8.1(c);
provided, however, that if the Issuers or the Guarantors make any payment of
principal and premium (if any) on any Note following the reinstatement of their
obligations, the Issuers and the Guarantors shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or the Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders.
Notwithstanding Section 9.2 of this Indenture, without notice to
or the consent of any Holder, the Issuers and the Guarantors, when authorized
by an appropriate partnership or board resolution evidenced by an Officers'
Certificate, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, and may
amend the Notes, the Guarantees or the Pledge Agreement, for any of the
following purposes:
(1) to cure any ambiguity, defect or inconsistency;
provided that such amendment or supplement does not, in the opinion of the
Trustee, adversely affect the legal rights of any Holder;
(2) to comply with Article V;
(3) to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(4) to comply with any requirements of the Commission
in order to effect or maintain the qualification of this Indenture under
the TIA;
(5) to make any change that would provide any
additional benefit or rights to the Holders or that does not adversely
affect the legal rights of any Holder;
-69-
<PAGE> 75
(6) to provide for issuance of the Exchange Notes
(which will have terms substantially identical in all material respects to
the Original Notes, except that the transfer restrictions contained in the
Original Notes will be modified or eliminated as appropriate, and which
will be treated together with any outstanding Original Notes as a single
issue of securities); or
(7) to make any other change that does not, in the
opinion of the Trustee, adversely affect in any material respect the legal
rights of any Holder;
provided that the Issuers deliver to the Trustee an Opinion of Counsel and an
Officer's Certificate stating that such amendment or supplement complies with
the provisions of this Section.
SECTION 9.2 With Consent of Holders.
Subject to Section 6.7, the Company and the Guarantors, when
authorized by an appropriate partnership or board resolution evidenced by an
Officers' Certificate and the Trustee, together with the written consent of the
Holder or Holders of at least a majority in aggregate principal amount of the
outstanding Notes, may amend or supplement this Indenture, the Notes, the
Guarantee or the Pledge Agreement without notice to or the consent of any other
Holder. Subject to Section 6.7, the Holder or Holders of at least a majority in
aggregate principal amount of the outstanding Notes may waive compliance by the
Company with any provision of this Indenture or the Notes without notice to or
the consent of any other Holder (including consents obtained in connection with
a tender offer or exchange offer for Notes). No amendment, supplement or
waiver, including a waiver pursuant to Section 6.4, shall, without the consent
of each Holder of each Note affected thereby:
(1) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver of any provision
of this Indenture, the Notes, the Guarantee or the Pledge Agreement;
(2) reduce the rate of or change or have the effect
of changing the time for payment of any interest (including Revenue
Participation Interest, if any) on any Note;
(3) reduce the principal of or change or have the
effect of changing the fixed maturity of any Note, or change the date on
which any Notes may be subject to redemption, or reduce the redemption
price therefor;
(4) make any Note payable in money other than that
stated in the Notes;
(5) make any change in provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal and premium (if any) of, and interest
(including Revenue Participation Interest, if any) or Liquidated Damages
(if any) on, the Notes;
(6) waive a Default or Event of Default in the
payment of principal and premium (if any) of, and interest (including
Revenue Participation Interest, if any) or Liquidated Damages (if any) on,
the Notes (except a recision of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the Notes and a waiver
of the payment default that resulted from such acceleration);
-70-
<PAGE> 76
(7) waive a redemption payment with respect to any
Note (other than a payment required by Section 4.14 and 4.15);
(8) release any Guarantor from any of its obligations
under its Guarantee or this Indenture otherwise than in accordance with the
terms of this Indenture; or
(9) make any change in the amendment and waiver
provisions of this Section 9.2.
Upon the request of the Issuers accompanied by an Officers'
Certificate in form satisfactory to the Trustee certifying corporate or
partnership resolutions, as the case may be, authorizing the execution of any
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory of the consent of the Holders as aforesaid, and upon
receipt by the Trustee of the documents described in Section 11.5 hereof, the
Trustee shall join with the Issuers in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, in addition to the documents required by Section 11.5, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article IX, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
-71-
<PAGE> 77
SECTION 9.5 Compliance with Trust Indenture Act.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 9.6 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Issuers shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Issuers, to any such supplemental indenture may be prepared and
executed by the Issuers and authenticated and delivered by the Trustee in
exchange for outstanding Notes.
SECTION 9.7 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder's Note, even if notation of the consent is not made on
any Note. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note or portion of such Note
by notice to the Trustee or the Issuers received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be at least 30 days
prior to the first solicitation of such consent. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder's Note; provided that any such waiver shall not impair
or affect the right of any Holder to receive payment of principal of, and
interest (including Revenue Participation Interest) and Liquidated Damages (if
any) on, a Note, on or after the respective due dates expressed in such Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
-72-
<PAGE> 78
ARTICLE X.
GUARANTEE
SECTION 10.1 Unconditional Guarantee.
Each Guarantor hereby fully and unconditionally guarantees,
jointly and severally, to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture or the Notes or the
obligations of the Guarantors under this Indenture or the Notes that: (i) the
principal of and premium (if any) and interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) on the Notes will be paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest (including Revenue Participation Interest, if any), to
the extent lawful, on the Notes and all other obligations of the Issuers to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (ii) in
case of any extension of time of payment or renewal of any Notes or of any such
other obligations, the same will be paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 10.5. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity, or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Issuers, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Issuers,
any right to require a proceeding first against the Issuers, protest, notice
and all demands whatsoever and covenants that this Guarantee will not be
discharged (except to the extent released pursuant to Section 8.1) except by
complete performance of the obligations contained in the Notes, this Indenture
and in this Guarantee. If any Holder or the Trustee is required by any court
or otherwise to return to the Issuers, any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Issuers
or any Guarantor, any amount paid by the Issuers or any Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect (except to the extent released
pursuant to Section 8.1). Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article VI for the purposes of this Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (y) in the event of any acceleration
of such obligations as provided in Article VI, such obligations (whether or not
due and payable) shall forthwith become due and payable by each Guarantor for
the purpose of this Guarantee.
SECTION 10.2 Priority of Guarantee.
The obligations of each Guarantor to the Holders of Notes and to
the Trustee pursuant to this Guarantee and this Indenture will rank senior in
right and priority of payment to all other indebtedness of such Guarantor that
is expressly subordinated to this Guarantee and will rank pari
-73-
<PAGE> 79
passu in right and priority of payment with all other indebtedness of such
Guarantor that is not expressly so subordinated to such Guarantee, except to
the extent of any collateral securing such other indebtedness.
SECTION 10.3 Severability.
In case any provision of this Guarantee shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.4 Release of a Subsidiary Guarantor.
Upon the sale or disposition (whether by merger, stock purchase,
asset sale or otherwise) of a Subsidiary Guarantor (or all or substantially all
its assets) to a Person which is not a Subsidiary of the Company and which sale
or disposition is otherwise in compliance with the terms of this Indenture,
such Subsidiary Guarantor shall be deemed released from all obligations under
this Article X without any further action required on the part of the Trustee
or any Holder.
The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a request by the Issuers accompanied by an
Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section. Any Subsidiary Guarantor not so released shall remain
liable for the full amount of principal of and interest (including Revenue
Participation Interest) and Liquidated Damages (if any) on the Notes as
provided in this Article X.
SECTION 10.5 Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each
Holder, hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to Section 10.1 not constitute
a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Guarantee shall be limited
to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor, and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Guarantee or pursuant to Section 10.6, result in the obligations of
such Subsidiary Guarantor under this Guarantee not constituting such fraudulent
transfer or conveyance.
SECTION 10.6 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under this Guarantee, such Funding Guarantor shall be
entitled to a contribution from all other Subsidiary Guarantors in a pro rata
amount
-74-
<PAGE> 80
based on the Adjusted Net Assets of each Subsidiary Guarantor (including the
Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Issuers' obligations with respect to the
Notes or any other Subsidiary Guarantor's obligations with respect to this
Guarantee. "Adjusted Net Assets" of such Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date
(other than liabilities of such Subsidiary Guarantor under Indebtedness of such
Subsidiary Guarantor that is subordinated in right of payment to this Guarantee
of such Subsidiary Guarantor)), but excluding liabilities under this Guarantee,
of such Subsidiary Guarantor at such date and (y) the present fair salable
value of the assets of such Subsidiary Guarantor at such date exceeds the
amount that will be required to pay the probable liability of such Subsidiary
Guarantor on its debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date and after giving effect to any
collection from any Subsidiary of such Subsidiary Guarantor in respect of the
obligations of such Subsidiary under this Guarantee), excluding debt in respect
of this Guarantee of such Subsidiary Guarantor, as they become absolute and
matured.
SECTION 10.7 Waiver of Subrogation.
Until all Obligations are paid in full each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Issuers that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under this Guarantee and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in
any claim or remedy of any Holder of Notes against the Issuers, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from
the Company, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Holders of the Notes, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with
the terms of this Indenture. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section 10.7 is knowingly
made in contemplation of such benefits.
SECTION 10.8 Execution of Guarantee.
This Indenture shall evidence the Guarantee to the Holders as set
forth in this Article X. Each Guarantor hereby certifies that this Guarantee
has been duly authorized by all requisite partnership or corporate action, as
the case may be, and that the execution and delivery of this Indenture to the
Trustee shall constitute due delivery of such Guarantee on behalf of such
Guarantor.
-75-
<PAGE> 81
SECTION 10.9 Waiver of Stay, Extension or Usury Laws.
Each Guarantor covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive each such
Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture, and (to the extent that it may
lawfully do so) each such Guarantor hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 10.10 Obligations of the Guarantors Unconditional.
Nothing contained in this Indenture is intended to or shall
impair, as between the Guarantors and the Holders, the obligation of the
Guarantors, which is absolute and unconditional, to pay to the Holders all
amounts due and payable under the Guarantees as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders and creditors of the Guarantors, nor
shall anything herein or therein prevent the Trustee or any Holder from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture in respect of cash, property or securities of the
Guarantors received upon the exercise of any such remedy. Upon any payment or
distribution of assets of any Guarantor referred to in this Article X, the
Trustee and the Holders shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which any dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee or agent or other Person
making any payment or distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
X.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with a provision of the TIA that is required under the TIA to be a part of and
govern this Indenture, such required provision shall control. If any provision
of this Indenture modifies or excludes any provision of the TIA that may be so
modified or excluded, the provision of the TIA shall be deemed to apply to this
Indenture as so modified or excluded, as the case may be.
-76-
<PAGE> 82
SECTION 11.2 Notices to Issuers and Trustee.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by facsimile, or by registered or certified mail, postage prepaid,
return receipt requested, and addressed as follows:
If to the Issuers or the Guarantors (other than OCC and Teleglobe
Mobile):
c/o ORBCOMM Global, L.P.
21700 Atlantic Boulevard
Dulles, Virginia 20166
Attn: General Counsel
Facsimile: 703-404-8012
If to OCC:
Orbital Communications Corp.
21700 Atlantic Boulevard
Dulles, Virginia 20166
Attn: General Counsel
Facsimile: 703-406-5572
If to Teleglobe Mobile:
c/o Teleglobe Inc.
1000 rue de La Gauchetiere ouest
Montreal, Quebec H313 4X5
Canada
Attn: General Counsel
Facsimile: 514-868-7719
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1180
Attn: Corporate Trust Services
Facsimile: 212-658-6425
Each of the Issuers, the Guarantors and the Trustee by written
notice as specified herein to each other Person may designate additional or
different addresses for notices to such Person. Any notice or communication to
the Issuers, the Guarantors or the Trustee shall be deemed to have been given
or made: as of the date delivered, if personally delivered; when receipt is
confirmed, if sent by facsimile; and five calendar days after mailing, if sent
by registered or certified mail, postage prepaid; provided, that a notice of
change of address shall not be deemed to have been given until actually
received by the addressee.
-77-
<PAGE> 83
SECTION 11.3 Notices to Holders.
Where this Indenture provides for notice to Holders, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and: (i) in the case of a Global Note, by facsimile or by overnight
mail to the Depository; and (ii) in the case of securities other than a Global
Note, by first-class mail, postage prepaid, in each case to each Holder
affected at his address as it appears in the Note Register, and shall be
sufficiently given if sent not later than the latest date (if any) and not
earlier than the earliest date (if any) prescribed for the giving of such
notice. Neither the failure to mail any such notice nor any defect in any
notice so mailed to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Notice may be waived in writing by any
Person entitled to receive such notice, either before or after the event
requiring notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 11.4 Trustee, Paying Agent and Registrar Procedures.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at meetings of Holders, and the
Paying Agent and the Registrar may make reasonable rules for their functions.
SECTION 11.5 Compliance Certificates and Opinions.
(a) Upon any application or request by the Issuers to
the Trustee to take any action under any provision of this Indenture, the
Issuers shall furnish to the Trustee such certificates and opinions as may be
required under the TIA and under this Indenture. Each such certificate or
opinion required to be made under this Indenture shall be given in the form of
an Officers' Certificate, if to be given by the Issuers, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the TIA and any other requirement set forth in this Indenture.
(b) Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(i) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
-78-
<PAGE> 84
SECTION 11.6 Form of Documents Delivered to Trustee.
(a) In any case where several matters are required to
be certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
(b) Any Officers' Certificate may be based, insofar
as it relates to legal matters, upon an Opinion of Counsel submitted therewith,
unless such officer knows, or in the exercise of reasonable care should know,
that the opinion with respect to the matters upon which his certificate is
based is erroneous. Any Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate of officers of the Issuers submitted
therewith stating the information on which such counsel is relying, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate with respect to such matters is erroneous.
SECTION 11.7 Acts of Holders; Registered Holders; Record
Dates.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more written
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Issuers. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 7.1)
conclusive in favor of the Trustee and the Issuers, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing pursuant to this Section may be proved by the
affidavit of a witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner which the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the
Note Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu
-79-
<PAGE> 85
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuers in reliance thereon, whether or not notation of such
action is made upon such Note.
(e) The Issuers may set any day as a record date for
the purpose of determining the Holders of outstanding Notes entitled to give,
make or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given,
made or taken by Holders of Notes; provided that the Issuers may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in paragraph (f) below. If not set by the Issuers prior
to the first solicitation of a Holder made by any Person in respect of any such
matter referred to in the foregoing sentence, the record date for any such
matter shall be the 30th day (or, if later, the date of the most recent list of
Holders required pursuant to Section 2.5) prior to such first solicitation. If
any record date is set pursuant to this paragraph, the Holders of outstanding
Notes on such record date, and no other Holders, shall be entitled to take the
relevant action, whether or not such Holders remain Holders after such record
date. Nothing in this paragraph shall be construed to prevent the Issuers from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of outstanding
Notes on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Issuers, at their own expense, shall cause
notice of such record date, the proposed action by Holders to be given to the
Trustee in writing and to each Holder of Notes in the manner set forth in
Section 11.2.
(f) The Trustee may set any day as a record date for
the purpose of determining the Holders of outstanding Notes entitled to join in
the giving or making of (i) any notice hereunder, (ii) any declaration of
acceleration referred to in Section 6.2, (iii) any request to institute
proceedings referred to in Section 6.6 or (iv) any direction referred to in
Section 6.5. If any record date is set pursuant to this paragraph, the Holders
of outstanding Notes on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically
and with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of outstanding Notes on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Issuers' expense, shall cause notice of such
record date, the proposed action by Holders to be given to the Issuers in
writing and to each Holder of Notes in the manner set forth in Section 11.2.
(g) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Note may
do so with regard to all or any part of the principal amount of such Note or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
-80-
<PAGE> 86
SECTION 11.8 Successors and Assigns.
All covenants and agreements of the Issuers and the Guarantors in
this Indenture, the Notes and the Guarantees shall bind their successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.9 Severability.
In case any one or more of the provisions in this Indenture or in
the Notes or in the Guarantees shall be held invalid, illegal or unenforceable
in any jurisdiction, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other jurisdiction and in every
other respect, and of the remaining provisions, shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 11.10 Benefits of Indenture.
Nothing in this Indenture or in the Notes or in the Guarantees,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders of Notes, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 11.11 Governing Law; Jurisdiction.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 11.12 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Proceeds Purchase Date or Change of Control Payment Date of any Note shall not
be a Business Day, then, notwithstanding any other provision of this Indenture
or of the Notes or the Guarantees, payment of interest (including Revenue
Participation Interest, if any) or Liquidated Damages (if any) on or principal
and premium (if any) of the Notes need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such Interest Payment Date, Redemption Date, Proceeds Purchase Date or
Change of Control Payment Date, as the case may be.
-81-
<PAGE> 87
SECTION 11.13 No Recourse Against Others; Limitation on
Liability.
Notwithstanding anything contained in this Indenture or the Notes
to the contrary, (i) except for the Issuers and the Guarantors to the extent
provided in clause (ii) below, no person or entity (including, without
limitation, the past, present or future general, limited partners and/or
shareholders of OCC and Teleglobe Mobile and the directors, officers and
employees of the Issuers and the Guarantors) shall have any liability
whatsoever with respect to or arising out of this Indenture, the Notes, the
Guarantees or any of the Issuers' or the Guarantors' obligations thereunder or
any agreements or documents executed by the Issuers or the Guarantors in
connection therewith and (ii) claims with respect to this Indenture, the Notes
and the Guarantees and any obligations thereunder or under any agreements or
documents executed in connection therewith shall be satisfied solely from the
assets of the Issuers and the Guarantors. Each Holder, by accepting a Note,
waives and releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Notes.
SECTION 11.14 Counterparts.
This Indenture may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-82-
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the day and year first above written.
ORBCOMM GLOBAL, L.P.
By
------------------------------
Name:
Title:
ORBCOMM GLOBAL CAPITAL CORP.
By
------------------------------
Name:
Title:
ORBITAL COMMUNICATIONS CORPORATION
By
------------------------------
Name:
Title:
TELEGLOBE MOBILE PARTNERS
By Teleglobe Mobile Investment Inc.,
its managing partner
By
------------------------------
Name:
Title:
ORBCOMM USA, L.P.
By
------------------------------
Name:
Title:
<PAGE> 89
ORBCOMM INTERNATIONAL PARTNERS, L.P.
By
------------------------------
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By
------------------------------
Name:
Title:
<PAGE> 90
EXHIBIT A
FACE OF NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH ORBCOMM
GLOBAL, L.P. AND ORBCOMM GLOBAL CAPITAL CORP. (THE "ISSUERS") OR ANY AFFILIATE
OF EITHER OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY TO BE COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE ISSUERS AND THE TRUSTEE.
A-1
<PAGE> 91
CUSIP No.:
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
14% SENIOR NOTE DUE 2004
No. $
ORBCOMM Global, L.P., a Delaware limited partnership ("ORBCOMM"),
and ORBCOMM Global Capital Corp., a Delaware corporation ("Capital" and,
together with ORBCOMM, the "Issuers"), for value received, jointly and
severally, promise to pay to ______________ or registered assigns, the
principal sum of _____________________ Dollars on August 15, 2004.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, each of the Issuers has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
ORBCOMM GLOBAL, L.P.
By
------------------------------
Name:
Title:
ORBCOMM GLOBAL CAPITAL CORP.
By
------------------------------
Name:
Title:
Dated: ,
-------- -- ----
A-2
<PAGE> 92
Trustee's Certificate of Authentication
This is one of the 14% Senior Notes due 2004 referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By:
------------------------------
Authorized Signatory
A-3
<PAGE> 93
(REVERSE OF NOTE)
14% Senior Note due 2004
Capitalized terms used herein shall have the meanings ascribed to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. ORBCOMM Global, L.P., a Delaware
limited partnership ("ORBCOMM"), and ORBCOMM Global Capital Corp., a Delaware
corporation ("Capital" and, together with ORBCOMM, the "Issuers"), promise to
pay interest on the principal amount of this Note at the rate per annum shown
above. Interest on the Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from August 7, 1996.
The Issuers will pay interest semi-annually in arrears on each Interest Payment
Date, commencing February 15, 1997. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest (including Revenue Participation Interest, if any)
from time to time on demand at the rate borne by the Notes plus 1.0% per annum
(without regard to any applicable grace periods) to the extent lawful.
In addition, the Notes shall bear Revenue Participation Interest,
calculated as described below, from the Issue Date to the date of payment of
the Notes. Installments of Revenue Participation Interest accrued through the
Accrual Period (as defined below) last ended or previously deferred shall
become due and payable semi-annually on each February 15 and August 15 after
the Issue Date, commencing on February 15, 1997, to the Holders of record at
the close of business on the preceding February 1 or August 1. Additionally,
all installments of accrued or deferred Revenue Participation Interest will
become due and payable (and may not be further deferred) with respect to any
principal amount of the Notes upon maturity (whether at stated maturity, upon
acceleration, maturity of repurchase obligation or otherwise) of such principal
amount of the Notes.
The Issuers, at their option, may defer payment of all or a
portion of Revenue Participation Interest then otherwise due if, and only to
the extent that, (a) the payment of such portion of Revenue Participation
Interest will cause the Credit Parties' Fixed Charge Coverage Ratio for the
four consecutive fiscal quarters last completed prior to such interest payment
date to be less than 2.0:1 on a pro forma basis after giving effect to the
assumed payment of such Revenue Participation Interest (as if such payment were
made during such four quarter period) (but may not defer such portion which, if
paid, will not cause such Credit Parties' Fixed Charge Coverage Ratio to be
less than 2.0:1); provided, however, that for purposes of calculating such
Credit Parties' Fixed Charge Coverage Ratio for any period, (x) the amount
representing Revenue Participation Interest that has been or will be deferred
A-4
<PAGE> 94
for such period shall not be included in the calculation of Credit Parties'
Fixed Charges for such period and (y) the amount representing Revenue
Participation Interest paid in such period (whether relating to such period or
any prior period) shall be included in the calculation of Credit Parties' Fixed
Charge Coverage for such period, and (b) the principal of the Notes
corresponding to such Revenue Participation Interest has not then matured and
become due and payable (at stated maturity, upon acceleration, upon maturity of
repurchase obligation or otherwise). Revenue Participation Interest that is
deferred shall become due and payable on the earlier of (i) the next succeeding
Interest Payment Date on which such Revenue Participation Interest is not
permitted to be deferred, and (ii) upon the maturity of the corresponding
principal of the Notes (whether at stated maturity, upon acceleration, upon
maturity of repurchase obligation or otherwise). No interest will accrue on
any deferred Revenue Participation Interest that has not yet become due and
payable.
Each installment of Revenue Participation Interest will be
calculated to accrue (an "Accrual Period") from, but not including, the most
recent date through which Revenue Participation Interest has been paid or
provided for or through which Revenue Participation Interest has been
calculated and deferred (or from and including the Issue Date if no installment
of Revenue Participation Interest has been paid, provided for or deferred) to,
and including, either (a) the last day of the next Semi-annual Period if the
corresponding principal of the Notes has not become due and payable (or
December 31, 1996 if no installment of Revenue Participation Interest has been
paid, provided for or deferred) or (b) the date of payment if the corresponding
principal of the Notes has become due and payable (whether at stated maturity,
upon acceleration, upon maturity of repurchase obligation or otherwise). With
respect to each Accrual Period, Revenue Participation Interest will accrue
daily on the principal of each Note outstanding during such period as follows:
(i) for each day during each month that ends during such Accrual Period and
which month ends at least 25 days prior to the date of payment, an amount equal
to 1/30th of the Monthly Revenue Participation Interest on the Note for such
month until all of such Monthly Revenue Participation Interest on the Note
shall be accrued (and all of such month's Monthly Revenue Participation
Interest on the Note shall be accrued by the last day of such month) and (ii)
for any day in any remaining period, 1/30th of the prior month's Monthly
Revenue Participation Interest on the Notes. For purposes hereof, "Monthly
Revenue Participation Interest" means, with respect to any month and any Note,
the product of 5.0% of System Revenue for such month times a fraction, the
numerator of which is the principal amount outstanding on such Note and the
denominator of which is $170,000,000.
Any reference in this Note to "accrued and unpaid interest"
includes the amount of unpaid Revenue Participation Interest and Liquidated
Damages, if any, due and payable thereon.
2. Method of Payment. The Issuers shall pay
interest (including Revenue Participation Interest, if any) on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are the Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date even if the Notes are cancelled on
A-5
<PAGE> 95
registration of transfer or registration of exchange after such Record Date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Issuers shall pay principal and interest in U.S. dollars. The Issuers may
pay principal and interest by their check payable in such U.S. dollars or by
wire transfer as provided in the Indenture. The Issuers may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Marine
Midland Bank, a New York banking corporation and trust company (the "Trustee",
which term includes any successor trustee under the Indenture referred to
below), will act as Paying Agent and Registrar. The Issuers may change the
Paying Agent or Registrar without notice to or consent of the Holders.
4. Indenture and Guarantee. The Issuers issued the
Note under an Indenture, dated as of August 7, 1996 (the "Indenture"), among
the Issuers, Orbital Communications Corporation, a Delaware corporation
("OCC"), Teleglobe Mobile Partners, a Delaware general partnership ("Teleglobe
Mobile"), ORBCOMM USA, L.P., a Delaware limited partnership ("USA"), and
ORBCOMM International Partners, L.P., a Delaware limited partnership
("International" and, together with OCC, Teleglobe Mobile and USA, the
"Guarantors"), and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of such terms. The Notes
are general obligations of the Issuers limited in aggregate principal amount to
$170,000,000. Payment on each Note is guaranteed on an unsecured basis by the
Guarantors pursuant to Article X of the Indenture. Each Holder, by accepting a
Note, agrees to be bound by all of the terms and provisions of the Indenture,
as the same may be amended from time to time.
5. Redemption.
(a) Optional Redemption. The Notes will be
redeemable, at the option of the Issuers, in whole or in part at any time or
from time to time, on and after August 15, 2001, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the
twelve-month period commencing on August 15 of the years set forth below, plus,
in each case, accrued and unpaid interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) thereon to the applicable
date of redemption:
A-6
<PAGE> 96
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 115.000%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 107.500%
2003 and thereafter . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Sale of Capital Stock.
Notwithstanding the provisions of paragraph (a) above, at any time, or from
time to time, on or prior to August 15, 1999, the Issuers may, at their option,
use the net proceeds of one or more sales of Capital Stock (other than
Disqualified Stock) of OCC, Teleglobe Mobile or the Company to redeem the Notes
at a redemption price equal to 115.000% of the principal amount thereof, plus
accrued and unpaid interest (including Revenue Participation Interest, if any)
and Liquidated Damages (if any) thereon to the redemption date; provided,
however, that (i) not less than $127,500,000 aggregate principal amount of
Notes shall remain outstanding immediately after any such redemption and (ii)
such redemption shall occur within 30 days after the date of closing of such
sale of Capital Stock.
6. Mandatory Redemption. The Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes, except as provided in Section 8 hereof and Sections 4.14 and 4.15 of
the Indenture.
7. Notice of Redemption. Notice of redemption will
be given by first-class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address as it appears in the Note
Register.
Notes to be redeemed shall cease to bear interest from and after
the Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any).
8. Offers to Purchase. Sections 4.14 and 4.15 of
the Indenture provide that, after certain Asset Sales and upon the occurrence
of a Change of Control, and subject to the conditions and limitations contained
therein, the Issuers will make an offer to purchase certain amounts of the
Notes in accordance with the procedures set forth in the Indenture at a
purchase price equal to 101% in the case of a Change of Control and 100% in the
case of Asset Sales, of the principal amount thereof plus accrued and unpaid
interest (including Revenue Participation Interest, if any) and Liquidated
Damages (if any) to the date of purchase.
9. Registration Rights. Pursuant to the
Registration Rights Agreement among the Issuers, the Guarantors and the Initial
Purchasers, the Issuers will be obligated to consummate an exchange offer
pursuant to which the Holder of this Note shall have the right
A-7
<PAGE> 97
to exchange this Note for the Issuers' Series B 14% Senior Notes due 2004 (the
"Exchange Notes"), which will be registered under the Securities Act, in like
principal amount and having terms identical in all material respects as the
Original Notes. The Holders of the Original Notes shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
10. Denomination; Transfer; Exchange. The Notes are
issued in fully registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register any transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as provided in the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption.
11. Persons Deemed Owners. The Holder of a Note
shall be treated as the owner of such Note for all purposes.
12. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Issuers or the Guarantors, as the
case may be, after which all liability of the Trustee and Paying Agent with
respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If
the Issuers and/or the Guarantors at any time deposit with the Trustee U.S.
dollars or Government Securities sufficient to pay the principal of and
interest (including Revenue Participation Interest, if any, and Liquidated
Damages, if any) on the Notes to redemption or maturity, and comply with the
other provisions of the Indenture relating thereto, the Issuers and the
Guarantors will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but excluding their obligation to pay the
principal of, and interest (including Revenue Participation Interest, if any)
and Liquidated Damages (if any) payable on, the Notes).
14. Amendment; Supplement; Waiver. Subject to
certain exceptions, the Indenture, the Notes, the Pledge Agreement or the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, and certain existing Defaults or Events of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may make such amendments or supplements to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, comply with Article V of the
Indenture (dealing with certain mergers and consolidations) or make any other
change that does not adversely affect the legal rights of any Holder of a Note.
A-8
<PAGE> 98
15. Restrictive Covenants. The Indenture imposes
certain limitations on the ability of the Issuers, the Guarantors and their
Restricted Subsidiaries to, among other things, incur additional Indebtedness,
pay dividends or make other distributions, repurchase Equity Interests, repay
subordinated Indebtedness, make certain other Restricted Payments, create
certain Liens, enter into certain transactions with Affiliates, sell assets,
issue or sell Equity Interests of the Issuers' Restricted Subsidiaries, or
enter into certain mergers or consolidations. Such limitations are subject to
important qualifications and exceptions. The Issuers must annually report to
the Trustee on compliance with such limitations.
16. Defaults and Remedies. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable in the manner, at the time and with the effect provided
in the Indenture. Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture or the Notes unless it has received security or indemnity
reasonably satisfactory to the Trustee. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Notes then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default in
payment of principal of, or interest (including Revenue Participation Interest,
if any) or Liquidated Damages, if any) payable on, the Notes if it determines
that withholding notice is in the Holders' interest.
17. Individual Rights of Trustee. Each of the
Trustee, the Paying Agent and the Registrar under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Issuers, the Guarantors or any of their respective
Subsidiaries or Affiliates as if it were not the Trustee or such agent.
18. No Recourse Against Others; Limitation on
Liability. Notwithstanding anything contained in the Indenture or the
Notes to the contrary, (i) except for the Issuers and the Guarantors to the
extent provided in clause (ii) below, no person or entity (including, without
limitation, the past, present or future general and limited partners and/or
shareholders of OCC and Teleglobe Mobile and the directors, officers and
employees of the Issuers and the Guarantors) shall have any liability
whatsoever with respect to or arising out of the Indenture, the Notes, the
Guarantees or any of the Issuers' or the Guarantors' obligations thereunder or
any agreements or documents executed by the Issuers or the Guarantors in
connection therewith and (ii) claims with respect to the Indenture, the Notes
and the Guarantees and any obligations thereunder or under any agreements or
documents executed in connection therewith shall be satisfied solely from the
assets of the Issuers and the Guarantors. Each Holder, by accepting a Note,
waives and releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid
until the Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.
A-9
<PAGE> 99
20. Governing Law. This Note, the Indenture and the
Guarantees shall be governed by and construed in accordance with the laws of
the State of New York, as applied to contracts made and performed entirely
within the State of New York, without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Issuers have caused CUSIP numbers to be printed on the Notes as a convenience
to the Holders of the Notes. No representation is made as to the accuracy of
such numbers as printed on the Notes and reliance may be placed only on the
other identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note,
agrees to be bound by all of the terms and provisions of the Indenture, as the
same may be amended from time to time.
The Issuers will furnish without charge to any Holder of a Note
upon written request a copy of the Indenture, which has the text of this Note
printed therein. Requests may be made c/o ORBCOMM Global, L.P., 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attn: Secretary.
A-10
<PAGE> 100
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below
and have your signature guaranteed 1/:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security
or tax ID number of assignee)
and irrevocably appoint _________________________________________________,
agent to transfer this Note on the books of the Issuers. The agent may
substitute another to act for him.
Date: Signed:
------------------------- -------------------------------------
(Signed exactly as your
name appears on the other
side of this Note)
Signature Guarantee:
-----------------------------------------------------------
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Securities and Exchange Commission of the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
covering resales of this Note (which effectiveness shall not have been
suspended or terminated at the date of the transfer) and (ii) August 7, 1999,
the undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer and that this Note is being
transferred:
- ----------------------------------
1/ Your Signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange
Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any
other guarantee program acceptable to the Trustee.
A-11
<PAGE> 101
(Check One)
(1) __ to an Issuer or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities
Act; or
(3) __ to an "institutional accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) that has
furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter is set
forth in Annex A to the Offering Memorandum and which can be
obtained from the Trustee); or
(4) __ outside the United States to a "foreign person" in compliance with
Regulation S under the Securities Act; or
(5) __ pursuant to the exemption from registration provided by Rule 144
under the Securities Act; or
(6) __ pursuant to an effective registration statement under the
Securities Act; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any Person other than
the Holder thereof; provided that if box (3), 4), (5) or (7) is checked, the
Issuers or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Issuers may reasonably request to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.
A-12
<PAGE> 102
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Sections 2.6, 2.15 and 2.16 of the
Indenture shall have been satisfied.
Date: Signed:
------------------------- -------------------------------------
(Sign exactly as name
appears on the other
side of this Note)
Signature Guarantee:
-----------------------------------------------------------
NOTICE: Your signature must be guaranteed by an Institution which is a member
of one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange
Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any
other guarantee program acceptable to the Trustee.
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuers as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
--------------------------
- ---------------------------------------
NOTICE: To be executed by an
executive officer
A-13
<PAGE> 103
[OPTION OF HOLDER TO ELECT PURCHASE]
If you elect to have this Note purchased by the Issuers pursuant
to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box:
Section 4.14 [ ]
Section 4.15 [ ]
If you elect to have only part of this Note purchased by the
Issuers pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
------------------------
Dated:
------------------ -----------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or any change whatsoever and be
guaranteed by the endorser's bank or broker.
Signature Guarantee:
-----------------------------------------------------------
NOTICE: Your signature must be guaranteed by an Institution which is a member
of one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange
Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any
other guarantee program acceptable to the Trustee.
A-14
<PAGE> 104
EXHIBIT B
CUSIP No.:
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
SERIES B 14% SENIOR NOTE DUE 2004
No. $
ORBCOMM Global, L.P., a Delaware limited partnership ("ORBCOMM"),
and ORBCOMM Global Capital Corp., a Delaware corporation ("Capital" and,
together with ORBCOMM, the "Issuers"), for value received, jointly and
severally, promise to pay to ______________ or registered assigns, the
principal sum of _____________________ Dollars on August 15, 2004.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, each of the Issuers has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
ORBCOMM GLOBAL, L.P.
By:
-----------------------------
Name:
Title:
ORBCOMM GLOBAL CAPITAL CORP.
By:
-----------------------------
Name:
Title:
Dated: ,
-------- -- ----
B-1
<PAGE> 105
Trustee's Certificate of Authentication
This is one of the 14% Senior Notes due 2004 referred to in the
within-mentioned Indenture.
MARINE MIDLAND BANK,
as Trustee
By:
-----------------------------
Authorized Signatory
B-2
<PAGE> 106
(REVERSE OF NOTE)
Series B 14% Senior Note due 2004
Capitalized terms used herein shall have the meanings ascribed to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. ORBCOMM Global, L.P., a Delaware
limited partnership ("ORBCOMM"), and ORBCOMM Global Capital Corp., a Delaware
corporation ("Capital" and, together with ORBCOMM, the "Issuers"), promise to
pay interest on the principal amount of this Note at the rate per annum shown
above. Interest on the Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from August 7, 1996.
The Issuers will pay interest semi-annually in arrears on each Interest Payment
Date, commencing February 15, 1997. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest (including Revenue Participation Interest, if any)
from time to time on demand at the rate borne by the Notes plus 1.0% per annum
(without regard to any applicable grace periods) to the extent lawful.
In addition, the Notes shall bear Revenue Participation Interest,
calculated as described below, from the Issue Date to the date of payment of
the Notes. Installments of Revenue Participation Interest accrued through the
Accrual Period (as defined below) last ended or previously deferred shall
become due and payable semi-annually on each February 15 and August 15 after
the Issue Date, commencing on February 15, 1997, to the Holders of record at
the close of business on the preceding February 1 or August 1. Additionally,
all installments of accrued or deferred Revenue Participation Interest will
become due and payable (and may not be further deferred) with respect to any
principal amount of the Notes upon maturity (whether at stated maturity, upon
acceleration, maturity of repurchase obligation or otherwise) of such principal
amount of the Notes.
The Issuers, at their option, may defer payment of all or a
portion of Revenue Participation Interest then otherwise due if, and only to
the extent that, (a) the payment of such portion of Revenue Participation
Interest will cause the Credit Parties' Fixed Charge Coverage Ratio for the
four consecutive fiscal quarters last completed prior to such interest payment
date to be less than 2.0:1 on a pro forma basis after giving effect to the
assumed payment of such Revenue Participation Interest (as if such payment were
made during such four quarter period) (but may not defer such portion which, if
paid, will not cause such Credit Parties' Fixed Charge Coverage Ratio to be
less than 2.0:1); provided, however, that for purposes of calculating such
Credit Parties' Fixed Charge Coverage Ratio for any period, (x) the amount
representing Revenue Participation Interest that has been or will be deferred
B-3
<PAGE> 107
for such period shall not be included in the calculation of Credit Parties'
Fixed Charges for such period and (y) the amount representing Revenue
Participation Interest paid in such period (whether relating to such period or
any prior period) shall be included in the calculation of Credit Parties' Fixed
Charge Coverage for such period, and (b) the principal of the Notes
corresponding to such Revenue Participation Interest has not then matured and
become due and payable (at stated maturity, upon acceleration, upon maturity of
repurchase obligation or otherwise). Revenue Participation Interest that is
deferred shall become due and payable on the earlier of (i) the next succeeding
Interest Payment Date on which such Revenue Participation Interest is not
permitted to be deferred, and (ii) upon the maturity of the corresponding
principal of the Notes (whether at stated maturity, upon acceleration, upon
maturity of repurchase obligation or otherwise). No interest will accrue on
any deferred Revenue Participation Interest that has not yet become due and
payable.
Each installment of Revenue Participation Interest will be
calculated to accrue (an "Accrual Period") from, but not including, the most
recent date through which Revenue Participation Interest has been paid or
provided for or through which Revenue Participation Interest has been
calculated and deferred (or from and including the Issue Date if no installment
of Revenue Participation Interest has been paid, provided for or deferred) to,
and including, either (a) the last day of the next Semi-annual Period if the
corresponding principal of the Notes has not become due and payable (or
December 31, 1996 if no installment of Revenue Participation Interest has been
paid, provided for or deferred) or (b) the date of payment if the corresponding
principal of the Notes has become due and payable (whether at stated maturity,
upon acceleration, upon maturity of repurchase obligation or otherwise). With
respect to each Accrual Period, Revenue Participation Interest will accrue
daily on the principal of each Note outstanding during such period as follows:
(i) for each day during each month that ends during such Accrual Period and
which month ends at least 25 days prior to the date of payment, an amount equal
to 1/30th of the Monthly Revenue Participation Interest on the Note for such
month until all of such Monthly Revenue Participation Interest on the Note
shall be accrued (and all of such month's Monthly Revenue Participation
Interest on the Note shall be accrued by the last day of such month) and (ii)
for any day in any remaining period, 1/30th of the prior month's Monthly
Revenue Participation Interest on the Notes. For purposes hereof, "Monthly
Revenue Participation Interest" means, with respect to any month and any Note,
the product of 5.0% of System Revenue for such month times a fraction, the
numerator of which is the principal amount outstanding on such Note and the
denominator of which is $170,000,000.
Any reference in this Note to "accrued and unpaid interest"
includes the amount of unpaid Revenue Participation Interest and Liquidated
Damages, if any, due and payable thereon.
2. Method of Payment. The Issuers shall pay
interest (including Revenue Participation Interest, if any) on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are the Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date even if the Notes are cancelled on
B-4
<PAGE> 108
registration of transfer or registration of exchange after such Record Date.
Holders must surrender Notes to a Paying Agent to collect principal payments.
The Issuers shall pay principal and interest in U.S. dollars. The Issuers may
pay principal and interest by their check payable in such U.S. dollars or by
wire transfer as provided in the Indenture. The Issuers may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, Marine
Midland Bank, a New York banking corporation and trust company (the "Trustee",
which term includes any successor trustee under the Indenture referred to
below), will act as Paying Agent and Registrar. The Issuers may change the
Paying Agent or Registrar without notice to or consent of the Holders.
4. Indenture and Guarantee. The Issuers issued the
Note under an Indenture, dated as of August 7, 1996 (the "Indenture"), among
the Issuers, Orbital Communications Corporation, a Delaware corporation
("OCC"), Teleglobe Mobile Partners, a Delaware general partnership ("Teleglobe
Mobile"), ORBCOMM USA, L.P., a Delaware limited partnership ("USA"), and
ORBCOMM International Partners, L.P., a Delaware limited partnership
("International" and, together with OCC, Teleglobe Mobile and USA, the
"Guarantors"), and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of such terms. The Notes
are general obligations of the Issuers limited in aggregate principal amount to
$170,000,000. Payment on each Note is guaranteed on an unsecured basis by the
Guarantors pursuant to Article X of the Indenture. Each Holder, by accepting a
Note, agrees to be bound by all of the terms and provisions of the Indenture,
as the same may be amended from time to time.
5. Redemption.
(a) Optional Redemption. The Notes will be
redeemable, at the option of the Issuers, in whole or in part at any time or
from time to time, on and after August 15, 2001, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the
twelve-month period commencing on August 15 of the years set forth below, plus,
in each case, accrued and unpaid interest (including Revenue Participation
Interest, if any) and Liquidated Damages (if any) thereon to the applicable
date of redemption:
B-5
<PAGE> 109
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115.000%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.500%
2003 and thereafter . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Optional Redemption Upon Sale of Capital Stock.
Notwithstanding the provisions of paragraph (a) above, at any time, or from
time to time, on or prior to August 15, 1999, the Issuers may, at their option,
use the net proceeds of one or more sales of Capital Stock (other than
Disqualified Stock) of OCC, Teleglobe Mobile or the Company to redeem the Notes
at a redemption price equal to 115.000% of the principal amount thereof, plus
accrued and unpaid interest (including Revenue Participation Interest, if any)
and Liquidated Damages (if any) thereon to the redemption date; provided,
however, that (i) not less than $127,500,000 aggregate principal amount of
Notes shall remain outstanding immediately after any such redemption and (ii)
such redemption shall occur within 30 days after the date of closing of such
sale of Capital Stock.
6. Mandatory Redemption. The Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Notes, except as provided in Section 8 hereof and Sections 4.14 and 4.15 of
the Indenture.
7. Notice of Redemption. Notice of redemption will
be given by first-class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address as it appears in the Note
Register.
Notes to be redeemed shall cease to bear interest from and after
the Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest
(including Revenue Participation Interest, if any) and Liquidated Damages (if
any).
8. Offers to Purchase. Sections 4.14 and 4.15 of
the Indenture provide that, after certain Asset Sales and upon the occurrence
of a Change of Control, and subject to the conditions and limitations contained
therein, the Issuers will make an offer to purchase certain amounts of the
Notes in accordance with the procedures set forth in the Indenture at a
purchase price equal to 101% in the case of a Change of Control and 100% in the
case of Asset Sales, of the principal amount thereof plus accrued and unpaid
interest (including Revenue Participation Interest, if any) and Liquidated
Damages (if any) to the date of purchase.
9. Denomination; Transfer; Exchange. The Notes are
issued in fully registered form in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register any transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer
B-6
<PAGE> 110
documents and to pay certain transfer taxes or similar governmental charges
payable in connection therewith as provided in the Indenture. The Registrar
need not register the transfer of or exchange of any Notes or portions thereof
selected for redemption.
10. Persons Deemed Owners. The Holder of a Note
shall be treated as the owner of such Note for all purposes.
11. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Issuers or the Guarantors, as the
case may be, after which all liability of the Trustee and Paying Agent with
respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If
the Issuers and/or the Guarantors at any time deposit with the Trustee U.S.
dollars or Government Securities sufficient to pay the principal of and
interest (including Revenue Participation Interest, if any, and Liquidated
Damages, if any) on the Notes to redemption or maturity, and comply with the
other provisions of the Indenture relating thereto, the Issuers and the
Guarantors will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but excluding their obligation to pay the
principal of, and interest (including Revenue Participation Interest, if any)
and Liquidated Damages (if any) payable on, the Notes).
13. Amendment; Supplement; Waiver. Subject to
certain exceptions, the Indenture, the Notes, the Pledge Agreement or the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding, and certain existing Defaults or Events of Default or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without notice to or consent of any Holder, the parties thereto
may make such amendments or supplements to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, comply with Article V of the
Indenture (dealing with certain mergers and consolidations) or make any other
change that does not adversely affect the legal rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes
certain limitations on the ability of the Issuers, the Guarantors and their
Restricted Subsidiaries to, among other things, incur additional Indebtedness,
pay dividends or make other distributions, repurchase Equity Interests, repay
subordinated Indebtedness, make certain other Restricted Payments, create
certain Liens, enter into certain transactions with Affiliates, sell assets,
issue or sell Equity Interests of the Issuers' Restricted Subsidiaries, or
enter into certain mergers or consolidations. Such limitations are subject to
important qualifications and exceptions. The Issuers must annually report to
the Trustee on compliance with such limitations.
B-7
<PAGE> 111
15. Defaults and Remedies. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable in the manner, at the time and with the effect provided
in the Indenture. Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture or the Notes unless it has received security or indemnity
reasonably satisfactory to the Trustee. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Notes then outstanding to direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default in
payment of principal of, or interest (including Revenue Participation Interest,
if any) or Liquidated Damages, if any) payable on, the Notes if it determines
that withholding notice is in the Holders' interest.
16. Individual Rights of Trustee. Each of the
Trustee, the Paying Agent and the Registrar under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Issuers, the Guarantors or any of their respective
Subsidiaries or Affiliates as if it were not the Trustee or such agent.
17. No Recourse Against Others; Limitation on
Liability. Notwithstanding anything contained in the Indenture or the
Notes to the contrary, (i) except for the Issuers and the Guarantors to the
extent provided in clause (ii) below, no person or entity (including, without
limitation, the past, present or future general and limited partners and/or
shareholders of OCC and Teleglobe Mobile and the directors, officers and
employees of the Issuers and the Guarantors) shall have any liability
whatsoever with respect to or arising out of the Indenture, the Notes, the
Guarantees or any of the Issuers' or the Guarantors' obligations thereunder or
any agreements or documents executed by the Issuers or the Guarantors in
connection therewith and (ii) claims with respect to the Indenture, the Notes
and the Guarantees and any obligations thereunder or under any agreements or
documents executed in connection therewith shall be satisfied solely from the
assets of the Issuers and the Guarantors. Each Holder, by accepting a Note,
waives and releases all such liability. Such waiver and release are part of
the consideration for the issuance of the Notes.
18. Authentication. This Note shall not be valid
until the Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.
19. Governing Law. This Note, the Indenture and the
Guarantees shall be governed by and construed in accordance with the laws of
the State of New York, as applied to contracts made and performed entirely
within the State of New York, without regard to principles of conflict of laws.
20. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of
B-8
<PAGE> 112
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Issuers have caused CUSIP numbers to be printed on the Notes as a convenience
to the Holders of the Notes. No representation is made as to the accuracy of
such numbers as printed on the Notes and reliance may be placed only on the
other identification numbers printed hereon.
22. Indenture. Each Holder, by accepting a Note,
agrees to be bound by all of the terms and provisions of the Indenture, as the
same may be amended from time to time.
The Issuers will furnish without charge to any Holder of a Note
upon written request a copy of the Indenture, which has the text of this Note
printed therein. Requests may be made c/o ORBCOMM Global, L.P., 21700 Atlantic
Boulevard, Dulles, Virginia 20166, Attn: Secretary.
B-9
<PAGE> 113
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code and social security
or tax ID number of assignee)
and irrevocably appoint _________________________________________________,
agent to transfer this Note on the books of the Issuers. The agent may
substitute another to act for him.
Date: Signed:
------------------------- -------------------------------------
(Signed exactly as your
name appears on the other
side of this Note)
Signature Guarantee:
-----------------------------------------------------------
Your Signature must be guaranteed by an Institution which is a member of
one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange
Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any
other guarantee program acceptable to the Trustee.
B-10
<PAGE> 114
[OPTION OF HOLDER TO ELECT PURCHASE]
If you elect to have this Note purchased by the Issuers pursuant
to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box:
Section 4.14 [ ]
Section 4.15 [ ]
If you elect to have only part of this Note purchased by the
Issuers pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
------------------------
Dated:
------------------ -----------------------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the
face of the within Note in every particular
without alteration or any change whatsoever and be
guaranteed by the endorser's bank or broker.
Signature Guarantee:
-----------------------------------------------------------
NOTICE: Your signature must be guaranteed by an Institution which is a member
of one of the following recognized signature Guarantee Programs: (i) The
Securities Transfer Agent Medallion Program; (ii) The New York Stock Exchange
Medallion Program; (iii) The Stock Exchange Medallion Program; or (iv) any
other guarantee program acceptable to the Trustee.
B-11
<PAGE> 115
EXHIBIT C
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN
EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY
OR A NOMINEE THEREOF IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE REFERRED TO HEREINAFTER. THIS GLOBAL SECURITY MAY NOT BE EXCHANGED,
IN WHOLE OR IN PART, FOR A SECURITY REGISTERED IN THE NAME OF ANY PERSON OTHER
THAN THE DEPOSITORY TRUST COMPANY OR A NOMINEE THEREOF EXCEPT IN THE
CIRCUMSTANCES SET FORTH IN SECTION 2.15 OF THE INDENTURE, AND MAY NOT BE
TRANSFERRED, IN WHOLE OR IN PART, EXCEPT IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.15 OF THE INDENTURE. BENEFICIAL INTEREST IN THIS GLOBAL
SECURITY MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH SECTION 2.15 OF THE
INDENTURE.
<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement is made and
entered into as of August 7, 1996 among ORBCOMM Global, L.P., a Delaware
limited partnership ("Global"), ORBCOMM Global Capital Corp., a Delaware
corporation ("Capital" and, together with Global, the "Issuers"), Orbital
Communications Corporation, a Delaware corporation ("OCC"), Teleglobe Mobile
Partners, a Delaware general partnership ("Teleglobe Mobile"), ORBCOMM USA,
L.P., a Delaware limited partnership ("USA"), and ORBCOMM International
Partners, L.P., a Delaware limited partnership ("International" and, together
with OCC, Teleglobe Mobile and USA, the "Guarantors"), and Bear, Stearns & Co.
Inc., J.P. Morgan Securities Inc. and RBC Dominion Securities Corporation (the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement
dated as of August 2, 1996 among the Issuers, the Guarantors and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Issuers to the Initial Purchasers of an aggregate of $170,000,000 aggregate
principal amount of the Issuers' 14% Senior Notes due 2004 (the "Notes"). In
order to induce the Initial Purchasers to enter into the Purchase Agreement and
to purchase the Notes, the Issuers and the Guarantors have agreed to provide to
the Initial Purchasers and their direct and indirect transferees the
registration rights for the Notes set forth in this Agreement. The execution
and delivery of this Agreement is a condition precedent to the obligations of
the Initial Purchasers under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings (and, unless
otherwise indicated, capitalized terms used herein without definition shall
have the meanings ascribed to them in the Purchase Agreement):
"Act" shall mean the Securities Act of 1933, as amended.
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
<PAGE> 2
"Applicable Period" shall have the meaning set forth in
Section 3(t) hereof.
"Capital" shall have the meaning set forth in the preamble to
this Agreement.
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Commission" shall mean the Securities and Exchange
Commission, or such other federal agency administering the Act or the
Exchange Act.
"Depository" shall mean The Depository Trust Company, or any
successor depositary appointed by the Issuers; provided, however, that
such depositary must have an address in the Borough of Manhattan, The
City of New York.
"Effectiveness Period" shall have the meaning set forth in
Section 2(b) hereof.
"Event Date" shall have the meaning set forth in Section 2(e)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" shall mean the exchange offer by the Issuers
of Exchange Notes for Notes pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under
the Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean the
registration statement (on Form S-4 or, if applicable, other
appropriate form) relating to the Exchange Offer, and all amendments
and supplements to such registration statement, in each case including
the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section
2(a) hereof.
"Exchange Notes" shall mean the 14% Series B Senior Notes due
2004, to be issued by the Issuers
-2-
<PAGE> 3
under the Indenture and containing terms identical to the Notes
(except that (i) interest thereon shall accrue from the last date on
which interest was paid on the Notes or, if no such interest has been
paid, from August 7, 1996, and (ii) the transfer restrictions thereon
shall be eliminated) to be offered to Holders of Notes in exchange for
Notes pursuant to the Exchange Offer.
"Global" shall have the meaning set forth in the preamble to
this Agreement.
"Guarantors" shall have the meaning set forth in the preamble
to this Agreement.
"Holder" shall mean any Initial Purchaser, for so long as it
owns any Registrable Securities, and each of their respective
successors, assigns and direct and indirect transferees who become
registered owners of Registrable Securities under the Indenture.
"Indenture" shall mean the Indenture dated as of August 7,
1996 by and among the Issuers, the Guarantors and Marine Midland Bank,
as trustee, as the same may be amended or supplemented from time to
time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n)
hereof.
"International" shall have the meaning set forth in the
preamble to this Agreement.
"Issuers" shall have the meaning set forth in the preamble to
this Agreement, and shall also include the Issuers' successors.
"Liquidated Damages" shall have the meaning set forth in
Section 2(e) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding (as determined under the
Indenture) Registrable Securities.
-3-
<PAGE> 4
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Notes" shall have the meaning set forth in the preamble to
this Agreement.
"OCC" shall have the meaning set forth in the preamble to this
Agreement.
"Participating Broker-Dealer" shall have the meaning set forth
in Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section
2(a) hereof.
"Private Exchange Notes" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Records" shall have the meaning set forth in Section 3(n)
hereof.
"Registrable Securities" shall mean the Notes and, if issued,
the Private Exchange Notes; provided, however, that Notes or Private
Exchange Notes, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such
Notes or Private Exchange Notes or the resale thereof shall have been
declared effective under the Act and such Notes or Private Exchange
Notes, as the case may be, shall have been disposed of pursuant to
such Registration Statement, (ii) such Notes or Private Exchange
Notes, as the case may be, shall have become
-4-
<PAGE> 5
eligible to be sold to the public pursuant to Rule 144(k) (or any
similar provision then in force, but not Rule 144A) under the Act,
(iii) such Notes or Private Exchange Notes, as the case may be, shall
have ceased to be outstanding or (iv) with respect to the Notes, such
Notes have been exchanged for Exchange Notes upon consummation of the
Exchange Offer.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Issuers with this
Agreement, including, without limitation: (i) Commission, stock
exchange or NASD registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained by any
Holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) fees and expenses incurred in connection
with compliance with state securities or blue sky laws (including
reasonable fees and disbursements of counsel for any underwriters or
Holders in connection with blue sky qualification of any of the
Exchange Notes or Registrable Securities) and compliance with the
rules of the NASD, (iii) expenses of any Persons in preparing or
assisting in preparing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto,
and in preparing or assisting in preparing, printing and distributing
any underwriting agreements, securities sales agreements and other
documents relating to the performance of and compliance with the
obligations under this Agreement, (iv) rating agency fees, (v) fees
and disbursements of counsel for and independent certified public
accountants of the Issuers, including the expenses of any "cold
comfort" letters required by or incident to such performance and
compliance, (vi) fees and expenses of the Trustee, and any exchange
agent or custodian, (vii) fees and expenses incurred in connection
with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, and (viii) the reasonable fees and
expenses of any special experts retained by the Issuers in connection
with any Registration Statement.
"Registration Statement" shall mean any registration statement
of the Issuers relating to the Exchange Notes or Registrable
Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such registration statement,
-5-
<PAGE> 6
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Issuers pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable
Securities, on an appropriate form under Rule 415 under the Act, or
any similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
"Teleglobe Mobile" shall have the meaning set forth in the
preamble to this Agreement.
"Trustee" shall mean the trustee under the Indenture.
"USA" shall have the meaning set forth in the preamble to this
Agreement.
2. Registration Under the Act.
(a) Exchange Offer. To the extent not prohibited by any
applicable law or applicable interpretation of the staff of the Commission, the
Issuers and the Guarantors shall, for the benefit of the Holders, at the
Issuers' cost, use their best efforts to cause to be filed with the Commission
within 30 days after the Closing Time an Exchange Offer Registration Statement
on an appropriate form under the Act covering the offer by the Issuers to the
Holders to exchange all of the Registrable Securities (other than Private
Exchange Notes) for a like aggregate principal amount of Exchange Notes, to
have such Exchange Offer Registration Statement declared effective under the
Act by the Commission not later than the date which is 150 days after the
Closing Time, to have such Registration Statement remain effective until the
closing of the Exchange Offer and
-6-
<PAGE> 7
to cause the Exchange Offer to be consummated not later than 180 days after the
Closing Time. The Exchange Notes will be issued under the Indenture. Upon the
effectiveness of the Exchange Offer Registration Statement, the Issuers shall
promptly commence the Exchange Offer, it being the objective of such Exchange
Offer to enable each Holder eligible and electing to exchange Registrable
Securities for Exchange Notes (assuming that such Holder is not an affiliate of
either Issuer within the meaning of Rule 405 under the Act, is not a
broker-dealer tendering Registrable Securities acquired directly from the
Issuers for its own account, acquires the Exchange Notes in the ordinary course
of such Holder's business and has no arrangements or understandings with any
Person to participate in the Exchange Offer for the purpose of distributing the
Exchange Notes) to transfer such Exchange Notes from and after their receipt
without any limitations or restrictions under the Act or under state securities
or blue sky laws.
In connection with the Exchange Offer, the Issuers and the
Guarantors shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a
period of not less than 30 days after the date notice thereof is
mailed to the Holders, or longer if required by applicable law (such
period being referred to herein as the "Exchange Period");
(iii) utilize the services of the Depository for the
Exchange Offer;
(iv) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business
day of the Exchange Period, by sending to the institution specified in
the notice a telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Notes delivered
for exchange, and a statement that such Holder is withdrawing its
election to have such Notes exchanged;
(v) notify each Holder that any Note not tendered will
remain outstanding and continue to accrue interest, but will not
retain any rights under this
-7-
<PAGE> 8
Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable
laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Notes acquired by it and having the status of an unsold
allotment in the initial distribution, the Issuers upon the request of such
Initial Purchaser shall, simultaneously with the delivery of the Exchange Notes
in the Exchange Offer, issue and deliver to such Initial Purchaser in exchange
(the "Private Exchange") for Notes held by such Initial Purchaser a like
principal amount of debt securities of the Issuers that are identical (except
that such securities shall bear appropriate transfer restrictions) to the
Exchange Notes (the "Private Exchange Notes") and which are issued pursuant to
the Indenture (which will provide that the Exchange Notes will not be subject
to the transfer restrictions set forth in the Indenture and that the Exchange
Notes, the Private Exchange Notes and the Notes will vote and consent together
on all matters as one class and that none of the Exchange Notes, the Private
Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter). The Private Exchange Notes shall be of the same
series as and shall bear the same CUSIP number as the Exchange Notes.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Issuers and the Guarantors
shall:
(i) accept for exchange all Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer;
(ii) accept for exchange all Notes duly tendered pursuant
to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by
the Issuers, and issue, and cause the Trustee under the Indenture to
promptly authenticate and deliver to each Holder, a new Exchange Note
or Private Exchange Note, as the case may be, equal in principal
amount to the principal amount of the Notes surrendered by such
Holder.
-8-
<PAGE> 9
To the extent not prohibited by applicable law or any
applicable interpretation of the staff of the Commission, the Issuers and the
Guarantor shall use their best efforts to complete the Exchange Offer as
provided above, and shall comply with all applicable requirements of the Act,
the Exchange Act and other applicable laws in connection with the Exchange
Offer. The Exchange Offer shall not be subject to any condition, other than
that (i) the Exchange Offer does not violate any applicable law or
interpretation of the staff of the Commission, (ii) no action or proceeding has
been instituted or threatened in any court or by or before any governmental
agency with respect to the Exchange Offer which, in the reasonable judgment of
the Issuers, might impair the ability of the Issuers to proceed with the
Exchange Offer, (iii) there has not been any material change, or development
involving a prospective change, in the business or financial affairs of the
Issuers or any of its subsidiaries which, in the reasonable judgment of the
Issuers, would materially impair the Issuers' ability to consummate the
Exchange Offer or have a Material Adverse Effect on the Issuers if the Exchange
Offer is consummated, (iv) there has not been proposed, adopted, or enacted any
law, statute, rule or regulation which, in the reasonable judgment of the
Issuer, might materially impair the ability of the Issuer to proceed with the
Exchange Offer or have a Material Adverse Effect on the Issuers if the Exchange
Offer is consummated or (v) all governmental approvals which the Issuers shall
reasonably deem necessary for the consummation of the Exchange Offer as
contemplated have been obtained. Each Holder of Registrable Securities who
wished to exchange such Registrable Securities for Exchange Notes in the
Exchange Offer will be required to make certain customary representations in
connection therewith, including representations that such Holder is not an
affiliate of any Issuer or Guarantor within the meaning of Rule 405 under the
Act, that any Exchange Notes to be received by it will be acquired in the
ordinary course of business and that at the time of the commencement of the
Exchange Offer it has no arrangement with any Person to participate in the
distribution (within the meaning of the Act) of the Exchange Notes. The
Issuers shall inform the Initial Purchasers, after consultation with the
Trustee and the Initial Purchasers, of the names and addresses of the Holders
to whom the Exchange Offer is made, and the Initial Purchasers shall have the
right to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
-9-
<PAGE> 10
In the event that the Issuers are unable to consummate the
Exchange Offer due to any event listed in clauses (i) through (v) above, the
Issuers shall not be deemed to have breached any covenant under this Section
2(a).
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
Private Exchange Notes and Exchange Notes held by Participating Broker-Dealers,
and the Issuers and the Guarantors shall have no further obligation to register
Registrable Securities (other than Private Exchange Notes) pursuant to Section
2(b) of this Agreement.
(b) Shelf Registration. In the event that the Exchange
Offer Registration provided in Section 2(a) above is not available to any
Holder or may not be consummated as soon as practicable after the last day of
the Exchange Period because, in either case, it would violate applicable
securities laws or because the applicable interpretations of the staff of the
Commission would not permit the Issuers to effect the Exchange Offer, or (ii)
the Exchange Offer is not for any other reason consummated within 180 days of
the Closing Time, the Issuers and the Guarantors shall, at their cost, cause to
be filed as promptly as practicable after such determination or date, as the
case may be, and, in any event, within 30 days thereafter, a Shelf Registration
Statement providing for the sale by the Holders of all of the Registrable
Securities, and shall use their best efforts to have such Shelf Registration
Statement declared effective by the Commission not later than the date which is
120 days after such determination. No Holder of Registrable Securities may
include any of its Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such Holder furnishes to the Issuers in
writing, within 15 days after receipt of a request therefor, such information
as the Issuers may, after conferring with counsel with regard to information
relating to Holders that would be required by the Commission to be included in
such Shelf Registration Statement or Prospectus included therein, reasonably
request for inclusion in any Shelf Registration Statement or Prospectus
included therein. Each Holder as to which any Shelf Registration is being
effected agrees to furnish promptly to the Issuers all information to be
disclosed in the applicable Shelf Registration Statement or Prospectus included
therein in order to make the information
-10-
<PAGE> 11
previously furnished to the Issuers by such Holder not materially misleading.
The Issuers and the Guarantors agree, subject to applicable
law or applicable interpretation of the staff of the Commission, to use their
reasonable best efforts to keep the Shelf Registration Statement continuously
effective under the Act for a period ending on the earlier of the date three
years from the Closing Time (subject to extension pursuant to the last
paragraph of Section 3) or when all of the Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding (the "Effectiveness Period").
The Issuers and the Guarantor shall not permit any securities other than
Registrable Securities to be included in the Shelf Registration. The Issuers
will, in the event a Shelf Registration Statement is declared effective,
provide to each Holder copies of the prospectus which is a part of the Shelf
Registration Statement, notify each such Holder when the Shelf Registration
Statement has become effective and take certain other actions as are customary
to permit unrestricted resales of the Notes. The Issuers and the Guarantors
further agree, if necessary, to use their reasonable best efforts to supplement
or amend the Shelf Registration Statement, if required by the Act or the rules,
regulations or instructions applicable to the registration form used by the
Issuers and the Guarantors for such Shelf Registration Statement or by any
other rules and regulations thereunder for shelf registrations, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Registrable Securities, and the Issuers agree to furnish to the Holders
of Registrable Securities copies of any such supplement or amendment promptly
after its being used or filed with the Commission.
(c) Expenses. The Issuers and the Guarantors shall pay
all Registration Expenses in connection with registrations pursuant to Section
2(a) or 2(b). Each Holder shall pay all expenses of its counsel, underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Shelf
Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
-11-
<PAGE> 12
effective unless it has been declared effective by the Commission; provided,
however, that if, after it has been declared effective, the offering of
Registrable Securities pursuant to a Shelf Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the
Commission or any other governmental agency or court, such Registration
Statement will be deemed not to have been effective during the period of such
interference, until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume.
(e) Liquidated Damages. In the event that an Exchange
Offer Registration Statement has not been filed with the Commission on or prior
to 30 days following the Closing Time, additional interest payable by the
Issuers as liquidated damages ("Liquidated Damages") will accrue on the Notes
from and including the 31st day following the Closing time until but excluding
the date such Exchange Offer Registration Statement is filed. In addition, if
on or prior to 150 days following the Closing Time, such Exchange Offer
Registration Statement is not declared effective, Liquidated Damages will
accrue on the Notes from and including the 151st day following the Closing Time
until but excluding the date such Exchange Offer Registration Statement is
declared effective. Further, if on or prior to 180 days following the Closing
Time the Exchange Offer is not consummated, Liquidated Damages will accrue on
the Notes from and including the 181st day following the Closing time until,
but excluding, the consummation of the Exchange Offer. If applicable law or
interpretations of the Commission prohibit a Holder from participating in the
Exchange Offer or if for any reason the Exchange Offer is not consummated
within 180 days of the Closing Time, and if a Shelf Registration Statement is
not filed or declared effective within the time period provided by Section 2(b)
for such filing or declaration, Liquidated Damages will accrue on the Notes not
exchanged as a result of such law or interpretation from and including the day
immediately following such default until the effective date of the Shelf
Registration Statement. In each case, such Liquidated Damages will be payable
in cash semiannually in arrears, with the first semiannual payment due on the
first interest payment date in respect of the Notes following the date from
which Liquidated Damages begin to accrue, and will accrue, under each
circumstance set forth above at a rate per annum equal to an additional one
quarter of one percent (O.25%) of the principal amount of the Notes upon the
occurrence of each such circumstance, which rate will increase by one
-12-
<PAGE> 13
quarter of one percent (0.25%) for each 90-day period that such Liquidated
Damages continues to accrue under any circumstance, with an aggregate maximum
increase in the interest rate per annum equal to one percent (1.00%).
Upon the filing of the Exchange Offer Registration Statement,
the effectiveness of the Exchange Offer Registration Statement, or the
consummation of the Exchange Offer, as the case may be, the interest rate borne
by the Notes will be reduced by the full amount of any such increase to the
extent that such increase related to the failure of any such event to have
occurred. Upon the effectiveness of a Shelf Registration Statement, the
interest rate borne by the Notes shall be reduced, from and as of the date of
such effectiveness, to the original interest rate of the Notes unless and until
increased as described above. Notwithstanding the foregoing, the Issuers and
the Guarantors (i) shall not be required to amend or supplement the Shelf
Registration Statement, any related prospectus or any document incorporated
therein by reference and (ii) may suspend the effectiveness of any such Shelf
Registration Statement in the event that, and for a period not to exceed, for
so long as this Agreement is in effect, an aggregate of 90 days in any one
calendar year if (A) an event occurs and is continuing as a result of which the
Shelf Registration Statement, any related prospectus or any document
incorporated therein by reference as then amended or supplemented would, in the
Issuers' good faith judgment, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading, and (B) the Issuers determine in their good faith judgment that
the disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Issuers.
The Issuers shall notify the Trustee within three business
days after each and every date on which an event occurs in respect of which
Liquidated Damages is required to be paid (an "Event Date"). Liquidated
Damages shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Notes, Exchange Notes or Private Exchange Notes, as the case
may be, on or before the applicable semiannual interest payment date,
immediately available funds in sums sufficient to pay the Liquidated Damages
then due. The Liquidated Damages due shall be payable on each interest payment
date to the record Holder of Notes entitled to receive the interest payment to
be paid on such date as set forth in the Indenture. Each obligation to pay
-13-
<PAGE> 14
Liquidated Damages shall be deemed to accrue from and including the day
following the applicable Event Date.
(f) Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Issuers and the
Guarantors acknowledge that any failure by the Issuers or the Guarantors to
comply with their obligations under Section 2(a) and Section 2(b) hereof would
result in material irreparable injury to the Initial Purchasers or the Holders
for which there is no adequate remedy at law, that it would not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, any Initial Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Issuers' and the Guarantors' obligations
under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Issuers and the Guarantors with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Issuers and the
Guarantors shall:
(a) prepare and file with the Commission a Registration Statement
or Registration Statements as prescribed by Sections 2(a) and 2(b)
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Act, which form (i) shall be selected by
the Issuers, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling
Holders and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the Commission to be filed therewith, and the
Issuers and the Guarantors shall use their reasonable best efforts to
cause such Registration Statement to become effective and remain
effective in accordance with Section 2; provided, however, that if (1)
such filing is pursuant to Section 2(b), or (2) a Prospectus contained
in an Exchange Offer Registration Statement filed pursuant to Section
2(a) is required to be delivered under the Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Issuers, if requested, shall furnish to and afford the
Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing
-14-
<PAGE> 15
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated
by reference therein and all exhibits thereto) proposed to be filed at
least 5 business days prior to such filing. The Issuers and the
Guarantors shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto in respect of which the Holders,
pursuant to this Agreement, must be afforded an opportunity to review
prior to the filing of such document, if the Majority Holders or such
Participating Broker-Dealer, as the case may be, their counsel or the
managing underwriters, if any, shall reasonably object;
(b) prepare and file with the Commission such amendments
and post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be, and
cause each Prospectus to be supplemented by any required prospectus
supplement and as so supplemented to be filed pursuant to Rule 424 (or
any similar provision then in force) under the Act, and comply with
the provisions of the Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to
the disposition of all securities covered by each Registration
Statement during the Effectiveness Period or the Applicable Period, as
the case may be, in accordance with the intended method or methods of
distribution by the selling Holders thereof described in this
Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities, at least three business days prior
to filing, that a Shelf Registration Statement with respect to the
Registrable Securities is being filed and advising such Holder that
the distribution of Registrable Securities will be made in accordance
with the method selected by the Majority Holders, (ii) furnish to each
Holder of Registrable Securities and to each underwriter of an
underwritten offering of Registrable Securities, if any, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other
documents as such Holder or underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the
Registrable Securities, and (iii) consent to the
-15-
<PAGE> 16
use of the Prospectus or any amendment or supplement thereto by each
of the selling Holders of Registrable Securities in connection with
the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement and each underwriter of
an underwritten offering of Registrable Securities shall reasonably
request by the time the applicable Registration Statement is declared
effective by the Commission, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder
and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that no Issuer or Guarantor shall be required to
(i) qualify as a foreign partnership or foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process in any jurisdiction where it
would not otherwise be subject to such service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not then
so subject;
(e) in the case of (1) a Shelf Registration or (2)
Participating Broker-Dealers who have notified the Issuers that they
will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking
to sell Exchange Notes and are required to deliver Prospectuses,
notify each Holder of Registrable Securities, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing
underwriters, if any, promptly and confirm such notice in writing (i)
when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective,
(ii) of any request by the Commission or any state securities
authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the
Commission or any state securities authority of any stop order
suspending the effectiveness of a
-16-
<PAGE> 17
Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and
warranties of the Issuers or the Guarantors contained in any
underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to such offering cease to be true and
correct in all material respects, (v) if any Issuer receives any
notification with respect to the suspension of the qualification of
the Registrable Securities or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction or
the initiation of any proceeding for such purpose, (vi) of the
happening of any event or the failure of any event to occur or the
discovery of any facts or otherwise, during the period a Shelf
Registration Statement is effective or the Applicable Period, as the
case may be, which makes any statement made in the Shelf Registration
Statement, Exchange Offer Registration Statement or the related
Prospectus untrue in any material respect or which causes such
Registration Statement or Prospectus, as the case may be, to omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
and (vii) the Issuers' reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate;
(f) make every effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, upon request and without charge, at
least one conformed copy of each Registration Statement and any
post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with
the Depository; and cause
-17-
<PAGE> 18
such Registrable Securities to be in such denominations (consistent
with the provisions of the Indenture) and registered in such names as
the selling Holders or the underwriters may reasonably request at
least two business days prior to the closing of any sale of
Registrable Securities;
(i) in the case of a Shelf Registration or an Exchange
Offer Registration, upon the occurrence of any circumstance
contemplated by Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v),
3(e)(vi) or 3(e)(vii) hereof, use its best efforts to prepare a
supplement or post-effective amendment to the Registration Statement
and the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The Issuers agree to notify each Holder to suspend
use of the Prospectus as promptly as practicable after the occurrence
of any such circumstance, and each Holder hereby agrees to suspend use
of the Prospectus until the Issuers and the Guarantors have amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, upon request,
provide a reasonable number of copies of any document which is
incorporated by reference into a Registration Statement or a
Prospectus after the initial filing of a Registration Statement;
(k) obtain a CUSIP number for all Exchange Notes or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee
with printed certificates for the Exchange Notes or the Registrable
Securities, as the case may be, in a form eligible for deposit with
the Depository;
(l) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Notes or Registrable
Securities, as the case may be, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for
the Indenture to be so qualified in accordance with the
-18-
<PAGE> 19
terms of the TIA and execute, and use their best efforts to cause the
Trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with
the Commission to enable the Indenture to be so qualified in a timely
manner;
(m) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are customary in
underwritten public offerings and take all such other appropriate
actions as are reasonably requested in order to expedite or facilitate
the registration or the disposition of such Registrable Securities,
and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration: (i) make such representations and warranties to Holders
of such Registrable Securities and the underwriters (if any), with
respect to the business of the Issuers and the Guarantors and their
subsidiaries and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to
underwriters in underwritten public offerings, and confirm the same if
and when requested; (ii) obtain opinions of counsel to the Issuers and
the Guarantors and updates thereof in form and substance reasonably
satisfactory to the managing underwriters (if any) and the Holders of
a majority in principal amount of the Registrable Securities being
sold, addressed to each selling Holder and the underwriters (if any)
covering the matters customarily covered in opinions requested in
underwritten public offerings and such other matters as may be
reasonably requested by such Holders and underwriters; (iii) obtain
"cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Issuers and the
Guarantors (and, if necessary, any other independent certified public
accountants of any subsidiary of the Issuers or the Guarantors or of
any business acquired or to be acquired by the Issuers or the
Guarantors for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed
to the selling Holders of Registrable Securities and to each of the
underwriters, such letters to be in customary form and covering
matters of the type customarily covered in
-19-
<PAGE> 20
"cold comfort" letters in connection with underwritten public
offerings and such other matters as reasonably requested by such
selling Holders and underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 4 hereof (or such other provisions and procedures acceptable
to Holders of a majority in aggregate principal amount of Registrable
Securities covered by such Registration Statement and the managing
underwriters or agents) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required
thereunder;
(n) if (1) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is required to
be delivered under the Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable
Securities being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition
of Registrable Securities, if any, and any attorney, accountant or
other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Issuers and the
Guarantors and their subsidiaries (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and the Guarantors and their
subsidiaries to supply all information in each case reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Issuers and the Guarantors determine, in
good faith, to be confidential and as to which they notify the
Inspectors are confidential shall not be disclosed by the Inspectors
unless, after prior consultation with the Issuers and the Guarantors,
(i) the disclosure of such Records is necessary to avoid or correct a
material misstatement or omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to an
-20-
<PAGE> 21
effective subpoena or other order from a court of competent
jurisdiction or (iii) the information in such Records has been made
generally available to the public, other than as a result of a breach
of confidentiality or secrecy to the Issuers or the Guarantors. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Issuers unless and until such is
made generally available to the public, other than as a result of a
breach of confidentiality or secrecy to the Issuers or the Guarantors.
Each selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction or is otherwise required in the
opinion of such Participating Broker-Dealer, give notice to the
Issuers and the Guarantors and allow the Issuers and the Guarantors at
their expense to undertake appropriate action to prevent disclosure of
the Records deemed confidential;
(o) comply with all applicable rules and regulations of
the Commission and, as soon as reasonably practicable, make generally
available to the Holders earnings statements of the Issuers satisfying
the provisions of Section 11(a) of the Act and Rule 158 thereunder (or
any similar rule promulgated under the Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the
end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of such Issuer
or Guarantor after the effective date of a Registration Statement,
which statements shall cover said 12-month period;
(p) upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers and the
Guarantors addressed to the Trustee for the benefit of all Holders of
Registrable Securities participating in the Exchange Offer or the
Private Exchange, as the case may be, and which includes an
-21-
<PAGE> 22
opinion that (i) the Issuers and the Guarantors have duly authorized,
executed and delivered the Exchange Notes and Private Exchange Notes
and the Indenture, as the case may be, and (ii) each of the Exchange
Notes or the Private Exchange Notes and the Indenture, as the case may
be, constitute a legal, valid and binding obligation of each of the
Issuers and the Guarantors, enforceable against each of the Issuers
and the Guarantors in accordance with its respective terms (in each
case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or cause to be marked, on such
Registrable Securities delivered by such Holders that such Registrable
Securities are being cancelled in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(s) use their best efforts to take all other steps
necessary to effect the registration of the Registrable Securities
covered by a Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer
Registration Statement (i) include in the Exchange Offer Registration
Statement a section entitled "Plan of Distribution," which section
shall be reasonably acceptable to the Initial Purchasers or another
representative of the Participating Broker-Dealers, and which shall
contain a summary statement of the positions taken or policies made by
the staff of the Commission with respect to the potential
"underwriter" status of any broker-dealer (a "Participating
Broker-Dealer") that holds Registrable Securities acquired for its own
account as a result of market-making activities or other trading
activities and that will be the
-22-
<PAGE> 23
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly
disseminated by the staff of the Commission or such positions or
policies, in the reasonable judgment of the Initial Purchasers or such
other representative, represent the prevailing views of the staff of
the Commission, including a statement that any such broker-dealer who
receives Exchange Notes for Registrable Securities pursuant to the
Exchange Offer may be deemed a statutory underwriter and must deliver
a prospectus meeting the requirements of the Act in connection with
any resale of such Exchange Notes, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Issuers the notice referred to
in Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request, (iii) hereby
consent to the use of the Prospectus forming part of the Exchange
Offer Registration Statement or any amendment or supplement thereto,
by any Person subject to the prospectus delivery requirements of the
Commission, including all Participating Broker-Dealers, in connection
with the sale or transfer of the Exchange Notes covered by the
Prospectus or any amendment or supplement thereto, (iv) use their best
efforts to keep the Exchange Offer Registration Statement effective
and to amend and supplement the Prospectus contained therein, in order
to permit such Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirements of the Act for such
period of time as such Persons must comply with such requirements in
order to resell the Exchange Notes (provided, however, that such
period shall not be required to exceed 180 days, or such longer period
if extended pursuant to the last sentence of this Section 3 (the
"Applicable Period")), and (v) include in the transmittal letter or
similar documentation to be executed by an exchange offeree all
necessary information for such offeree to participate in the Exchange
Offer:
(B) in the case of any Exchange Offer Registration
Statement, the Issuers agree to deliver to the Initial Purchasers or
to another representative of the Participating Broker-Dealers on
behalf of the Participating Broker-Dealers upon consummation of the
-23-
<PAGE> 24
Exchange Offer (i) an opinion of counsel substantially in the form
attached hereto as Exhibit A, (ii) an Officers' Certificate containing
certifications substantially similar to those set forth in Section
7(b) of the Purchase Agreement and such additional certifications as
are customarily delivered in a public offering of debt securities, and
(iii) a comfort letter in customary form permitted by Statement of
Auditing Standards No. 72 of the American Institute of Certified
Public Accountants.
The Issuers may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Issuers such
information regarding such seller and the proposed distribution of such
Registrable Securities as the Issuers may from time to time reasonably request
in writing. The Issuers may exclude from such registration the Registrable
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
In the case of (1) a Shelf Registration Statement or (2)
Participating Broker-Dealers who have notified the Issuers that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, are seeking to sell Exchange Notes and are
required to deliver copies of such Prospectus, each Holder agrees that, upon
receipt of any notice from the Issuers of the happening of any event of the
kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v), 3(e)(vi) or
3(e)(vii) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(i) hereof or until it is advised in writing by the Issuers that the
use of the applicable Prospectus may be resumed, and, if so directed by the
Issuers, such Holder will deliver to the Issuers (at the Issuers' expense) all
copies in such Holder's possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable
Securities or Exchange Notes, as the case may be, current at the time of
receipt of such notice. If the Issuers shall give any such notice to suspend
the disposition of Registrable Securities or Exchange Notes, as the case may
be, pursuant to a Registration Statement, the Issuers shall use their best
efforts to file and have declared effective as soon as practicable an amendment
or supplement to the Registration Statement and shall extend the period during
-24-
<PAGE> 25
which such Registration Statement shall be maintained effective pursuant to
this Agreement by the number of days in the period from and including the date
of the giving of such notice to and including the date when the Issuers shall
have made available to the Holders copies of the supplemented or amended
Prospectus necessary to resume such dispositions or shall have advised the
Holders in writing that the use of the applicable Prospectus may be resumed.
4. Indemnification and Contribution. (a) The Issuers
and the Guarantors shall, jointly and severally, indemnify and hold harmless
each Initial Purchaser, each Holder, each Participating Broker-Dealer, each
underwriter who participates in an offering of Registrable Securities, each of
their respective affiliates, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and each of their respective directors, officers, partners,
employees, representatives and agents, to the fullest extent lawful as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or any amendment thereto
related to the Registrable Securities or Exchange Notes, including all
documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus or any amendment or
supplement thereto, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation,
or any investigation or proceeding by any court or governmental agency
or body, whether commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, if and only if such settlement is
effected with the prior written consent of the Issuers; and
-25-
<PAGE> 26
(iii) from and against any and all expenses whatsoever
(including reasonable fees and disbursements of counsel chosen by such
Initial Purchaser, Holder, Participating Broker-Dealer or underwriter
(except to the extent otherwise expressly provided in Section 4(c)
hereof)), as incurred, reasonably incurred in investigating, preparing
for or defending against any litigation, or any investigation or
proceeding by any court or governmental agency or body, whether
commenced or threatened, and any amount paid in settlement thereof, or
any other claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or
(ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with written information furnished to the Issuers by such Initial
Purchaser, such Holder, such Participating Broker-Dealer or any underwriter in
writing expressly for use in the Registration Statement or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) or (ii)
contained in any preliminary prospectus if such Initial Purchaser, such Holder,
such Participating Broker-Dealer or such underwriter failed to send or deliver
a copy of the Prospectus to the Person asserting such losses, claims, damages
or liabilities on or prior to the delivery of written confirmation of any sale
of securities covered thereby to such Person in any case where such delivery is
required by the Act and a court of competent jurisdiction in a judgment not
subject to appeal or final review shall have determined that such Prospectus
would have corrected such untrue statement or omission. Any amounts advanced
by the Issuers or the Guarantors to an indemnified party pursuant to this
Section 4 as a result of such losses shall be returned to the Issuers if it
shall be finally judicially determined by such a court in a judgment not
subject to appeal or final review that such indemnified party was not entitled
to indemnification by the Issuers and the Guarantors.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Issuers and the Guarantors, each Initial
Purchaser, each underwriter who participates in an offering of Registrable
Securities and the other selling Holders and each of their respective
-26-
<PAGE> 27
directors, officers (including each officer of any Issuer who signed the
Registration Statement), employees and agents, and each Person, if any, who
controls either Issuer or any Guarantor, any Initial Purchaser, any underwriter
or any other selling Holder within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 4(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Issuers by such selling Holder expressly for use in the
Registration Statement (or any amendment thereto) or any such Prospectus (or
any amendment or supplement thereto); provided, however, that, in the case of a
Shelf Registration Statement, no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party (but failure to notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement). An indemnifying party may participate,
at its own expense, in the defense of any such action. If an indemnifying
party so elects within a reasonable time after receipt of such notice, such
indemnifying party, jointly with any other indemnifying party, may assume the
defense of such action with counsel chosen by it and reasonably satisfactory to
the indemnified parties defendant in such action; provided, however, that if
any such indemnified party reasonably determines, upon written advice of
counsel, that there may be legal defenses available to such indemnified party
which are different from or in addition to those available to such indemnifying
party or that representation of such indemnifying party and any indemnified
party by the same counsel would present a conflict of interest, then such
indemnifying party or parties shall not so be entitled to assume such defense.
If an indemnifying party is not so
-27-
<PAGE> 28
entitled to assume the defense of such action, counsel for such indemnifying
party shall be entitled to conduct the defense of such indemnifying party and
counsel for each indemnified party or parties shall be entitled to conduct the
defense of such indemnified party or parties. If an indemnifying party assumes
the defense of an action in accordance with and as permitted by the provisions
of this Section 4(c), such indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one action, or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, which consent shall not be
unreasonably withheld, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4, unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) Notwithstanding any payment or payments made by any
Issuer or Guarantor hereunder, (i) each Issuer and each Guarantor hereby
expressly waives subrogation to, and agrees that it shall not be entitled to be
subrogated to, any of the rights of any indemnified party against any other
Issuer or Guarantor or any right of offset held by any indemnified party for
the payment of any amounts owed to any indemnified party pursuant to this
Section 4, and (ii) each Issuer and each Guarantor hereby expressly waives any
right to contribution from any other Issuer or Guarantor; provided, however,
that if any of the foregoing provisions of this paragraph are held to be
contrary to applicable law or unenforceable by a court of competent
jurisdiction, each Issuer and each Guarantor hereby expressly agrees that any
right of subrogation or contribution that such Issuer or Guarantor may have as
a result of such applicable law or unenforceability, as the case may be, shall
be subordinate in right of payment to the payment in full in cash of all
-28-
<PAGE> 29
amounts owed to any indemnified party pursuant to this Section 4.
(e) If the indemnification provided for in this Section 4
is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers on the one
hand and the Initial Purchasers on the other hand from the offering of the
Notes pursuant to the Purchase Agreement, or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Issuers on the one hand
and the Initial Purchasers on the other hand in connection with the offering of
the Notes pursuant to the Purchase Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Notes
pursuant to the Purchase Agreement (before deducting expenses) received by the
Issuers and the total discount received by the Initial Purchasers bear to the
aggregate initial offering price of the Notes.
The relative fault of the Issuers on the one hand and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Issuers or by the Initial Purchasers, and the
respective parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which
-29-
<PAGE> 30
does not take account of the equitable considerations referred to above in this
Section 4(e). The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4(e) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing for or defending against
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4(e), no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4(e), each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director or officer of either of the Issuers
and each person, if any, who controls either of the Issuers within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Issuer. The Initial Purchasers' respective
obligations to contribute pursuant to this Section 4(e) are several in
proportion to the principal amount of Notes set forth opposite their respective
names in Schedule 2 to the Purchase Agreement and not joint.
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any customary underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up
-30-
<PAGE> 31
letters and other documents reasonably required in connection with such
underwriting arrangements.
6. Selection of Underwriters. In any underwritten
offering, the underwriter or underwriters and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Registrable Securities included in such
offering; provided, however, that such underwriters and managers must be
reasonably satisfactory to the Issuers.
7. Miscellaneous.
(a) No Inconsistent Agreements. Neither the Issuers nor
the Guarantors have entered into nor will the Issuers or the Guarantors on or
after the date of this Agreement enter into any agreement that is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Issuers have
not previously entered into any agreement granting any registration or similar
rights with respect to their securities to any person. The rights granted to
the Holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Issuers' other issued and
outstanding securities, if any, under any agreement in effect on the date
hereof.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuers have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of the Registrable Securities; affected by such
amendment, modification, supplement, waiver or departure; provided, however,
that no amendment, modification or supplement or waiver or consent to the
departure with respect to the provisions of Section 4 hereof shall be effective
as against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities.
(c) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, sent by any national courier service guaranteeing overnight delivery or
transmitted by any standard form of telecommunication, as follows: (i) if to a
Holder, at the most current address given by such
-31-
<PAGE> 32
Holder to the Issuers in accordance with the provisions of this Section 7(d),
which address, with respect to the Initial Purchasers, shall initially be the
address provided for the Initial Purchasers in the Purchase Agreement; and (ii)
if to the Issuers or the Guarantors, at their respective addresses provided for
notices for each Issuer and Guarantor in the Purchase Agreement, or at such
other address provided in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have
been duly given at the earlier of: (i) the time of actual receipt by the
addressee; or (ii) the time delivered, if personally delivered, or five
business days after being deposited in the mail, postage prepaid, if mailed, or
when answered back, if telexed, or when transmission is confirmed, if
telecopied, or on the next business day, if timely delivered to a national
courier service guaranteeing overnight delivery.
Copies of all notices, demands, or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at its
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and transferees
of the Initial Purchasers, including, without limitation and without the need
for an express assignment, subsequent Holders; provided, however, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms of the Purchase Agreement
or the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement and such Person shall be entitled
to receive the benefits hereof.
(e) Third Party Beneficiary. The Holders shall be third
party beneficiaries of the agreements made hereunder between the Issuers and
the Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
and the Holders shall have the right to enforce such agreements directly to the
extent they deem such enforcement necessary
-32-
<PAGE> 33
or advisable to protect their rights or the rights of any of the other Holders.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(i) Notes Held by the Issuers or their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
any Issuer or the affiliate of any Issuer (as such term is defined in Rule 405
under the Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(j) Counterparts. This Agreement may be executed in one
or more counterparts and, when so executed, all such counterparts taken
together shall constitute one and the same agreement.
-33-
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first written above.
ORBCOMM GLOBAL, L.P.
By:
----------------------------------
Name:
Title:
ORBCOMM GLOBAL CAPITAL CORP.
By:
----------------------------------
Name:
Title:
ORBITAL COMMUNICATIONS CORPORATION
By:
----------------------------------
Name:
Title:
TELEGLOBE MOBILE PARTNERS
By Teleglobe Mobile Investment Inc.,
its managing partner
By:
----------------------------------
Name:
Title:
ORBCOMM USA, L.P.
By:
----------------------------------
Name:
Title:
ORBCOMM INTERNATIONAL PARTNERS, L.P.
By:
----------------------------------
Name:
Title:
<PAGE> 35
Accepted as of the
date first above written:
BEAR, STEARNS & CO. INC.
By:
----------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
----------------------------------
Name:
Title:
RBC DOMINION SECURITIES CORPORATION
By:
----------------------------------
Name:
Title:
<PAGE> 36
Exhibit A
Form of Opinion of Counsel
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical data and supplemental schedules included or
referred to therein or omitted therefrom and the Form T-l, as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Act and the applicable rules and
regulations promulgated under the Act.
2. In the course of such counsel's review and discussion of
the contents of the Exchange Offer Registration Statement and the Prospectus
with certain officers and other representatives of the Issuers and
representatives of the independent certified public accountants of the Issuers,
but without independent check or verification or responsibility for the
accuracy, completeness or fairness of the statements contained therein, on the
basis of the foregoing (relying as to materiality to a large extent upon
representations and opinions of officers and other representatives of the
Issuers), no facts have come to such counsel's attention which cause such
counsel to believe that the Exchange Offer Registration Statement (other than
the financial statements, notes and schedules thereto and other financial and
statistical information contained or referred to therein and the Form T-1, as
to which such counsel need express no belief), at the time the Exchange Offer
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading, or that
the Prospectus (other than the financial statements, notes and schedules
thereto and other financial and statistical information contained or referred
to therein, as to which such counsel need express no belief) contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
-36-
<PAGE> 1
EXHIBIT 10.2
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of August 7, 1996, among ORBCOMM
Global, L.P., a Delaware limited partnership ("Global"), ORBCOMM Global Capital
Corp., a Delaware corporation ("Capital" and, together with Global, the
"Pledgors") and Marine Midland Bank, as collateral agent (the "Collateral
Agent"), for the holders of the Notes (as defined herein). Capitalized terms
used but not otherwise defined herein shall have the meanings given to such
terms in the Indenture (as defined herein).
W I T N E S S E T H:
WHEREAS, the Pledgors and the Trustee have entered into that
certain Indenture dated as of August 7, 1996 (as amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"),
pursuant to which the Pledgors are issuing $170,000,000 in aggregate principal
amount of their 14% Senior Notes due 2004 (the "Notes");
WHEREAS, the Pledgors have agreed, pursuant to a Purchase
Agreement dated August 2, 1996 by and among the Pledgors, Teleglobe Mobile
Partners, Orbital Communications Corporation, ORBCOMM USA, L.P., ORBCOMM
International Partners, L.P., Bear, Stearns & Co. Inc., J.P. Morgan Securities
Inc. and RBC Dominion Securities Corporation, to (i) purchase a portfolio of
Government Securities initially consisting of those securities listed on
Exhibit A hereto (together with any replacement or substitute securities, the
"Pledged Securities") in an amount sufficient, upon receipt of the scheduled
interest and principal payments in respect of the Pledged Securities, in the
opinion of a nationally recognized firm of independent certified public
accountants selected by the Pledgors, to provide for payment of the first four
scheduled interest payments due on the Notes, and (ii) place the Pledged
Securities in the Pledge Account (as defined herein) held by the Collateral
Agent for the benefit of the holders of the Notes;
WHEREAS, the Pledgors are to be the sole legal and beneficial
owners of the Pledged Securities; and
WHEREAS, to secure the payment and performance by the Pledgors
of their respective obligations under the Indenture and the Notes
(collectively, the "Obligations"), the Pledgors have agreed to pledge to the
Collateral Agent for its benefit and the ratable benefit of the holders of the
Notes a security interest in the Pledged Securities and the Pledge Account and
execute and deliver this Pledge Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE> 2
1. Pledge and Grant of Security Interest.
The Pledgors hereby pledge to the Collateral Agent for the
ratable benefit of the holders of the Notes, and grant to the Collateral Agent
for the ratable benefit of the holders of the Notes, a continuing first
priority security interest in and to (i) all of the Pledgors' right, title and
interest in the Pledged Securities and the Pledge Account, (ii) all
certificates or other evidence of ownership representing the Pledged Securities
and the Pledge Account, and (iii) all products and proceeds of any of the
Pledged Securities, including, without limitation, all dividends, interest,
principal payments, cash, options, warrants, rights, instruments, subscriptions
and other property or proceeds from time to time received, receivable or
otherwise distributed or distributable in respect of or in exchange for any or
all of the Pledged Securities (collectively, the "Collateral").
2. Security for Obligations.
This Pledge Agreement and the Collateral secure the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all of the Obligations.
3. Delivery of Collateral; Pledge Account; Interest;
Substitution of Collateral.
(a) All certificates or instruments representing or
evidencing the Pledged Securities shall be delivered to and held by or on
behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer and delivery, or shall be accompanied by instruments of transfer
or assignment duly executed in blank all in form and substance satisfactory to
the Collateral Agent or shall be delivered to the Collateral Agent through the
book-entry facilities of the applicable depositary.
(b) Concurrently with the execution and delivery of this
Pledge Agreement, the Collateral Agent shall establish an account entitled the
"ORBCOMM PLEDGE ACCOUNT" for the deposit of the Pledged Securities (the "Pledge
Account") at its office at 140 Broadway, 12th Floor, New York, New York.
Subject to the other terms and conditions of this Pledge Agreement, all funds
or other property accepted by the Collateral Agent pursuant to this Pledge
Agreement shall be held in the Pledge Account for the ratable benefit of the
holders of the Notes. The Pledged Securities shall be registered in the name
of the Collateral Agent or its custodian, as collateral agent for the benefit
of the holders of the Notes, and the proceeds of any such Pledged Securities
shall remain on deposit in the Pledge Account until withdrawn in accordance
with this Agreement. If and to the extent the Pledged Securities comprise
certificated securities (as defined in Section 8-102 of the Uniform Commercial
Code in the State of New York), such securities shall be registered in the name
of the
-2-
<PAGE> 3
Collateral Agent or its custodian, as collateral agent for the benefit of the
holders of the Notes, and possession thereof shall be maintained by the
Collateral Agent within the State of New York.
(c) All interest earned on or other distributions or
amounts paid with respect to any Collateral shall be retained in the Pledge
Account and may be reinvested from time to time pending disbursement pursuant
to the terms hereof.
(d) At any time while this Pledge Agreement is in force,
the Pledgors may, on at least two Business Days prior written notice to the
Collateral Agent,substitute Marketable Securities for the Government Securities
originally pledged as collateral hereunder; provided, however, that any
Marketable Securities so substituted must have a value (measured at the date of
substitution) as certified to the Collateral Agent by a nationally recognized
firm of independent certified public accountants selected by the Pledgors, at
least equal to 125% of the amount of any of the first four scheduled interest
payments on the Notes that are unpaid (or the pro rata portion of such interest
payments equal to the percentage of such interest payments to be secured by
such Marketable Securities) as of the date such Marketable Securities are
proposed to be substituted as security for the Obligations. Concurrently with
such substitution, each of the Pledgors shall deliver to the Collateral Agent
an Officers' Certificate reaffirming the representations and warranties set
forth in Section 5 hereof.
(e) Pending disbursement of funds from the Pledge Account
pursuant to the terms hereof, the Collateral Agent may reinvest any interest or
other amounts received in respect of the Pledged Securities in money market
deposit accounts issued or offered by an Eligible Institution, which may be
Marine Midland Bank; provided that any monies so reinvested and the securities
acquired thereby shall be (i) held as Collateral in the Pledge Account, (ii)
subject in all respects to the security interest created hereby and (iii)
otherwise subject to the terms hereof.
4. Disbursements.
(a) Not less than five Business Days prior to the date of
any of the first four scheduled interest payments due on the Notes, the
Pledgors may direct the Collateral Agent in writing to transfer from the Pledge
Account to the Trustee in its capacity as Paying Agent, funds necessary to
provide for payment in full or of any portion of the next scheduled interest
payment on the Notes. Upon receipt of such written request, the Collateral
Agent shall take such action as is necessary to provide for the payment of such
interest payment on the Notes directly to the Trustee as Paying Agent from
proceeds of the Pledged Securities held in the Pledge Account.
-3-
<PAGE> 4
(b) If the Pledgors elect to pay any of the first four
scheduled interest payments (or portion thereof) on the Notes from a source of
funds other than the Pledge Account (the "Pledgors' Funds"), then the Pledgors
may on at least two Business Days' prior written notice and, after payment in
full of such interest payment, direct the Collateral Agent in writing to
release to the Pledgors or as they may direct an amount of funds from the
Pledge Account less than or equal to the amount of Pledgors' Funds so expended.
Upon receipt of such written direction from the Pledgors, together with the
certificate described in the following sentence, the Collateral Agent shall
take such action as is necessary to provide for the payment to the Pledgors of
the amount requested from the Pledge Account. Prior to any release of funds to
the Pledgors from the Pledge Account pursuant to this Section 4(b), each of the
Pledgors shall deliver to the Collateral Agent an Officers' Certificate stating
that such use of Pledgors' Funds has been duly authorized by all necessary
partnership or corporate action, as the case may be, does not contravene or
constitute a default under any provision of applicable law, regulation or the
partnership agreement or certificate of incorporation, as the case may be, of
such Pledgor, or of any material agreement, judgment, injunction, order, decree
or other instrument binding upon such Pledgor, and does not result in the
creation or imposition of any Lien on any asset of such Pledgor.
(c) If at any time the amount of Pledged Securities
exceeds (i) for so long as the Pledged Securities consist solely of Government
Securities, 100% of the amount sufficient, in the opinion of a nationally
recognized firm of independent certified public accountants selected by the
Pledgors, to provide for payment in full of the first four scheduled interest
payments due on the Notes (or, in the event any interest payments have been
made on the Notes, an amount sufficient to provide for payment in full of all
interest payments then remaining up to and including the fourth scheduled
interest payment), and (ii) if at any time Marketable Securities have been
substituted for any Government Securities, 125% of the amount sufficient, in
the opinion of a nationally recognized firm of independent certified public
accountants selected by the Pledgors, to provide for payment in full (or such
pro rata portion as is equal to the percentage of such interest payments then
secured by Marketable Securities) of the first four scheduled interest payments
due on the Notes (or, in the event any interest payments have been made on the
Notes, an amount sufficient to provide for payment in full of all interest
payments then remaining up to and including the fourth scheduled interest
payment), the Pledgors may direct the Collateral Agent in writing to release to
the Pledgors or as they direct an amount less than or equal to such excess.
Upon receipt of such written direction from the Pledgors, together with the
opinion of a nationally recognized firm of independent certified public
accountants with respect to the value of the Pledged Securities, the Collateral
Agent shall take such action as is necessary to provide for the payment to the
Pledgors of the amount requested from the Pledge Account.
-4-
<PAGE> 5
(d) Upon payment in full of the first four scheduled
interest payments on the Notes, the security interest in the Collateral
evidenced by this Pledge Agreement shall terminate and be of no further force
and effect. Furthermore, upon release of any Collateral from the Pledge
Account in accordance with the terms of this Pledge Agreement, the security
interest evidenced by this Pledge Agreement in the Collateral so released shall
terminate and be of no further force and effect.
5. Representations and Warranties.
Each of the Pledgors hereby, jointly and severally, represents
and warrants that:
(a) The execution, delivery and performance by such
Pledgor of this Pledge Agreement has been duly authorized by such Pledgor and
does not contravene or constitute a default under any provision of applicable
law, regulation or the partnership agreement or certificate of incorporation,
as the case may be, of such Pledgor, or of any judgment, injunction, order,
decree or any material agreement or instrument binding upon such Pledgor, and
does not result in the creation or imposition of any Lien on any asset of such
Pledgor, except for the security interests granted under this Pledge Agreement.
(b) No financing statement covering the Pledged
Securities is on file in any public office, other than financing statements
filed pursuant to this Pledge Agreement.
(c) Upon the delivery to the Collateral Agent of the
certificates, if any, representing the Pledged Securities, any filing of
financing statements required by the Uniform Commercial Code (the "UCC") and
notation on the records of the Collateral Agent that it holds the Pledged
Securities as pledgee, the pledge of the Collateral pursuant to this Pledge
Agreement constitutes a valid and perfected first priority security interest in
and to the Collateral, securing the payment and performance of the Obligations
for the ratable benefit of the holders of the Notes, enforceable as such
against all creditors of such Pledgor and any persons purporting to purchase
any of the Collateral from such Pledgor.
(d) No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body, is required either (i) for the
pledge by such Pledgor of the Collateral pursuant to this Pledge Agreement or
for the execution, delivery or performance of this Pledge Agreement by such
Pledgor (except for any filings and notations necessary to perfect the security
interest created hereby in the Collateral) or (ii) for the exercise by the
Collateral Agent of the rights provided for in this Pledge Agreement or the
remedies in respect of the Collateral pursuant to this Pledge Agreement.
-5-
<PAGE> 6
(e) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by any applicable law or government regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
6. Further Assurances.
Each of the Pledgors agrees to promptly take such actions and
to execute and deliver or cause to be executed and delivered, or use its best
efforts to procure, such stock or bond powers, proxies, assignments,
instruments and such other or different writings as the Collateral Agent may
reasonably request, all in form and substance satisfactory to the Collateral
Agent, deliver any instruments to the Collateral Agent and take any other
actions that are necessary or, in the opinion of the Collateral Agent,
desirable, to perfect, continue the perfection of, confirm and assure the first
priority of the Collateral Agent's security interest in the Collateral, to
protect the Collateral against the rights, claims or interests of third
persons, or to otherwise effect the purposes of this Pledge Agreement.
Notwithstanding the foregoing, the Collateral Agent shall have no duty or
obligation to ensure the maintenance or perfection of any security interest
hereunder.
7. Covenants.
Each of the Pledgors covenants and agrees with the Collateral
Agent and the holders of the Notes from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of (A) each of the first
four scheduled interest payments due on the Notes under the terms of the
Indenture or (B) all Obligations due and owing under the Indenture and the
Notes in the event such Obligations become due and payable prior to the payment
of the first four scheduled interest payments on the Notes, as follows:
(a) Each of the Pledgors agrees that it (i) will not sell
or otherwise dispose of, or grant any option or other interest with respect to,
any of the Collateral, (ii) will not create or permit to exist any Lien upon or
with respect to any of the Collateral, except for the Liens created pursuant to
this Pledge Agreement, and (iii) will at all times, together with the other
Pledgor, be the sole beneficial owner of the Collateral.
(b) Each of the Pledgors agrees that it will not (i)
enter into any agreement or understanding that purports to or may restrict or
inhibit the Collateral Agent's rights or remedies hereunder, including, without
limitation, the Collateral Agent's right to sell or otherwise dispose of the
Collateral, or (ii) with regard to the Collateral, fail to pay or discharge any
tax, assessment or levy of
-6-
<PAGE> 7
any nature due with respect thereto later than five days prior to the date of
any proposed sale under any judgment, writ or warrant of attachment.
8. Power of Attorney.
(a) The Pledgors hereby appoint and constitute the Collateral
Agent as the Pledgors' attorney-in-fact to exercise to the fullest extent
permitted by law all of the following powers upon and at any time after the
occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral;
(ii) conveyance of any item of Collateral to any purchaser
thereof as specified herein;
(iii) giving of any notices or recording of any Liens
pursuant to Section 6 hereof;
(iv) making any payments or taking any acts pursuant to
Section 9 hereof; and
(v) paying or discharging taxes or Liens levied or placed
upon the Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by the Collateral Agent in its sole
discretion, and any such payments made by the Collateral Agent shall become
Obligations of the Pledgors to the Collateral Agent, due and payable
immediately upon demand.
(b) The Collateral Agent's authority under this Section 8
shall include, without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Collateral in the name of the
Pledgors, execute and give receipt for any certificate of ownership or any
document constituting Collateral, transfer title to any item of Collateral, to
the extent permitted by applicable law, sign the Pledgors' names on all
financing statements or any other documents deemed necessary or appropriate by
the Collateral Agent to preserve, process or perfect the security interest in
the Collateral, and to file the same, and to prepare, sign the Pledgors' names
and file any notice of Lien, and to take any other actions arising from or
incident to the powers granted to the Collateral Agent in this Pledge
Agreement. This power of attorney is coupled with an interest and shall be
irrevocable by the Pledgors.
9. Collateral Agent May Perform.
If the Pledgors fail to perform any agreement contained
herein, the Collateral Agent may, but shall not be obligated to, itself perform
or cause performance of such agreement, and the reasonable expenses incurred by
or on
-7-
<PAGE> 8
behalf of the Collateral Agent in connection therewith shall be payable by the
Pledgors under Section 13 hereof.
10. No Assumption of Duties; Reasonable Care.
The rights and powers granted to the Collateral Agent
hereunder are being granted in order to preserve and protect the security
interest of the Collateral Agent and the holders of Notes in and to the
Collateral granted hereby and shall not be interpreted to, and shall not,
impose any duties on the Collateral Agent in connection therewith other than
those imposed under applicable law.
11. Indemnity.
The Pledgors shall jointly and severally indemnify, defend and
hold harmless the Collateral Agent and its directors, officers, agents and
employees from and against all claims, actions, obligations, losses,
liabilities and expenses, including costs, fees and disbursements of counsel,
the costs of investigations, and claims for damages, arising from the
Collateral Agent's performance under this Pledge Agreement, except insofar as
the same may have been caused by the bad faith, gross negligence or willful
misconduct of such indemnified person. The obligations of the Pledgors under
this Section 11 shall survive the resignation or removal of the Collateral
Agent and the termination of this Agreement.
12. Remedies upon Event of Default.
If an Event of Default shall have occurred:
(a) The Collateral Agent shall have and may exercise with
reference to the Collateral any or all of the rights and remedies of a secured
party under the UCC in effect in the State of New York, and as otherwise
granted herein or under any other applicable law or under any other agreement
now or hereafter in effect executed by Pledgors, including, without limitation,
the right and power to sell, at public or private sale or sales, or otherwise
dispose of, or otherwise utilize the Collateral and any part or parts thereof,
in any manner authorized or permitted under said UCC after default by a debtor,
and to apply the proceeds thereof toward payment of any costs and expenses and
attorneys' fees and expenses thereby incurred by the Collateral Agent and
toward payment of the Obligations in such order or manner as the Collateral
Agent may elect. Specifically, and without limiting the foregoing, the
Collateral Agent shall have the right to take possession of all or any part of
the Collateral or any security therefor and of all books, records, papers and
documents of the Pledgors or in the Pledgors' possession or control relating to
the Collateral that are not already in the Collateral Agent's possession, and
for such purpose may enter upon any premises upon which any of the Collateral
or any security therefor or any of said books, records, papers and documents
are situated and remove the
-8-
<PAGE> 9
same therefrom without any liability for trespass or damages thereby
occasioned. To the extent permitted by law, the Pledgors expressly waive any
notice of sale or other disposition of the Collateral and all other rights or
remedies of the Pledgors or formalities prescribed by law relative to sale or
disposition of the Collateral or exercise of any other right or remedy of the
Collateral Agent existing after Default or Event of Default hereunder. To the
extent any such notice is required and cannot be waived, the Pledgors agree
that if such notice is given in the manner provided in Section 17 hereof at
least three days before the time of the sale or disposition, such notice shall
be deemed reasonable and shall fully satisfy any requirement for giving of said
notice. The Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale. The Pledgors further agree to
use their best efforts to do or cause to be done all such other acts as may be
necessary to effect the intention of this Section 12.
(b) All rights to marshalling of assets of the Pledgors,
including any such right with respect to the Collateral, are hereby waived by
the Pledgors. The Pledgors shall not contest or support any other person in
contesting the validity or priority of the security interests created under
this Pledge Agreement.
13. Fees and Expenses.
The Pledgors shall, upon demand, pay to the Collateral Agent
the amount of its fees (which shall be in an amount previously agreed by the
Pledgors and the Collateral Agent) and any and all reasonable expenses
(including, without limitation, the reasonable fees, expenses and disbursements
of counsel, experts and agents retained by the Collateral Agent) that the
Collateral Agent may incur in connection with (i) the administration of this
Pledge Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent and the
holders of the Notes hereunder, or (iv) the failure by the Pledgors to perform
or observe any of the provisions hereof.
14. Security Interest Absolute.
All rights of the Collateral Agent and the holders of the
Notes, and the security interests created hereunder, and all obligations of the
Pledgors hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture;
-9-
<PAGE> 10
(c) any exchange, surrender, release or non-perfection of
any Liens on any other collateral for all or any of the Obligations; or
(d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Pledgors in respect
of the Obligations or of this Pledge Agreement.
15. Continuing Security Interest; Termination.
(a) This Pledge Agreement shall create a continuing
security interest in and to the Collateral and shall, unless otherwise provided
in the Indenture or in this Pledge Agreement, remain in full force and effect
until the earlier of payment in full of (i) each of the first four scheduled
interest payments due on the Notes under the terms of the Indenture or (ii) all
Obligations due and owing under the Indenture and the Notes in the event such
Obligations become payable prior to the payment of the first four scheduled
interest payments on the Notes. This Pledge Agreement shall be binding upon
the Pledgors, their successors and assigns, and shall inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and the holders of the Notes and their respective successors,
transferees and assigns.
(b) This Pledge Agreement shall terminate upon the
earlier of payment in full in cash of (i) each of the first four scheduled
interest payments due on the Notes under the terms of the Indenture or (ii) all
Obligations due and owing under the Indenture and the Notes in the event such
Obligations become payable prior to the payment of the first four scheduled
interest payments on the Notes. At such time, the Collateral Agent shall, at
the written request of the Pledgors, reassign and redeliver to the Pledgors all
of the Collateral hereunder that has not been sold, disposed of, retained or
applied by the Collateral Agent in accordance with the terms of this Pledge
Agreement and the Indenture. Such reassignment and redelivery shall be without
warranty (either express or implied) by or recourse to the Collateral Agent,
except as to the absence of any prior assignments by the Collateral Agent of
its interest in the Collateral, and shall be at the expense of the Pledgors.
16. Authority of the Collateral Agent.
(a) The Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Collateral
Agent by the terms hereof, together with such powers as are reasonably incident
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. None of the Collateral Agent, any director,
officer, employee, attorney or agent of the Collateral Agent nor the holders of
the Notes shall be liable to the Pledgors for any action taken or omitted to be
taken by it or them
-10-
<PAGE> 11
hereunder, except for its or their own bad faith, gross negligence or willful
misconduct, nor shall the Collateral Agent be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper Person or Persons.
(b) The Pledgors acknowledge that the rights and
responsibilities of the Collateral Agent under this Pledge Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Pledge Agreement shall, as between the Collateral Agent and the holders of the
Notes, be governed by the Indenture and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Pledgors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the holders of the Notes with full and valid
authority so to act or refrain from acting, and the Pledgors shall not be
obligated or entitled to make any inquiry respecting such authority.
(c) The Collateral Agent undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement and
no implied covenants or obligations shall be read in this Agreement against the
Collateral Agent. The Collateral Agent shall not be deemed to have knowledge
of an Event of Default under the Indenture unless informed in writing by any
Pledgor or the holder of any Note.
(d) The Collateral Agent shall not be required to
exercise any remedies hereunder unless requested in writing to do so by the
holders of majority in principal amount of the outstanding Notes and only if
furnished with indemnity satisfactory to the Collateral Agent. The Collateral
Agent may consult with counsel and shall not be liable for any action taken in
good faith in reliance upon advice of counsel except for gross negligence or
willful misconduct. The Collateral Agent makes no representation or warranty
and shall have not responsibility concerning the value or validity of the
Collateral or the validity or perfection of the pledge thereof.
(e) The Collateral Agent may at any time on 30 days
notice to the Pledgors and the holders of the Notes resign hereunder. Upon any
such resignation the Pledgors jointly shall promptly appoint another financial
institution to act as Collateral Agent hereunder and such resignation shall
become effective upon the acceptance of the appointment by the successor.
(f) The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession
-11-
<PAGE> 12
if the Collateral is accorded treatment substantially equal to that which an
ordinary person accords its own property, it being understood that neither the
Collateral Agent nor the holders of the Notes shall have responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
any such Person has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
17. Notices.
Any communication, notice or demand to be given hereunder
shall be duly given hereunder if given in the form and manner, and delivered to
their address set forth in the Indenture, or in such other form and manner or
to such other address as shall be designated by any party hereto to each other
party hereto in a written notice delivered in accordance with the terms of the
Indenture.
18. No Waiver; Cumulative Rights.
No failure on the part of the Collateral Agent to exercise,
and no delay in exercising, any right, remedy or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by the Collateral
Agent of any right, remedy or power hereunder preclude any other or future
exercise of any other right, remedy or power. Each and every right, remedy and
power hereby granted to the Collateral Agent or allowed it by law or other
agreement shall be cumulative and not exclusive the one of any other, and may
be exercised by the Collateral Agent from time to time.
19. Benefits of Pledge Agreement.
Nothing in this Pledge Agreement, whether express or implied,
shall give to any Person other than the parties hereto and their successors
hereunder, and the holders of the Notes, any benefit or any legal or equitable
right, remedy or claim under this Pledge Agreement.
20. Applicable Law; Consent to Jurisdiction; Waiver of
Jury Trial.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. TO INDUCE THE COLLATERAL AGENT TO
ENTER INTO THIS PLEDGE AGREEMENT, THE PLEDGORS HEREBY IRREVOCABLY AGREE THAT,
SUBJECT TO THE COLLATERAL AGENT'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR
PROCEEDINGS THAT IN ANY MANNER ARISE OUT OF OR IN
-12-
<PAGE> 13
CONNECTION WITH OR ARE IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE COUNTY OF NEW YORK, STATE OF NEW
YORK. THE PLEDGORS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK. THE PLEDGORS
HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL TO THE PLEDGORS' NOTICE ADDRESS
SPECIFIED HEREIN. THE PLEDGORS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BETWEEN THE PLEDGORS AND THE
COLLATERAL AGENT IN ACCORDANCE WITH THIS PARAGRAPH. EACH OF THE PLEDGORS AND
THE COLLATERAL AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT IN ANY MANNER ARISES
OUT OF OR IN CONNECTION WITH OR IS IN ANY WAY RELATED TO THIS PLEDGE AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.
(b) THE PROVISIONS OF THIS SECTION 20 ARE A MATERIAL
INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS PLEDGE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY. THE PLEDGORS HEREBY ACKNOWLEDGE THAT THEY
HAVE REVIEWED THE PROVISIONS OF THIS SECTION 20 WITH INDEPENDENT COUNSEL.
21. Calculation of Interest.
For purposes of this Agreement, all calculations of the first
four scheduled interest payments on the Notes shall be calculated on the basis
that interest will accrue on the Notes at the rate of 14% per annum and will be
payable semi-annually in arrears on February 15, 1997, August 15, 1997,
February 15, 1998, and August 15, 1998, and no effect shall be given in such
calculation to the Revenue Participation Interest, if any, or Liquidated
Damages, if any, that may be payable on the Notes pursuant to the terms
thereof.
22. Execution in Counterparts.
This Pledge Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
23. Settlement.
Amounts, if any, held in the Pledge Account pending settlement
of purchase of the Pledged Securities shall constitute Collateral hereunder,
shall be held by the Collateral Agent for the benefit of the Holders of the
Notes and a
-13-
<PAGE> 14
portion thereof equal to the aggregate price paid for such Pledged Securities
shall be released by the Collateral Agent (without further direction or
instruction required from any other party hereto) against delivery of such
Pledged Securities, and any excess funds remaining in the Pledge Account after
giving effect to such settlement shall be promptly forwarded to Global at the
following account:
Bank: First Union National Bank
Charlotte, NC
ABA No.: 05300219
Credit Trust Ledger No.: 465946
Account Name: ORBCOMM Global, L.P. Investment Account
Account No: 7053291117
-14-
<PAGE> 1
EXHIBIT 10.3
RESTATED INTERNATIONAL SYSTEM CHARGE AGREEMENT
This Restated International System Charge Agreement (the "Agreement")
is entered into as of September 12, 1995 among ORBCOMM Global, L.P., a Delaware
limited partnership ("ORBCOMM Global"), Teleglobe Mobile Partners, a Delaware
general partnership ("Teleglobe Mobile"), and ORBCOMM International Partners,
L.P., a Delaware limited partnership (the "Operator"), and restates the
International System Charge and Marketing (Non-U.S.) Agreement dated as of June
30, 1993, as amended by Amendment No. 1 thereto dated as of June 30, 1994, and
Amendment No. 2 thereto dated as of September 12, 1995.
WITNESSETH
WHEREAS, Orbital Sciences Corporation, a Delaware corporation
("Orbital"), Orbital Communications Corporation ("ORBCOMM"), Teleglobe Inc., a
Canadian corporation ("Teleglobe"), Teleglobe Mobile, ORBCOMM Global, ORBCOMM
USA, L.P., a Delaware limited partnership ("ORBCOMM USA"), and the Operator
have entered into agreements for the development, construction, operation and
marketing of a global digital satellite communications system (the "ORBCOMM
System") of low-Earth orbit satellites intended to provide two-way data and
message communications and position determination services throughout the world
(the "ORBCOMM Services");
WHEREAS, the development, construction and operation of the ORBCOMM
System is planned to occur in two phases: an initial phase consisting of two
satellites (the "Phase 1A System") and a second phase consisting of a total of
up to an additional 34 satellites;
WHEREAS, on March 13, 1992 and May 28, 1993, ORBCOMM received from the
FCC (as such term is hereinafter defined) experimental licenses (as renewed and
modified from time to time, the "FCC Experimental Licenses") to develop,
construct and operate the Phase 1A System and to market communications services
to up to 1,000 subscribers in the United States;
WHEREAS, ORBCOMM Global, Teleglobe Mobile and the Operator wish to
enter into this Agreement setting forth each of their respective
responsibilities regarding use of the ORBCOMM System; and
WHEREAS, ORBCOMM Global desires to contract with Teleglobe Mobile for
the marketing by it of the ORBCOMM Services in all areas of the world outside
the United States (the "Non-U.S. Area"), and Teleglobe Mobile in turn desires
to assign to the Operator and the Operator desires to assume responsibility for
the marketing by the Operator of ORBCOMM Services in the Non-U.S. Area.
NOW, THEREFORE, in consideration of the foregoing premises, the
agreements and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
ORBCOMM Global, Teleglobe Mobile and the Operator hereby agree as follows:
<PAGE> 2
1. Definitions. Capitalized terms shall have the meanings ascribed
thereto in Appendix C to the Master Agreement dated as of June 30, 1993 among
Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile, as amended and restated from
time to time, which Appendix is incorporated herein by reference.
2. Term of Agreement. The term of this Agreement shall commence on
the date hereof and shall continue until the earlier of June 30, 2013 and the
date on which Teleglobe Mobile ceases to be a general and limited partner of
ORBCOMM Global. Except as otherwise expressly provided in this Agreement,
neither Teleglobe Mobile or the Operator shall terminate nor shall either have
any right to terminate, this Agreement, and Teleglobe Mobile's obligation to
pay the System Charge (as such term is hereinafter defined), and the Operator's
obligation to remit or pay the International Output Capacity Charge (as such
term is hereinafter defined) and perform its other obligations hereunder, shall
be absolute and unconditional and not subject to abatement, suspension or
permanent reduction.
3. ORBCOMM Global Grant to Teleglobe Mobile.
(a) Subject to the terms and conditions of this Agreement,
ORBCOMM Global hereby grants to Teleglobe Mobile the exclusive right
in the Non-U.S. Area to market, sell, lease and franchise all ORBCOMM
System output capacity and exclusive use of the System Assets located
in the Non-U.S. Area for the duration of this Agreement; provided that
Teleglobe Mobile is hereby authorized to grant to the Operator the
rights specified in Section 5 hereof. Except as otherwise provided
herein, ORBCOMM Global shall retain all rights in and to, and
Teleglobe Mobile shall not have any rights to, the ORBCOMM System
output capacity.
(b) ORBCOMM Global hereby represents to Teleglobe Mobile that
neither the FCC Experimental Licenses nor the grant by ORBCOMM to
ORBCOMM Global of the rights assigned hereunder prohibit ORBCOMM
Global from making, and ORBCOMM Global has all material licenses,
consents, approvals and authorizations presently required and the
partnership power to make, the exclusive grant provided in Section
3(a).
4. International System Charge.
4.1 Calculation of System Charge. In consideration of the grant to
Teleglobe Mobile of the exclusive right to market, sell, lease and franchise
all ORBCOMM System output capacity in the Non-U.S. Area, within ten (10) days
of receipt by Teleglobe Mobile of the International Output Capacity Charge (as
defined in Section 6.1(a)), Teleglobe Mobile shall remit to ORBCOMM Global
Teleglobe Mobile's allocated portion of the System Charge calculated in
accordance with Section 6.9 of the ORBCOMM Global Partnership Agreement,
provided that if the International Output Capacity Charge for such calendar
quarter is less than 1.15% of Total Aggregate Revenues (as such term is defined
in the ORBCOMM Global Partnership Agreement), then Teleglobe Mobile
2
<PAGE> 3
shall not be required to pay, and it shall not owe ORBCOMM Global, any portion
of the System Charge for such calendar quarter.
4.2. Payment Terms. Teleglobe Mobile shall remit all System Charges
in lawful money of the United States pursuant to written instructions to it
furnished by ORBCOMM Global. Payment of the System Charge shall be deemed to
have been made on the date received in full in collectable funds. If any date
on which a payment of the System Charge becomes due and payable is not a
business day in the State of New York, the System Charge payment otherwise due
and payable on such date shall be due and payable on the next succeeding
business day.
5. Exclusive Use of Non-U.S. System Capacity.
(a) Subject to the terms and conditions of this Agreement,
Teleglobe Mobile hereby grants to the Operator the exclusive right in
the Non-U.S. Area to market, sell, lease and franchise all ORBCOMM
System output capacity and exclusive use of the System Assets located
in the Non-U.S. Area for the duration of this Agreement.
(b) Teleglobe Mobile hereby represents to the Operator that
neither the FCC Experimental Licenses nor the grant by ORBCOMM Global
to Teleglobe Mobile pursuant to Section 3 hereof of the rights
assigned hereunder prohibit Teleglobe Mobile from making, and
Teleglobe Mobile has all material licenses, consents, approvals and
authorizations presently required and the partnership power to make,
the exclusive grant provided in Section 5(a).
6. Operator International Output Capacity Charge.
6.1. Calculation of International Output Capacity Charge. In
consideration of the grant by Teleglobe Mobile pursuant to Section 5(a) hereof
to the Operator of the exclusive right to market, sell, lease and franchise all
ORBCOMM System output capacity in the Non U.S. Area, the Operator agrees as
follows:
Within thirty (30) days of the end of each calendar quarter,
the Operator shall (i) notify ORBCOMM Global of the Total Aggregate
Revenues invoiced by the Operator during such calendar quarter and
(ii) remit to Teleglobe Mobile twenty-three percent (23%) of the Total
Aggregate Revenues invoiced by the Operator in such calendar quarter
(the "International Output Capacity Charge"). For purposes of this
Agreement, "Total Aggregate Revenues" shall mean the total aggregate
revenues invoiced by the Operator to its Subscribers, Resellers and
Licensees in connection with the operation, marketing and use of the
ORBCOMM System in such calendar quarter; provided that revenues
invoiced by the Operator in connection with the sale of network
control centers, gateway earth stations and subscriber communicators
shall be excluded from the calculation of total aggregate
3
<PAGE> 4
revenues. The Operator shall have the sole discretion to set the fees
to be paid by its Subscribers, Resellers and Licensees for use of the
ORBCOMM System.
6.2. Payment Terms. The Operator shall remit all International
Output Capacity Charges in lawful money of the United States pursuant to
written instructions to the Operator furnished by Teleglobe Mobile. Payment of
the International Output Capacity Charge shall be deemed to have been made on
the date received in full in collectable funds. If any date on which a payment
of the International Output Capacity Charge becomes due and payable is not a
business day in the State of New York, the International Output Capacity Charge
payment otherwise due and payable on such date shall be due and payable on the
next succeeding business day.
7. System Operation. The Operator's exclusive right to market, sell,
lease and franchise all ORBCOMM System Output Capacity in the Non-U.S. Area
shall be subject to the following terms, conditions and covenants:
7.1. Lawful Operations; Use. The Operator shall not use or operate
the ORBCOMM System or any System Asset in violation of any governmental law,
rule or regulation applicable to the ORBCOMM System, any System Asset, ORBCOMM,
ORBCOMM Global, Teleglobe Mobile or the Operator, except for such violations as
would not (a) have a material adverse effect on the Operator's financial
condition or its ability to continue to have the exclusive right to market,
sell, lease and franchise all ORBCOMM System output capacity in the Non-U.S.
Area or use any of the System Assets in the manner contemplated hereby or (b)
result in (i) the imposition of any civil or criminal fines, penalties or other
sanctions against ORBCOMM, ORBCOMM Global, Teleglobe Mobile, the ORBCOMM System
or any System Asset or (ii) loss of any governmental license or permit relating
to the ORBCOMM System, and except for such violations as are being contested in
good faith and by appropriate proceedings and the existence of which during the
pendency of such proceedings does not (a) result in the seizure, impoundment,
confiscation, condemnation, sale, forfeiture or loss of any System Asset or any
right, title or interest of ORBCOMM, ORBCOMM Global, Teleglobe Mobile or the
Operator therein or (b) subject ORBCOMM, ORBCOMM Global or Teleglobe Mobile to
any criminal or civil liability. In the event that any such applicable
governmental law, rule or regulation requires any modification to the ORBCOMM
System or any System Asset, Teleglobe Mobile and the Operator shall cooperate
with ORBCOMM and ORBCOMM Global in their efforts to make such modifications.
The Operator shall use the ORBCOMM System solely in the provision of ORBCOMM
Services, and shall not use or permit the use of the ORBCOMM System or any
System Asset for any purpose for which the ORBCOMM System or such System Asset
is not reasonably suitable. The Operator agrees to use all commercially
reasonable efforts to ensure that each of its Subscribers, Resellers and
Licensees agrees to comply in all material respects with the substance of the
foregoing requirements.
7.2. Mortgages; Liens, etc. Neither Teleglobe Mobile nor the
Operator shall directly or indirectly create, incur, assume or suffer to exist
any Lien securing any obligation of it on or with
4
<PAGE> 5
respect to the ORBCOMM System, any System Asset, any part thereof, title
thereto or any interest therein. Teleglobe Mobile and the Operator, as the
case may be, shall promptly and in any event within twenty (20) days, at its
own expense, take such action as may be necessary to duly discharge any such
Lien (or cause the Lien on the ORBCOMM System or any System Asset to be
released by posting an adequate bond) if the same shall arise at any time with
respect to the ORBCOMM System or any System Asset.
7.3. Waiver of Liability. (a) EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, NEITHER ORBCOMM NOR ORBCOMM GLOBAL NOR TELEGLOBE MOBILE HAS MADE,
AND EACH HEREBY DISCLAIMS LIABILITY FOR, AND EACH OF TELEGLOBE MOBILE AND THE
OPERATOR HEREBY WAIVES ALL RIGHTS AGAINST ORBCOMM, ORBCOMM GLOBAL OR, IN THE
CASE OF THE OPERATOR, TELEGLOBE MOBILE RELATING TO, ANY AND ALL REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, ARISING BY APPLICABLE LAW OR OTHERWISE,
INCLUDING ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, ARISING (i)
FROM MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE, (ii) FROM COURSE
OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (iii) IN TORT (WHETHER
OR NOT ARISING FROM THE ACTUAL IMPLIED OR IMPUTED NEGLIGENCE OF ORBCOMM,
ORBCOMM GLOBAL OR TELEGLOBE MOBILE OR STRICT LIABILITY). The provisions of
this Section have been negotiated by ORBCOMM Global, Teleglobe Mobile and the
Operator and are intended to be a complete exclusion and negation of any
representations or warranties of other Persons, express or implied, written or
oral, with respect to the ORBCOMM System or any System Asset that may arise
pursuant to any applicable governmental law, rule or regulation.
(b) The Operator agrees to ensure that each of its Licensees,
Subscribers and Resellers agrees to a waiver of liability substantially similar
to that in Section 7.3(a) hereof.
8. Marketing Services.
8.1. Performance of International Marketing Services. In accordance
with the terms and conditions set forth herein, the Operator shall (a) furnish
the management, labor, facilities and materials necessary to perform the
services set forth in Appendix A (the "International Marketing Services") and
(b) use all commercially reasonable efforts to perform the International
Marketing Services, provided, that the Operator does not guaranty or warrant
the development of a market for ORBCOMM Services in the Non-U.S. Area. The
International Marketing Services shall be provided principally at the
Operator's headquarters in Dulles, Virginia.
8.2 Term of Marketing Services. The Operator shall perform the
International Marketing Services from the date hereof until the earlier of the
expiration of the Teleglobe Mobile Option Period and the exercise by Teleglobe
Mobile of the Teleglobe Mobile Option.
5
<PAGE> 6
9. Information and Inspection.
9.1 System Information. Consistent with applicable governmental
laws, rules and regulations, including the International Traffic in Arms
Regulations, during the term of this Agreement, ORBCOMM Global and Teleglobe
Mobile shall furnish to the Operator such additional information concerning the
location, condition, use and operation of the System Assets as the Operator may
reasonably request, and ORBCOMM Global and Teleglobe Mobil shall permit the
Operator or any Person designated by the Operator in writing, at the Operator's
expense, to inspect each System Asset, and its condition, use, and operation
and the books, information and other data, maintained in connection therewith,
and to visit and inspect the System Assets and to discuss the affairs, finances
and accounts of ORBCOMM Global or Teleglobe Mobile, as the case may be, with
the principal officers of ORBCOMM Global or Teleglobe Mobile, as the case may
be, all at such reasonable times during normal business hours upon five (5)
days prior written notice and as often as the Operator may reasonably request.
9.2. Financial Information. Each of Teleglobe Mobile and the
Operator shall maintain its books in accordance with generally accepted
accounting principles in the United States, and shall maintain and furnish to
ORBCOMM Global and upon written request all records, agreements, documents,
invoices and other financial information and data relating (a) directly or
indirectly to the amount of the System Charge remitted to ORBCOMM Global
pursuant to Section 4.1 and (b) and the International Output Capacity Charge
remitted to Teleglobe Mobile pursuant to Section 6.l(a) and (b) the performance
by the Operator of the Marketing Services. For purposes of determining
compliance by Teleglobe Mobile and the Operator with the terms of this
Agreement, all such books and documentation shall be available for inspection
all at such reasonable times during normal business hours upon five (5) days
prior written notice and as often as ORBCOMM Global may reasonably request.
10. Indemnification.
10.1. General Indemnification. ORBCOMM Global, Teleglobe Mobile and
the Operator (each an "Indemnifying Party") shall indemnify, defend and hold
harmless each other and their respective successors and assigns (the
"Indemnitees") against any liability, damage, loss, or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon them or any one of them in connection with any claims, suits, actions,
demands or judgments arising out of any breach of the Indemnifying Party's
obligations under this Agreement. Indemnitees agree to notify the Indemnifying
Party promptly of any claims by third parties of which they become aware. The
Indemnifying Party shall have the right and the obligation to defend and to
settle such claims; provided, however, that any such settlements shall not
impose any obligations or restrictions on the Indemnitees without their
consent, which consent shall not be unreasonably withheld.
6
<PAGE> 7
10.2. Indemnification of Operator Against Patent Infringement.
ORBCOMM Global shall defend, indemnify and hold harmless Teleglobe Mobile and
the Operator and their respective successors and assigns from and against any
claim with respect to an infringement or other violation of any copyright,
trademark or patent or other validly registered enforceable intellectual
property right of any third party for any items ORBCOMM Global has authorized
Teleglobe Mobile and the Operator to use under this Agreement but only to the
same extent as the indemnification received by ORBCOMM Global from Orbital, if
any, under Section 9.4 of the Procurement Contract.
11. Events of Default. Each of the following events shall constitute
an event of default (whether any such event shall be voluntary or involuntary
or come about or be effected by operation of law or pursuant to or in
compliance with any judgment, decree or order or any court or any order, rule
or regulation of any administrative or governmental body) and shall entitle
ORBCOMM Global to terminate this Agreement with respect to the Operator:
11.1. Performance Defaults. The Operator shall fail to comply with
any of its covenants or agreements contained herein and such failure shall
exist for sixty (60) days; or
11.2. Bankruptcy of Operator. A Bankruptcy involving the Operator
shall occur.
12. Recordation and Further Assurances. Upon written request by
ORBCOMM Global or Teleglobe Mobile, the Operator shall, at its own expense,
execute, deliver, file and record any statement, notice or agreement and take
any other action that ORBCOMM Global or Teleglobe Mobile deems to be necessary,
appropriate or desirable to evidence its interest in the ORBCOMM System or any
System Assets.
13. Use of Trademarks, Etc.
(a) The Operator agrees and shall use all commercially
reasonable efforts to require its Subscribers, Resellers and Licensees
to agree (i) to use such service marks, trademarks and trade names in
its advertising, promotional and sales materials that refer to ORBCOMM
or the ORBCOMM System or any aspect thereof and to ensure that such
use conforms to ORBCOMM Global's written requirements for display of
such logos, service marks and trademarks, including registry and
trademark symbols, which requirements shall be in conformance with the
ORBCOMM Identity Manual and (ii) to obtain the prior written consent
of ORBCOMM Global for such advertising, promotional and sales
materials, which approval shall not be unreasonably withheld, provided
that if the Operator or such Subscriber, Reseller or Licensee complies
with the terms of the ORBCOMM Global Identity Manual or any
replacement document thereto, which Manual or document shall be in
conformance with the ORBCOMM Identity Manual, the advance written
approval of ORBCOMM Global shall not be required.
7
<PAGE> 8
(b) ORBCOMM Global represents and warrants to the Operator
that it has the authority to make the grant specified in Section
13(a).
14. Miscellaneous.
14.1 Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement.
14.2. Force Majeure. Neither party shall be held responsible for
failure or delay in performance or delivery if such failure or delay is the
result of an act of God, the public enemy, embargo, governmental act, fire,
accident, war, riot, strikes, inclement weather or other cause of a similar
nature that is beyond the control of the parties. In the event of such
occurrence, this Agreement shall be amended by mutual agreement to reflect an
extension in the period of performance and/or time of delivery. Failure to
agree on an equitable extension shall be considered a dispute and resolved in
accordance with Section 14.1 hereof.
14.3. Separability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof, or affecting the validity or
enforceability of such provision in any other jurisdiction.
14.4. Specific Enforcement. Each of the parties hereto acknowledges
and agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction to enforce specifically the terms
and provisions hereof in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which they may be
entitled at law or equity.
14.5. Entire Agreement. This Agreement (including the Appendix
hereto) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any prior written and oral agreement or
understanding relating to the subject matter hereof.
14.6. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
14.7. Notices. All notices, requests and other communications
required to be delivered to any party hereunder shall be in writing (including
any facsimile transmission or similar writing), and shall be sent by telecopy
or delivered in person addressed as follows:
8
<PAGE> 9
(a) If to the Operator, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy (703) 406-3508
Attention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and
General Manager/Communications and
Information Systems Group
Teleglobe Mobile Partners
c/o Teleglobe Inc.
1000, rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
(b) If to ORBCOMM Global, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy (703) 406-3508
Attention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and
General Manager/Communications and
Information Systems Group
9
<PAGE> 10
Teleglobe Mobile Partners
c/o Teleglobe Inc.
1000, rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
(c) If to Teleglobe Mobile, to it:
c/o Teleglobe Inc.
1000, rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted and
the appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier or (iii) if
given by any other means, when received at the address specified in this
Section.
14.8. Amendment: Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by all the parties hereto.
14.9. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns. Neither this Agreement nor any interests or obligations
hereunder shall be assigned or transferred (by operation of law or otherwise)
to any person without the prior written consent of the other parties, provided
that any of the parties may assign this Agreement and its interest and
obligations hereunder to any wholly owned subsidiary of such party.
14.10 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York, without giving effect
to the provisions, policies or principles thereof relating to choice or
conflict of laws.
10
<PAGE> 11
14.11 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement as of the day and year first above written.
ORBCOMM GLOBAL, L.P.
By: Orbital Communications
Corporation, General Partner
By: /s/ ALAN L. PARKER
--------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment
Inc., its Managing Partner
By: /s/ GUTHRIE J. STEWART
-------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
TELEGLOBE MOBILE PARTNERS
By: Teleglobe Mobile Investment
Inc., its Managing Partner
By: /s/ GUTHRIE J. STEWART
---------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
11
<PAGE> 12
APPENDIX A
STATEMENT OF WORK
The Operator shall use reasonable efforts to establish an initial
distribution network for ORBCOMM Services in the Non-U.S. Area and shall
furnish the management, labor, facilities and materials required for the
performance of the following marketing services:
ITEM 1 - STRATEGY AND PLANS
Completion of business and marketing plans ("Plans") including, but
not limited to, a Non U.S. Area implementation strategy, for the ORBCOMM
System. Such strategy and Plans shall (a) be phased in time, (b) cover a
minimum of 5 years, and (c) recognize, identify and separately treat the
different market segments for, and the different types of services, using the
ORBCOMM System.
Once each calendar quarter at a mutually agreeable time and place, the
Operator shall provide to ORBCOMM a marketing review that shall compare actual
performance by the Operator under this Agreement against the applicable
strategy and Plans and shall review anticipated development activity in the
succeeding calendar quarter.
ITEM 2 - IMPLEMENTATION PLANNING
Implementation of the strategy and Plans including, but not limited
to, the (a) establishment of an initial sales distribution network, (b)
development of country marketing and business plans, and (c) execution of
regulatory strategies.
ITEM 3 - ANALYSES
In conjunction with candidate country operators, generate market
analyses of target market segments and applications where required to aid in
the development and implementation of country strategies and Plans.
12
<PAGE> 1
EXHIBIT 10.4
RESTATED MASTER AGREEMENT
This Restated Master Agreement ("AGREEMENT") is made and entered into
as of September 12, 1995 among ORBITAL SCIENCES CORPORATION, a Delaware
corporation ("ORBITAL"), ORBITAL COMMUNICATIONS CORPORATION, a Delaware
corporation ("ORBCOMM"), TELEGLOBE INC., a Canadian corporation ("TELEGLOBE"),
and TELEGLOBE MOBILE PARTNERS, a Delaware general partnership ("TELEGLOBE
MOBILE"), and restates the Master Agreement dated as of June 30, 1993 among the
parties hereto, as amended by Amendment No. 1 to Master Agreement dated as of
April 1, 1994, Amendment No. 2 to Master Agreement dated as of October 1, 1994,
and Amendment No. 3 to Master Agreement dated September 12, 1995.
WITNESSETH
WHEREAS, ORBCOMM is currently contemplating the development of a
digital satellite communications system of low-Earth orbit satellites and
terrestrial facilities intended to provide two-way data and message
communications and position determination services throughout the world (the
"ORBCOMM SYSTEM");
WHEREAS, the development, construction and operation of the ORBCOMM
System is planned to occur in two phases: an initial phase consisting of two
satellites (the "PHASE 1A SYSTEM"), and a second phase consisting of a total of
up to an additional 34 satellites (the "PHASE 1B SYSTEM");
WHEREAS, on March 13, 1992 and May 28, 1993, ORBCOMM received from the
FCC (as such term is hereinafter defined) experimental licenses to develop,
construct and operate the Phase 1A System and to market communications services
to up to 1,000 subscribers in the United States;
WHEREAS, ORBCOMM has applied to the FCC for the requisite license to
develop and construct the ORBCOMM System and will undertake the construction of
certain assets comprising the Phase 1B System;
WHEREAS, ORBCOMM and Teleglobe Mobile intend to create three new
partnerships -- ORBCOMM Global, ORBCOMM USA and ORBCOMM International (as such
terms are hereinafter defined) -- through which partnerships, ORBCOMM and
Teleglobe Mobile will develop, construct, operate and market the Phase 1A
System and, as the case may be, the Phase B System;
WHEREAS, the initial ownership structure of ORBCOMM Global, ORBCOMM
USA and ORBCOMM International in Phase 1A shall be as set forth in Appendix A
attached hereto and incorporated herein by reference and in the event Teleglobe
Mobile exercises the option
<PAGE> 2
specified in Article V of this Agreement, the ownership structure in Phase 1B
shall be as set forth in Appendix B attached hereto and incorporated herein by
reference; and
WHEREAS, it is contemplated that ORBCOMM and Teleglobe Mobile shall
make the capital contributions to fund the development, construction and
operation of the ORBCOMM System as more fully described herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL. Except as otherwise specifically defined herein, capitalized
terms shall have the meanings ascribed thereto in Appendix C attached hereto
and incorporated herein by reference.
ARTICLE II
CLOSING OF TRANSACTIONS
2.1 THE CLOSING. The closing of the transactions contemplated hereby (the
"CLOSING") shall occur on July 21, 1993 or such other date as may be agreed to
by Orbital and Teleglobe (the "CLOSING DATE") at the offices of Ropes & Gray,
1001 Pennsylvania Avenue, N.W., Washington, D.C. at 8:00 p.m. local time.
2.2 PAYMENTS. The parties acknowledge that upon and in accordance with
the execution of the Memorandum of Agreement dated as of June 30, 1993, (a) (i)
Teleglobe contributed to ORBCOMM Global on behalf of and for the account of
Teleglobe Mobile cash in the amount of $2,000,000 and (ii) ORBCOMM contributed
to ORBCOMM Global cash in the amount of $30,148,997, which amount equals 100%
of the costs through June 30, 1993 in the development and construction of the
Phase 1A System minus $2,000,000, (b) ORBCOMM presented to ORBCOMM Global two
invoices equal to $18,194,958 and $13,954,039, respectively, the first of which
represented costs through March 31, 1993 and the second of which represented
costs from April 1, 1993 through June 30, 1993 and is subject to review and
acceptance by ORBCOMM Global pursuant to the System Agreement; and (c) ORBCOMM
Global paid to ORBCOMM all amounts set forth on such invoices.
-2-
<PAGE> 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF ORBITAL AND ORBCOMM. Orbital and
ORBCOMM jointly and severally represent and warrant to each of Teleglobe and
Teleglobe Mobile as follows:
(a) Organization and Authority. Each of Orbital and ORBCOMM is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the
corporate power to own its property and to carry on its
business as now being or, in the case of ORBCOMM, proposed to
be conducted by it. Each of Orbital and ORBCOMM has the
corporate power and authority to execute, deliver and perform
its obligations under the Definitive Agreements to which it is
a party. Each of ORBCOMM Global, ORBCOMM USA and ORBCOMM
International is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of
Delaware and has the partnership authority to own its property
and to carry on its business as proposed to be conducted by
it. Each of ORBCOMM Global, ORBCOMM USA and ORBCOMM
International has the partnership authority to execute,
deliver and perform its obligations under the Definitive
Agreements to which it is a party.
(b) Due Authorization. The execution, delivery and performance by
each of Orbital and ORBCOMM of the Definitive Agreements to
which it is a party have been duly authorized by all requisite
corporate proceedings. The execution, delivery and
performance by each of ORBCOMM Global, ORBCOMM USA and ORBCOMM
International of the Definitive Agreements to which it is a
party have been duly authorized by all requisite partnership
proceedings. Assuming the correctness of the representations
set forth in Section 3.2(b) with respect to the due execution
and delivery by Teleglobe and Teleglobe Mobile of the
Definitive Agreements to which they are a party, each of
Orbital, ORBCOMM, ORBCOMM Global, ORBCOMM USA and ORBCOMM
International has duly executed and delivered the Definitive
Agreements to which it is a party and each such document
constitutes a valid and binding agreement enforceable against
Orbital, ORBCOMM, ORBCOMM Global, ORBCOMM USA or ORBCOMM
International, as the case may be, in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, and
similar laws of general application affecting the rights and
relief of creditors and secured parties and to the further
extent that the availability of the remedies of specific
performance and injunctive relief and other equitable remedies
is subject to the discretion of the court before which any
proceeding therefor may be brought. Each of Orbital and
ORBCOMM has furnished to Teleglobe true and correct copies of
its Certificate of Incorporation and By-Laws, each as amended
and in effect on the Closing Date.
(c) SEC Reports. All proxy statements, reports and other
documents required to be filed by Orbital under the Securities
Exchange Act of 1934, as amended (the
-3-
<PAGE> 4
"EXCHANGE ACT"), after January 1, 1993 have been filed and
Orbital has furnished or made available to Teleglobe copies of
Orbital's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1993 and all final proxy
statements and reports filed by Orbital under the Exchange Act
after December 31, 1992, each as filed with the Securities and
Exchange Commission (collectively, the "SEC REPORTS"), and
Orbital's Annual Report to Shareholders for the fiscal year
ended December 31, 1992 (the "ANNUAL REPORT"). Each SEC
Report and the Annual Report was in substantial compliance
with the requirements of its respective form and none of the
SEC Reports, the Annual Report or the financial statements
(and the notes thereto) included therein, as of their
respective dates, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(d) Financial Statements; Absence of Changes. The financial
statements (including any related schedule and/or notes
thereto) included in the SEC Reports and the Annual Report
have been prepared in accordance with generally accepted
accounting principles in the United States consistently
applied (except as indicated in the notes thereto) throughout
the periods involved and fairly present in all material
respects the consolidated financial position, results of
operations and cash flows of Orbital and its consolidated
subsidiaries, as of the dates thereof and for the periods
ended on such dates (subject, in the case of interim
statements, to changes resulting from normal year-end
adjustments); neither Orbital nor ORBCOMM had, on December 31,
1992, any material contingent liabilities, unusual long-term
commitments or anticipated losses from any unfavorable
commitments that are not disclosed, or reserved against, in
the related balance sheet or the notes thereto. Since
December 31, 1992, there has been no material adverse change
in the business, financial position or results of operations
of Orbital, other than changes disclosed or referred to in any
filings made by Orbital under the Securities Act of 1933, as
amended, the SEC Reports, the Annual Report or otherwise
disclosed in writing to Teleglobe.
(e) Financial Projections. The financial projections attached
hereto as Schedule 3.1(e) have been prepared by the management
of ORBCOMM on the basis of normal and reasonable information,
assumptions and procedures and reflect ORBCOMM's best
estimates of such amounts for the periods presented.
(f) Governmental Consents, etc. Except as disclosed in Schedule
3.1(f), no material licenses, consents, approvals or
authorizations of, or declaration or filing with, any United
States governmental authority need be obtained or made by
Orbital, ORBCOMM, ORBCOMM Global, ORBCOMM USA and ORBCOMM
International as a condition to or in connection with the
execution, delivery and performance by each of Orbital,
ORBCOMM, ORBCOMM Global, ORBCOMM USA and ORBCOMM International
of the Definitive Agreements to which it is a
-4-
<PAGE> 5
party and no consents, approvals or authorizations need be
obtained by Orbital, ORBCOMM, ORBCOMM Global, ORBCOMM USA,
ORBCOMM International, Teleglobe or Teleglobe Mobile from the
FCC, and to Orbital's and ORBCOMM's knowledge under United
States laws generally, prior to the exercise by Teleglobe
Mobile of the Teleglobe Mobile Option (it being understood
that Orbital and ORBCOMM have only limited knowledge of
Teleglobe's and Teleglobe Mobile's business activities).
(g) FCC Licenses. On March 13, 1992 and May 28, 1993, ORBCOMM
received from the FCC experimental licenses to develop,
construct and operate two low-Earth orbit satellites and four
gateway earth stations, and to market communications services
to up to 1,000 subscribers in the United States and such
licenses, if renewed, are sufficient authorization from the
FCC to operate and market to such subscribers the Phase 1A
System in accordance with the Definitive Agreements.
(h) No Conflict with Other Agreements. The execution, delivery
and performance by each of Orbital and ORBCOMM of the
Definitive Agreements to which it is a party do not and will
not conflict with or result in a breach of the terms,
conditions or provisions of, or give rise to a right of
termination or constitute a default under, or result in any
violation of, (i) the Certificate of Incorporation or By-Laws,
(ii) any mortgage or material agreement or instrument to which
it is a party, (iii) any order, judgment or decree binding on
it or any of its property, or (iv) any applicable law, rule or
regulation to which Orbital or ORBCOMM or any of their
respective property and assets are subject, or (v) any
material license, waiver or permit currently held by Orbital
or ORBCOMM. The execution, delivery and performance by each
of Orbital and ORBCOMM of, and any compliance with, each of
the Definitive Agreements to which it is a party will not
result in the creation of any Lien upon any of the property
and assets of ORBCOMM except as otherwise provided therein.
(i) Actions Pending; Compliance with Law. Except as otherwise
disclosed in writing to Teleglobe, there is no action, suit or
proceeding pending, or to the knowledge of Orbital or ORBCOMM,
threatened against Orbital or ORBCOMM before any court,
arbitrator or governmental body, agency or official, which (i)
questions the validity of any of the transactions contemplated
in this Agreement or (ii) would, if adversely determined, have
a material adverse effect on the business, financial position
or results of operations of Orbital and its consolidated
subsidiaries, taken as a whole.
(j) Capital of ORBCOMM. ORBCOMM is a wholly-owned direct
subsidiary of Orbital. The authorized capital stock of
ORBCOMM consists of 20,000,000 shares of common stock, par
value $0.01 per share, of which 4,650,000 shares have been
duly and validly authorized and issued and are fully paid and
non-assessable.
-5-
<PAGE> 6
(k) No options. Except for the Orbital Communications Corporation
1992 Stock Option Plan, there are no outstanding:
(i) securities of ORBCOMM convertible or
exchangeable into shares of the capital
stock of ORBCOMM;
(ii) subscriptions, options, warrants, calls,
commitments or agreements obligating ORBCOMM
to issue or granting any Person the right to
purchase or otherwise acquire any of its
shares or any securities of any class or kind
of ORBCOMM; or
(iii) voting trust or voting agreements or pooling
agreements or proxies with respect to any of
the shares of ORBCOMM.
3.2 REPRESENTATIONS AND WARRANTIES OF TELEGLOBE AND TELEGLOBE MOBILE.
Teleglobe and Teleglobe Mobile jointly and severally represent and warrant to
each of Orbital and ORBCOMM as follows:
(a) Organization; Authority. Each of Teleglobe and Teleglobe
Canada Inc. is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power
to own its property and to carry on its business as now being
conducted. Teleglobe has the corporate power and authority to
execute, deliver and perform its obligations under the
Definitive Agreements to which it is a party. Teleglobe
Mobile is a general partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware
and has the partnership authority to own its property and to
carry on its business as proposed to be conducted by it.
Teleglobe Mobile has the partnership authority to execute,
deliver and perform its obligations under the Definitive
Agreements to which it is a party.
(b) Due Authorization. The execution, delivery and performance by
Teleglobe of the Definitive Agreements to which it is a party
have been duly authorized by all requisite corporate
proceedings. The execution, delivery and performance by
Teleglobe Mobile of the Definitive Agreements to which it is a
party have been duly authorized by all requisite partnership
proceedings. Each of Teleglobe and Teleglobe Mobile has duly
executed and delivered the Definitive Agreements to which it
is a party and each such document constitutes a valid and
binding agreement enforceable against Teleglobe or Teleglobe
Mobile, as the case may be, in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, or other
similar laws of general application affecting the rights and
relief of creditors and secured parties and to the further
extent that the availability of the remedies of specific
performance and injunctive relief and other equitable remedies
is subject to the discretion of the court before which any
proceeding therefor may be
-6-
<PAGE> 7
brought. Teleglobe has furnished to Orbital true and correct
copies of its Articles and By-Laws, each as amended and in
effect on the Closing Date.
(c) Securities Filing. All proxy statements, prospectuses, annual
information forms, reports and other documents required to be
filed by Teleglobe under applicable securities legislation in
Canada after January 1, 1993 have been filed and Teleglobe has
furnished or made available to Orbital copies of Teleglobe's
1992 Annual Report for the fiscal year ended December 31,
1992, the interim quarterly report for the fiscal quarter
ended March 31, 1993 and all final proxy statements and
reports filed by Teleglobe under the applicable Canadian
securities legislation after December 31, 1992, each as filed
in English with the applicable Canadian securities regulatory
authority. Each such document filed with such Canadian
securities regulatory authorities was in substantial
compliance with the requirements of the applicable Canadian
securities legislation and none of such documents or the
financial statements (and the notes thereto) included therein,
as of their respective dates, contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) Financial Statements; Absence of Changes. The financial
statements (including any related schedule and/or notes
thereto) included in the documents referred to in paragraph
3.2(c) have been prepared in accordance with generally
accepted accounting principles in Canada consistently applied
(except as indicated in the notes thereto) throughout the
periods involved and fairly present in all material respects
the consolidated financial position, results of operations and
cash flows of Teleglobe and its consolidated subsidiaries, as
of the dates thereof and for the periods ended on such dates
(subject, in the case of interim statements, to changes
resulting from normal year-end adjustments); Teleglobe did not
have, on December 31, 1992, any material contingent
liabilities, unusual long-term commitments or anticipated
losses from any unfavorable commitments that are not
disclosed, or reserved against, in the related balance sheet
or the notes thereto. Since December 31, 1992, there has been
no material adverse change in the business, financial position
or results of operations of Teleglobe other than changes
disclosed or referred to in any filings made by Teleglobe
under applicable Canadian securities legislation, the
documents referred to in paragraph 3.2(c) or otherwise
disclosed in writing to Orbital.
(e) Governmental Consents, etc. Neither Teleglobe nor Teleglobe
Mobile is required to obtain any material license, consent,
approval or authorization of, or to make any declaration or
filing with, any governmental authority as a condition to or
in connection with the execution, delivery and performance by
it of the Definitive Agreements to which it is a party.
-7-
<PAGE> 8
(f) No Conflict with other Agreements. The execution, delivery
and performance by each of Teleglobe and Teleglobe Mobile of
the Definitive Agreements to which it is a party do not and
will not conflict with or result in a breach of the terms,
conditions or provisions of, or give rise to a right of
termination or constitute a default under, or result in any
violation of, (i) its Articles or By-Laws in the case of
Teleglobe and its partnership agreement in the case of
Teleglobe Mobile, (ii) any mortgage or material agreement or
instrument to which it is a party, (iii) any order, judgment
or decree binding on it or any of its property, or (iv) any
applicable law, rule or regulation to which Teleglobe,
Teleglobe Mobile or any of their respective property and
assets are subject or (v) any material license, waiver or
permit currently held by Teleglobe or Teleglobe Mobile. The
execution, delivery and performance by each of Teleglobe and
Teleglobe Mobile of, and any compliance with, each of the
Definitive Agreements to which it is a party will not result
in the creation of any Lien upon any of the property and
assets of Teleglobe Mobile except as otherwise provided
therein.
(g) Actions Pending; Compliance with Law. Except as otherwise
disclosed in writing to Orbital, there is no action, suit or
proceeding pending, or to the knowledge of Teleglobe or
Teleglobe Mobile, threatened against Teleglobe or Teleglobe
Mobile before any court, arbitrator or governmental body,
agency or official, which (i) questions the validity of any of
the transactions contemplated by this Agreement or (ii) would,
if adversely determined, have a material adverse effect on the
business, financial position or results of operations of
Teleglobe and its consolidated subsidiaries, taken as a whole.
ARTICLE IV
COVENANTS OF ORBITAL, ORBCOMM AND TELEGLOBE
4.1 AFFIRMATIVE COVENANTS OF ORBITAL AND ORBCOMM. Except with the prior
written consent of Teleglobe, which consent shall not be unreasonably withheld,
Orbital and ORBCOMM hereby covenant and agree with Teleglobe that they shall:
(a) Corporate Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect the
corporate existence of ORBCOMM;
(b) Licenses. Use all commercially reasonable efforts, in a
timely manner, to obtain, maintain, renew and comply with,
pursuant to the System Agreement (and after September 12, 1995
pursuant to the Procurement Agreement), all material United
States operating licenses and permits necessary for the
construction, operation and marketing of the ORBCOMM System
(including, without limitation, the items listed on Schedule
3.1(f) and a private carrier license from the FCC) and to
assist Teleglobe Mobile in obtaining all applicable United
States governmental approvals necessary for the exercise by
Teleglobe Mobile of the Teleglobe Mobile Option;
-8-
<PAGE> 9
(c) Notification. Promptly notify Teleglobe of any event or
circumstances not generally known to the public which in the
reasonable judgment of Orbital and/or ORBCOMM would materially
and adversely affect the construction, operation or marketing
of the ORBCOMM System;
(d) ORBCOMM. Ensure that so long as ORBCOMM holds any license
from the FCC required to construct or operate the ORBCOMM
System, ORBCOMM will at all times:
(i) remain a wholly-owned subsidiary of Orbital
(except with respect to the exercise of
options for a maximum of 750,000 shares under
the Orbital Communications Corporation 1992
Stock Option Plan);
(ii) carry on no business other than the
construction, operation and marketing of the
ORBCOMM System or businesses which are in
furtherance, or in connection with the
expansion of the size or capabilities, of the
ORBCOMM System; and
(iii) remain the sole holder of all FCC licenses
required for the construction, launch and
operation of the ORBCOMM System other than
FCC licenses for individual user transceivers
and FCC licenses that are held by ORBCOMM
Global and ORBCOMM USA.
(e) Supply of Financial Information. Deliver to Teleglobe on a
timely basis all information that it delivers to its public
security-holders and (without duplication) all final financial
statements, proxy statements and reports filed with the
Securities and Exchange Commission;
(f) Syndication. Not seek to obtain any investors in ORBCOMM or
ORBCOMM's interest in ORBCOMM Global until such time as the
Teleglobe Mobile Option Period has expired;
(g) No Conflicts. Not enter into any contract or amendment to any
existing contract or seek any license or amendment to any
license that would be breached by the exercise by Teleglobe
Mobile of the Teleglobe Mobile Option; and
(h) Transfer of ORBCOMM Employees. By January 1, 1996, transfer
all of the employees of ORBCOMM to ORBCOMM Global, ORBCOMM USA
or ORBCOMM International, as the case may be.
4.2 NEGATIVE COVENANTS OF ORBITAL AND ORBCOMM. Orbital and ORBCOMM hereby
agree with Teleglobe that, so long as ORBCOMM holds any license from the FCC
required to construct or operate the ORBCOMM System, without Teleglobe's prior
written consent, which
-9-
<PAGE> 10
consent shall not be unreasonably withheld, or except as may be required to
fulfill ORBCOMM's obligations under its FCC licenses:
(a) Negative Pledge. Except for such actions as would not
materially and adversely affect ORBCOMM's ability to carry on
its operations and perform its obligations, both in accordance
with the Definitive Agreements, and except as provided for in
the list of permitted encumbrances attached as Schedule
4.2(a), ORBCOMM will not grant, create, assume, incur or
suffer to exist any Lien affecting ORBCOMM, or any of its
property, rights, revenues or assets; provided that in no
circumstances shall ORBCOMM grant, create, assume, incur or
suffer to exist any Lien on any FCC licenses held by ORBCOMM.
(b) Sale of Assets. Except for such actions as would not
materially and adversely affect ORBCOMM' s ability to carry on
its operations and perform its obligations, both in accordance
with the Definitive Agreements, Orbital shall not dispose of
any debt interest in ORBCOMM and ORBCOMM shall not sell,
transfer, convey, lease, or otherwise dispose of any of its
assets except as provided for in the Definitive Agreements.
(c) Merger and Amalgamation. ORBCOMM shall not consolidate, merge
or amalgamate with any other Person.
(d) Corporate Documents. Except for such actions as would not
materially and adversely affect ORBCOMM's ability to carry on
its operations and perform its obligations, both in accordance
with the Definitive Agreements, Orbital and ORBCOMM shall not
create, amend or repeal any by-law or modify the certificate
of incorporation of ORBCOMM.
(e) Loans. Except for such actions as would not materially and
adversely affect ORBCOMM's ability to carry on its operations
and perform its obligations, both in accordance with the
Definitive Agreements, ORBCOMM shall not make any loans or
give any financial guarantees for the obligations of any other
party.
(f) Insolvency and Liquidation. Orbital and ORBCOMM shall not
make any assignment for the benefit of creditors or subject
ORBCOMM to any proceedings under any bankruptcy or insolvency
law or cause ORBCOMM to avail itself of the benefit of any
other similar legislation for the benefit of debtors or take
steps to wind-up or terminate its corporate existence or
engage in any financial restructuring.
4.3 AFFIRMATIVE COVENANTS OF TELEGLOBE. Teleglobe and Teleglobe Mobile
hereby covenant and agree with Orbital that they shall:
(a) Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect the existence of
Teleglobe Mobile which in the case of
-10-
<PAGE> 11
Teleglobe shall consist of voting its interests in Teleglobe
Mobile or, to the extent permitted by law, causing its
nominees on the board of directors of Teleglobe Mobile
Investment Inc., the Managing Partner of Teleglobe Mobile, if
any, to vote to do such things or cause such things to be
done.
(b) Notification. Promptly notify Orbital and ORBCOMM of any
event or circumstances not generally known to the public which
in the reasonable judgment of Teleglobe and/or Teleglobe
Mobile would materially and adversely affect the marketing of
the ORBCOMM System.
(c) Supply of Financial Information. Deliver to Orbital on a
timely basis all information which it delivers to its public
security-holders and (without duplication) all final financial
statements, proxy statements and reports in the English
language filed with applicable Canadian securities regulatory
authorities.
(d) No Conflicts. Not enter into any contract or amendment to any
existing contract or seek any license or amendment to any
license that would be breached by the exercise by ORBCOMM of
the ORBCOMM Option.
4.4 AFFIRMATIVE COVENANTS OF THE PARTNERS. Each of ORBCOMM and Teleglobe
Mobile covenant and agree that the headquarters facilities for ORBCOMM Global
shall be relocated from 21700 Atlantic Boulevard, Dulles Virginia to another
facility upon the approval by the general partners of ORBCOMM Global of a
capital budget and plan for such relocation. The President of ORBCOMM Global
shall submit to each of its general partners for their approval a capital
expenditure budget and plan for such relocation, which approval by such general
partners shall not be unreasonably withheld. The fact that the Dulles facility
may be less expensive shall not be a basis for withholding approval of a
proposed relocation plan and budget if such plan and budget are otherwise
reasonable and consistent with applicable market requirements and conditions.
ARTICLE V
TELEGLOBE MOBILE OPTION
5.1 TELEGLOBE MOBILE OPTION. Subject to the terms and conditions of this
Agreement and in reliance thereon, ORBCOMM hereby grants to Teleglobe Mobile an
exclusive option (the "TELEGLOBE MOBILE OPTION") exercisable from the earlier
of (a) April 1, 1994 or (b) the Phase 1A launch until the later of (i) ninety
(90) days after the Phase 1A launch and initial satellite signal acquisition or
(ii) thirty (30) days after completion of on-orbit satellite acceptance testing
(the "TELEGLOBE MOBILE OPTION PERIOD"), to contribute $70,000,000 to ORBCOMM
Global and in exchange therefor to cause ORBCOMM to contribute and itself to
contribute certain of their respective interests in ORBCOMM USA and ORBCOMM
International to ORBCOMM Global, each in the manner and to the extent provided
in Section 5.2.
-11-
<PAGE> 12
5.2 EFFECT OF EXERCISE. Upon exercise of the Teleglobe Mobile Option by
Teleglobe Mobile:
(a) The ORBCOMM Global Partnership Agreement shall, without any
action by the partners of ORBCOMM Global, be amended and
restated in its entirety as set forth in Appendix D.
(b) The ORBCOMM USA Partnership Agreement shall, without any
further action on the part of the general partners of ORBCOMM
USA, be amended to provide that (i) ORBCOMM Global shall be a
general and a limited partner of ORBCOMM USA with a
Participation Percentage equal to 98% of the aggregate
Participation Percentages in ORBCOMM USA, (ii) ORBCOMM shall
be a general and limited partner of ORBCOMM USA with a
Participation Percentage equal to 2%, (iii) ORBCOMM Global
shall succeed to the Unrecouped Capital Preferences of ORBCOMM
and of Teleglobe Mobile in ORBCOMM USA, and (iv) Teleglobe
Mobile shall no longer be a partner in ORBCOMM USA. Upon the
Teleglobe Option Effective Date, the general partners of
ORBCOMM USA may but shall not be obligated to execute a
written document to memorialize the amendments but such
amendments set forth in this Section 5.2(b), shall be
effective regardless of whether such a document is
contemplated or executed.
(c) The ORBCOMM International Partnership Agreement shall, without
any further action on the part of the general partners of
ORBCOMM International, be amended to provide that (i) ORBCOMM
Global shall be a general and a limited partner of ORBCOMM
International with a Participation Percentage equal to 98% of
the aggregate Participation Percentages in ORBCOMM
International, (ii) Teleglobe Mobile shall be a general and
limited partner of ORBCOMM International with a Participation
Percentage equal to 2%, (iii) ORBCOMM Global shall succeed to
the Unrecouped Capital Preferences of ORBCOMM and of Teleglobe
Mobile in ORBCOMM International, and (iv) ORBCOMM shall no
longer be a partner in ORBCOMM International. Upon the
Teleglobe Mobile Option Effective Date, the general partners
of ORBCOMM International may but shall not be obligated to
execute a written document to memorialize the amendments set
forth in this Section 5.2(c), but such amendments shall be
effective regardless of whether such a document is
contemplated or executed.
5.3 ORBCOMM SYSTEM FCC LICENSES. Orbital and ORBCOMM jointly and
severally represent and warrant to Teleglobe and Teleglobe Mobile that, upon
the exercise of the Teleglobe Mobile Option, ORBCOMM has obtained all FCC
licenses required to construct the Phase 1B System except as specified in
Schedule 5.3.
-12-
<PAGE> 13
ARTICLE VI
[RESERVED]
ARTICLE VII
CONDITIONS PRECEDENT TO AND
PROCEDURES FOR EXERCISE OF TELEGLOBE MOBILE OPTION
7.1 CONDITIONS PRECEDENT. Exercise by Teleglobe Mobile of the Teleglobe
Mobile Option is subject to (a) the receipt of all necessary approvals,
authorizations and actions by any governmental or administrative authority or
any other Person required in connection with the exercise of the Teleglobe
Mobile Option and the transactions contemplated thereby shall have been
obtained, and the exercise of the Teleglobe Mobile Option shall not conflict
with any applicable law and (b) the requirement that Teleglobe Mobile shall
have contributed to ORBCOMM Global an aggregate of at least $10,000,000 to the
development, construction, operation and marketing of the Phase 1A System.
7.2 MANNER OF EXERCISE. The Teleglobe Mobile Option shall be exercised by
delivery to Orbital and ORBCOMM in the manner provided in Section 13.1 of this
Agreement of the Teleglobe Mobile Option Exercise Notice in the form of
Appendix F attached hereto and incorporated herein by reference on or before
the expiration of the Teleglobe Mobile Option Period.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF
ORBCOMM FINANCING TRANSACTION
8.1 CONDITIONS TO THE OBLIGATIONS OF ORBITAL AND ORBCOMM. The obligation
of Orbital and ORBCOMM to consummate the transaction with Teleglobe and
Teleglobe Mobile for the financing of the ORBCOMM System is subject to the
satisfaction on or before the Closing Date of the following conditions:
(a) Opinion of Counsel. Orbital, ORBCOMM, ORBCOMM Global, ORBCOMM
USA and ORBCOMM International shall have received from Guthrie
J. Stewart, Vice-President, Legal Matters and Corporate
Secretary of Teleglobe, Sullivan & Worcester and Ropes & Gray
opinions in form and substance reasonably satisfactory to
them;
(b) Execution by Teleglobe and Teleglobe Mobile of Definitive
Agreements. Each of Teleglobe and Teleglobe Mobile shall have
executed the documents specified in Appendix E attached hereto
and incorporated herein by reference to be executed by it;
-13-
<PAGE> 14
(c) Formation of ORBCOMM Global ORBCOMM USA and ORBCOMM
International. All necessary action shall have been taken to
form ORBCOMM Global, ORBCOMM USA and ORBCOMM International,
including the filing with the Delaware Secretary of State of
the Partnership Certificates, and all contributions by
Teleglobe Mobile to ORBCOMM Global, ORBCOMM USA or ORBCOMM
International required to occur at the Closing shall have
occurred and such partnerships shall be validly existing at
the date of Closing;
(d) Execution by ORBCOMM GLOBAL, ORBCOMM USA and ORBCOMM
International of Definitive Agreements. Each of ORBCOMM
Global, ORBCOMM USA and ORBCOMM International shall have
executed the documents specified in Appendix E attached hereto
and incorporated herein by reference to be executed by it; and
(e) Transactions Permitted by Applicable Law. The consummation of
the transactions contemplated hereby shall not violate any
applicable law, rule or regulation of any federal, state,
local or foreign governmental authority or other regulatory or
administrative entity.
8.2 CONDITIONS TO THE OBLIGATIONS OF TELEGLOBE AND TELEGLOBE MOBILE. The
obligation of Teleglobe and Teleglobe Mobile to consummate the transaction with
Orbital and ORBCOMM for the financing of the ORBCOMM System is subject to the
satisfaction on or before the Closing Date of the following conditions:
(a) Opinion of Counsel. Teleglobe, Teleglobe Mobile, ORBCOMM
Global, ORBCOMM USA and ORBCOMM International shall have
received from Mary Ellen Seravalli, Assistant General Counsel
of Orbital Sciences Corporation, and Ropes & Gray, opinions in
form and substance reasonably satisfactory to them;
(b) Execution by Orbital and ORBCOMM of Definitive Agreements.
Each of Orbital and ORBCOMM shall have executed the documents
specified in Appendix E attached hereto and incorporated
herein by reference to be executed by it;
(c) Formation of ORBCOMM Global ORBCOMM USA and ORBCOMM
International. All necessary action shall have been taken to
form ORBCOMM Global, ORBCOMM USA and ORBCOMM International,
including the filing with the Delaware Secretary of State of
the Partnership Certificates, and all contributions by ORBCOMM
to ORBCOMM Global, ORBCOMM USA or ORBCOMM International
required to occur at the Closing shall have occurred and such
partnerships shall be validly existing at the date of Closing;
(d) Execution by ORBCOMM Global, ORBCOMM USA and ORBCOMM
International of Definitive Agreements. Each of ORBCOMM
Global, ORBCOMM USA and ORBCOMM International shall have
executed the
-14-
<PAGE> 15
documents specified in Appendix E attached hereto and
incorporated herein by reference to be executed by it;
(e) Transactions Permitted by Applicable Law. The consummation of
the transactions contemplated hereby shall not violate any
applicable law, rule or regulation of any federal, state,
local or foreign governmental authority or other regulatory or
administrative entity.
ARTICLE IX
GUARANTY
9.1 TELEGLOBE GUARANTY. Teleglobe hereby unconditionally and absolutely
guarantees the full and punctual payment of all of Teleglobe Mobile's payment
obligations under the Definitive Agreements to which it is a party. Upon
failure of Teleglobe Mobile to pay any of its payment obligations under any of
the Definitive Agreements to which it is a party, Teleglobe shall on demand pay
such obligation in the manner specified in such Definitive Agreement and none
of the beneficiaries of this guaranty shall have any obligation to proceed to
first preserve, use or exhaust any right or remedy it may have against
Teleglobe Mobile.
9.2 ORBITAL GUARANTY. Orbital hereby unconditionally and absolutely
guarantees the full and punctual payment of all of ORBCOMM's payment
obligations under the Definitive Agreements to which it is a party. Upon
failure of ORBCOMM to pay any of its payment obligations under any of the
Definitive Agreements to which it is a party, Orbital shall on demand pay such
obligation in the manner specified in such Definitive Agreement and none of the
beneficiaries of this guaranty shall have any obligation to proceed to first
preserve, use or exhaust any right or remedy it may have against ORBCOMM.
ARTICLE X
CHANGE IN CONTROL
10.1 CHANGE OF CONTROL. (a) In the event of a Change of Control of Orbital
or Teleglobe, as the case may be (the "Change of Control Party"), Teleglobe
Mobile or ORBCOMM, as the case may be (the "Non-Change of Control Party"),
shall have the option to:
(i) for a period of 180 days from such Change of Control
(the "Option Period"), cause the Change of Control
Party to purchase the Non-Change of Control Party's
interest in each of ORBCOMM Global, ORBCOMM USA and
ORBCOMM International at an aggregate price equal to
the greater of (A) the Non-Change of Control Party's
aggregate Unrecouped Capital Preferences in such
partnerships and (B) the Non-Change of Control
Party's direct and indirect Participation Percentage
in each such partnership multiplied by the Fair
Market Value of each such partnership as determined
in accordance with Section 10.1(d); or
-15-
<PAGE> 16
(ii) cause the General Partners of ORBCOMM Global to adopt
a resolution providing that in the event there is a
deadlock on a matter requiring the approval of a
Majority in Interest of the Partners, the President
of ORBCOMM Global shall be entitled to decide on such
matter by way of a casting vote or otherwise, as
deemed appropriate by the Non-Change of Control
Party, notwithstanding any contrary provision set
forth in the ORBCOMM Global Partnership Agreement.
Such resolution shall be automatically deemed adopted
by the General Partners upon the written election by
the Non-Change of Control Party to require that such
resolution be adopted.
(b) The Non-Change of Control Party shall exercise the Section
10.1(a)(i) option by delivering to the Change of Control Party
a written notice of exercise ("the "Option Exercise Notice")
within the Option Period.
(c) For purposes of Section 10.1(a), (i) a "Change of Control"
shall be deemed to occur if a Person or "group," as such term
is used in Rule 13d-5(b)(1) or 14(d)(2) under the Securities
Exchange Act, becomes the beneficial owner of more than 50% of
the voting power represented by Orbital's or Teleglobe's, as
the case may be, outstanding securities; provided however,
that a Change of Control shall not be deemed to have occurred
with respect to (A) Orbital if the Person who acquires such
securities is Teleglobe or an Affiliate of Teleglobe and (B)
Teleglobe if the Person or group who acquires such securities
is or includes as its largest member (x) Orbital or an
Affiliate of Orbital or (y) a Person that owns, directly or
indirectly, fifteen percent or more of the voting power
represented by outstanding securities of Teleglobe as of the
Restatement Date, or an Affiliate of such Person.
(d) "Fair Market Value" shall be determined for each of ORBCOMM
Global, ORBCOMM USA and ORBCOMM International and shall be the
value thereof as of the date of the Change of Control on the
basis of an arms' length transaction between a willing buyer
and a willing seller involving the sale of all partnership
interests, determined in the manner specified in this Section
10.1(d). Any determination of Fair Market Value pursuant to
this Section 10.1 shall be final, binding and conclusive on
the parties. Fair Market Value shall be determined as
follows:
(i) Promptly after delivery of the Option Exercise
Notice, Orbital and Teleglobe shall attempt in good
faith to agree on the Fair Market Value. If Orbital
and Teleglobe agree on a value (regardless of when
such agreement is reached, and notwithstanding the
pendency of appraisal efforts pursuant to this
Section), such value shall be the Fair Market Value.
-16-
<PAGE> 17
(ii) If Orbital and Teleglobe fail to reach such an
agreement within one month after the delivery of the
Option Exercise Notice, they shall each select an
independent appraiser who is one of the "Big Six"
United States accounting firms. If either Orbital or
Teleglobe shall fail to select an appraiser within
twenty (20) days after the expiration of the
one-month period referred to in the preceding
sentence, the Fair Market Value shall be determined
by the appraiser selected by the other. Following
such selection, each such appraiser shall determine
the value of each of ORBCOMM Global, ORBCOMM USA and
ORBCOMM International as quickly as practicable, and
in any event within forty-five (45) days after the
last appraiser has been selected, and give notice of
such determination to Orbital and Teleglobe. If
either appraiser shall fail to make such a
determination of value within forty-five days after
the last appraiser has been selected, the Fair Market
Value shall be the value determined by the other
appraiser. If the greater of the two values
determined by such two appraisers is within 10% of
the lesser of such two values, the Fair Market Value
shall be the average of such two values.
(iii) If the greater of the two values determined by such
two appraisers is not within 10% of the lesser of
such two values, such two appraisers shall select a
third independent appraiser who shall be one of the
"Big Six" United States accounting firms and who
shall as quickly as practicable, but in no event
later than forty-five days after appointment, select
one of the values determined by the first two
appraisers as the value that more closely
approximates the correct fair market value, and such
value selected by the third appraiser shall be Fair
Market Value.
(iv) Orbital and Teleglobe agree to cooperate with one
another and with the appraisers in determining Fair
Market Value. Orbital and Teleglobe shall each bear
its own out-of-pocket expenses incurred in connection
with the determination of Fair Market Value,
including without limitation the fees and expenses of
the appraiser selected by each, and one-half of the
fees and expenses of the third appraiser, if any.
10.2 TRANSFER OF FCC LICENSES FOR THE ORBCOMM SYSTEM. Subject to the
receipt of all necessary governmental approvals, including all approvals
required under the rules and regulations of the FCC, upon the Change of Control
of Orbital, Orbital agrees to cause ORBCOMM to transfer to ORBCOMM USA at no
additional cost any and all FCC licenses then held by ORBCOMM relating to the
construction, launch or operation of the ORBCOMM System."
-17-
<PAGE> 18
ARTICLE XI
DEFAULT
11.1 DEFAULTS. If there is any material breach, non-performance of or
non-compliance with any covenant, agreement or obligation of any of the parties
to this Agreement (the "DEFAULTING PARTY") under or pursuant to this Agreement
then, upon notice from a non-Defaulting Party to the Defaulting Party, the
Defaulting Party shall have a period of thirty (30) days to cure such default
failing which all payments under the Definitive Agreements due to the
Defaulting Party and any of its Affiliates shall be subject to a holdback until
such default has been cured or waived to the reasonable satisfaction of the
non-Defaulting Party giving such notice.
ARTICLE XII
TERMINATION
This Agreement shall terminate upon the earlier of ORBCOMM or
Teleglobe Mobile ceasing to be both a general and limited Partner of ORBCOMM
Global.
ARTICLE XIII
MISCELLANEOUS
13.1 NOTICES. All notices, requests and other communications to any party
hereunder shall be in writing (including any facsimile transmission or similar
writing), and shall be sent either by telecopy, by reputable overnight courier
or delivered in person addressed as follows:
(a) If to Orbital, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice and General Manager/
Communications and Information Systems Group
(b) If to ORBCOMM, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
(c) If to Teleglobe, to it at:
1000, rue de La Gauchetiere ouest
Montreal, Quebec Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
-18-
<PAGE> 19
(d) If to Teleglobe Mobile, to it:
c/o Teleglobe Inc.
1000, rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted and
the appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier or (iii) if
given by any other means, when received at the address specified in this
Section.
13.2 COSTS AND EXPENSES. Except as otherwise specifically set forth in the
Definitive Agreements, each party shall bear all costs and expenses incurred in
connection with the preparation, negotiation and performance of its obligations
under the Definitive Agreements; provided, however, that fees and expenses of
J.P. Morgan Securities Inc. incurred in obtaining financing for the ORBCOMM
System and assisting in structuring the transactions contemplated by and
preparing the Definitive Agreements shall be borne by ORBCOMM Global.
13.3 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York, without giving effect to the
provisions, policies or principles thereof relating to choice or conflict of
laws.
13.4 RESOLUTION OF DISPUTES.
(a) Any controversy or claim that may arise under, out of, in
connection with or relating to this Agreement or any
Definitive Agreement (other than the Procurement Contract) or
any breach hereof or thereof, shall be submitted to a
representative management panel of Orbital and Teleglobe,
provided that in the case of the ORBCOMM System Construction
Agreement, the System Charge Agreement and the International
System Charge Agreement, ORBCOMM Global shall be entitled to
representation on such management panel. Each of Orbital and
Teleglobe (and where applicable, ORBCOMM Global) may appoint
up to two individuals to such panel. The members of such
panel shall be appointed by each party within ten (10) days of
the receipt by either Orbital or Teleglobe (or where
applicable, ORBCOMM Global) of notice of the existence of such
controversy or claim. The unanimous decision and agreement of
such panel shall resolved the controversy or claim. If the
panel is unable to resolve such matter within thirty (30) days
of the submission of such controversy or claim to such panel,
it shall be brought before the Presidents of Orbital and
Teleglobe (and where applicable, ORBCOMM Global) for final
resolution. If such individuals are unable to resolve
-19-
<PAGE> 20
the matter within thirty (30) days of the submission of such
controversy or claim to such individuals, either Orbital or
Teleglobe may remove the controversy or claim for arbitration
in accordance with Section 13.4(b).
(b) Any controversy or claim that is not resolved under Section
13.4(a) shall be settled by final and binding arbitration in
New York, New York in accordance with the then existing United
States domestic rules of the American Arbitration Association
("AAA") (to the extent not modified by this Section 13). In
the event that more than one claim or controversy arises under
this Agreement and any Definitive Agreement, such claims or
controversies may be consolidated in a single arbitral
proceeding. The arbitral tribunal shall be composed of three
arbitrators. Each of Orbital and Teleglobe shall appoint one
arbitrator. If any party shall fail to appoint an arbitrator
within thirty (30) days from the date on which another party's
request for arbitration has been communicated to the first
party, such appointment shall be made by the AAA. The two
arbitrators so appointed shall agree upon the third arbitrator
who shall act as chairman of the arbitral tribunal and who
shall be an expert in satellite communications systems. If
the two appointed arbitrators fail to nominate a chairman
within ten (10) days from the date as of which both
arbitrators shall have been appointed, such chairman shall be
selected by the AAA. In all cases, the arbitrators shall be
fluent in English. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction or
application may be made for judicial acceptance of the award
and an order of enforcement, as the case may be. The parties
agree that if it becomes necessary for any party to enforce an
arbitral award by a legal action or additional arbitration or
judicial methods, the party against whom enforcement is sought
shall pay all reasonable costs and attorneys' fees incurred by
the party seeking to enforce the award.
13.5 ENTIRE AGREEMENT. This Agreement, together with the Definitive
Agreements, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes any prior agreement or understanding
among the parties with respect to the subject matter hereof.
13.6 AMENDMENT; WAIVER. This Agreement may not be amended nor may any
rights hereunder be waived except by an instrument in writing signed by the
parties.
13.7 BINDING EFFECT: ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. Neither this Agreement nor any interests or obligations
hereunder shall be assigned or transferred (by operation of law or otherwise)
to any person without the prior written consent of the other parties.
13.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
-20-
<PAGE> 21
13.9 SEPARABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
13.10 HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Restated Master
Agreement as of the day and year first above written.
<TABLE>
<S> <C>
TELEGLOBE INC. ORBITAL SCIENCES CORPORATION
By: /s/ GUTHRIE J. STEWART By: /s/ BRUCE W. FERGUSON
---------------------------------------- -----------------------------------------------
Name: Guthrie J. Stewart Name: Bruce W. Ferguson
Title: Executive Vice President, Title: Executive Vice President
Corporate Development and General Manager/
and Corporate Secretary Communications and Information
Systems Group
TELEGLOBE MOBILE PARTNERS ORBITAL COMMUNICATIONS
BY: TELEGLOBE MOBILE INVESTMENT INC. CORPORATION
its Managing Partner
By: /s/ GURTHRIE J. STEWART By: /s/ ALAN L. PARKER
--------------------------------------- -----------------------------------------------
Name: Guthrie J. Stewart Name: Alan L. Parker
Title: Chairman of the Board and Title: President
and Chief Executive Officer
</TABLE>
-21-
<PAGE> 22
SCHEDULE 5.3
In the event ORBCOMM Global determines to use dual 4.8/9.6 kbps subscriber
terminal downlinks for the ORBCOMM System satellites, a modification to the
existing FCC license granted to ORBCOMM on October 20, 1994 relating to the
construction, launch and operation of the ORBCOMM System will need to be
obtained to permit the construction, launch and operation of such dual 4.8/9.6
kbps subscriber terminal downlinks.
-22-
<PAGE> 23
APPENDIX C
RESTATED DEFINITIONS
The parties to the Master Agreement hereby restate this Appendix C as of
September 12, 1995 as follows:
"AAA" has the meaning assigned thereto in Section 13.4(b) to the
Master Agreement.
"Affiliate" has the meaning assigned thereto in the ORBCOMM Global
Partnership Agreement.
"Annual Report" has the meaning assigned thereto in Section 3.1(c) of
the Master Agreement.
"Bankruptcy" shall mean (a) the filing by a Person of a voluntary
petition seeking liquidation, reorganization, arrangement or readjustment, in
any form, of its debts under any applicable United States, Canadian or other
insolvency law, or such Person's filing an answer consenting to or acquiescing
in any such petition, (b) the making by such Person of any assignment for the
benefits of its creditors or (c) the expiration of sixty (60) days after the
filing of an application for the appointment of a receiver for the assets of
such Person or an involuntary petition seeking liquidation, reorganization
arrangement or readjustment of its debts under any applicable United States,
Canadian or other insolvency law, provided that the same shall not have been
vacated, set aside or stayed within such sixty-day period.
"Capital Preference" has the meaning assigned thereto in Section 6.1
of the Master Agreement.
"Change of Control" has the meaning assigned thereto in Section 10.2
of the Master Agreement.
"Closing Date" shall be July 21, 1993 or such other date as may be
agreed on by Orbital and Teleglobe.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, or any successor statute, and the rules and regulations thereunder, as
amended from time to time.
"Defaulting Party" shall have the meaning assigned thereto in Section
11.1 of the Master Agreement.
"Definitive Agreements" shall mean, for the purposes of Articles 3 and
8 of the Master Agreement the Master Agreement, the ORBCOMM Global Partnership
Agreement, the ORBCOMM USA Partnership Agreement, the ORBCOMM International
Partnership Agreement, the ORBCOMM System Construction Agreement, the System
Charge Agreement,
<PAGE> 24
the International System Charge Agreement, the System Agreement and the
Proprietary Information and Non-Competition Agreement. Otherwise "Definitive
Agreements" shall mean the Master Agreement, the ORBCOMM Global Partnership
Agreement, the ORBCOMM USA Partnership Agreement, the ORBCOMM International
Partnership Agreement, the ORBCOMM System Construction Agreement, the System
Charge Agreement, the International System Charge Agreement, the Procurement
Contract and the Proprietary Information and Non-Competition Agreement.
Any reference to "dollar", "dollars", or "$" shall mean the lawful
currency of the United States.
"Exchange Act" has the meaning assigned thereto in Section 3.1(c) of
the Master Agreement.
"FCC" shall mean the Federal Communications Commission or any
successor agency thereto.
"Gateway Earth Station" shall mean any of the fixed-Earth stations
that are part of the ground segment of the ORBCOMM System and are used to
communicate (a) by VHF radio with the Satellites and (b) by microwave, cable,
geostationary very small aperture terminal or any other means with the Master
Network Control Center of which they are a part.
"International System Charge Agreement" shall mean the International
System Charge Agreement dated as of June 30, 1993 among ORBCOMM Global,
Teleglobe Mobile and ORBCOMM International, as such agreement may be amended
and restated from time to time.
"Licensee" shall mean any Person that has executed a service license
or similar agreement with either ORBCOMM USA or ORBCOMM International through
which such person intends to provide two-way data and message communications
and position determining services.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition of
title, encumbrance, lease or security interest.
"Master Agreement" shall mean this Agreement, as it may be amended and
restated from time to time.
"Master Network Control Center" shall mean the Network Control Center
and the Satellite Control Center to be located in Dulles, Virginia.
"Network Control Center" shall mean the facilities consisting of
computers, displays, control consoles, communications equipment and other
hardware that control the flow of data and message communications and other
information with the ORBCOMM System.
2
<PAGE> 25
"ORBCOMM" shall mean Orbital Communications Corporation, a Delaware
corporation.
"ORBCOMM Global" shall mean ORBCOMM Global, L.P., the limited
partnership created pursuant to the ORBCOMM Global Partnership Agreement.
"ORBCOMM Global Partnership Agreement" shall mean the limited
partnership agreement dated as of June 30, 1993 between ORBCOMM and Teleglobe
Mobile, as such partnership agreement may be amended and restated from time to
time.
"ORBCOMM International" shall mean ORBCOMM International Partners,
L.P., a Delaware limited partnership created pursuant to the ORBCOMM
International Partnership Agreement.
"ORBCOMM International Partnership Agreement" shall mean the limited
partnership agreement dated as of June 30, 1993 between ORBCOMM and Teleglobe
Mobile, as such partnership agreement, may be amended and restated from time to
time.
"ORBCOMM System" has the meaning assigned thereto in the Recitals of
the Master Agreement.
"ORBCOMM System Construction Agreement" shall mean the ORBCOMM System
Construction Agreement dated as of June 30, 1993 between ORBCOMM and ORBCOMM
Global, as such agreement may be amended and restated from time to time.
"ORBCOMM USA" shall mean ORBCOMM USA, L.P., the limited partnership
created pursuant to the ORBCOMM USA partnership Agreement.
"ORBCOMM USA Partnership Agreement" shall mean the limited partnership
agreement dated as of June 30, 1993 between ORBCOMM and Teleglobe Mobile, as
such partnership agreement may be amended and restated from time to time.
"Orbital" shall mean Orbital Sciences Corporation, a Delaware
corporation.
"Orbital/ORBCOMM Non-Disclosure Agreement" shall mean the letter
agreement dated December 22, 1992 between J.P. Morgan Securities, Inc., as
agent for ORBCOMM, and Teleglobe International, as amended by the letter
agreement dated April 30, 1993 between ORBCOMM and Teleglobe International and
Teleglobe.
"Participation Percentage" shall have the meaning assigned thereto in
the ORBCOMM Global Partnership Agreement, the ORBCOMM International Partnership
Agreement or the ORBCOMM USA Partnership Agreement, as the context may require.
3
<PAGE> 26
"Person" shall mean any individual, partnership, joint venture,
corporation, trust, unincorporated organization, associated, government or
department or agency of a government or other entity.
"Phase 1A System" shall have the meaning assigned thereto in the
Recitals of the Master Agreement.
"Phase 1B System" shall have the meaning assigned thereto in the
Recitals of the Master Agreement.
"Procurement Contract" shall mean the Procurement Contract dated
September 12, 1995 between Orbital and ORBCOMM Global, as such agreement may be
amended and restated from time to time.
"Proprietary Information and Non-Competition Agreement" shall mean the
Proprietary Information and Non-Competition Agreement dated as of June 30, 1993
among Orbital, ORBCOMM, Teleglobe, Teleglobe Mobile, ORBCOMM Global, ORBCOMM
USA and ORBCOMM International, as such agreement may be amended and restated
from time to time.
"Reseller" shall mean any Person that purchases services from either
ORBCOMM USA or ORBCOMM International and who intends to resell two-way data and
message communication and position determination services to a customer.
"Restatement Date" shall have the meaning ascribed thereto in Section
2.31 of the ORBCOMM Global Partnership Agreement.
"Satellite" shall mean any of the communication satellites designed
and constructed for the ORBCOMM System.
"Satellite Control Center" shall mean the facilities that process and
display the telemetry data for the Satellites, monitor the operational status
of the satellites and control the operation of the Satellites' power
subsystems, attitude control subsystems and all other subsystems.
"SEC Reports" has the meaning assigned thereto in Section 3.1(c) of
the Master Agreement.
"Subscriber" shall mean a customer purchasing data, message
communications or position determination services from either ORBCOMM USA or
ORBCOMM International.
"System Agreement" shall mean the ORBCOMM System Design, Development,
Construction, Integration, Test and Operations Agreement dated as of June 30,
1993 between ORBCOMM and ORBCOMM Development as amended from time to time.
4
<PAGE> 27
"System Assets" shall mean the tangible property (including software)
to be delivered to ORBCOMM Global (formerly known as ORBCOMM Development
Partners, L.P.) pursuant to the System Agreement or the Procurement Contract.
"System Charge" shall have the meaning assigned thereto in Section
2.2(a) of the ORBCOMM System Construction Agreement.
"System Charge Agreement" shall mean the System Charge Agreement dated
as of June 30,1 993 between ORBCOMM and ORBCOMM USA, as such agreement may be
amended and restated from time to time.
"Teleglobe" shall mean Teleglobe Inc., a Canadian corporation.
"Teleglobe Mobile" shall mean Teleglobe Mobile Partners, a Delaware
general partnership.
"Teleglobe Mobile Option" shall have the meaning assigned thereto in
Section 5.1 of the Master Agreement.
"Teleglobe Mobile Option Period" shall have the meaning assigned
thereto in Section 5.1 of the Master Agreement.
"Teleglobe Non-Disclosure Agreement" shall mean the letter agreement
dated December 22, 1992 between J.P. Morgan Securities Inc., as agent for
ORBCOMM, and Teleglobe International, as amended by the letter agreement dated
April 30, 1993 among ORBCOMM, Teleglobe and Teleglobe International.
"U.S. Gateway Earth Station" shall mean any or more of the Gateway
Earth Stations to be constructed pursuant to the System Agreement or the
Procurement Contract in St. Johns, Arizona; Ocilla, Georgia; Arcade, New York;
and East Wenatchee, Washington.
"United States" shall mean the United States of America and its
territories and possessions.
"United States Network Ground Segment" shall mean the Master Network
Control Center and the U.S. Gateway Earth Stations and the communications links
between them.
"Unrecouped Capital Preference" shall have the meaning assigned
thereto in the ORBCOMM Global Partnership Agreement, the ORBCOMM International
Partnership Agreement or the ORBCOMM USA Partnership, as the context may
require.
5
<PAGE> 1
EXHIBIT 10.6
RESTATED PROPRIETARY INFORMATION
AND NON-COMPETITION AGREEMENT
THIS RESTATED PROPRIETARY INFORMATION AND NON-COMPETITION AGREEMENT
(this "AGREEMENT") is made and entered into as of September 12, 1995 among
Orbital Sciences Corporation, a Delaware corporation ("ORBITAL"), Orbital
Communications Corporation, a Delaware corporation ("ORBCOMM"), Teleglobe Inc.,
a Canadian corporation ("TELEGLOBE"), Teleglobe Mobile Partners, a Delaware
general partnership ("TELEGLOBE MOBILE"), ORBCOMM Global, L.P., a Delaware
limited partnership ("ORBCOMM GLOBAL"), ORBCOMM USA, L.P., a Delaware limited
partnership ("ORBCOMM USA"), and ORBCOMM International Partners, a Delaware
limited partnership ("ORBCOMM INTERNATIONAL") and restates the Proprietary
Information and Non-Competition Agreement dated as of June 30, 1993, as amended
by Amendment No. 1 thereto dated as of September 12, 1995.
W I T N E S S E T H:
WHEREAS, Orbital, ORBCOMM, Teleglobe, Teleglobe Mobile, ORBCOMM
Global, ORBCOMM USA and ORBCOMM International have entered into agreements for
the development, construction, operation and marketing of a global digital
satellite communications system of low-Earth orbit satellites intended to
provide two-way data and message communications and position determination
services throughout the world (the "ORBCOMM SYSTEM") and related activities in
connection therewith; and
WHEREAS, the parties wish to enter into this Agreement setting forth
their understanding concerning the protection of confidential and proprietary
information that may be disclosed to each other in connection with the
foregoing and to provide for a non-competition covenant.
NOW, THEREFORE, in consideration of the foregoing premises, the
agreements and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Except as otherwise specified herein, capitalized terms shall have the
meanings ascribed to such terms in Appendix C to the Master Agreement dated as
of June 30, 1993 among Orbital ORBCOMM, Teleglobe and Teleglobe Mobile, as
amended and restated from time to time, which Appendix is incorporated herein
by reference.
<PAGE> 2
ARTICLE II
PROPRIETARY INFORMATION
2.1 PROPRIETARY INFORMATION. For purposes of this Agreement,
"PROPRIETARY INFORMATION" shall mean written or oral information of any kind
that is disclosed to a party to this Agreement (the "RECEIVING PARTY") by
another party to this Agreement (the "DISCLOSING PARTY") and designated as
proprietary information and clearly identified as "confidential", "restricted",
"proprietary", or bearing similar notice of classification, including, but not
limited to, technical, financial and business information and models, and any
information, reports, plans, market projections, data or any other confidential
and proprietary information, together with analyses, work papers, compilations,
comparisons, studies, documents, terms, conditions, correspondence, facts or
other materials that contain, summarize or are based upon any of the foregoing;
provided, however, that "Proprietary Information" shall not include information
that:
(a) is or hereafter becomes publicly available through no
wrongful act of the Receiving Party;
(b) is known by the Receiving Party without any
proprietary restrictions at the time of receipt of
such information from the Disclosing Party or becomes
rightfully known to the Receiving Party without
proprietary restrictions from a source other than the
Disclosing Party;
(c) is independently developed by the Receiving Party by
Persons who did not, directly or indirectly, have
access to the Proprietary Information:
(d) is obligated to be produced under order of a court of
competent jurisdiction or a valid administrative or
governmental subpoena or demand, provided that the
Receiving Party promptly notifies in writing the
Disclosing Party of such event so that the Disclosing
Party may seek an appropriate protective order; or
(e) is required to be disclosed pursuant to applicable
law, rule or regulation, to the extent of such
requirement.
2.2 RESTRICTIONS ON DISCLOSURE AND USE.
(a) The Receiving Party agrees that except with the prior
written consent of the Disclosing Party or as
otherwise specifically provided herein, it will not,
during and for a period of five (5) years after the
term of this Agreement, use, disclose or otherwise
disseminate such Proprietary Information to any
Person.
(b) Except as necessary to perform its obligations under
any of the Definitive Agreements, the Receiving Party
shall not make any use of the Disclosing Party's
Proprietary Information for its own benefit or for
the benefit of any other Person.
2
<PAGE> 3
(c) The Receiving Party shall not disclose all or any
part of the Disclosing Party's Proprietary
Information to any officers, directors, employees,
banks, advisers, affiliates, agents or
representatives (collectively, "REPRESENTATIVES") of
the Receiving Party except on a need-to-know basis.
Such Representatives shall be informed of the
confidential and proprietary nature of the
Proprietary Information and of the obligations
imposed on the Receiving Party by the provisions of
this Agreement.
(d) Each party to this Agreement shall maintain the other
parties' Proprietary Information with at least the
same degree of care such party uses to maintain its
own proprietary information. The Receiving Party
shall immediately advise the Disclosing Party in
writing of any misappropriation or misuse by any
Person of the Disclosing Party's Proprietary
Information of which the Receiving Party is aware.
2.3 RETURN OF PROPRIETARY INFORMATION. All Proprietary
Information in whatever form shall be promptly returned by the Receiving Party
to the Disclosing Party upon written request by the Disclosing Party if the
Disclosing Party or the Receiving Party terminates its participation in
development, construction, operation and marketing of the ORBCOMM System,
provided that any materials prepared by a Receiving Party containing
Proprietary Information need not be returned to the Disclosing Party if the
Receiving Party destroys such materials and confirms such destruction in
writing to the Disclosing Party within ten (10) days of the termination of this
Agreement.
ARTICLE III
NON-COMPETITION AGREEMENT
3.1 NON-COMPETITION AGREEMENT. Each of Orbital and Teleglobe
hereby covenants and agrees that, except with the prior written consent of
Teleglobe or Orbital, as the case may be, it shall not and shall cause its
Affiliates not to, during the term of this Agreement and for one (1) year
thereafter, solely or jointly, on its own behalf or on behalf of any Person,
directly or indirectly, in any capacity whatsoever including but not limited
to, as partner, shareholder, owner or otherwise:
(a) except in connection with the fulfillment of their
respective obligations under any of the Definitive
Agreements, carry on, engage, participate, invest or
have an equity interest in, or have any financial
interest in the marketing, construction, development
or management of any business or enterprise that
competes with Orbital or any of its Affiliates or
Teleglobe or any of its Affiliates, as the case may
be, in offering commercial low-Earth orbit non-voice
satellite communications services operating in the
137-150 MHz band or such other frequency allocated to
"little LEO" mobile satellite services below 1 GHz;
provided, however, that notwithstanding the
foregoing, ORBCOMM and Orbital shall be permitted to
(i) sell satellites, launch vehicles, launch services
and
3
<PAGE> 4
communication services to non-commercial entities
without limitation and (ii) provide all other
entities up to two satellites every two years and
launch vehicles or launch services for up to two
satellites every two years;
(b) assist in or influence the engagement or hiring by
any Person that competes with Orbital or any of its
Affiliates or Teleglobe or any of its Affiliates, as
the case may be, of any salesman, distributor, or
employee of Orbital or any of its Affiliates or
Teleglobe or any of its Affiliates, as the case may
be, or otherwise cause any Person having a business
relationship with Orbital or any of its Affiliates or
Teleglobe or any of its Affiliates, as the case may
be, to sever such relationship with, Orbital or any
of its Affiliates or Teleglobe or any of its
Affiliates, as the case may be; or
(c) employ any person to work on or represent the ORBCOMM
System who will also work on or represent another
mobile communications system, whether in a technical,
marketing or other non-administrative capacity,
without first notifying the President of ORBCOMM
Global of such person's proposed duties and the
duties such person may have with respect to such
other mobile communications projects.
3.2 PORTFOLIO EXCEPTION. None of the parties shall be in default
under this Article III by virtue of holding for portfolio purposes as a passive
investor not more than five percent (5%) of the issued and outstanding equity
securities of a corporation, the equity securities of which are listed or
quoted on a stock exchange or on an over-the-counter market within the United
States or Canada.
ARTICLE IV
REMEDIES
4.1 INDEMNIFICATION. Orbital or, as the case may be, Teleglobe
shall indemnify and save harmless Teleglobe and its Affiliates or Orbital and
its Affiliates, as the case may be, and its Representatives (individually, an
"INDEMNIFIED PARTY") from and against any claims, demands, actions, causes of
action, judgments, damages, losses (which shall include any diminution in
value), liabilities, costs or expenses (including, without limitation,
interest, penalties and reasonable attorneys' and experts' fees and
disbursements) that may be made against any Indemnified Party or which any
Indemnified Party may suffer or incur as a result of, arising out of or
relating to any violation, contravention or breach of this Agreement by a party
which is not the Indemnified Party.
4.2 INJUNCTIVE RELIEF. (a) Each Receiving Party acknowledges
that the Proprietary Information of the Disclosing Party is central to the
Disclosing Party's business and was developed by or for the Disclosing Party at
a significant cost.
4
<PAGE> 5
(b) Each party acknowledges that damages would not be an
adequate remedy for any breach of this Agreement by another party and that a
party may obtain injunctive or other equitable relief to remedy or prevent any
breach or threatened breach of this Agreement by another party. Such remedy
shall not be deemed to be the exclusive remedy for any such breach of this
Agreement, but shall be in addition to all other remedies available at law or
in equity.
ARTICLE V
TERMINATION
5.1 This Agreement shall terminate upon the earlier of ORBCOMM or
Teleglobe Mobile ceasing to be both a general and limited partner of ORBCOMM
Global.
ARTICLE VI
STANDSTILL
6.1 Until December 22, 1995, Teleglobe shall not and shall use its
commercially reasonable efforts to ensure that its Affiliates (and any Person
acting on behalf of or in concert with Teleglobe or any of its Affiliates)
shall not, without the prior written approval of the Board of Directors of
ORBCOMM or Orbital, as the case may be, purchase or otherwise acquire (or enter
into any agreement or make any proposal to purchase or otherwise acquire) other
than in a transaction contemplated in the Definitive Agreements, any securities
of ORBCOMM or Orbital, any warrant or option to purchase such securities, any
security convertible into any such securities or any other right to acquire
such securities.
ARTICLE VII
MISCELLANEOUS
7.1 SEPARABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent such prohibition or unenforceability without
invalidating the remaining portions hereof, or affecting the validity or
enforceability of such provision in any other jurisdiction.
7.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written and oral agreement or understanding relating to
the subject matter hereof (including, but not limited to, the Orbital/ORBCOMM
Non-Disclosure Agreement and the Teleglobe Non-Disclosure Agreement).
7.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
5
<PAGE> 6
7.4 NOTICES. All notices, requests and other communications
required to be delivered to any party hereunder shall be in writing (including
any facsimile transmission or similar writing), and shall be sent by telecopy
or delivered in person addressed as follows:
<TABLE>
<S> <C>
(a) If to Orbital, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General Manager/
Communications and Information Systems Group
(b) If to ORBCOMM, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
(c) If to Teleglobe or Teleglobe Mobile, to it at:
1000 rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate Development and
Corporate Secretary
(d) If to ORBCOMM Development, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General Manager/
Communications and Information Systems Group
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C>
Teleglobe Inc.
1000 rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate Development and
Corporate Secretary
(e) If to ORBCOMM U.S., to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General Manager/
Communications and Information Systems Group
Teleglobe Inc.
1000 rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate Development and
Corporate Secretary
(f) If to ORBCOMM International:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C>
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General Manager/
Communications and Information Systems Group
Teleglobe Inc.
1000 rue de La Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate Development and
Corporate Secretary
</TABLE>
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted and the
appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier, or (iii)
if given by any other means, when received at the address specified in this
Article.
7.5 AMENDMENT; WAIVER. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by all the parties hereto.
7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns. Neither this Agreement nor any interests or obligations
hereunder shall be assigned or transferred (by operation of law or otherwise)
to any Person without the prior written consent of the other parties.
7.7 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to the provisions, policies or principles thereof relating to
choice or conflict of laws.
7.8 PUBLIC ANNOUNCEMENT. Orbital and Teleglobe agree that the
form, contents, and timing of the release of any public announcement concerning
the transactions contemplated in the Definitive Agreements which public
announcement contains information regarding the other party shall be subject to
coordination and agreement between the parties; provided, however, that either
party is entitled to make disclosure at any time to the extent required by law,
rule or regulation.
8
<PAGE> 9
7.9 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the undersigned parties hereto have
executed this Agreement as of the day and year first above written.
<TABLE>
<S> <C>
ORBITAL SCIENCES CORPORATION ORBITAL COMMUNICATIONS
CORPORATION
By: /s/ BRUCE W. FERGUSON By: /s/ ALAN L. PARKER
---------------------------------- -------------------------------------
Name: Bruce W. Ferguson Name: Alan L. Parker
Title: Executive Vice President Title: President
and General Manager/
Communications and
Information Systems Group
TELEGLOBE INC. TELEGLOBE MOBILE PARTNERS
By: Teleglobe Mobile Investments Inc.,
its Managing General Partner
By: /s/ GUTHRIE J. STEWART By: /s/ GUTHRIE J. STEWART
---------------------------------- -------------------------------------
Name: Guthrie J. Stewart Name: Guthrie J. Stewart
Title: Executive Vice President, Title: Secretary
Corporate Development
and Corporate Secretary
ORBCOMM GLOBAL, L.P. ORBCOMM USA, L.P.
By: Orbital Communications Corporation, By: Orbital Communications Corporation,
General Partner General Partner
By: /s/ ALAN L. PARKER By: /s/ ALAN L. PARKER
---------------------------------- -------------------------------------
Name: Alan L. Parker Name: Alan L. Parker
Title: President Title: President
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C>
By: Teleglobe Mobile Partners, By: Teleglobe Mobile Partners,
General Partner General Partner
By: Teleglobe Mobile Investment Inc., By: Teleglobe Mobile Investment Inc.,
its Managing General Partner its Managing General Partner
By: /s/ GUTHRIE J. STEWART By: /s/ GUTHRIE J. STEWART
---------------------------------- -------------------------------------
Name: Guthrie J. Stewart Name: Guthrie J. Stewart
Title: Secretary Title: Secretary
ORBCOMM INTERNATIONAL PARTNERS, L.P.
By: Orbital Communications Corporation,
General Partner
By: /s/ ALAN L. PARKER
---------------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners, General Partner
By: Teleglobe Mobile Investment Inc.,
its Managing General Partner
By: /s/ GUTHRIE J. STEWART
---------------------------------
Name: Guthrie J. Stewart
Title: Secretary
</TABLE>
10
<PAGE> 1
EXHIBIT 10.7
RESTATED SYSTEM CHARGE AGREEMENT
This Restated System Charge Agreement (the "Agreement") is entered
into as of September 12, 1995, between Orbital Communications Corporation, a
Delaware corporation ("ORBCOMM"), and ORBCOMM USA, L.P., a Delaware limited
partnership (the "Operator") and restates the System Charge and Marketing
(U.S.) Agreement dated as of June 30, 1993, as amended by Amendment No. 1
thereto dated as of June 30, 1994, and Amendment 2 thereto dated as of
September 12, 1995.
WITNESSETH
WHEREAS, Orbital Sciences Corporation, a Delaware corporation
(Orbital"), ORBCOMM, Teleglobe Inc., a Canadian corporation ("Teleglobe"),
Teleglobe Mobile Partners, a Delaware general partnership ("Teleglobe Mobile"),
the Operator, ORBCOMM Global Partners, L.P., a Delaware limited partnership,
and ORBCOMM International Partners, L.P., a Delaware limited partnership, have
entered into agreements for the development, construction, operation and
marketing of a global digital satellite communications system (the "ORBCOMM
System") of low-Earth orbit satellites intended to provide two-way data and
message communications and position determination services throughout the world
(the "ORBCOMM Services");
WHEREAS, the development, construction and operation of the ORBCOMM
System is planned to occur in two phases: an initial phase consisting of two
satellites (the "Phase lA System"), and a second phase consisting of a total of
up to an additional 34 satellites;
WHEREAS, on March 13, 1992 and May 28, 1993, ORBCOMM received from the
FCC (as such term is hereinafter defined) experimental licenses (as renewed and
modified from time to time, the "FCC Experimental Licenses") to develop,
construct and operate the Phase lA System and to market communications services
to up to 1,000 subscribers in the United States;
WHEREAS, ORBCOMM and the Operator wish to enter into this Agreement
setting forth ORBCOMM's and the Operator's responsibilities regarding use of
the ORBCOMM System; and
WHEREAS, ORBCOMM desires to contract with the Operator for the
marketing by the Operator of ORBCOMM Services in the United States (as such
term is hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises, the
agreements and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
ORBCOMM and the Operator hereby agree as follows.
1. Definitions. Capitalized terms shall have the meanings ascribed
thereto in Appendix C to the Master Agreement dated as of June 30, 1993 among
Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile, as amended and restated from
time to time, which Appendix is incorporated herein by reference.
<PAGE> 2
2. Term of Agreement. The term of this Agreement shall commence on
the date hereof and shall continue until June 30, 2013. Except as otherwise
expressly provided in this Agreement, the Operator shall not terminate, nor
have any right to terminate, this Agreement, and the Operator's obligation to
remit or pay the Output Capacity Charge (as such term is hereinafter defined)
and perform its other obligations hereunder shall be absolute and unconditional
and not subject to abatement, suspension or permanent reduction.
3. Exclusive Use of U.S. System Capacity.
(a) Subject to the terms and conditions of this Agreement,
ORBCOMM hereby grants to the Operator the exclusive right in the
United States to market, sell, lease and franchise all ORBCOMM System
output capacity and exclusive use of the System Assets located in the
United States for the duration of this Agreement; provided that the
Operator is hereby authorized to grant to ORBCOMM International use of
the United States Network Ground Segment for purposes of operating the
ORBCOMM System in Canada, Mexico and any other country proximate to
the United States as may be agreed to by the Operator. Except as
otherwise provided herein, ORBCOMM shall retain all rights in and to,
and the Operator shall not have any rights to, the ORBCOMM System
output capacity.
(b) ORBCOMM represents and warrants that the FCC Experimental
Licenses do not prohibit ORBCOMM from making and ORBCOMM has all
material licenses, consents, approvals and authorizations presently
required and the corporate power to make the exclusive grant provided
in Section 3(a).
(c) Notwithstanding the foregoing, ORBCOMM, as holder of the
FCC Experimental Licenses and of all FCC licenses relating to the
ORBCOMM System, hereby retains and will retain upon receipt thereof
full authority to control the ORBCOMM System and require the Operator
to comply with all FCC requirements set forth in such licenses.
4. Output Capacity Charge.
4.1. Calculation of Output Capacity Charge. In consideration of the
grant to the Operator of the exclusive right to market, sell, lease and
franchise all ORBCOMM System output capacity in the United States, the Operator
hereby agrees as follows:
Within thirty (30) days of the end of each calendar quarter,
the Operator shall (i) notify ORBCOMM Global of the Total Aggregate
Revenues invoiced by the Operator during such calendar quarter and
(ii) remit to ORBCOMM twenty-three percent (23%) of the Total
Aggregate Revenues invoiced by the Operator in such calendar quarter
(the "Output Capacity Charge"). For purposes of this Agreement,
"Total Aggregate Revenues" shall mean the total aggregate revenues
invoiced by the Operator to its Subscribers, Resellers and Licensees
in connection with the operation, marketing and use of the ORBCOMM
System in such calendar quarter; provided that revenues invoiced by
the Operator in connection with the sale of network control centers,
gateway earth stations and subscriber communicators shall be excluded
from the calculation of total aggregate
2
<PAGE> 3
revenues. The Operator shall have the sole discretion to set the fees
to be paid by its Subscribers, Resellers and Licensees for use of the
ORBCOMM System.
4.2 Payment Terms. The Operator shall remit all Output Capacity
Charges in lawful money of the United States pursuant to written instructions
to the Operator furnished by ORBCOMM. Payment of the Output Capacity Charge
shall be deemed to have been made on the date received in full in collectable
funds. If any date on which a payment of the Output Capacity Charge becomes
due and payable is not a business day in the State of New York, the Output
Capacity Charge payment otherwise due and payable on such date shall be due and
payable on the next succeeding business day.
5. System Operation. The Operator's exclusive right to market, sell,
lease and franchise all ORBCOMM System output capacity in the United States
shall be subject to the following terms, conditions and covenants:
5.1. Lawful Operations; Use. The Operator shall not use or operate
the ORBCOMM System or any System Asset in violation of any governmental law,
rule or regulation applicable to the ORBCOMM System, any System Asset, ORBCOMM,
ORBCOMM Global or the Operator, except for such violations as would not (a)
have a material adverse effect on the Operator's financial condition or its
ability to continue to have the exclusive right to market, sell, lease and
franchise all ORBCOMM System output capacity in the United States or use any of
the System Assets in the manner contemplated hereby or (b) result in (i) the
imposition of any civil or criminal fines, penalties or other sanctions against
ORBCOMM, ORBCOMM Global, the ORBCOMM System or any System Asset or (ii) loss of
any governmental license or permit relating to the ORBCOMM System, and except
for such violations as are being contested in good faith and by appropriate
proceedings and the existence of which during the pendency of such proceedings
does not (a) result in the seizure, impoundment, confiscation, condemnation,
sale, forfeiture or loss of any System Asset or any right, title or interest of
ORBCOMM, ORBCOMM Global or the Operator therein or (b) subject ORBCOMM or
ORBCOMM Global to any criminal or civil liability.
In the event that any such applicable governmental law, rule or
regulation requires any modification to the ORBCOMM System or any System Asset,
the Operator shall cooperate with ORBCOMM and ORBCOMM Global in their efforts
to make such modifications. The Operator shall use the ORBCOMM System solely
in the provision of ORBCOMM Services, and shall not use or permit the use of
the ORBCOMM System or any System Asset for any purpose for which the ORBCOMM
System or such System Asset is not reasonably suitable. The Operator agrees to
use all commercially reasonable efforts to ensure that each of its Subscribers,
Resellers and Licensees agrees to comply in all material respects with the
substance of the foregoing requirements.
5.2. Mortgages, Liens, etc. The Operator shall not directly or
indirectly create, incur, assume or suffer to exist any Lien securing any
obligation of the Operator on or with respect to the ORBCOMM System, any System
Asset, any part thereof, title thereto or any interest therein. The Operator
shall promptly and in any event within twenty (20) days, at its own expense,
take such action as may be necessary to duly discharge any such Lien (or cause
the Lien on the ORBCOMM
3
<PAGE> 4
System or any System Asset to be released by posting an adequate bond) if the
same shall arise at any time with respect to the ORBCOMM System or any System
Asset.
5.3. Waiver of Liability. (a) EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, ORBCOMM HAS NOT MADE, AND HEREBY DISCLAIMS LIABILITY FOR, AND THE
OPERATOR HEREBY WAIVES ALL RIGHTS AGAINST ORBCOMM RELATING TO, ANY AND ALL
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, ARISING BY APPLICABLE LAW OR
OTHERWISE, INCLUDING ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES,
ARISING (i) FROM MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE, (ii)
FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (iii) IN
TORT (WHETHER OR NOT ARISING FROM THE ACTUAL IMPLIED OR IMPUTED NEGLIGENCE OF
ORBCOMM OR STRICT LIABILITY). The provisions of this Section have been
negotiated by ORBCOMM and the Operator and are intended to be a complete
exclusion and negation of any representations or warranties of other Persons,
express or implied, written or oral, with respect to the ORBCOMM System or any
System Asset that may arise pursuant to any applicable governmental law, rule
or regulation.
(b) The Operator agrees to ensure that each of its
Subscribers, Resellers and Licensees agrees to a waiver of liability
substantially similar to that in Section 5.3(a) hereof.
6. Marketing Services.
6.1. Performance of Marketing Services. In accordance with the terms
and conditions set forth herein, the Operator shall (a) furnish the management,
labor, facilities and materials necessary to perform the services set forth in
Appendix A (the "Marketing Services") and (b) use all commercially reasonable
efforts to perform the Marketing Services, provided, that the Operator does not
guaranty or warrant the development of a market for ORBCOMM Services in the
United States. The Marketing Services shall be provided principally at the
Operator's headquarters in Dulles, Virginia.
6.2. Consideration for Marketing Services. In consideration of the
performance by the Operator of the Marketing Services, the Operator shall be
reimbursed for, and ORBCOMM shall pay to the Operator, all cash expenditures
and all other non-cash costs and expenses (including all applicable taxes and
other governmental charges but excluding all depreciation and amortization
expense for goods delivered to ORBCOMM pursuant to this Agreement) incurred by
the Operator in the provision of the Marketing Services. To the extent the
Operator is reimbursed by ORBCOMM for any cash expenditures made by the
Operator to acquire tangible assets (other than subscriber terminals, which
shall be placed in inventory) to be used in the performance by the Operator of
the Marketing Services, title to such property shall pass from the Operator to
ORBCOMM.
6.3. Payment Terms. (a) ORBCOMM shall pay to the Operator the
amounts specified in Section 6.2 on a monthly basis. By the fifteenth business
day of each calendar month, the Operator shall submit to ORBCOMM an invoice
that sets forth the cash expenditures and all other non-cash
4
<PAGE> 5
costs and expenses incurred by the Operator in the performance of its
obligations under this Section 6 during the preceding calendar month. Invoices
shall be submitted to ORBCOMM, and copies thereof shall be submitted to Orbital
Sciences Corporation and Teleglobe Inc., at their addresses specified in
Section 12.7.
(b) ORBCOMM shall pay such invoices in lawful money of the
United States within five (5) business days of receipt thereof
pursuant to written payment instructions to ORBCOMM furnished by the
Operator.
6.4. Term of Marketing Services. The Operator shall perform the
Marketing Services from the date hereof until the earlier of the expiration of
the Teleglobe Mobile Option Period and the exercise by Teleglobe Mobile of the
Teleglobe Mobile Option.
7. Information and Inspection.
7.1. System Information. Consistent with applicable governmental
laws, rules and regulations, including the International Traffic in Arms
Regulations, during the term of this Agreement, ORBCOMM shall furnish to the
Operator such additional information concerning the location, condition, use
and operation of the System Assets as the Operator may reasonably request, and
ORBCOMM shall permit the Operator or any Person designated by the Operator in
writing, at the Operator's expense, to inspect each System Asset, and its
condition, use, and operation and the books, information and other data,
maintained in connection therewith, and to visit and inspect the System Assets
and to discuss the affairs, finances and accounts of ORBCOMM with the principal
officers of ORBCOMM, all at such reasonable times during normal business hours
upon five (5) days prior written notice and as often as the Operator may
reasonably request.
7.2. Financial Information. The Operator shall maintain its books in
accordance with generally accepted accounting principles in the United States.
The Operator shall maintain and furnish to ORBCOMM upon written request all
records, agreements, documents, invoices and other financial information and
data relating (a) directly or indirectly to the amount of the Output Capacity
Charge remitted to ORBCOMM pursuant to Section 4.1 and (b) the performance by
the Operator of the Marketing Services. For purposes of determining compliance
by the Operator with the terms of this Agreement, all such books and
documentation shall be available for inspection all at such reasonable times
during normal business hours upon five (5) days prior written notice and as
often as ORBCOMM may reasonably request.
8. Indemnification.
8.1. General Indemnification. ORBCOMM and the Operator (each an
"Indemnifying Party") shall indemnify, defend and hold harmless each other and
their respective successors and assigns (the "Indemnitees") against any
liability, damage, loss, or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon them or any one of them in
connection with any claims, suits, actions, demands or judgments arising out of
any breach of the Indemnifying Party's obligations under this Agreement.
Indemnitees agree to notify the Indemnifying Party promptly of any claims by
third parties of which they become aware. The
5
<PAGE> 6
Indemnifying Party shall have the right and the obligation to defend and to
settle such claims; provided, however, that any such settlements shall not
impose any obligations or restrictions on the Indemnitees without their
consent, which consent shall not be unreasonably withheld.
8.2. Indemnification of Operator Against Patent Infringement.
ORBCOMM shall defend, indemnify and hold harmless the Operator and its
respective successors and assigns from and against any claim with respect to an
infringement or other violation of any copyright, trademark or patent or other
validly registered enforceable intellectual property right of any third party
for any items ORBCOMM has authorized the Operator to use under this Agreement
but only to the same extent as the indemnification received by ORBCOMM from
ORBCOMM Global, if any, under Section 2.5 of the ORBCOMM System Construction
Agreement.
9. Events of Default. Each of the following events shall constitute
an event of default (whether any such event shall be voluntary or involuntary
or come about or be effected by operation of law or pursuant to or in
compliance with any judgment, decree or order or any court or any order, rule
or regulation of any administrative or governmental body) and shall entitle
ORBCOMM to terminate this Agreement with respect to the Operator:
9.1. Performance Defaults. The Operator shall fail to comply with
any of its covenants or agreements contained herein and such failure shall
exist for sixty (60) days; or
9.2. Bankruptcy of Operator. A Bankruptcy involving the Operator
shall occur.
10. Recordation and Further Assurances. Upon written request by
ORBCOMM, the Operator shall, at its own expense, execute, deliver, file and
record any statement, notice or agreement and take any other action that
ORBCOMM deems to be necessary, appropriate or desirable to evidence its
interest in the ORBCOMM System or any System Assets.
11. Use of Trademarks, Etc.
(a) ORBCOMM hereby grants to the Operator a non-exclusive
license, and authorizes the Operator to grant to each of its
Subscribers, Resellers and Licensees a non-exclusive license, to use
all service marks, trademarks and trade names of ORBCOMM relating to
the ORBCOMM System, including without limitation the ORBCOMM name, in
the course of the Operator's or its Subscriber's, Reseller's and
Licensee's business, for advertising, promotional or sales literature,
or any other form of publicity for the duration of this Agreement.
The Operator agrees and shall use all commercially reasonable efforts
to require its Subscribers, Resellers and Licensees to agree (i) to
use such service marks, trademarks and trade names in its advertising,
promotional and sales materials that refer to ORBCOMM or to the
ORBCOMM System or any aspect thereof and to ensure that such use
conforms to ORBCOMM's written requirements set forth in the ORBCOMM
Identity Manual for display of such logos, service marks and
trademarks, including registry and trademark symbols and (ii) to
obtain the prior written consent of ORBCOMM for such advertising,
promotional or sales material, which approval shall not be
unreasonably withheld, provided that if the Operator or such
Subscriber, Reseller or Licensee complies
6
<PAGE> 7
with the terms of the ORBCOMM Identity Manual or any replacement
document thereto, the advance written approval of ORBCOMM shall not be
required.
(b) ORBCOMM represents and warrants to the Operator that it
has the authority to make the grant specified in Section 11(a).
12. Miscellaneous.
12.1. Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement.
12.2. Force Majeure. Neither party shall be held responsible for
failure or delay in performance or delivery if such failure or delay is the
result of an act of God, the public enemy, embargo, governmental act, fire,
accident, war, riot, strikes, inclement weather or other cause of a similar
nature that is beyond the control of the parties. In the event of such
occurrence, this Agreement shall be amended by mutual agreement to reflect an
extension in the period of performance and/or time of delivery. Failure to
agree on an equitable extension shall be considered a dispute and resolved in
accordance with Section 12.1 hereof.
12.3. Separability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof, or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.4. Specific Enforcement. Each of the parties hereto acknowledges
and agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction to enforce specifically the terms
and provisions hereof in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which they may be
entitled at law or equity.
12.5. Entire Agreement. This Agreement (including the Appendix
hereto) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any prior written and oral agreement or
understanding relating to the subject matter hereof.
12.6. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.7. Notices. All notices, requests and other communications
required to be delivered to any party hereunder shall be in writing (including
any facsimile transmission or similar writing), and shall be sent by telecopy
or delivered in person addressed as follows:
7
<PAGE> 8
(a) If to the Operator, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and
General Manager/Communications and
Information Systems Group
Teleglobe Mobile Partners
c/o Teleglobe Inc.
1000, rue de la Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate
Development and Corporate Secretary
(b) If to ORBCOMM, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy (703) 406-3508
Attention: President
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted and
the appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier or (iii) if
given by any other means, when received at the address specified in this
Section.
12.8. Amendment; Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by all the parties hereto.
12.9. Successors and Assigns This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns. Neither this Agreement
8
<PAGE> 9
nor any interests or obligations hereunder shall be assigned or transferred (by
operation of law or otherwise) to any person without the prior written consent
of the other parties.
12.10. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, without
giving effect to the provisions, policies or principles thereof relating to
choice or conflict of laws.
12.11. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement as of the day and year first above written.
<TABLE>
<S> <C>
ORBITAL COMMUNICATIONS ORBCOMM USA, L.P.
CORPORATION By: Orbital Communications
Corporation, General Partner
By: /s/ ALAN L. PARKER By: /s/ ALAN L. PARKER
-------------------------------- ---------------------------------
Name: Alan L. Parker Name: Alan L. Parker
Title: President Title: President
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment
Inc., its Managing Partner
By: /s/ GUTHRIE J. STEWART
----------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board
and Chief Executive Officer
</TABLE>
9
<PAGE> 10
APPENDIX A
STATEMENT OF WORK
A. UNITED STATES MARKETING
The Operator shall use all commercially reasonable efforts to develop
a market for ORBCOMM Services in the United States and shall furnish the
management, labor, facilities and materials required for the performance of the
following marketing services:
ITEM 1 - PLANS
Development of comprehensive business and marketing plans including,
but not limited to, a United States sales campaign ("Plans"), for the ORBCOMM
System in the United States. Such Plans shall (a) be phased in time, (b) cover
a minimum of 5 years, (c) be updated at least once every calendar year, and (d)
recognize, identify and separately treat the different market segments for, and
the different types of services using, the ORBCOMM System.
Once each calendar quarter at a mutually agreeable time and place, the
Operator shall provide to ORBCOMM a marketing and financial review that shall
compare actual performance by the Operator under this Agreement against the
applicable Plans and shall review anticipated marketing activity in the
succeeding calendar quarter.
ITEM 2 - IMPLEMENTATION
Implementation and execution of the Plans including, but not limited
to, the establishment and management of (a) sales distribution networks, and
(b) marketing support programs, including advertising, trade shows and
exhibits, merchandising programs, public relations, customer relations, special
events and cooperative programs with equipment suppliers.
ITEM 3 - ANALYSES
Generation and maintenance of market analyses of target market
segments and applications where required to aid in the development and
implementation of the Plans including, but not limited to, statistics relating
to customer usage and demographics and customers by type of service and by
distribution channel.
ITEM 4 - CUSTOMER SERVICE
Establishment of a United States customer service organization that is
capable of responding to customer inquiries regarding operation of the Phase lA
System, pricing, service and subscriber terminals.
10
<PAGE> 11
ITEM 5 - BRAND NAME AWARENESS
Preparation and implementation of a brand name awareness plan for the
United States. Such plan shall be prepared in coordination with other brand
name plans that may be prepared by the Operator and/or ORBCOMM International
for brand awareness outside the United States.
ITEM 6 - TECHNICAL SUPPORT TO CUSTOMERS
The provision, either directly or indirectly, of technical resources
to ensure the proper use by United States customers of their subscriber
terminals, and to promote the applications development necessary to meet the
needs of the United States market. This service shall be carried out in
coordination with other similar services that may be carried out by the
Operator and/or ORBCOMM International for the needs of markets outside the
United States.
ITEM 7 - PROCUREMENT OF SUBSCRIBER TERMINALS
The Operator shall procure a sufficient number of the developmental,
preprototype, prototype and/or production models of the terminals from a
sufficient number of the manufacturers to perform tests of the terminals and of
the Phase lA System.
11
<PAGE> 12
B. INITIAL INTERNATIONAL MARKETING
The Operator shall use all commercially reasonable efforts to provide
the following initial international marketing services.
ITEM 1 - STRATEGY AND PLANS
Completion of business and marketing plans ("Plans") including, but
not limited to, an implementation strategy, for the ORBCOMM System outside the
United States (the "Non-U.S. Area"). Such strategy and Plans shall (a) be
phased in time, (b) cover a minimum of 5 years, and (c) recognize, identify and
separately treat the different market segments for, and the different types of
services, using the ORBCOMM System.
Once each calendar quarter at a mutually agreeable time and place, the
Operator shall provide to ORBCOMM a marketing review that shall compare actual
performance by the Operator under this Agreement against the applicable
strategy and Plans and shall review anticipated development activity in the
succeeding calendar quarter.
ITEM 2 - IMPLEMENTATION PLANNING
Implementation of the strategy and Plans including, but not limited
to, the (a) establishment of an initial sales distribution network, (b)
development of country marketing and business plans, and (c) execution of
regulatory strategies.
ITEM 3 - ANALYSES
In conjunction with candidate country operators, generate market
analyses of target market segments and applications where required to aid in
the development and implementation of country strategies and Plans.
12
<PAGE> 1
EXHIBIT 10.8
RESTATED ORBCOMM SYSTEM CONSTRUCTION AGREEMENT
This Restated ORBCOMM System Construction Agreement ("Agreement") is
made and entered into as of September 12, 1995 between Orbital Communications
Corporation, a Delaware corporation ("ORBCOMM"), and ORBCOMM Global, L.P., a
Delaware limited partnership ("ORBCOMM Global") and restates the ORBCOMM System
Construction Agreement dated as of June 30, 1993, as amended by Amendment No. 1
to ORBCOMM Construction Agreement dated as of September 12, 1995.
WITNESSETH
WHEREAS, Orbital Sciences Corporation, a Delaware corporation
("Orbital"), ORBCOMM, Teleglobe Inc., a Canadian corporation ("Teleglobe"),
Teleglobe Mobile Partners, a Delaware general partnership ("Teleglobe Mobile"),
ORBCOMM Global, ORBCOMM USA, L.P., a Delaware limited partnership, and ORBCOMM
International Partners, L.P., a Delaware limited partnership, have entered into
agreements for the development, construction, operation and marketing of a
global digital satellite communications system of low-Earth orbit satellites
and certain terrestrial facilities intended to provide two-way data and message
communications and position determination services throughout the world (the
"ORBCOMM System") and related activities in connection therewith;
WHEREAS, the development, construction and operation of the ORBCOMM
System is planned to occur in two phases: an initial phase consisting of two
satellites (the "Phase lA System") and a second phase consisting of up to an
additional 34 satellites (the "Phase lB System");
WHEREAS, on March 13, 1992 and May 28, 1993, ORBCOMM received from the
FCC (as such term is hereinafter defined) experimental licenses (as renewed and
modified from time to time, the "FCC Experimental Licenses") to develop,
construct and operate the Phase lA System and to market communications services
to up to 1,000 subscribers in the United States; and
WHEREAS, ORBCOMM and ORBCOMM Global desire to have ORBCOMM Global
develop and construct certain assets comprising the Phase lA System and Phase
lB System.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1 - DEFINITIONS
Except as otherwise specifically defined herein, capitalized terms
shall have the meanings ascribed to such terms in Appendix C attached to the
Master Agreement dated as of June 30,
<PAGE> 2
1993 among Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile, as amended and
restated from time to time, which Appendix is incorporated herein by reference.
ARTICLE 2 - CONSTRUCTION OF SYSTEM ASSETS
Section 2.1 Construction of System Assets in the United States.
ORBCOMM and ORBCOMM Global hereby agree that ORBCOMM Global shall (a) develop,
construct and launch the two Satellites for the Phase lA System and develop and
construct the other assets in the Phase lA System located in the United States
in fulfillment of ORBCOMM's right to construct such assets pursuant to the FCC
Experimental Licenses and (b) develop, construct and launch the Satellites for
the Phase lB System and develop and construct the other assets for the Phase lB
System located in the United States upon receipt by ORBCOMM of a license from
the FCC to construct the Phase lB System in fulfillment of ORBCOMM's right to
construct such assets pursuant to such licenses, all of which assets shall be
procured by ORBCOMM Global pursuant to the System Agreement or the Procurement
Contract dated as of September 12, 1995 between Orbital and ORBCOMM Global, as
the case may be. Subject to the provisions of the System Charge Agreement,
ORBCOMM shall have the exclusive right in the United States to use the System
Assets.
Section 2.2. Consideration for Construction and Financing of System
Assets.
In consideration of the construction and financing of the System
Assets provided in Section 2.1, ORBCOMM hereby agrees as follows:
(a) Within ten (10) days of receipt by ORBCOMM of the Output
Capacity Charge (as such term is defined in the System Charge
Agreement) for any calendar quarter, ORBCOMM shall remit to ORBCOMM
Global ORBCOMM's allocated portion of the system charge (the "System
Charge") calculated in accordance with Section 6.9 of the ORBCOMM
Global Partnership Agreement, provided that if the Output Capacity
Charge for such calendar quarter is less than 1.15% of Total Aggregate
Revenues (as such term is defined in the ORBCOMM Global Partnership
Agreement), then ORBCOMM shall not be required to pay, and it shall
not owe ORBCOMM Global, any portion of the System Charge for such
calendar quarter.
(b) ORBCOMM Global is hereby granted the right to market,
sell, lease and franchise all ORBCOMM System output capacity outside
the United States. ORBCOMM hereby grants to ORBCOMM Global a
non-exclusive license, and authorizes ORBCOMM Global to grant to
ORBCOMM International (who shall be authorized to grant to its
Subscribers, Resellers and Licensees) a non-exclusive license, to use
all service marks, trademarks and trade names of ORBCOMM relating to
the ORBCOMM System, including without limitation the ORBCOMM name, in
the course of ORBCOMM Global's or ORBCOMM International's (or such
Subscriber's, Reseller's or Licensee's) business, for
-2-
<PAGE> 3
advertising, promotional or sales literature, or any other form of
publicity for the duration of this Agreement. ORBCOMM Global agrees
and shall require ORBCOMM International (who shall use all
commercially reasonable efforts to require its Subscribers, Resellers
and Licensees) to agree (i) to use such service marks, trademarks and
trade names in its advertising, promotional and sales materials that
refer to ORBCOMM or the ORBCOMM System or any aspect thereof and to
ensure that such use conforms (A) with respect to ORBCOMM Global's
use, to ORBCOMM's written requirements for display of such logos,
service marks and trademarks, including registry and trademark
symbols, and (B) with respect to ORBCOMM International's or its
Subscribers', Resellers' or Licensees' use, to ORBCOMM Global's
written requirements for display of such logos, service marks and
trademarks, including registry and trademark symbols, which
requirements shall be in conformance with the ORBCOMM Identity Manual
and (ii) to obtain the prior written consent of (A) with respect to
ORBCOMM Global's use, ORBCOMM and (B) with respect to ORBCOMM
International's or its Subscribers', Resellers' or Licensee's use,
ORBCOMM Global for such advertising, promotional and sales materials,
which approval shall not be unreasonably withheld, provided that (x)
with respect to ORBCOMM Global's use, if ORBCOMM Global complies with
the terms of the ORBCOMM Identity Manual or any replacement document
thereto, the advance written approval of ORBCOMM shall not be required
and (y) with respect to ORBCOMM International's or such Subscribers',
Resellers' or Licensees' use, if such Person complies with the terms
of the ORBCOMM Global Identity Manual or any replacement document
thereto, which Manual or document shall be in conformance with the
ORBCOMM Identity Manual, the advance written approval of ORBCOMM
Global shall not be required.
(c) Notwithstanding the foregoing, ORBCOMM, as the holder of
the FCC Experimental Licenses and of all FCC licenses relating to the
ORBCOMM System, hereby retains and will retain upon receipt thereof
full authority to control the ORBCOMM System and require ORBCOMM
Global to comply with all FCC requirements set forth in such licenses.
Section 2.3 Insurance on System Assets. Insurance on the ORBCOMM System
and the System Assets shall be procured by ORBCOMM Global or, at ORBCOMM
Global's discretion, by Orbital for ORBCOMM Global's account in such amounts,
at such times and shall cover such risks as ORBCOMM Global shall determine in
its sole discretion.
Section 2.4 Transfer of ORBCOMM Trademark and Service Mark. ORBCOMM
agrees to transfer and assign to ORBCOMM Global, at ORBCOMM Global's expense,
the applications for or the registered trademark and service mark "ORBCOMM",
which transfer and assignment shall occur upon terms and conditions to be
mutually agreed upon but in any event at such time as such registered trademark
or service mark comes up for renewal in the country where it is registered.
Section 2.5 Patent Indemnification. ORBCOMM Global shall defend,
indemnify and hold harmless ORBCOMM and its respective successors and assigns
from and against any claim with
-3-
<PAGE> 4
respect to an infringement or other violation of any copyright, trademark or
patent or other validly registered enforceable intellectual property right of
any third party for any items ORBCOMM Global has constructed for ORBCOMM
pursuant to the authority granted in Section 2.1 hereof but only to the same
extent as the indemnification received by ORBCOMM Global from Orbital, if any,
under Section 9.4 of the Procurement Contract.
ARTICLE 3 - MISCELLANEOUS
Section 3.1 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, USA, without
giving effect to the provisions, policies or principles thereof relating to
choice or conflict of laws.
Section 3.2 Dispute Resolution. Any controversy or claim that may arise
under, out of, in connection with or relating to this Agreement shall be
resolved in accordance with Section 13.4 of the Master Agreement."
Section 3.3 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior writing or agreement or understanding among the parties
with respect to the subject matter hereof.
Section 3.4 Amendment: Waiver. Except as provided otherwise herein, this
Agreement may not be amended nor may any rights hereunder be waived except by
an instrument in writing signed by the parties hereto.
Section 3.5 Binding Effect; Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and permitted assigns. Neither this Agreement nor any interests or
obligations hereunder shall be assigned or transferred (by operation of law or
otherwise) to any Person without the prior written consent of the other
parties.
Section 3.6 Counterparts. This Agreement may be executed in any number
of counterparts of the signature pages, each of which shall be considered an
original, but all of which together shall constitute one and the same
instrument.
Section 3.7 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 3.8 Notices. Except as otherwise specified herein, all notices,
requests and other communications required to be delivered to any party
hereunder shall be in writing (including any facsimile transmission or similar
writing), and shall be sent by telecopy or delivered in person addressed as
follows:
-4-
<PAGE> 5
(a) If to ORBCOMM, to it at:
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3508
Attention: President
(b) If to ORBCOMM Global, to it at:
1700 Atlantic Boulevard
ulles, Virginia 20166
elecopy: (703) 406-3508
ttention: President
with copies to:
Orbital Sciences Corporation
21700 Atlantic Boulevard
Dulles, Virginia 20166
Telecopy: (703) 406-3509
Attention: Executive Vice President and General
Manager/Communications and Information Systems Group
Teleglobe Inc.
1000 rue de la Gauchetiere ouest
Montreal, Quebec
Canada H3B 4X5
Telecopy: (514) 868-8153
Attention: Executive Vice President, Corporate Development and
Corporate Secretary
or to such other persons or addresses as any party may designate by written
notice to the others. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted and the
appropriate answerback is received, (ii) if given by reputable overnight
courier, one (1) business day after being delivered to such courier, or (iii)
if given by any other means, when received at the address specified in this
Section 3.8.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
<TABLE>
<S> <C>
ORBITAL COMMUNICATIONS ORBCOMM GLOBAL, L.P.
CORPORATION
By: Orbital Communications
By: /s/ ALAN L. PARKER Corporation, General Partner
--------------------------------------
Name: Alan L. Parker
Title: President
By: /s/ ALAN L. PARKER
------------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners,
By: Teleglobe Mobile Investment Inc.,
its Managing General Partner
By: /s/ GUTHRIE J. STEWART
--------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
</TABLE>
-6-
<PAGE> 1
EXHIBIT 10.9
AMENDMENT NO. 1 TO
RESTATED ORBCOMM SYSTEM CONSTRUCTION AGREEMENT
This Amendment No. 1 to Restated ORBCOMM System Construction Agreement
is made and entered into as of the 1st day of July, 1996 by and between Orbital
Communications Corporation ("ORBCOMM") and ORBCOMM Global, L.P. ("ORBCOMM
Global").
W I T N E S S E T H
WHEREAS, ORBCOMM and ORBCOMM Global previously entered into the
Restated ORBCOMM System Construction Agreement dated as of September 12, 1995
(the "System Construction Agreement"); and
WHEREAS, ORBCOMM and ORBCOMM Global wish to amend the System
Construction Agreement to clarify certain terms and conditions with respect to
operation of the ORBCOMM System;
NOW THEREFORE, the parties agree as follows:
SECTION 1. Terms used but not otherwise defined herein shall have the meanings
assigned thereto in the System Construction Agreement.
SECTION 2. Section 2.2(c) of the System Construction Agreement is hereby
deleted in its entirety and replaced with the following:
(c) ORBCOMM Global is hereby granted the right to manage
and operate the ORBCOMM System on behalf of ORBCOMM, and ORBCOMM
Global shall provide ORBCOMM management and operational services,
including the performance of tracking, telemetry and control
functions, with respect to the ORBCOMM System, all subject to the
oversight, supervision and control of ORBCOMM. Notwithstanding any
provision in this Agreement to the contrary, ORBCOMM and ORBCOMM
Global acknowledge and agree (i) that ORBCOMM is in sole control of
the FCC Experimental Licenses, the FCC license with respect to the
ORBCOMM System granted to ORBCOMM on October 20, 1994, the FCC license
with respect to the U.S. Earth stations granted to ORBCOMM on May 17,
1995 and June 12, 1995 and the FCC license with respect to provision
of service using the ORBCOMM System to up to 200,000 Subscriber
Communicators granted to ORBCOMM on June 12, 1995 (collectively, the
"FCC Authorizations") and the ORBCOMM System (ii) that ORBCOMM is
required by FCC regulations to be in sole control so long as it is the
licensee under the FCC Authorizations and accordingly, has the right,
among
<PAGE> 2
other things, to order the discontinuance of operations to avoid any
violations of FCC rules and regulations and the right to unfettered
access to all facilities, sites and equipment used in the operation of
the ORBCOMM System. ORBCOMM Global further acknowledges and agrees
that ORBCOMM has ultimate control over all decisions affecting the
ORBCOMM System including, but not limited to, employment, supervision
and dismissal of personnel, notwithstanding any other provision of the
any of the Definitive Agreements. ORBCOMM Global shall assist ORBCOMM
in complying with all applicable Federal, state and local rules and
regulations regarding operation of the ORBCOMM System, including all
FCC requirements set forth in any of the FCC Authorizations.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
Restated ORBCOMM System Construction Agreement to be executed as of the day and
year first above written.
ORBCOMM GLOBAL, L.P.
By: Orbital Communications Corporation,
General Partner
By: /s/ ALAN L. PARKER
---------------------------------------
Name: Alan L. Parker
Title: President
By: Teleglobe Mobile Partners,
General Partner
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ GUTHRIE J. STEWART
---------------------------------------
Name: Guthrie J. Stewart
Title: Chairman of the Board and
Chief Executive Officer
-2-
<PAGE> 3
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. PARKER
--------------------------------------
Name: Alan L. Parker
Title: President
-3-
<PAGE> 1
EXHIBIT 12
ORBCOMM GLOBAL, L.P.
Computation of Ratios of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended Six Months Ended
----------------------------------- ------------------------------------
December 31, Pro Forma June 30, Pro Forma
-------------------- --------- ---------------------- ---------
1994 1995 1995 1995 1996 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest costs,
including amortization
of debt issue costs (1) 0 426 25,066 222 184 12,482
Portion of rent expense
representative of interest (2) 0 0 0 0 58 58
------ ------ ------- ------ ------ -------
Total fixed charges (1) 0 426 25,066 222 242 12,540
====== ====== ======= ====== ====== =======
Earnings:
Excess (deficiency) of income
over expenses (9) 55 55 634 (8,995) (8,995)
Fixed charges (1) 0 0 0 0 58 58
------ ------ ------- ------ ------ -------
Earnings adjusted for fixed charges (9) 55 55 634 (8,937) (8,937)
====== ====== ======= ====== ====== =======
Ratio of earnings to fixed charges (3) -- -- -- 2.9x -- --
Deficiency of earnings to fixed charges (1) N/A(4) (371) (25,011) (9,179) (21,477)
</TABLE>
(1) A portion of the interest costs were capitalized as a part of the cost
of the fixed assets and therefore excluded from excess (deficiency) of
income over expenses in the calculation of earnings adjusted for
fixed charges.
(2) One-third of rent expense is deemed to be representative of interest.
(3) For purposes of determining the ratio of earnings to fixed charges,
"earnings" included excess (deficiency) of income over expenses adjusted
for fixed charges.
(4) Ratio of earnings to fixed charges is not applicable as there were no
fixed charges during the period.
<PAGE> 1
EXHIBIT 21
Exhibit 21
List of Subsidiaries
ORBCOMM Global Capital Corp.
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Partners
ORBCOMM Global, L.P.:
We consent to the use of our report included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, DC
August 28, 1996
<PAGE> 1
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Partners
ORBCOMM USA, L.P.:
We consent to the use of our report included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, DC
August 28, 1996
<PAGE> 1
EXHIBIT 23.3
ACCOUNTANTS' CONSENT
The Partners
ORBCOMM International Partners, L.P.:
We consent to the use of our report included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, DC
August 28, 1996
<PAGE> 1
EXHIBIT 23.4
ACCOUNTANTS' CONSENT
The Partners
Orbital Communications Corporation:
We consent to the use of our report included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Washington, DC
August 28, 1996
<PAGE> 1
EXHIBIT 23.5
CONSENT OF AUDITORS
We consent to the inclusion of our report dated June 25, 1996 in the
Registration Statement on Form S-4 and the related prospectus of Orbcomm Global,
L.P. and Orbcomm Global Capital Corp. for the registration of the Offer to
Exchange 14% Series B Senior Notes due 2004 with Revenue Participation Interest
for all outstanding 14% Senior Notes due 2004 with Revenue Participation
Interest. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
GRANT THORNTON
GENERAL PARTNERSHIP
CHARTERED ACCOUNTANTS
MONTREAL, QUEBEC
AUGUST 28, 1996
<PAGE> 1
EXHIBIT 25
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
ORBCOMM GLOBAL, L.P.
(Exact name of co-registrant as specified in its charter)
Delaware 54-1698039
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 2
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 3
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 5
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- --------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- --------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 6
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<PAGE> 8
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
(Name, address and telephone number of agent for service)
ORBCOMM GLOBAL CAPITAL CORP.
(Exact name of co-registrant as specified in its charter)
Delaware N/A
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 9
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 10
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 12
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- ---------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- ---------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 13
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<PAGE> 15
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
ORBCOMM USA, L.P.
(Exact name of co-registrant as specified in its charter)
Delaware 54-1689429
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 16
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 17
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 19
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- ------------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- ------------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 20
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<PAGE> 22
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
ORBCOMM INTERNATIONAL PARTNERS, L.P.
(Exact name of co-registrant as specified in its charter)
Delaware 54-1690862
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 23
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 24
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 25
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 26
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- -------------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- -------------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 27
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<PAGE> 29
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
ORBITAL COMMUNICATIONS CORPORATION
(Exact name of co-registrant as specified in its charter)
Delaware 54-1535585
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 30
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 31
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 32
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 33
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- --------------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- --------------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 34
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<PAGE> 36
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Eric Parets
Senior Vice President
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-6560
(Name, address and telephone number of agent for service)
TELEGLOBE MOBILE PARTNERS
(Exact name of co-registrant as specified in its charter)
Delaware 98-1035820
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-6000 (Zip Code)
(Address of principal executive offices)
14 % SERIES B SENIOR NOTES DUE 2004
(Title of Indenture Securities)
<PAGE> 37
General
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None
<PAGE> 38
Item 16. List of Exhibits.
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
T1A(i) * - Copy of the Organization
Certificate of Marine
Midland Bank.
T1A(ii) * - Certificate of the State
of New York Banking
Department dated December
31, 1993 as to the
authority of Marine
Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-
Laws of Marine Midland
Bank as adopted on January
20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland
Bank required by Section
321(b) of the Trust
Indenture Act of 1939.
T1A(vii) - Copy of the latest report
of condition of the
trustee (June 30, 1996),
published pursuant to law
or the requirement of its
supervisory or examining
authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
</TABLE>
* Exhibits previously filed with the Securities and Exchange
Commission with Registration No. 33-53693 and incorporated
herein by reference thereto.
<PAGE> 39
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Marine Midland Bank, a banking corporation and trust company
organized under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York and State of New
York on the 27th day of August, 1996.
MARINE MIDLAND BANK
By: /s/ BarbaraJean McCauley
---------------------------------
BarbaraJean McCauley
Assistant Vice President
<PAGE> 40
EXHIBIT T1A (vii)
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-00811
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
This financial information has not been reviewed, or confirmed -------
for accuracy or relevance, by the Federal Reserve System. Please refer to page i, 1
Table of Contents, for -------
the required disclosure
of estimated burden.
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(950630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches and
(State member banks); 12 U.S.C. Section 1817 (State consolidated subsidiaries in U.S. territories and possessions,
nonmember banks); and 12 U.S.C. Section 161 (National Edge or Agreement subsidiaries, foreign branches, consoli-dated
banks). foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority instructions. NOTE:
be attested to by not less than two directors (trustees) These instructions may in some cases differ from generally
for State nonmember banks and three directors for State accepted accounting principles.
member and National Banks.
I, Gerald A. Ronning, Executive VP & Controller
-------------------------------------------- We, the undersigned directors (trustees), attest to the
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the supporting
of the named bank do hereby declare that these Reports of schedules) and declare that it has been examined by us and to the
Condition and Income (including the supporting schedules) best of our knowledge and belief has been prepared in conformance
have been prepared in conformance with the instructions with the instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority authority and is true and correct.
and are true to the best of my knowledge and believe.
/s/ Henry J. Nowak
----------------------------------------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning /s/ Bernard J. Kennedy
- ---------------------------------------------------- ----------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
7/25/96 /s/ Northrup R. Knox
- ---------------------------------------------------- ----------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to NATIONAL BANKS: Return the original only in the special return
the appropriate Federal Reserve District Bank. address envelope provided. If express mail is used in lieu of the
special return address envelope, return the original only to the
STATE NONMEMBER BANKS: Return the original only in the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204,
special return address envelope provided. If express Crofton, MD 21114.
mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 0 | 5 | 8 | 9 |
---------------------
(RCRI 9030)
</TABLE>
<PAGE> 41
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for your state
publication requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,133,237
Interest-bearing balances ........................... 1,117,267
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,312,291
Federal Funds sold and securities purchased
under agreements to resell in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold................................... 555,000
Securities purchased under
agreements to resell................................. 421,771
Loans and lease financing receivables:
Loans and leases net of unearned
income............................... 14,765,000
LESS: Allowance for loan and lease
losses............................... 456,646
LESS: Allocated transfer risk reserve 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 14,308,354
Trading assets....................................... 871,466
Premises and fixed assets (including
capitalized leases).................................. 181,721
Other real estate owned................................. 4,643
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 23,253
Intangible assets....................................... 164,521
Other assets............................................ 460,618
Total assets............................................ 2,554,142
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................... 14,788,828
Noninterest-bearing.................. 3,061,906
Interest-bearing..................... 11,726,922
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................. 3,485,266
Noninterest-bearing.................. 0
Interest-bearing..................... 3,485,266
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.............................. 859,455
Securities sold under agreements to
repurchase........................................... 324,584
Demand notes issued to the U.S. Treasury 246,051
Trading Liabilities...................................... 415,593
Other borrowed money:
With original maturity of one year
or less.............................................. 32,459
With original maturity of more than
one year............................................. 0
Mortgage indebtedness and obligations
under capitalized leases................................ 34,193
Bank's liability on acceptances
executed and outstanding................................ 23,253
Subordinated notes and debentures....................... 225,000
Other liabilities....................................... 326,680
Total liabilities....................................... 20,761,362
Limited-life preferred stock and
related surplus......................................... 0
EQUITY CAPITAL
Perpetual preferred stock and related
surplus................................................. 0
Common Stock............................................ 185,000
Surplus................................................. 1,633,098
Undivided profits and capital reserves.................. (23,953)
Net unrealized holding gains (losses)
on available-for-sale securities........................ (1,365)
Cumulative foreign currency translation
adjustments............................................. 0
Total equity capital.................................... 1,792,780
Total liabilities, limited-life
preferred stock, and equity capital..................... 22,554,142
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 JUN-30-1996
<PERIOD-START> JAN-01-1995 APR-01-1996
<PERIOD-END> DEC-31-1995 JUN-30-1996
<CASH> 1,784,950 1,038,650
<SECURITIES> 0 0
<RECEIVABLES> 0 115,783
<ALLOWANCES> 0 0
<INVENTORY> 446,684 883,761
<CURRENT-ASSETS> 2,231,634 2,038,194
<PP&E> 106,989,940 135,937,681
<DEPRECIATION> 0 3,041,850
<TOTAL-ASSETS> 109,029,658 134,826,326
<CURRENT-LIABILITIES> 11,158,800 13,435,125
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 94,601,239 118,606,049
<TOTAL-LIABILITY-AND-EQUITY> 109,029,658 134,826,326
<SALES> 0 54,615
<TOTAL-REVENUES> 958,415 71,827
<CGS> 0 54,615
<TOTAL-COSTS> 0 54,615
<OTHER-EXPENSES> 903,213 9,012,403
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 55,202 (8,995,191)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 55,202 (8,995,191)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 55,202 (8,995,191)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
---------------
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
14% SERIES B SENIOR NOTES DUE 2004
OF
ORBCOMM GLOBAL, L.P.
ORBCOMM GLOBAL CAPITAL CORP.
PURSUANT TO THE PROSPECTUS
DATED , 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
__________ WILL ACCEPT ALL NOTES (AS HEREINAFTER DEFINED) TENDERED
AND NOT WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 18,
1994, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Exchange Agent is:
Marine Midland Bank
<TABLE>
<CAPTION>
By Registered or
By Facsimile: Certified Mail: By Overnight Delivery:
<S> <C> <C>
Marine Midland Bank Marine Midland Bank Marine Midland Bank
(212) 140 Broadway 140 Broadway
New York, New York 10005-1180 New York, New York 10005-1180
Attention: Corporate Trust
Services
<CAPTION>
By Hand Delivery: Confirm by Telephone:
<S> <C> <C>
Marine Midland Bank (212) 658-1000
140 Broadway
New York, New York 10005-1180
Attention: Corporate Trust
Services
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE> 2
The undersigned acknowledges receipt of the Prospectus dated
, 1996 (the "Prospectus"), of ORBCOMM Global, L.P. and ORBCOMM
Global Capital Corp. ("the Issuers"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together with the Prospectus constitutes the
Issuers' offer (the "Exchange Offer") to exchange $1,000 principal amount of its
14% Series B Senior Notes due 2004 (the "Exchange Notes") for each $1,000
principal amount of its outstanding 14% Senior Notes due 2004 (the "Notes").
Recipients of the Prospectus should read the requirements described in such
Prospectus with respect to eligibility to participate in the Exchange Offer.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
The undersigned hereby tenders the Notes described in the box entitled
"Description of Notes" below pursuant to the terms and conditions described in
the Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Notes and the undersigned represents that it has received from
each beneficial owner of Notes ("Beneficial Owners") a duly completed and
executed form of "Instruction to Registered Holder from Beneficial Owner"
accompanying this Letter of Transmittal, instructing the undersigned to take the
action described in this Letter of Transmittal.
This Letter of Transmittal is to be used only by a holder of Notes (i) if
certificates representing Notes are to be forwarded herewith or (ii) if delivery
of Notes is to be made by book-entry transfer to the Exchange Agent's account at
The Depository Trust Company ("Depositary"), pursuant to the procedures set
forth in the section of the Prospectus entitled "The Exchange
Offer -- Procedures for Tendering." If delivery of the Notes is to be made by
book-entry transfer to the account maintained by the Exchange Agent at the
Depositary, this Letter of Transmittal need not be manually executed; provided,
however, that tenders of the Notes must be effected in accordance with the
procedures mandated by the Depositary's Automated Tender Offer Program and the
procedures set forth in the Prospectus under the caption "The Exchange Offer --
Book-Entry Transfer."
The undersigned hereby represents and warrants that the information set
forth in the box entitled "Beneficial Owner(s)" is true and correct.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact such registered holder of Notes promptly and instruct such
registered holder of Notes to tender on behalf of the beneficial owner. If such
beneficial owner wishes to tender on its own behalf, such beneficial owner must,
prior to completing and executing this Letter of Transmittal and delivering its
Notes, either make appropriate arrangements to register ownership of the Notes
in such beneficial owner's name or obtain a properly completed bond power from
the registered holder of Notes. The transfer of record ownership may take
considerable time.
In order to properly complete this Letter of Transmittal, a holder of Notes
must (i) complete the box entitled "Description of Notes," (ii) if appropriate,
check and complete the boxes relating to book-entry transfer, guaranteed
delivery, Special Issuance Instructions and Special Delivery Instructions, (iii)
sign the Letter of Transmittal by completing the box entitled "Sign Here" and
(iv) complete the Substitute Form W-9. Each holder of Notes should carefully
read the detailed instructions below prior to completing the Letter of
Transmittal.
Holders of Notes who desire to tender their Notes for exchange and (i)
whose Notes are not immediately available, (ii) who cannot deliver their Notes
and all other documents required hereby to the Exchange Agent on or prior to the
Expiration Date or (iii) who are unable to complete the procedure for book-entry
transfer on a timely basis, must tender the Notes pursuant to the guaranteed
delivery procedures set forth in the section of the Prospectus entitled "The
Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2.
Holders of Notes who wish to tender their Notes for exchange must, at a
minimum, complete columns (1) through (3) in the box below entitled "Description
of Notes" and sign the box below entitled "Sign Here." If only those columns are
completed, such holder of Notes will have tendered for exchange all Notes listed
in column (3) below. If the holder of Notes wishes to tender for exchange less
than all of such Notes, column (4) must be completed in full. In such case, such
holder of Notes should refer to Instruction 5.
2
<PAGE> 3
<TABLE>
<CAPTION>
=====================================================================================================
DESCRIPTION OF NOTES
=====================================================================================================
(1) (2) (3) (4)
Principal
Amount
Tendered
For
Exchange
(only if
different
amount
Note from
Number(s)(1) column (3))
Name(s) and Address(es) of Registered (Attach (must be in
Holder(s) of Note(s), exactly as name(s) signed Aggregate integral
appear(s) on Note Certificate(s) List if Principal multiples
(Please fill in, if blank) necessary) Amount of $1,000)(2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
=====================================================================================================
</TABLE>
(1) Column (2) need not be completed by holders of Notes tendering Notes for
exchange by book-entry transfer. Please check the appropriate box below and
provide the requested information.
(2) Column (4) need not be completed by holders of Notes who wish to tender for
exchange the principal amount of Notes listed in column (3). Completion of
column (4) will indicate that the holder of Notes wishes to tender for
exchange only the principal amount of Notes indicated in column (4).
/ / CHECK HERE IF TENDERED NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND
COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
DEFINED) ONLY):
Name of Tendering Institution
----------------------------------------------
Account Number
--------------------------------------------------------------
Transaction Code Number
-----------------------------------------------------
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY
ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Note(s)
-----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Window Ticket Number (if available)
-----------------------------------------
Name of Institution which Guaranteed Delivery
-------------------------------
Account Number (if delivered by book-entry transfer)
------------------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
------------------------------------------------------------------------
Address
----------------------------------------------------------------------
3
<PAGE> 4
===============================================================================
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the Exchange Notes issued in exchange for
Notes, certificates for Notes in a principal amount not exchanged for
Exchange Notes or Notes (if any) not tendered for exchange, are to be
issued in the name of someone other than the undersigned, or (ii) if Notes
tendered by book-entry transfer which are not exchanged are to be returned
by credit to an account maintained at the Depositary.
Issue to:
Name
------------------------------------------------------------------------
(Please Print)
Address
---------------------------------------------------------------------
----------------------------------------------------------------------------
(Include Zip Code)
----------------------------------------------------------------------------
(Tax Identification or Social Security No.)
Credit Notes not exchanged and delivered by book-entry transfer to the
Depositary account set forth below:
----------------------------------------------------------------------------
(Account Number)
===============================================================================
===============================================================================
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 6, 7 and 8)
To be completed ONLY (i) if the Exchange Notes issued in exchange for
Notes, certificates for Notes in a principal amount not exchanged for
Exchange Notes or Notes (if any) not tendered for exchange, are to be mailed
or delivered to someone other than the undersigned, or to the undersigned at
an address other than the address shown below the undersigned's signature.
Mail or delivered to:
Name
------------------------------------------------------------------------
(Please Print)
Address
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Include Zip Code)
----------------------------------------------------------------------------
(Tax Identification or Social Security No.)
===============================================================================
<TABLE>
<CAPTION>
=============================================================================================
BENEFICIAL OWNER(S)
- ---------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF NOTES
BENEFICIAL OWNER OF NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER(S)
- ---------------------------------------------------------------------------------------------
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
=============================================================================================
</TABLE>
If delivery of Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at the Depositary, then tenders of Notes must
be effected in accordance with the procedures mandated by the Depositary's
Automated Tender Offer Program and the procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Book-Entry Transfer."
4
<PAGE> 5
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Pursuant to the offer by ORBCOMM Global, L.P. and ORBCOMM Global Capital
Corp. (the "Issuers"), upon the terms and subject to the conditions set forth in
the Prospectus dated August , 1996 (the "Prospectus") and this Letter of
Transmittal (the "Letter of Transmittal"), which together with the Prospectus
constitutes the Issuer's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 14% Series B Senior Notes Due 2004 (the "Exchange
Notes") for each $1,000 principal amount of its outstanding 14% Senior Notes Due
2004 (the "Notes"). The undersigned hereby tenders to for exchange the
Notes indicated above.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Notes tendered for exchange herewith, the
undersigned will have irrevocably sold, assigned, transferred and exchanged, to
, all right, title and interest in, to and under all of the Notes
tendered for exchange hereby, and hereby appoints the Exchange Agent as the true
and lawful agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as agent of ) of such holder of Notes with respect to
such Notes, with full power of substitution to (i) deliver certificates
representing such Notes, or transfer ownership of such Notes on the account
books maintained by the Depositary (together, in any such case, with all
accompanying evidences of transfer and authenticity), to , (ii)
present and deliver such Notes for transfer on the books of and
(iii) receive all benefits and otherwise exercise all rights and incidents of
beneficial ownership with respect to such Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner; (ii) has a net long position within the meaning of Rule 14e-4 under
the Securities Exchange Act as amended ("Rule 14e-4") equal to or greater than
the principal amount of Notes tendered hereby; (iii) the tender of such Notes
complies with Rule 14e-4 (to the extent that Rule 14e-4 is applicable to such
exchange); (iv) the undersigned has full power and authority to tender,
exchange, assign and transfer the Notes and (v) that when such Notes are
accepted for exchange by , will acquire good and
marketable title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claims. The undersigned will, upon
receipt, execute and deliver any additional documents deemed by the Exchange
Agent or to be necessary or desirable to complete the exchange,
assignment and transfer of the Notes tendered for exchange hereby.
The undersigned hereby further represents to that (i) the
Exchange Notes to be acquired by the undersigned in exchange for the Notes
tendered hereby and any beneficial owner(s) of such Notes in connection with the
Exchange Offer will be acquired by the undersigned and such beneficial owner(s)
in the ordinary course of business of the undersigned, (ii) the undersigned (if
not a broker-dealer referred to in the last sentence of this paragraph) are not
participating and do not intend to participate in the distribution of the
Exchange Notes, (iii) the undersigned have no arrangement or understanding with
any person to participate in the distribution of the Notes, (iv) the undersigned
and each beneficial owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the staff of
the SEC set forth in certain no-action letters, (v) the undersigned and each
beneficial owner understand that a secondary resale transaction described in
clause (iv) above should be covered by an effective registration statement
containing the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the SEC and (vi) neither the
undersigned nor any beneficial owner is an "affiliate" of , as
defined under Rule 405 under the Securities Act. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange
5
<PAGE> 6
Notes received in respect of such Notes pursuant to the Exchange Offer; however,
by so acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For purposes of the Exchange Offer, will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Notes, if, as and
when gives oral or written notice thereof to the Exchange Agent.
Tenders of Notes for exchange may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date. See "The Exchange
Offer -- Withdrawal of Tenders" in the Prospectus. Any Notes tendered by the
undersigned and not accepted for exchange will be returned to the undersigned at
the address set forth above unless otherwise indicated in the box above entitled
"Special Delivery Instructions."
The undersigned acknowledges that 's acceptance of Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the undersigned
and upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Notes not tendered for exchange in the name(s)
of the undersigned. Similarly, unless otherwise indicated in the box entitled
"Special Delivery Instructions," please mail any certificates for Notes not
tendered or exchanged (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the
Exchange Notes issued in exchange for the Notes accepted for exchange in the
name(s) of, and return any Notes not tendered for exchange or not exchanged to,
the person(s) so indicated. The undersigned recognizes that has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Notes from the name of the holder of Note(s)
thereof if does not accept for exchange any of the Notes so tendered
for exchange or if such transfer would not be in compliance with any transfer
restrictions applicable to such Note(s).
IN ORDER TO VALIDLY TENDER NOTES FOR EXCHANGE, HOLDERS OF NOTES MUST
COMPLETE, EXECUTE, AND DELIVER THIS LETTER OF TRANSMITTAL.
Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Notes is
irrevocable.
6
<PAGE> 7
================================================================================
SIGN HERE
--------------------------------------------------------------------------
(Signature(s) of Owner(s))
--------------------------------------------------------------------------
Date: ________________ , 1996
Must be signed by the registered holder(s) of Notes exactly as
name(s) appear(s) on certificate(s) representing the Notes or on a
security position listing or by person(s) authorized to become registered
Note holder(s) by certificates and documents transmitted herewith. If
signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following
information. (See Instruction 6).
Name(s)
-------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Please Print)
Capacity (full title)
-----------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No. (______)
-------------------------------------
Tax Identification or Social Security Nos.
--------------------------------
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(Signature(s) must be guaranteed if required by Instruction 1)
Authorized Signature
--------------------------------------------------------------------------
Dated
--------------------------------------------------------------------
Name and Title
------------------------------------------------------------
(Please Print)
Name of Firm
-------------------------------------------------------------
================================================================================
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or is a commercial bank or
trust company having an office or correspondence in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934 which is a member of one of the following
recognized Signature Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Series A
Notes tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Notes are tendered
for the account of an Eligible Institution. IN ALL OTHER CASES, ALL SIGNATURES
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES; GUARANTEED DELIVERY
PROCEDURE. This Letter of Transmittal is to be completed by holders of Notes
(i) if certificates are to be forwarded herewith or (ii) if tenders are to be
made pursuant to the procedures for tender by book-entry transfer or guaranteed
delivery set forth in the section of the Prospectus entitled "The Exchange
Offer." Certificates for all physically tendered Notes or any confirmation of a
book-entry transfer (a "Book-Entry Confirmation"), as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
hereof, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at its address set forth on the cover of this
Letter of Transmittal prior to 5:00 p.m., New York City time, on the Expiration
Date. Holders of Notes who elect to tender Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver the Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date or (iii) who are unable to complete the procedure for book-entry
transfer on a timely basis, may have such tender effected if: (a) such tender is
made by or through an Eligible Institution; and (b) prior to 5:00 p.m., New York
City time, on the Expiration Date, the Exchange Agent has received from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile hereof) and Notice of Guaranteed Delivery (by
telegram, telex, facsimile transmission, mail or hand delivery) setting forth
the name and address of the holder of such Notes, the certificate numbers(s) of
such Notes and the principal amount of Notes tendered for exchange, stating that
tender is being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, the certificates representing
such Notes (or a Book-Entry Confirmation), in proper form for transfer, and any
other documents required by this Letter of Transmittal, will be deposited by
such Eligible Institution with the Exchange Agent; and (c) certificates for all
tendered Notes, or a Book-Entry Confirmation, together with a copy of the
previously executed Letter of Transmittal (or facsimile thereof) and any other
documents required by this Letter of Transmittal are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date.
THE METHOD OF DELIVERY OF NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF NOTES.
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
NEITHER THIS LETTER OF TRANSMITTAL NOR ANY NOTES SHOULD BE SENT TO THE ISSUERS
OR THE TRUSTEE.
8
<PAGE> 9
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Notes" above is inadequate, the certificate numbers and
principal amounts of the Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration Date by delivery of written
notice of withdrawal to the Exchange Agent at the address set forth on the cover
of this Letter of Transmittal. To be effective, a notice of withdrawal of Notes
must (i) specify the name of the person who tendered the Notes to be withdrawn
(the "Depositor"), (ii) identify the Notes to be withdrawn (including the
certificate number or numbers and aggregate principal amount of such Notes),
(iii) be signed by the holder of Notes in the same manner as the original
signature on the Letter of Transmittal by which such Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the applicable transfer agent register the transfer
of such Notes into the name of the person withdrawing the tender. Withdrawals of
tenders of Notes may not be rescinded, and any Notes withdrawn will thereafter
be deemed not validly tendered for purposes of the Exchange Offer and no
Exchange Notes will be issued with respect thereto unless the Notes so withdrawn
are validly retendered. Properly withdrawn Notes may be retendered by following
one of the procedures described in the section of the Prospectus entitled "The
Exchange Offer -- Procedures for Tendering" at any time prior to 5:00 p.m., New
York City time, on the Expiration Date.
5. PARTIAL TENDERS. (Not applicable to holders of Notes who tender Notes
by book-entry transfer). Tenders of Notes will be accepted only in integral
multiples of $1,000 principal amount. If a tender for exchange is to be made
with respect to less than the entire principal amount of any Notes, fill in the
principal amount of Notes which are tendered for exchange in column (4) of the
box entitled "Description of Notes," as more fully described in the footnotes
thereto. In case of a partial tender for exchange, a new certificate, in fully
registered form, for the remainder of the principal amount of the Notes, will be
sent to the holders of Notes unless otherwise indicated in the appropriate box
on this Letter of Transmittal as promptly as practicable after the expiration or
termination of the Exchange Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.
(a) The signature(s) of the holder of Notes on this Letter of Transmittal
must correspond with the name(s) as written on the face of the Notes without
alternation, enlargement or any change whatsoever.
(b) If tendered Notes are owned of record by two or more joint owners, all
such owners must sign this Letter of Transmittal.
(c) If any tendered Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal and any necessary or required documents as
there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the Notes
listed and transmitted hereby, no endorsements of Notes or separate powers of
attorney are required. If, however, Notes not tendered or not accepted, are to
be issued or returned in the name of a person other than the holder of Notes,
then the Notes transmitted hereby must be endorsed or accompanied by appropriate
powers of attorney in a form satisfactory to , in either case signed
exactly as the name(s) of the holder of Notes appear(s) on the Notes. Signatures
on such Notes or powers of attorney must be guaranteed by an Eligible
Institution (unless signed by an Eligible Institution).
(e) If this Letter of Transmittal or Notes or powers of attorney are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
of their authority so to act must be submitted.
9
<PAGE> 10
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Notes listed, the Notes must be endorsed or accompanied by
appropriate powers of attorney, in either case signed exactly as the name(s) of
the registered holder of Notes appear(s) on the certificates. Signatures on such
Notes or powers of attorney must be guaranteed by an Eligible Institution
(unless signed by an Eligible Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7,
will pay all transfer taxes, if any, applicable to the transfer and exchange of
Notes pursuant to the Exchange Offer. If, however, issuance of Exchange Notes is
to be made to, or Notes not tendered for exchange are to be issued or returned
in the name of, any person other than the holder of Notes, and satisfactory
evidence of payment of such taxes or exemptions from taxes therefrom is not
submitted with this Letter of Transmittal, the amount of any transfer taxes
payable on account of the transfer to such person will be imposed on and payable
by the holder of Notes tendering Notes for exchange prior to the issuance of the
Exchange Notes.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the Exchange Notes are
to be issued, or if any Notes not tendered for exchange are to be issued or sent
to someone other than the holder of Notes or to an address or other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
complete. Holders of Notes tendering Notes by book-entry transfer may request
that Notes not accepted be credited to such account maintained at the Depositary
as such holder of Notes may designate.
9. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time or receipt), acceptance and withdrawal of
Notes will be determined by , in its sole discretion, whose
determination shall be final and binding. reserves the absolute
right to reject any or all tenders for exchange of any particular Notes that are
not in proper form, or the acceptance of which would, in the opinion of
or its counsel, be unlawful. reserves the absolute right
to waive any defect, irregularity or condition of tender for exchange with
regard to any particular Notes. 's interpretation of the term of,
and conditions to, the Exchange Offer (including the instructions herein) will
be final and binding. Unless waived, any defects or irregularities in connection
with the Exchange Offer must be cured within such time as shall
determine. Neither , the Exchange Agent nor any other person shall
be under any duty to give notice of any defects or irregularities in Notes
tendered for exchange, nor shall any of them incur any liability for failure to
give such notice. A tender of Notes will not be deemed to have been made until
all defects and irregularities with respect to such tender have been cured or
waived. Any Notes received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. WAIVER OF CONDITIONS. reserve the absolute right to waive,
amend or modify certain of the specified conditions as described under "The
Exchange Offer -- Conditions of the Exchange Offer" in the Prospectus in the
case of any Notes tendered (except as otherwise provided in the Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. If a holder of Notes
desires to tender Notes pursuant to the Exchange Offer, but any of such Notes
has been mutilated, lost, stolen or destroyed, such holder of Notes should write
to or telephone the Trustee at the address listed below, concerning the
procedures for obtaining replacement certificates for such Notes, arranging for
indemnification or any other matter that requires handling by the Trustee:
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
(212) 658-1000
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED
10
<PAGE> 11
DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Notes whose tendered
Notes are accepted for exchange may be subject to backup withholding unless the
holder provides (as payor), through the Exchange Agent, with either
(i) such holder's correct taxpayer identification number ("TIN") on Substitute
Form W-9 attached hereto, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such holder of Notes is awaiting a TIN) and that (A) the
holder of Notes has not been notified by the Internal Revenue Service that he or
she is subject to backup withholding as a result of a failure to report all
interest or dividends or (B) the Internal Revenue Service has notified the
holder of Notes that he or she is no longer subject to backup withholding; or
(ii) an adequate basis for exemption from backup withholding. If such holder of
Notes is an individual, the TIN is such holder's social security number. If the
Exchange Agent is not provided with the correct taxpayer identification number,
the holder of Notes may be subject to certain penalties imposed by the Internal
Revenue Service.
Certain holders of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Notes should indicate their exempt
status on Substitute Form W-9. A foreign individual may qualify as an exempt
recipient by submitting to the Exchange Agent a properly completed Internal
Revenue Service Form W-8 (which the Exchange Agent will provide upon request)
signed under penalty of perjury, attesting to the holder's exempt status. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (the "Guidelines") for additional instructions.
If backup withholding applies, is required to withhold 31% of
any payment made to the holder of Notes or other payee. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
The holder of Notes is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the record owner of
the Notes. If the Notes are held in more than one name or are not held in the
name of the actual owner, consult the enclosed Guidelines for additional
guidance regarding which number to report.
11
<PAGE> 12
<TABLE>
<CAPTION>
====================================================================================================================================
PAYER'S NAME: _______________________________
====================================================================================================================================
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR
FORM W-9 TIN IN THE BOX AT RIGHT AND
Department of the Treasury CERTIFY BY SIGNING AND DATING ------------------------------------
Internal Revenue Service BELOW Social Security Number
Payer's Request for Taxpayer
Identification Number (TIN) OR
------------------------------------
Employer Identification Number
---------------------------------------------------------------------------------------------------
PART 2 -- PART 3 --
CERTIFICATION -- Under Penalties of Perjury, I certify that: Awaiting
(1) The number shown on this form is my current taxpayer identification TIN / /
number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not
been notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified me that I am no
longer subject to backup withholding.
---------------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest or
dividends on your tax return. However, if after being notified by the IRS that you are subject to
backup withholding you receive another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
SIGNATURE DATE
------------------------------------------------------ --------------------------
NAME
---------------------------------------------------------------------------------------------
ADDRESS
------------------------------------------------------------------------------------------
CITY STATE ZIP CODE
----------------------------------------------------- -------- -------------------
====================================================================================================================================
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
================================================================================
PAYOR'S NAME: MARINE MIDLAND BANK
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
such a number.
------------------------------------------------------- ---------------
Signature Date
================================================================================
12
<PAGE> 13
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
---------------
14% SENIOR NOTES DUE 2004
The undersigned hereby acknowledges receipt of the Prospectus dated July 20,
1994 (the "Prospectus") of ORBCOMM Global, L.P., a Delaware limited partnership
and ORBCOMM Global Capital Corp., a Delaware corporation (the "Issuers") and the
accompanying Letter of Transmittal (the "Letter of Transmittal"), that together
constitute the Issuers' offer (the "Exchange Offer"). Capitalized terms used but
not defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the 14% Senior Note due
2004 (the "Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (fill in amount):
$ of the Notes.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
/ / To TENDER the following Notes held by you for the account of the
undersigned (insert principal amount of Series A Notes to be tendered, if any):
$ of the Notes.
/ / NOT to TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner of the Notes, including but not limited to the representations
that (i) the undersigned's principal residence is in the state of (fill in
state) , (ii) the undersigned is acquiring the Exchange Notes in
the ordinary course of business of the undersigned, (iii) the undersigned is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of Exchange
Notes, (iv) the undersigned acknowledges that any person participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended, in connection with any resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the Staff of
the Securities and Exchange Commission set forth in certain no-action letters
(See the section of the Prospectus entitled "The Exchange Offer -- Resales of
the Exchange Notes"), (v) the undersigned understands that a secondary resale
transaction described in clause (iv) above should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, if applicable, of Regulation S-K of the
Commission, (vi) the undersigned is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company, (vii) if the undersigned is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, a
distribution of Notes; and (viii) if the undersigned is a broker-dealer that
will receive Exchange Notes for its own account in exchange for Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Notes received in respect
of such Notes pursuant to the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act; (b) to agree, on
behalf of the undersigned, as set forth in the Letter of Transmittal; and (c) to
take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of Notes.
SIGN HERE
Name of Beneficial Owner(s):
----------------------------------------------------
Signature(s):
-------------------------------------------------------------------
Name(s) (please print):
---------------------------------------------------------
Address:
------------------------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
Date:
---------------------------------------------------------------------------
13
